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Legal*10184613.1

Management’s Discussion and Analysis For the Year Ended December 31, 2015

TOREX GOLD RESOURCES INC.MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE YEAR ENDED DECEMBER 31, 2015

TABLE OF CONTENTS

Company Overview and Strategy ....................................................................................................... 2Highlights............................................................................................................................................ 2Overview of the 2015 Financial Results.............................................................................................. 5Objectives for 2016............................................................................................................................. 6Morelos Gold Property ....................................................................................................................... 6

El Limón Guajes Mine Update ........................................................................................................ 7Morelos Gold Property Exploration Update................................................................................... 9Media Luna Project Update............................................................................................................ 10

Debt Financing.................................................................................................................................... 11Results of Operations ......................................................................................................................... 12Summary of Annual Information ........................................................................................................ 14Summary of Quarterly Results............................................................................................................ 15Liquidity and Capital Resources .......................................................................................................... 16Economic Trends and Liquidity and Capital Resources Outlook ......................................................... 18Off-Balance Sheet Arrangements ....................................................................................................... 18Financial Risk Management................................................................................................................ 18Transactions with Related Parties....................................................................................................... 21Outstanding Share Data...................................................................................................................... 21Critical Accounting Policies and Estimates.......................................................................................... 21Accounting Pronouncements ............................................................................................................. 23Risks and Uncertainties ...................................................................................................................... 24Internal Control Over Financial Reporting .......................................................................................... 26Qualified Person ................................................................................................................................. 26Cautionary Note Regarding Forward-Looking Statements ................................................................. 27

This management’s discussion and analysis of the financial condition and results of operations (“MD&A”)for Torex Gold Resources Inc. (“Torex” or the “Company”) was prepared as at March 30, 2016 and is intendedto supplement and complement the Company’s audited consolidated financial statements and related notesfor the year ended December 31, 2015. The audited consolidated financial statements have been preparedin accordance with International Financial Reporting Standards (“IFRS”). All dollar figures included thereinand in the following MD&A are stated in United States dollars (“U.S. dollar”) unless otherwise stated.Additional information relating to the Company, including its annual information form and other Companyfilings, can also be viewed on the Company’s website at www.torexgold.com or on SEDAR at www.sedar.com.

For further details regarding the El Limón Guajes (“ELG”) mine (the “ELG Mine”) and the Media Luna Project(the “Media Luna Project”), please refer to the updated ELG mine plan and the Media Luna ProjectPreliminary Economic Assessment (the “PEA”), dated effective August 17, 2015, and titled “NI 43-101Technical Report - El Limón Guajes Mine Plan and Media Luna Preliminary Economic Assessment, GuerreroState, Mexico” (the “Technical Report”). The updated mine plan for the ELG Mine was undertaken in

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connection with the PEA for the Media Luna Project, which are both located on the Morelos gold property(the “Morelos Gold Property”). The PEA considers the potential economic viability of developing the MediaLuna resource by making use of the infrastructure, social capital, and secure work area which has beendeveloped for the ELG Mine. As such, the Technical Report was completed to include the updated mineplan for the ELG Mine and the PEA for the Media Luna Project in accordance with National Instrument43-101 (“NI 43-101”). The Technical Report was filed on SEDAR at www.sedar.com on September 3, 2015,and is available on the Company’s website at www.torexgold.com.

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COMPANY OVERVIEW AND STRATEGY

The Company is a Canadian-based resource company engaged in the exploration, development andexploitation of the Morelos Gold Property. The Morelos Gold Property includes a large land package ofapproximately 29,000 hectares and contains, among other things, two assets, the ELG Mine, which pouredits first gold in December 2015, and the Media Luna Project, which is in an advanced stage of exploration,for which the Company issued a PEA in 2015.

The Company’s strategy is to grow the production from the Morelos Gold Property. In March 2016, theCompany announced that ELG Mine had reached commercial production status ahead of schedule. TheMedia Luna Project, 7 km from the ELG processing plant, provides prospects for future production growth,and exploration targets below the El Limón pit provide the opportunity to extend the ELG Mine life. Thereare many other exploration targets on the Morelos Gold Property, but at the moment exploration activitieshave been curtailed in favor of a focus on ELG ramp-up and Media Luna development.

HIGHLIGHTS

ELG Mine

• On March 30, 2016, the Company announced that the ELG Mine had achieved commercial productionahead of schedule and under budget, reaching an average of 60% of design throughput of 14,000 tonnesper day for 30 days. For accounting purposes, the transition to the production phase will be reflectedcommencing April 1, 2016.

• In December 2015, the Company announced that first gold had been poured at the ELG Mine with pre-commercial production of 350 ounces of gold and an additional 5,600 estimated ounces containedwithin the processing circuit at year-end.

• Dry testing of the SAG and ball mill commenced in October 2015, with first ore processed inNovember 2015. By year end, the processing circuit was operational with 6 of 11 leach tanks and 5 of7 tailing filters in use. Subsequent to year end, all 11 leach tanks and all 7 tailing filters werecommissioned and placed into service.

• Mining of the Guajes and North Nose pits ended the year, ahead of schedule, with approximately1.2 million tonnes of ore stockpiled as of December 31, 2015. With an adequate stockpile available,the focus of the mining team shifted to waste stripping in the fourth quarter of 2015 to reduce futurere-handling costs.

• Overall construction was 98% complete as at the end of 2015. With the processing plant turned overto operations, construction activities are focused on the remaining non-critical path work and projectclose-out procedures.

• Construction of the El Limón crusher continued in the fourth quarter and the conveyor belting for theRope Conveyor (“RopeCon”) was installed in October 2015. Commissioning of both the El Limón crusherand RopeCon commenced in March 2016.

• The resettlement of all 102 families of the village of La Fundición was completed in August 2015. Workis continuing on the construction of the second village for the resettlement of the Real del Limóncommunity, which is expected to be concluded in the second quarter of 2016.

• With the construction activities winding down, there were less than 1,000 workers on site at the endof 2015, a reduction of more than 75% since the peak of the construction activities.

• The Company signed a letter of intent with the Ministry of Public Safety of the State Government ofGuerrero (the “State Government”), endorsed by the Federal Government, for the provision ofpermanent police and military presence in the areas adjacent to the Company’s Morelos Gold Property.The final agreement was signed on February 11, 2016, under which the Company will provide facilitiesand vehicles to establish security checkpoints, while the State Government, through the State Policeand Military, will provide human resources to enhance security for communities in the mining area.

• 14.0 million hours had been worked on the ELG Mine with eight lost time accidents with no fatalitiesas of December 31, 2015. However, subsequent to year end, in March 2016, a contractor operating aunion water truck off site had a fatal accident. It is believed that the accident was a result of a mechanicalfailure leading to loss of control of the vehicle. Safety continues to be the Company’s top priority. TheCompany is committed to reviewing and reinforcing its safety standards, and is working with the unionand other contractors on the project to ensure the standards for all vehicles operating on behalf of theCompany are uniform.

• The first phase of the ramp-up was focused on achieving plant reliability and planned utilization. Thisphase has been completed. The team and plant are advancing steadily towards full production. Someoperating measures for the ramp-up to date include:

• The ramp-up throughput is ahead of the ramp-up plan for tonnes processed.

• The plant utilization reached design level in February 2016 with over 90% (151 hours/week)up-time.

• The plant has been operating at greater than 60% of design capacity for more than 30 days.Production throughput levels, are expected to increase toward nameplate capacity byincreasing the ball charge in the mills to design levels.

• The plant utilization and processing rates contributed to the ELG Mine reaching commercialproduction status in March 2016.

• The tailings filtration plant is delivering the expected product for dry stack disposal, andthroughput has been steadily increasing as processes and filter cloth selection are optimized.

• Leached copper initially presented a challenge to efficient gold elution and electrowinning stepsduring the early ramp-up stage. Adjusting the free cyanide concentration and the introductionof a cold wash cycle have resulted in the copper levels returning to design background levels.

• Gold recovery rates reached above 80% in March 2016, compared to life of mine design levelsof 87.4%.

• During the pre-commercial production period, 38,161 cumulative ounces were produced, and 31,518ounces of gold were sold at an average price of $1,234 per ounce (including deliveries under the hedgecontracts entered into in connection with the Company’s Credit Agreement, as discussed in “DebtFinancing”).

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Estimated Expenditures for the ELG Mine 1

As at March 30, 2016, current estimates suggest that the ELG Mine total project cost will be $10 millionless than the approved budget of $800 million. As construction draws to an end, the focus is on closing outthe remaining construction contracts.

As at December 31, 2015, the total cash spent on the development of the ELG Mine was $690 million.Effectively 100% of the budget had been committed (excluding pre-production costs) and 92% had beeninvoiced at year end. The following summarizes the cash spent on the development of the ELG Mine as atDecember 31, 2015:

• $136 million had been spent on Mine Capital, which includes costs for the acquisition of miningequipment, the development of haul roads and pre-production stripping of the open pits.

• $475 million had been spent on Process Plant Capital, which includes costs in connection with theacquisition of process plant equipment, materials and labour to erect the process plant and relatedinfrastructure, engineering, procurement, and construction management (“EPCM”) fees to oversee theconstruction period, and the resettlement of two villages.

• $79 million had been spent on Owner’s Costs, which includes costs in connection with the Company’sproject team, insurance, and certain land lease costs.

Financing

As at December 31, 2015, the Company had fully drawn down its $300 million 8-year senior secured projectfinance facility and its $75 million cost overrun facility (together, the “Loan Facility”), receiving $330.0 millionduring the year ended December 31, 2015.

In December 2015, the Company executed a $7.6 million 4-year loan agreement with BNP Paribas (the“Equipment Loan”) which is secured by certain mining vehicles, as well as a $17.4 million finance leaseagreement with Parilease SAS (the “Finance Lease Arrangement”) for equipment expected to be deliveredin 2016. As of March 30, 2016, the Company has utilized $6.2 million of the Finance Lease Arrangement.

See “Debt Financing” for further details on the Loan Facility, the Equipment Loan and the Finance LeaseArrangement.

As at December 31, 2015, the Company had cash and cash equivalents of $46.1 million on a consolidatedbasis, with a further $44.6 million in restricted cash. In February 2016, $4.0 million was released fromrestricted cash, and in March 2016, $6.0 million was utilized to fund ELG Mine expenditures.

Exploring the Morelos Gold Property

A 14-hole diamond drill program of approximately 11,900 meters was completed to support an updatedinferred mineral resource for the Media Luna Project. The updated resource was released as part of aTechnical Report in September 2015.

A 1,733-metre in-fill drilling program in the El Limón East area within the El Limón resource was completedin June 2015. A 5,558-metre diamond drilling program was also completed within the Guajes deposit.

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1 Excluding capitalized interest costs and fees associated with funding the ELG Mine.

Learnings from the Media Luna geological model, regarding age dating of intrusive events, led to a decisionto re-log all existing El Limón and Guajes core. This work sought to identify the intrusive dikes that occurredafter the mineralising event, and was completed in the second half of 2015. The resultant learnings willbe used in the development of the 2016 Life of Mine (LoM), which is scheduled for completion in the secondquarter of 2016.

One early outcome of the re-modelling effort for El Limón was the identification of a particular intrusivesill (the “Sill”) that has mineralized material underneath it as well as above it. The resource above it is wellunderstood, but the three identified target areas under the Sill represent an opportunity to add undergroundresources that are close to the existing infrastructure.

Continued Evaluation of the Media Luna Project

In September 2015, the Company released a positive PEA for the Media Luna Project, as well as a newinferred mineral resource estimate, prepared in accordance with NI 43-101, of 7.42 million gold equivalentounces, including 3.98 million ounces of gold, at a cut-off grade of 2 g/t gold equivalent. The PEA considersthe potential economic viability of developing the Media Luna resource by making use of the infrastructure,social capital and secure work area developed for the ELG Mine. As such, the Technical Report includesboth an updated mine plan for the ELG Mine and the PEA for the Media Luna Project.

The PEA is preliminary in nature, and is based on inferred mineral resources that are considered toospeculative geologically to have the economic considerations applied to them that would enable them tobe categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resourcesthat are not mineral reserves do not have demonstrated economic viability.

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OVERVIEW OF THE 2015 FINANCIAL RESULTS

The net loss for the year ended December 31, 2015 totaled $24.6 million, a decrease from the net loss forthe year ended December 31, 2014 of $26.3 million. The decrease in net loss in the year ended December 31,2015 compared to the prior year is primarily related to lower exploration and evaluation expenditures andgeneral and administrative expenses, as well as a significant gain on the Company’s gold derivative contracts,reflecting the downward trend in gold prices during 2015. These benefits were partly offset by a foreignexchange loss of $13.7 million for the year ended December 31, 2015. As the Company has significant cashand cash equivalents, Value Added Tax receivables (“VAT”) or “Impuesto al Valor Agregado” (“IVA”), andaccounts receivable, denominated in Mexican pesos and Canadian dollars, foreign exchange losses occurwhen these currencies devalue relative to the U.S. dollar. During the year 2015, the Mexican peso andCanadian dollar devalued by 17% and 19% relative to the U.S. dollar, respectively.

During the year ended December 31, 2015, in addition to draws totaling $330.0 million from the LoanFacility, and $7.6 million from the Equipment Loan, the Company collected $34.7 million in VAT receivables,(excluding interest of $1.2 million). The Company’s cash and cash equivalents position as at December 31,2015 was $46.1 million, with a further $44.6 million of cash restricted pursuant to the Loan Facility, asdiscussed in “Debt Financing”. At December 31, 2015, the Company had $1,121.1 million in total assets,and had a working capital balance of $56.7 million, compared with $773.6 million in assets and a workingcapital balance of $83.9 million as at December 31, 2014.

As at December 31, 2015, the Company recognized a discounted decommissioning liability of$9.4 million relating to its ELG Mine, and determined that no significant decommissioning liabilities existin connection with the exploration activities at the Media Luna Project. The Company has calculated the

fair value of the decommissioning liability at December 31, 2015 using a pre-tax discount rate of 3.31% andhas estimated that expenditures will be incurred between 2026 and 2032. The estimated total futureundiscounted cash flows to settle the decommissioning liability at December 31, 2015 is $14.2 million.

For a discussion of trends which may impact the Company, see “Economic Trends and Liquidity and CapitalResources Outlook.”

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OBJECTIVES FOR 2016

The following highlights the Company’s primary objectives for 2016:

Safety and Health:• No fatalities.• A lost time injury frequency of no more than 2 lost time injuries per million hours worked

(contractors and employees combined).

Environment• No reportable spills of 1,000 litres or more to the river or the reservoir.

Production:• 2016 Production: Sell 275,000 ELG Mine gold ounces.• Setting up 2017 Production: Strip 17 million tonnes of waste in 2016.

Cost Control:• Cash cost of less than $550 per equivalent gold ounce.• All-in sustaining cost of less than $775 per equivalent gold ounce.

Milestones:• Achieve commercial production in the second quarter of 2016.• Complete commissioning of the El Limón crusher and RopeCon in the second quarter of 2016.• Complete the resettlement of the Real del Limón village in the second quarter of 2016.• Complete the commissioning of the truck shop for the ELG Mine in the second quarter of 2016.• Obtain the permits for an exploration tunnel for the Media Luna Project.

MORELOS GOLD PROPERTY

Overview

The Morelos Gold Property is in the Guerrero Gold Belt in southern Mexico, 180 kilometres to the southwestof Mexico City and approximately 50 kilometres southwest of Iguala. The Guerrero Gold Belt contains anumber of gold deposits and prospects, including Goldcorp Inc.’s Los Filos Mine, located approximately14 kilometres southeast of the ELG Mine of the Morelos Gold Property.

The Morelos Gold Property consists of seven mineral concessions covering a total area of approximately29,000 hectares. The 29,000 hectare land package is bisected by the Balsas River and the drilling areas thatthe Company has defined are generally referenced as “North” or “South” of the Balsas River. Drilling areaslocated north of the Balsas River include the ELG Mine, Guajes South and Pacifico. Additional prospectiveareas in the north include Todos Santos (north portion), Corona, Tecate, Azcala, Modelo, Querenque andEl Limón Deep. Drilling areas located south of the Balsas River include Media Luna, El Cristo, Naranjo andLa Fe.

El Limón Guajes Mine Update

First Gold and Ramp-Up Phase

First gold from the ELG Mine was announced in December 2015, after 25 months of construction, with anestimated 350 ounces of gold doré, and an additional 5,600 estimated ounces contained within theprocessing circuit at year-end. As of March 30, 2016, a total of 38,161 ounces of gold had been produced,and 31,518 ounces of gold have been sold at an average price of $1,234 per ounce (including deliveriesunder the hedge contracts entered into in connection with the Company’s Credit Agreement, as discussedin “Debt Financing”). Sales of gold prior to achieving commercial production are offset against theconstruction costs for the ELG Mine.

Ramp-up of the processing plant continued ahead of schedule. The design throughput rate per hour isapproximately 650 tonnes per hour (tph). The plant has consistently operated at 60% of that rate,approximately 400 tph, through the reliability ramp-up phase. In late February, additional grinding mediawas added and the throughput rate exceeded 500 tph at the date of this report. To date, a daily performancerecord of 13,460 tonnes per day for the grinding circuit and 14,300 tonnes per day for tailings filtration hasbeen achieved. As additional grinding media is being added, the teams are honing their skills and proceduresfor the push to full production of 14,000 tonnes per day.

Mining from the Guajes pit is ahead of schedule and the mine plan was adjusted to allow for the drawdownof the ore stockpile through 2016. At the end of 2015, there were 1.2 million tonnes of ore stockpiled,consisting of 0.6 million tonnes from Guajes and 0.6 million tonnes from North Nose. The stockpile was ofsufficient size to take mining off the critical path to achieve commercial production. As such, the focus ofthe mining team in the fourth quarter of 2015 was shifted to waste stripping to reduce future re-handlingcosts. Subsequent to year end, mining at the Guajes pit restarted in January 2016, El Limón pit pre-strippingcommenced, and construction of the haul road to the El Limón crusher was completed, ahead of schedule.

By the end of 2015, the RopeCon was mechanically complete and preparations were underway for electricalcommissioning after completion of the El Limón crusher. Commissioning of both the El Limón crusher andthe RopeCon, with ore, commenced in March 2016. Ore from El Limón has been conveyed via the RopeConto the fine ore stockpile ahead of the SAG mill.

In the processing plant, the ramp-up started with 6 of 11 leach tanks available, and 5 of the 7 tailing filtersin operation. Subsequent to year end, production volumes increased, and the remaining leach tanks andtailing filters were placed into service. Tailings filtration plant throughput has been steadily increasing asprocesses and filter cloth selection are optimized.

Leached copper initially presented a challenge to efficient gold elution and electrowinning steps during theearly ramp-up stage with copper levels in solution reaching 1000 parts per million (ppm). Adjusting the freecyanide concentration and the introduction of a cold wash cycle have resulted in the copper levels returningto design background levels. Evaluation efforts are in progress to determine if mitigation actions need tocontinue.

Gold recovery levels varied through February and March as the plant response to differing concentrationsof reagents was tested. Design level recoveries are 87.4%. During the last five days prior to the date of thisreport, recoveries have fluctuated between 81.2% and 90.7%.

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Construction Progress

EPCM activities by M3 Engineering & Technological Corporation (“M3”) continued during 2015. Overallconstruction progress was at approximately 98% at the end of 2015.

Construction milestones achieved in 2015 included the following:• Construction of the Guajes primary crusher was completed by June 2015. • The Eastern Service Road was commissioned in July 2015, allowing construction supply traffic to

access the plant site.• The permanent camp commissioning was completed and turned over to the operations team in

August 2015.• The resettlement of the village of La Fundición was completed in August 2015. The relocation of

this village made it safe to begin working above the former village, which allowed for the start ofwaste stripping for the El Limón pit. 

• Water and grid power were available at the processing plant by the end of September 2015.• The RopeCon conveyor belt was installed in October 2015.

Commercial Production

With the construction of the ELG Mine close to completion and the ramp-up of the plant progressing aheadof schedule, the Company announced on March 30, 2016 that commercial production had been achieved.The Company had previously anticipated this significant milestone would be reached in the second quarterof 2016.

Commercial production signals the transition for a project from the development phase into the productionphase. On March 30, 2016, the Company announced that the ELG Mine had reached commercial production.For accounting purposes, this transition will be reflected as of April 1, 2016 and the Company will beginrecognizing revenue and operating costs, including depreciation, and reporting operating measures suchas total cash costs and all-in sustaining costs, as defined by standards published by the World Gold Council.

Safety

As of December 31, 2015, 14.0 million hours had been worked on the ELG Mine, through the peak ofconstruction, with eight lost time accidents and no fatalities. In March 2016, a contractor operating a unionwater truck off site had a fatal accident, while maintaining a community road. It is believed that the accidentwas a result of a mechanical failure leading to loss of control of the vehicle. Safety continues to be theCompany’s top priority. The Company is committed to reviewing and reinforcing its safety standards, andis working with the union and other contractors on the project to ensure the standards for all vehiclesoperating on behalf of the Company are uniform.

Community

The Company completed the resettlement of all 102 families of the village of La Fundición in August 2015.During the latter part of the year, the Company’s Corporate Responsibility team tended to minor issueswith the new village as the resettled community adjusted to its new surroundings. Community membersare transforming their new living spaces into homes, making changes and customizations to their houses.

The resettlement of the second village, Real del Limón started in the first quarter of 2016 and is expectedto be completed in the second quarter of 2016.

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In September 2015, a group of local fishermen restricted access to the plant site. The group of fishermenalleged that the Company’s activities resulted in lower fish catches in the Caracol Reservoir. The Company’sCorporate Responsibility team hired an independent third party to prepare a study to determine whetherthere is legitimacy to their claim, and continues to work with the local community to address perceivedconcerns over the ELG Mine’s activities. The studies will include blast monitoring, and acoustic assessmentsin the lake. Preliminary data indicate that vibration and noise are not reaching the lake such that fish wouldbe affected.

Security

In September 2015, the Company signed a letter of intent with the Ministry of Public Safety of the StateGovernment of Guerrero (the “Ministry”), endorsed by the Federal Government, for the provision ofpermanent police and military presence in the areas adjacent to the Company's Morelos Gold Property.The agreement was subsequently signed in February 2016. In the first stage under this agreement, theMinistry will establish three check points with permanent police and military presence which, along withregular patrols, will improve security for the communities in the areas adjacent to the ELG Mine. The MediaLuna Project will receive some security benefits from this pilot program, with more comprehensive coverageplanned for later programs. The Company will support the program with infrastructure including lodgingfor the police and military forces, and additional support in the form of transportation and vehiclemaintenance. The program came into effect immediately upon the signing of the formal agreement onFebruary 11, 2016, and may be renewed on a yearly basis by agreement of the parties.

The Company also continues to provide private security at the plant and satellite installations such as thepermanent camp.

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Morelos Gold Property Exploration Update

Age dating of intrusive events in the Media Luna area led to an understanding of which intrusive dikesoccurred before, during, and after the mineralizing event. This learning was also applicable to the El Limonand Guajes geological models, since any pre mineralization dikes could contain gold, but post mineralizationdikes would not. To gain additional information on whether certain dikes in the southeast portion of theEl Limon deposit were pre, during, or post mineralization, a 1,773-metre in-fill drilling program wascompleted during June 2015. This drilling, plus 5,558 metres of grade control drilling in the Guajes East Pit,plus a re-logging of all existing ELG core, will contribute to an updated resource estimate and Life of MinePlan, which is expected to be completed late in the second quarter of 2016.

During the course of generating new geology interpretations for El Limón, further geological work hasfocused attention on an intrusive sill that projects from the main intrusive body. Much of the El Limóndeposit lies above this Sill and conditions below the Sill are also positive for gold skarn mineralization. Thedistribution (extent and thickness) of the granodiorite Sill that underlies the El Limón deposit east of theFlaca fault was estimated. In addition, it was noted that four of the only six drill holes that pierced the Sillintersected gold mineralized skarn. There are also several highly magnetic targets underneath this Sill, whichhave not yet been tested.

Based on the results, work was completed to identify targets at the base of the Sill capable of providinghigh grade ore and to develop a plan to test these targets. Three targets were identified. These targets aresupported by gold and bismuth anomalous rock and drill core samples, geology interpretation, and

geological data from the 2013 airborne ZTEM, a form of time-domain electromagnetics, and magneticsurvey.

The three targets represent prospects to add underground resources to the ELG Mine close to existinginfrastructure. These and other nearby pits exploration targets will be evaluated as opportunities to extendthe ELG Mine life.

Eleven diamond drill holes totaling 6,539 meters were completed within a broad area south of the BalsasRiver, west and north of the Media Luna deposit. This wide-spaced reconnaissance drilling returned anumber of skarn alteration intersections but no significant gold-silver-copper mineralization.

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Media Luna Project Update

The Media Luna deposit occurs primarily at the contact between Morelos formation carbonate rocks andthe El Limón granodiorite. The sedimentary rocks and their contact with the main granodiorite stock dip tothe south west at about 35 degrees. Extensive skarn alteration and mineralization formed at this contactand exhibits the same dip. Later intrusive dikes and sills cut the deposit and its host rocks and are moreabundant in the northwestern portion of the current resource area. The mineralized zone is widely exposedat the surface in steep cliffs along the northeastern margin of the area.

Drilling shows that the large magnetic anomalies in the area are explained by the presence of massivemagnetite and magnetic pyrrhotite, which are typically associated with gold-silver-copper mineralization.In more detail, gold-silver-copper mineralization typically occurs together with sulfide minerals and a latestage of skarn alteration. A significant area of the magnetic anomalies remains untested and skarn alterationand associated gold-silver-copper mineralization remains open in several directions.

In September 2015, the Company released the Technical Report. The results of the Technical Reportdemonstrate the positive economics for both the ELG Mine plan as well as the Media Luna Project.

The economics for the ELG Mine plan were completed to a feasibility study level of detail while the MediaLuna Project were completed to a PEA level of detail. The PEA is a conceptual study of the potential viabilityof the mineral resources of the Media Luna Project; the economic and technical viability of the Media LunaProject has not been demonstrated at this time.

Recommendations from the authors of the study called for the completion of the build and operations ofthe ELG Mine as per the plan presented, as well as the further development of the Media Luna Projectthrough additional study and underground exploration work. The Company has accepted theserecommendations and is completing the build of the ELG mine, and preparing plans to advance the MediaLuna Project.

Work on the Media Luna Project during the fourth quarter of 2015 was limited to preparation for theunderground exploration program. This work included continued environmental studies and landacquisition to support the permit application. The goal of the work is to have permits in hand and readyfor execution when the Company chooses to undertake this work as recommended in the Technical Report.

The Company incurred $2.2 million in evaluation expenditures in relation to the Media Luna Project for theyear ended December 31, 2015 (2014 - $0.9 million).

DEBT FINANCING

In August 2014, the Company announced the signing, through its subsidiary Minera Media Luna, S.A. deC.V., of a credit agreement (the “Credit Agreement”) with BMO Harris N.A., BNP Paribas, CommonwealthBank of Australia, ING Bank N.V., Société Génerale, and The Bank of Nova Scotia (the “Lenders”) and otherdefinitive documentation giving effect to its previously announced $375 million senior secured projectfinance Loan Facility that is due to mature on June 30, 2022. The proceeds from the Loan Facility were usedto fund the development of the ELG Mine.

The Loan Facility is comprised of two separate facilities, a project finance facility of $300 million (the “PFF”)and a cost overrun facility of $75 million (the “COF”). Advances under the PFF bear interest at a rate ofLIBOR + 4.25% to 4.75% and advances under the COF bear interest at the same rate plus 1%. A copy of theCredit Agreement was filed on August 21, 2014 and is available on SEDAR at www.sedar.com.

On March 30, 2015, the Company concluded an amendment of the Credit Agreement, a copy of which wasfiled on March 31, 2015 and is available on SEDAR at www.sedar.com. The amendment addressed potentialimpacts that the change in the anticipated commencement of production may have on certain requirementsunder the Loan Facility. While the Company anticipated that first gold production would occur in the fourthquarter of 2015, certain of the amendments to the Credit Agreement were based on more conservativeassumptions relating to production schedule, capital expenditures and production ramp-up.

As such, the Company advanced $10.0 million to the ELG Mine and placed $30.9 million in a reserve account(the “Sponsor Reserve Account”) to fund the conservative assumptions, and as a result, the Lenders agreedto make the full COF of $75 million available to the Company. The Company is able, in the absence of theconservative assumptions occurring, to withdraw funds from the account under certain conditions. InFebruary 2016, the Company met such conditions, and withdrew $4.0 million from the Sponsor ReserveAccount. In March 2016, the Company also utilized $6.0 million from the Sponsor Reserve Account to fundexpenditures for the ELG Mine.

During 2015, the Company received additional draws totaling $330.0 million from the Loan Facility. Thetotal amount drawn on the Loan Facility as at December 31, 2015 is $375.0 million. Net of transaction costs,the Loan Facility included in the Statement of Financial Position contained in the Company’s consolidatedannual financial statements for the year ended December 31, 2015 totaled $363.3 million.

In connection with the Loan Facility, the Company entered into commitments to deliver 204,360 ounces ofgold over an 18-month period commencing in January 2016 to the Lenders, at an average flat forward goldprice of $1,241 per ounce. The gold hedges provide price protection for the Company’s debt obligationsand represent approximately 6% of the Company’s expected total gold production from the ELG Mine. TheCompany has also executed the required foreign exchange currency hedges which cover 75% of theCompany’s non-U.S. dollar denominated capital expenditures for the ELG Mine from November 2014 tothe second quarter of 2017. An operating expenditures foreign exchange currency hedge to cover exposurefor 75%, 50% and 25% annually, on a three year rolling basis, of the Company’s non-U.S. dollar denominatedoperating expenditures for the ELG Mine, will be required during production. The hedges are secured onan equal basis with the Loan Facility and documented in the form of International Swaps and DerivativesAssociation Agreements.

In December, 2015, the Company executed the Equipment Loan, which provides for $7.6 million as a 4-yearloan, secured by certain mining vehicles that are owned by the Company. Net of financing costs, the Company

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received proceeds of $7.1 million. The Equipment Loan is due to mature on December 31, 2019, is repayablein quarterly installments starting March 31, 2016, and bears interest at a rate of LIBOR + 3.75%.

Further, on December 31, 2015, the Company executed the Finance Lease Arrangement which provides upto $17.4 million in lease financing for mining equipment expected to be delivered in 2016. As of March 30,2016, the Company has utilized $6.2 million under the Finance Lease Arrangement. Advances under theFinance Lease Arrangement bear interest at a rate of LIBOR + 4.0%, and are repayable in quarterly rentinstallments starting June 30, 2016.

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RESULTS OF OPERATIONS

The Company is in the exploration stage at the Media Luna Project and in the ramp-up stage at the ELGMine. The Company had not generated operating revenue as of December 31, 2015 and will continue toincur operating expenses related to its corporate and exploration activities in 2016. The expendituresdirectly attributable to the development of the ELG Mine have been capitalized until reaching commercialproduction, while evaluation expenditures related to the Media Luna Project, exploration expenses, andother corporate activities will continue to be expensed. The Company commenced selling gold from theELG Mine in February 2016. Proceeds from gold sales were offset against the costs capitalized for the ELGMine prior to commercial production.

For the Year Ended December 31, 2015 compared to the Year Ended December 31, 2014

The net loss for the year ended December 31, 2015 was $24.6 million ($0.03 per common share) comparedto $26.3 million ($0.04 per common share) for the year ended December 31, 2014.

General and administrative costs totaled $12.2 million for the year ended December 31, 2015, comparedto $14.5 million for the prior year. General and administrative costs were lower in 2015 compared to 2014due to lower share based compensation, severance and employee benefit related costs. Fewer stock optionswere issued year over year with 3,530,400 stock options in 2015 compared to 6,640,000 in 2014. However,an accrual was recorded in 2015 for performance based bonuses for certain executives which are expectedto be awarded in restricted share units to be issued in 2016. This has resulted in share based compensationexpense of $2.8 million in the year ended December 31, 2015, compared with $2.9 million for the yearended December 31, 2014. Further, as the majority of salary, benefit and share-based compensation costsare incurred in Canadian dollars, the devaluation of the Canadian dollar resulted in a lower U.S. dollarequivalent.

For the year ended December 31, 2015, exploration and evaluation expenditures totaled $9.7 million,compared to $12.2 million in the comparable period in 2014. During 2015, the Company completed adiamond drill program totalling approximately 11,900 metres to support an updated inferred resource forMedia Luna, as well as well as a 1,700 metre in-fill drilling program within the El Limon resource. Evaluationexpenditures also included expenditures in relation to the PEA for the Media Luna Project, the results ofwhich were released in September 2015. Comparatively, approximately 11,400 metres were drilled at theEl Limón Sur and the Media Luna Project in the comparable period in 2014. The increase in drilling activitieswas partly offset by lower overhead costs, as well as the devaluation of the Mexican peso relative to theU.S. dollar.

The Company recognized a foreign exchange loss of $13.7 million for the year ended December 31, 2015,compared to a gain of $5.4 million for the year ended December 31, 2014. As the Company holds a portion

of its cash balances, accounts receivable and accounts payable in Mexican pesos or Canadian dollars, theforeign exchange gains and losses fluctuate with the value of these currencies relative to the U.S. dollar,the Company’s functional currency. A weakening Mexican peso and Canadian dollar result in a foreignexchange loss on non-U.S. dollar denominated monetary assets, which results in a foreign exchange gainon non-U.S. dollar denominated monetary liabilities.

In connection with the Loan Facility, in October 2014, the Company entered into commitments to deliver204,360 ounces of gold over an 18-month period commencing in January 2016 to the Lenders, at an averageflat forward gold price of $1,241 per ounce. The gold contracts provide price protection for the Company’sdebt obligations and represent approximately 6% of the Company’s expected total gold production for theELG Mine. These contracts are marked-to-market at each reporting period as they are considered non-designated hedges. Based on the forward prices for gold at December 31, 2015, the Company recognizedan asset of $34.4 million as at December 31, 2015 (December 31, 2014 - $11.4 million), and recorded anunrealized gain of $23.0 million for the year ended December 31, 2015 compared to $11.4 million for theyear ended December 31, 2014, reflecting the continued downward trend in gold prices during 2015.Further in December 2015, the Company net settled the gold contracts due to mature in January 2016pertaining to 5,780 ounces at an average unwind price of $1,065 per ounce, resulting in a realized gain of$1.0 million after fees and discount.

In October 2014, also in connection with the Loan Facility, the Company executed the required foreignexchange currency contracts which cover 75% of the Company’s non-U.S. dollar denominated capitalexpenditures for the ELG Mine from November 2014 to the second quarter of 2017. The Company recognizeda realized loss of $10.5 million for the year ended December 31, 2015 in relation to contracts settled duringthe period. Similar to the gold contracts, currency contracts that remain outstanding as at December 31,2015 are marked-to-market at each reporting period. The resulting liability as at December 31, 2015 totalled$5.6 million, compared to $8.0 million as at December 31, 2014, reflecting fewer contracts outstanding,partly offset by further depreciation of the Mexican peso during 2015.

The Company recognized deferred income tax expense of $4.8 million in the year ended December 31,2015, compared to an income tax recovery of $2.5 million in the comparable period in 2014. The incometax expense in 2015 reflects the deferred income tax liability relating to the Mexican mining royalty for thedecommissioning liability of the ELG Mine and the Company’s unrealized gain on the gold derivativecontracts, deferred withholding taxes, as well as the impact the foreign exchange rate fluctuations have onthe tax base of the Company’s exploration and evaluation tax pools.

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SUMMARY OF ANNUAL INFORMATION

Table 1: Selected annual information

in millions, except per share amounts Dec 31, 2015 Dec 31, 2014 Dec 31, 2013

Operating revenues $ — $ — $ —

Operating expenses 21.9 26.7 58.9

Net loss 24.6 26.3 67.0

Loss per share - basic and diluted 0.03 0.04 0.11

Current assets 107.1 101.5 206.1

Long-term assets 1,014.0 672.1 359.8

Total assets 1,121.1 773.6 565.9

Long-term liabilities 400.5 63.2 20.5

Dividends $ — $ — $ —

The consolidated annual financial statements for each of the three years most recently completed financial years were preparedin accordance with IFRS. The presentation currency and functional currency are U.S. dollars.

The Company has not generated operating revenues as at December 31, 2015. Operating expenses, netloss and net loss per share decreased from 2013 to 2015 due to a decrease in general and administrativeexpenses, exploration and evaluation expenditures, as well as a gain on gold derivative contracts. Thesebenefits were partly offset by higher foreign exchange losses, and income tax expenses.

Long-term and total assets have decreased since 2013, reflecting purchases of equipment and capitalizationof expenditures related to the construction of the ELG Mine. Cash and cash equivalents have decreasedyear over year since 2013, reflecting the use of cash for investing in the ELG Mine. In 2015, the decrease incash and cash equivalents was more than offset by the gain on derivative gold contracts and the increasein the VAT receivables which the Company has classified as current assets as at December 31, 2015.

Long-term liabilities have increased year over year reflecting the draw downs on the Company’s Loan Facility.In addition, long-term liabilities as at December 31, 2015 reflects the Company’s borrowing under theEquipment Loan, as well as the provision for decommissioning liabilities which was recorded in 2015.

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SUMMARY OF QUARTERLY RESULTS

Table 2: Quarterly Results for the Eight Most Recently Completed Quarters

in millions, exceptper share amounts

2015 2014Dec 31 Sept 30 Jun 30 Mar 31 Dec 31 Sept 30 Jun 30 Mar 31

Operating revenues $ — $ — $ — $ — $ — $ — $ — $ —

General & administrative 3.8 2.8 2.7 2.9 4.5 3.0 3.6 3.4

Exploration and evaluation 1.6 1.7 2.7 3.7 5.5 1.8 0.6 4.3

Net (gain) loss (0.1) $ 4.8 $ 9.2 $ 10.7 $ 15.7 $ 1.1 $ 6.2 $ 3.3

Basic and diluted loss per share $ 0.00 $ 0.01 $ 0.01 $ 0.01 $ 0.02 $ 0.00 $ 0.01 $ 0.01

For each of the eight most recent completed quarters, the financial data was prepared in accordance with IFRS. All dollar figuresincluded in this section are stated in U.S dollars, unless otherwise stated. The presentation and functional currency is in U.S. dollars.

The net (gain) loss in all quarters includes costs for exploration, evaluation, corporate general andadministrative cost, and foreign exchange gains and losses. The net (gain) loss also includes derivative gainsand losses and financing costs starting in the fourth quarter of 2014.

The Company’s policy is to expense all mineral property exploration and evaluation costs when incurredand to capitalize its development expenditures. Exploration expenditures, include drilling, sampleprocessing, road maintenance, water consumption, security, and personnel costs. In 2015, exploration andevaluation expenditures were highest in the first and second quarters, as the Company completed twodrilling programs, one of which totalled approximately 11,900 metres to support an updated inferredresource for Media Luna, which was released in September 2015 in conjunction with the Media Luna ProjectPEA. The second program related to a 1,733-metre in-fill drilling program in the El Limón East area withinthe El Limón resource. In 2014, exploration and evaluation expenses were lowest in the second and thirdquarters of 2014, as the Company suspended the drilling program at the ELG Mine and the Media LunaProject from April to October 2014.

Corporate general and administrative expenses, which include depreciation on corporate assets, remainedrelatively consistent for the eight most recent quarters. In general, performance based bonuses for theCompany’s executive team and corporate employees are accrued in the last quarter of every year.

Share-based compensation expense and salaries and benefits varied during the eight most recent quarters.Share purchase options vest over a two-year term with one third of the options vesting immediately andone third vesting on each of the two subsequent anniversary dates. The related expense is based on thevesting dates, with one third of the expense recorded immediately, one third of the expense amortizedequally over the first year, and one­third of the expense amortized equally over two years. Restricted shareunits are expensed from the issue date over the vesting period. As a result, quarterly share basedcompensation expense was the greatest during the quarters in which options were granted. Share basedcompensation expenses were higher in 2014 than in 2015 as fewer options and restricted share units wereissued in 2015 than in 2014. The decrease in the number of share based awards in 2015 compared to 2014is due to the fact that long-term incentive awards for directors and certain executives were not granted in2015, and are expected to be issued in 2016. The related expense will be recognized over the vesting period,and therefore has not been recognized in 2015.

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Further, the majority of expenses related to salaries, benefits and share-based compensation aredenominated in Canadian dollars. A weakening of the Canadian dollar during 2015 resulted in lower U.S.dollar equivalent amounts compared to 2014.

In October 2014, in connection with the Loan Facility, the Company entered into gold and currency hedgecontracts, which are marked-to-market at every reporting period as they are considered non-designatedhedges. The gain or loss relating to these contracts fluctuates with the price of gold and the Mexican pesoexchange rate relative to the U.S. dollar, respectively.

The Company holds cash balances in both Canadian dollars and Mexican pesos in addition to its U.S. dollarholdings. The Company also has VAT receivables denominated in Mexican pesos. The foreign exchange gainsand losses for the eight quarters fluctuate with the movement of the Canadian dollar and Mexican pesoexchange rate relative to the U.S. dollar.

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LIQUIDITY AND CAPITAL RESOURCES

As noted in “Results of Operations”, the Company does not generate cash from operations. The Company’sprimary source of funding has been through the issuance of equity and draws from the Loan Facility.

The total assets of the Company as at December 31, 2015 were $1,121.1 million (December 31, 2014 -$773.6 million), which includes $46.1 million in cash and cash equivalents (December 31, 2014 -$99.4 million), excluding restricted cash of $44.6 million (December 31, 2014 - $15.0 million). The Companyhad working capital of $56.7 million as at December 31, 2015, compared to $83.9 million at December 31,2014.

Cash flow used in operating activities, including changes in non-cash working capital, for the year endedDecember 31, 2015 totaled $34.3 million, compared to $21.4 million for the year ended December 31,2014. The increase in cash flows used in operations is primarily a result of the realized loss on the derivativecurrency contracts of $10.5 million and the purchase of materials and supplies inventory in the second halfof 2015. This was partly offset by lower exploration and evaluation costs and general and administrativeexpenses, as well as an increase in accounts payable and accrued liabilities during the year endedDecember 31, 2015 compared to the same period in 2014.

Investing activities resulted in cash outflows of $349.0 million for the year ended December 31, 2015,compared with cash outflows of $301.2 million for the year ended December 31, 2014. In both periods,the outflows include the purchase of equipment and the capitalization of expenditures directly related tothe development of the ELG Mine. Cash outflows for investing activities also includes capitalized borrowingcosts of $14.1 million in 2015. Development activity has been increasing steadily since the fourth quarterof 2013 when the final construction decision was made. Cash flows used in investing activities include thecollection of $34.7 million in VAT refunds, excluding interest, partly offsetting the increase in VAT paid of$47.2 million relating primarily to construction activities. Investing activities also reflect the investment of$29.6 million (2014 - $15.0 million) of restricted cash which has been set aside for potential cost overruns,as described in “Debt Financing”. This was partly offset by the release of $1.3 million in the amount restrictedfor potential obligations in the event of an unplanned temporary closure of the ELG Mine.

Financing activities resulted in cash inflows of $335.7 million for the year ended December 31, 2015,compared with $234.8 million for the year ended December 31, 2014. Cash flows from financing activitiesin 2015 relate to further draws from the Loan Facility totaling $330.0 million. These proceeds were partlyoffset by $1.9 million in financing charges which are presented net of the gross amounts borrowed on theStatement of Financial Position contained in the Company’s consolidated annual financial statements forthe year ended December 31, 2015, and $0.9 million in finance costs which are expensed in the Statementof Operations contained in the Company’s consolidated annual financial statements for the year endedDecember 31, 2015. The Company also received net proceeds from the Equipment Loan of $7.1 million.Comparatively, in the year ended December 31, 2014, the Company completed a public bought deal offeringof 119,830,000 units at a price of CDN $1.20 per unit, for aggregate gross proceeds of approximatelyCDN $143.8 million (or $130.0 million) and net proceeds of approximately CDN $136.9 million (or$123.8 million). During that year, the Company also completed its first draw against the Loan Facility of$45.0 million, and incurred $10.1 million in deferred financing charges, and $3.4 million in financing costs.

As discussed under “Debt Financing,” an amendment to the Loan Facility was completed in March 2015.The amendment included adjustments to accommodate the financing impacts of a change in the plannedschedule, as well as additional conservatism in the event that the schedule for the first gold pour was tobe delayed until the first quarter of fiscal 2016. Consequently, additional funding was deemed required tobe injected into the ELG Mine’s Sponsor Reserve Account for potential project cost overruns. With theCompany producing its first gold on schedule in the fourth quarter of 2015, some of the concerns relatingto the progress of the schedule were alleviated. In February 2016, the Company met the conditions requiredto withdraw from the Sponsor Reserve Account, and $4.0 million was released to fund future corporateexpenditures. In March 2016, $6.0 million was used from the Sponsor Reserve Account to fund ELG Mineexpenditures. Furthermore, as set out in the Credit Agreement, the Company is restricted from repatriatingfunds from Minera Media Luna, S.A. de C.V., the borrower under the Credit Agreement, until FinalCompletion pursuant to the Loan Facility.

As at December 31, 2015, the Company’s contractual obligations included a head office lease agreement,office equipment leases, long-term land lease agreements with the Rio Balsas, the Real del Limón, and theValerio Trujano Ejidos and the individual owners of land parcels within certain of those Ejido boundaries,a five-year exploration access agreement with the Puente Sur Balsas Ejido, and contractual commitmentsrelated to the ongoing construction of the ELG Mine. All of the long-term land lease agreements and theexploration agreement can be terminated at the Company’s discretion at any time without penalty. Thefive-year exploration access agreement includes access to the new discoveries at the Media Luna Project.These agreements are not included in the contractual commitments reported below. In addition, theCompany has entered into several exploration-related agreements, all of which are cancellable within ayear at the Company’s discretion. The Company has entered into development-related agreements for theELG Mine that extend through 2016.

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Table 3: Contractual Commitments (in thousands)

Contractual Obligations Payments Due by Period

TotalLess than 1

year 1-3 years 4-5 yearsGreater than

5 yearsLong-term leases $ 698 $ 163 $ 307 $ 228 $ —

ELG Mine commitments 63,048 63,048 — — —

Debt 382,556 1,889 50,278 150,502 179,837

Other Obligations 48,911 48,607 304 229 —

Total $ 495,213 $ 113,707 $ 50,889 $ 150,959 $ 179,837

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ECONOMIC TRENDS AND LIQUIDITY AND CAPITAL RESOURCES OUTLOOK

As at December 31, 2015, the total amount spent on the development of the ELG Mine was $690 million.The remaining costs to complete are expected to be funded through the Company’s existing cash resources,undrawn amounts under the Finance Lease Arrangement, restricted cash reserves if necessary, funds fromthe collection of VAT receivables, proceeds from pre-production sales, and other financing options ifnecessary.

The average trading price of a troy ounce of gold for the year ended December 31, 2015 was $1,160,compared to $1,266 for the year ended December 31, 2014, representing a decrease of 8% year over year.The market price of gold continues to exhibit significant volatility. Proceeds from gold sales will be impactedby fluctuations in the price of gold.

The average exchange rate of the Mexican peso relative to the U.S. dollar for the year ended December 31,2015 was 15.87 pesos, compared to 13.30 pesos for the year ended December 31, 2014, representing adevaluation of 19% year over year. The Mexican peso continues to exhibit significant volatility. The valueof the Mexican peso relative to the U.S. dollar will impact the valuation and financial models of the ELGMine, as well as the value of monetary assets and liabilities denominated in Mexican pesos.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements.

FINANCIAL RISK MANAGEMENT

The Company examines the various financial risks to which it is exposed and assesses the impact andlikelihood of those risks. These risks include credit risk, liquidity risk, foreign currency risk and interest raterisk.

Credit risk

Credit risk is the risk of a loss associated with a counterparty’s inability to fulfill its contractual paymentobligations. The Company’s financial assets are primarily composed of cash and cash equivalents, restrictedcash, derivative contracts and VAT receivables. To mitigate exposure to credit risk, the Company has adoptedstrict investment policies, which prohibit any equity or money market investments. All of the Company’scash, cash equivalents, restricted cash and derivative contracts are with reputable financial institutions,

and as such, the Company does not consider its credit risk on these balances to be significant as atDecember 31, 2015.

Liquidity risk

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financialobligations as they come due. The Company has a history of operating losses and has traditionally obtainedcash from its financing activities and as a result the Company’s liquidity may be adversely affected if theCompany’s access to the capital market is hindered, whether as a result of a downturn in stock marketconditions generally or related to matters specific to the Company. In the opinion of management, theCompany’s working capital balance, collection from VAT receivables, proceeds from gold sales and undrawnamounts on the Finance Lease Arrangement will be sufficient to sustain operations and corporate activities.

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meetliabilities when due. At December 31, 2015, the Company had cash balances of $46.1 million (excludingrestricted cash of $44.6 million) (December 31, 2014 – cash balance of $99.4 million, excluding restrictedcash of $15.0 million). The Company maintains its cash in fully liquid business accounts.

During 2015, the Company received nine additional drawdowns on its Loan Facility amounting to$329.1 million, net of financing costs, for a total of $375.0 million drawn as at December 31, 2015. TheCompany also received net proceeds of $7.1 million from its Equipment Loan in December 2015, andexecuted a Finance Lease Arrangement providing for an amount of up to $17.4 million in finance leasingfor equipment expected to be delivered in 2016. As at March 30, 2016, the Company had utilized $6.2million under the Finance Lease Arrangement.

Under the terms of the Credit Agreement, the Company is restricted from repatriating funds from MineraMedia Luna, S.A. de C.V., the borrower, under the Credit Agreement, until final completion pursuant to theLoan Facility. In addition there can be no assurance that the Company will be able to recover some or allof the amount remaining in the Sponsor Reserve Account.

Cash flows that are expected to fund, in part, the ELG Mine construction are dependent on, among otherthings, pre-production revenues and recovery of the Company’s VAT receivables. The Company is exposedto liquidity and credit risk with respect to its VAT receivables if the Mexican tax authorities are unable orunwilling to make payments in a timely manner in accordance with Company’s monthly filings. Timing ofcollection on VAT receivables is uncertain as VAT refund procedures require a significant amount ofinformation and follow-up. As at December 31, 2015, the Company expects to recover $29.7 million overthe next twelve months and a further $21.6 million thereafter.  Significant delays in the collection of VATreceivables may affect the Company's ability to fund the completion of the construction of the remainingoperational elements of the ELG Mine, or fund operating expenses in the ramp-up to full production. TheCompany’s approach to managing liquidity risk with respect to its VAT receivables is to file its refund requestson a timely basis, monitor actual and projected collections of its VAT receivables, and cooperate with theMexican tax authorities in providing information as required. Although the Company expects a full recovery,there remains risk on the amount and timing of collection of the Company’s VAT receivables, which mayaffect the Company’s liquidity and ability to fund other priorities.

The Company regularly evaluates its cash position to ensure preservation and security of capital as well asmaintenance of liquidity.

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Commodity Price Risk

Gold prices have fluctuated widely in recent years and the market price of gold has decreased significantlysince 2013. There is no assurance that, even as commercial quantities of gold may be produced in thefuture, a profitable market will exist for them. Under requirements from the Loan Facility, the Companyentered into commitments to deliver 204,360 ounces of gold over an 18-month period commencing inJanuary 2016 to the Lenders, at an average flat forward gold price of $1,241 per ounce. During the yearended December 31, 2015, the Company net settled the contracts due to mature January 2016, leaving198,580 ounces to be delivered as at December 31, 2015. A 10% appreciation or depreciation of gold priceswould result in an increase or decrease of $21.1 million (using the spot rate as at December 31, 2015) inthe Company’s mark to market asset relating to the derivative gold contracts.

Foreign Currency Risk

The Company is exposed to financial risk related to foreign exchange rates. The Company operates in Canadaand Mexico and has foreign currency exposure to non-U.S dollar denominated transactions. Managementexpects the majority of exploration on the Media Luna Project and development expenditures associatedwith the ELG Mine to be paid in U.S. dollars and Mexican pesos. A significant change in the currency exchangerates between the Canadian dollar and Mexican peso compared with the U.S. dollar is expected to have aneffect on the Company’s results of operations in the future periods. As at December 31, 2015, the Companyhad cash and cash equivalents, VAT receivables, accounts payable and accrued liabilities and income taxpayable that are in Mexican pesos and in Canadian dollars. As at December 31, 2015, a 10% appreciationor depreciation of the Mexican peso and Canadian dollar relative to the U.S. dollar would have resulted ina decrease or increase of $6.0 million and $0.9 million in the Company’s net loss for the year, respectively.

At December 31, 2015, the Company has hedged its exposure to foreign currency exchange fluctuationsthrough the execution of foreign exchange currency contracts which cover 75% of the Company’s non-U.S.dollar denominated capital expenditures from November 2014 to the second quarter of 2017. An operatingexpenditures foreign exchange currency contract to cover exposure for 75%, 50% and 25% annually, on athree year rolling basis, of the Company’s non-U.S. dollar denominated operating expenditures for the ELGMine, will be required following the start of commercial production. As at December 31, 2015, a 10%appreciation or depreciation of the Mexican peso relative to the U.S. dollar would have resulted in a decreaseor increase of $3.0 million (using the spot rate as at December 31, 2015) in the Company’s net loss for theyear.

Interest Rate Risk

Interest rate risk is the risk that the future cash flows of a financial instrument or its fair value will fluctuatebecause of changes in market interest rates. Amounts outstanding under the PFF of the Loan Facility bearinterest at a rate of LIBOR + 4.25% to 4.75% and advances under the COF bear interest at the same rate+ 1% until project completion, while amounts outstanding under the Equipment Loan bear interest at arate of LIBOR + 3.75%. As at December 31, 2015, a 100 basis point change in the LIBOR rate would resultin a $3.8 million change per annum in interest expense. The Company has not entered into any agreementsto hedge against unfavourable changes in interest rates.

The Company deposits cash in fully liquid business bank accounts with reputable financial institutions. Assuch, the Company does not consider its interest rate risk exposure to be significant at December 31, 2015with respect to its cash and cash equivalent positions.

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TRANSACTIONS WITH RELATED PARTIES

The Company did not have any transactions with related parties in the year ended December 31, 2015.

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OUTSTANDING SHARE DATA

Table 4: Outstanding Share Data at March 30, 2016

Number

Common shares 786,961,118

Share purchase options 1 21,602,494

Restricted share units 2 2,302,941

1 Each share purchase option is exercisable into one common share of the Company.2 Each restricted share unit is redeemable into one common share of the Company.

In 2015, the Company granted 3,530,400 stock options, issued 375,000 shares of common stock as a resultof the exercise of stock options, and had 672,000 stock options forfeited.

Subsequent to December 31, 2015, 10,508,300 stock options were exercised using the SOP Plan’s cashlessexercise option, resulting in the issuance of 1,494,200 shares. A further 20,000 shares were issued pursuantto regular stock option exercises.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in accordance with IFRS requires management to make estimatesand judgments that affect the reported amounts of assets and liabilities at the date of the financialstatements and reported amounts of expenses during the reporting period. Actual results could differ fromthese estimates. Revisions to accounting estimates are recognized in the period in which the estimate isrevised and the revision affects both the current and future periods.

The areas which require management to make significant judgments in applying the Company’s accountingpolicies to determine carrying values include, but are not limited to:

Presentation and Functional Currency

The Company’s presentation currency is the U.S. dollar and the functional currency of the Company andeach of its significant subsidiaries is the U.S. dollar as it was assessed by management as being the primarycurrency of the economic environment in which the Company and its significant subsidiaries operate.

Development Expenditures

In the construction of plant and equipment, the Company capitalizes costs that can be directly attributedto bringing the asset into working condition for its intended use, including costs during a commissioningperiod, before the asset is able to operate at expected levels.

Significant judgement is required to determine when an asset is able to operate at expected levels andrequires an assessment of both qualitative and quantitative factors. The Company uses several criteria todetermine when an asset is able to operate at expected levels. These are complex, and depend on eachdevelopment property’s plan and its economic, political and environmental condition. Criteria can include:

• Substantial completion of the construction activities,• The level of capital expenditures in relation to the project budget,• Producing saleable material,• Completion of a reasonable period of testing of the plant and equipment in the mine and/or mill,• Achieving certain level of recoveries from the ore mined and processed, and• Reaching a certain level of production and sustaining ongoing production.

Taxes

The Company is subject to income tax in several jurisdictions. Significant judgment is required in determiningthe provision for income taxes, due to the complexity of legislation. There are many transactions andcalculations for which the ultimate tax determination is uncertain during the ordinary course of business.

Deferred Income Taxes

The Company has historical tax losses that may be carried forward to reduce tax payments in future years.The Company recognizes the deferred tax benefit related to deferred income to the extent recovery isprobable. Assessing the recoverability of deferred income tax assets requires management to makesignificant estimates of future taxable profit. To the extent that future cash flows and taxable profit differsignificantly from estimates, the ability of the Company to realize the net deferred tax assets recorded onthe balance sheet date could be impacted. In addition, future changes in tax laws could limit the ability ofthe Company to obtain tax deductions in future periods from deferred income tax assets.

VAT Receivable

The Company is exposed to liquidity and credit risk with respect to its VAT receivables if the Mexican taxauthorities are unable or unwilling to make payments in a timely manner in accordance with Company’smonthly filings. Timing of collection on VAT receivables is uncertain as VAT refund procedures require asignificant amount of information and follow-up. The Company assesses the recoverability of the amountsreceivable at each reporting date. At December 31, 2015, the Company determined the full balance to berecoverable.

Mineral Reserves and Resources

The Company estimates its mineral reserves and recourses based on information compiled by qualifiedpersons as defined in accordance with National Instrument 43-101 - Standards of Disclosure for MineralProjects. The estimation of ore reserves and resources requires judgment to interpret available geologicaldata then select an appropriate mining method and establish an extraction schedule. It also requiresassumptions about future commodity prices, exchange rates, production costs and recovery rates. Thereare numerous uncertainties inherent in estimating mineral reserves and resources and assumptions thatare valid at the time of estimation and may change significantly when new information becomes available.New geological data as well as changes in the above assumptions may change the economic status ofreserves and may, ultimately, result in the reserves being revised.

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Changes in the proven and probable mineral reserves or measured and indicated and inferred mineralresources estimates may impact the carrying value of property, plant and equipment, the calculation ofdepletion and depreciation expense, the capitalization of production phase stripping costs,decommissioning and site restoration costs and recognition of deferred tax amounts.

Impairment of Assets

The carrying value of property, plant and equipment is reviewed each reporting period to determine whetherthere is any indication of impairment. If indications of impairment are identified, an impairment test isconducted. If the results indicate that the carrying amount of an asset exceeds its recoverable amount, theasset is impaired and an impairment loss is recognized in the Consolidated Statement of Operations andComprehensive Loss. The assessment of the recoverability of an asset’s carrying value requires judgmentabout future production and sales volumes, future commodity prices, recoverable mineral reserves,discount rates, foreign exchange rates, and future operating and capital costs. There were no triggeringevents identified at December 31, 2015.

Decommissioning Liabilities

A decommissioning liability is recognized by the Company when a legal or constructive obligation to incurrestoration, rehabilitation and environmental costs arises as a result of environmental disturbance causedby the exploration, development or ongoing production of a mineral property. Significant judgment isinvolved in determining whether a constructive obligation has occurred. Decommissioning liabilities aremeasured at the present value of the expected expenditures required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to theobligation. The effect of any changes to the decommissioning liability, including changes to the underlyingestimates and changes in market interest rates used to discount the obligation, is added to or deductedfrom the cost of the related assets.

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ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements Issued But Not Yet Adopted

The following IFRS standards have recently been issued or revised by the International Accounting StandardsBoard (“IASB”):

IFRS 9 - Financial Instruments

IFRS 9 Financial Instruments (“IFRS 9”) was issued by the IASB in July 2014 and will replace IAS 39, FinancialInstruments: Recognition and Measurement (“IAS 39”). IFRS 9 utilizes a single approach to determinewhether a financial asset is measured at amortized cost or fair value and a new mixed measurement modelfor debt instruments having only two categories: amortized cost and fair value. The approach in IFRS 9 isbased on how an entity manages its financial instruments in the context of its business model and thecontractual cash flow characteristics of the financial assets. IFRS 9 also introduces a new expected lossimpairment model and limited changes to the classification and measurement requirements for financialassets. IFRS 9 is effective for annual periods beginning on or after January 1, 2018 with early adoptionpermitted. The Company is currently evaluating the impact of this to its consolidated financial statements.

IFRS 15 - Revenue from Contracts and Customers

IFRS 15 Revenue from Contracts and Customers (“IFRS 15”) was issued by the IASB in May 2014, and willreplace IAS 18, Revenue, IAS 11 Construction Contracts, and related interpretations on revenue. IFRS 15sets out the requirements for recognizing revenue that apply to all contracts with customers, except forcontracts that are within the scope of the standards on leases, insurance contracts and financial instruments.IFRS 15 uses a control based approach to recognize revenue which is a change from the risk and rewardapproach under the current standard. Companies can elect to use either a full or modified retrospectiveapproach when adopting this standard and it is effective for annual periods beginning on or after January1, 2018. The Company does not expect the standard to have a material impact to its consolidated financialstatements.

IFRS 16 - Leases

IFRS 16, issued in January 2016, replaces IAS 17, Leases. IFRS 16 results in most leases being reported onthe balance sheet for lessees, eliminating the distinction between a finance lease and an operating lease.IFRS 16 is effective for annual periods beginning on or after January 1, 2019. Early adoption is permittedfor companies that also adopt IFRS 15. The Company is currently assessing the impact of this standard toits consolidated financial statements.

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RISKS AND UNCERTAINTIES

The most significant risks and uncertainties the Company faces are: the Company’s reliance on its principalassets, the ELG Mine and the Media Luna Project that form part of its 100% owned Morelos Gold Property;key issues relating to the development and exploitation of the ELG Mine, including matters pertaining tothe substantial capital requirements to complete the ELG Mine and conduct further exploration of otherproperties, operating risks safety and security of operations. Risks inherent in mineral exploration, minedevelopment and mining operations include the negative operating cash flow of the Company, risksassociated with the potential construction and start-up of a new mine, including the ability to reachcommercial production, open pit mine risks, risks of interruptions to construction or operating activities asa result of contractor, labour, or community demands, protests or blockades, political and country risk,foreign taxation, the timing and receipt of the Company’s anticipated refunds of value-added taxes, recentincreases in demand for and cost of mining contract services and equipment, availability of all applicablepermits and licenses and adequate infrastructure, risks associated with land title, reliability of mineralresource and reserve estimates, environmental risks and hazards, the absence of history of mineralproduction by the Company, dependence on key executives and employees, competition within the industry,exchange rate fluctuations, the absence of any hedging policy by the Company, litigation and insurancerisks, volatility of the market price of the common shares of the Company, limitations under the Loan Facility,liquidity of parent company, potential conflicts of interest with directors and officers, dilution risk, risksassociated with compliance with anti-corruption laws and enforcement of legal rights under the laws ofMexico and Canada, no certainty of economically viable mining operations, volatility and fluctuations ingold prices, and the volatility of global markets, the impact of which is to cause volatility in the Company’sstock price and may have a resulting effect on the Company’s ability to obtain and secure financing ifrequired. For a detailed description of risks and uncertainties refer to the Company’s most recent annualinformation form, which is available on SEDAR at www.sedar.com. See also “Cautionary Note RegardingForward-Looking Statements.”

Security Risks in the State of Guerrero

As noted previously, the ELG Mine and the Media Luna Project are located in the State of Guerrero, Mexico.Criminal activities in the region, or the perception that activities are likely, may disrupt the Company’soperations, hamper the Company’s ability to hire and keep qualified personnel and impair the Company’saccess to sources of capital.

Social acceptance remains strong and supportive of the ELG Mine, however, in September 2014 there weretwo blockades of the ELG Mine that lasted two days each. The blockades were not supported by thecommunity at large and were quickly resolved with the assistance of mediation by the state government.

Of larger significance to the construction workforce was the violence initiated by the municipal police inSeptember 2014 in the City of Iguala against protesting students about 60 km from the ELG Mine site.Municipal police fired on protesting college students, killing six and then abducting another 43. Thosestudents have not been seen since. The incident resulted in national and international outcry and the federalgovernment responded by taking over the policing of the City of Iguala and some other municipalities inGuerrero.

In February 2015, the Company received information that 12 community members, from the vicinity of theELG Mine, had gone missing from the public highway to Cocula, in the State of Guerrero, and possibly fromthe public waterways. It was encouraging to see the rapid progress made by the army and community policein recovering ten of the missing community members. Within the following two weeks the other two missingcommunity members were returned to their families. The army has continued to maintain a presence inthe area. The Company shut down construction on February 7, 2015 to give the army and community policethe opportunity to conduct their operations without the complexity of project generated road traffic. Theconstruction activities were restarted on February 13, 2015.

Over the long-term, the increased presence of the federal police, state police, and army is expected toenhance the security profile of the state, but in the short term, the situation described above was unsettlingfor contract construction workers that come from other parts of the country to work on the ELG Mine.While there has been no change in the specific security environment at the ELG Mine site, some contractworkers chose to leave to work on projects in other areas. With the calm in the area over the past months,this is no longer the case and workers are more comfortable working in the area.

In September 2015, the Company signed a letter of intent with the Ministry of Public Safety of the StateGovernment of Guerrero, endorsed by the Federal Government, for the provision of permanent police andmilitary presence in the areas adjacent to the Company’s Morelos Gold Property. In the first stage underthis agreement, the Ministry will establish three check points with permanent police and military presencewhich, along with regular patrols, will control access to the communities in the areas adjacent to the ELGMine. The Media Luna Project will receive some security benefits from this program, with morecomprehensive coverage planned for later programs. The Company will support the program withinfrastructure including lodging for the police and miiltary forces, and additional support in the form oftransportation and vehicle maintenance. The program came into effect immediately upon the signing ofthe formal agreement on February 11, 2016, and may be renewed on a yearly basis by agreement of theparties.

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Mexican Tax Reform

On October 31, 2013, the Mexican Congress approved the 2014 Mexican tax reform package. Among otherthings, the reform broadened the tax base, eliminated the single rate business tax, and introduced a tax-deductible mining royalty of 7.5% on earnings before the deduction of interest, taxes, depreciation andamortization, with precious metal mining companies paying an additional 0.5% on precious metals grossrevenue. In addition, a new 10% income tax withholding on dividend distributions was imposed at thedistributing corporation level. The law came into effect on January 1, 2014, and applies on a prospectivebasis and therefore will affect the future earnings of the Company’s operations in Mexico.

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INTERNAL CONTROL OVER FINANCIAL REPORTING

The President and Chief Executive Officer and Chief Financial Officer of the Company are responsible fordesigning internal controls over financial reporting or causing them to be designed under their supervisionin order to provide reasonable assurance regarding the reliability of financial reporting and the preparationof financial statements for external purposes in accordance with IFRS. The Company’s internal controlframework was designed based on the Internal Control - Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Based on a review of the internal controls over financial reporting at December 31, 2015 conducted by thePresident and Chief Executive Officer and Chief Financial Officer, the Company’s internal controls andprocedures are appropriately designed and operating effectively to provide reasonable assurance that thefinancial information is recorded, processed, summarized and reported in a timely manner.

There was no change in the Company’s internal controls over financial reporting that occurred during thefourth quarter of 2015 that has materially affected, or is reasonably likely to materially affect, the Company’sinternal controls over financial reporting.

Disclosure Controls and Procedures

Disclosure controls and procedures have been designed to provide reasonable assurance that all relevantinformation required to be disclosed by the Company is accumulated and communicated to seniormanagement as appropriate to allow timely decisions regarding required disclosure. The Company’sPresident and Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluationof the design and operating effectiveness of the disclosure controls and procedures as of December 31,2015, which disclosure controls and procedures provide reasonable assurance that material information ismade known to them by others within the Company are appropriately designed.

Limitations of Controls and Procedures

The Company’s management, including the President and Chief Executive Officer and Chief Financial Officer,believe that any internal controls over financial reporting and disclosure controls and procedures, no matterhow well designed, can have inherent limitations. Therefore, even those systems determined to be effectivecan provide only reasonable assurance that the objectives of the control system are met.

QUALIFIED PERSON

The scientific and technical information contained in this MD&A has been reviewed and approved byDawson Proudfoot, P.Eng., Vice President, Engineering of Torex and a Qualified Person under NI 43-101.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This MD&A contains “forward-looking statements” and “forward-looking information” within the meaningof applicable Canadian securities legislation. Forward-looking information includes, but is not limited to,information with respect to the future exploration, development and exploitation plans concerning theMorelos Gold Property, the adequacy of the Company’s financial resources, business plans and strategyand other events or conditions that may occur in the future, and the results set out in the Technical Reportincluding the PEA (including with respect to mineral resource and mineral reserve estimates, the ability torealize estimated mineral reserves, the Company’s expectation that the ELG Mine will be profitable withpositive economics from mining, recoveries, grades, annual production, receipt of all necessary approvalsand permits, the parameters and assumptions underlying the mineral resource and mineral reserveestimates and the financial analysis, and gold prices). Generally, forward-looking information can beidentified by the use of forward-looking terminology such as “plans,” “expects,” or “does not expect,” “isexpected,” “budget,” “scheduled,” “estimates,” “forecasts,” “intends,” “anticipates,” or “does notanticipate,” or “believes” or variations of such words and phrases or statements that certain actions, eventsor results “may,” “could,” “would,” “might,” or “will be taken,” “occur,” or “be achieved.” Forward-lookinginformation is subject to known and unknown risks, uncertainties and other factors that may cause theactual results, level of activity, performance or achievements of the Company to be materially differentfrom those expressed or implied by such forward-looking information, including risks associated with theexploration, development, exploitation and the mining industry generally such as economic factors as theyeffect exploration, development, exploitation and mining, future commodity prices, government policiesand practices in respect of the administration of value-added tax refunds, market conditions, changes ininterest rates, safety and security, access to the Morelos Gold Property, actual results of current exploration,development and exploitation activities not being consistent with expectations, unexpected events anddelays impacting exploration, development and exploitation activities, parameters and assumptionsunderlying mineral resource and mineral reserve estimates and financial analyses being incorrect,government regulation, political, social or economic developments, environmental matters, insurance,capital expenditures, operating or technical difficulties in connection with development and miningactivities, hiring the required personnel and maintaining personnel relations, ability to realize estimatedmineral reserves, annual production, recoveries, grades, receipt of all necessary approvals and permits, thespeculative nature of gold exploration, development and exploitation, including the risks of diminishingquantities of grades of mineral resources and mineral reserves, contests over property title, and changesin project parameters as plans for the Morelos Gold Property continue to be refined as well as those riskfactors included herein and elsewhere in the Company’s public disclosure. Forward-looking information isbased on the reasonable assumptions, estimates, analysis and opinions of management made in light ofits experience and its perception of trends, current conditions and expected developments, as well as otherfactors that management believes to be relevant and reasonable in the circumstances at the date that suchstatements are made, but which may prove to be incorrect. Although the Company believes that theassumptions and expectations reflected in such forward-looking information are reasonable, undue relianceshould not be placed on forward-looking information because the Company can give no assurance thatsuch expectations will prove to be correct. In addition to other factors and assumptions which may beidentified in this MD&A, assumptions have been made regarding, among other things: the Company’s abilityto carry on its exploration, development and exploitation activities planned for the Morelos Gold Property,the timely completion of development and construction of the ELG Mine to bring it into profitableoperations, the receipt of any required approvals and permits, the price of gold, the ability of the Companyto obtain qualified personnel, equipment and services in a timely and cost-efficient manner, the ability ofthe Company to operate in a safe, efficient and effective manner, the ability of the Company to obtainfinancing on acceptable terms, the ability of the Company to access the Morelos Gold Property, the accuracy

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of the Company’s mineral resource and mineral reserve estimates, annual production, the financial analysiscontained in the Technical Report including the PEA, and geological, operational and price assumptions onwhich these are based and the regulatory framework regarding environmental matters. Readers arecautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used.Although the Company has attempted to identify important factors that could cause actual results to differmaterially from those contained in forward-looking information, there may be other factors that causeresults not to be as anticipated, estimated or intended. There can be no assurance that such informationwill prove to be accurate, as actual results and future events could differ materially from those anticipatedin such information. Accordingly, readers should not place undue reliance on forward-looking information.The forward-looking information contained herein is presented for the purposes of assisting investors inunderstanding the Company’s expected financial and operating performance and the Company’s plans andobjectives and may not be appropriate for other purposes. The Company does not undertake to updateany forward-looking information, except in accordance with applicable securities laws.

CAUTIONARY NOTE TO UNITED STATES INVESTORS CONCERNING MINERAL RESOURCE AND MINERALRESERVE ESTIMATES

This MD&A has been prepared in accordance with the requirements of Canadian securities laws in effect,which differ from the disclosure requirements of United States securities laws. The terms “mineral reserve,”“proven mineral reserve” and “probable mineral reserve” are Canadian mining terms as defined inaccordance with NI 43-101 and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) –CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, asamended. These definitions differ from the definitions in the disclosure requirements of the Securities andExchange Commission (the “SEC”) and contained in Industry Guide 7 (“Industry Guide 7”). Under IndustryGuide 7 standards, a “final” or “bankable” feasibility study is required to report mineral reserves, the three-year historical average price is used in any mineral reserve or cash flow analysis to designate mineral reservesand the primary environmental analysis or report must be filed with the appropriate governmentalauthority. In addition, the terms “mineral resource,” “measured mineral resource,” “indicated mineralresource” and “inferred mineral resource” are defined in and required to be disclosed by NI 43-101. However,these terms are not defined terms under Industry Guide 7 and are not permitted to be used in reports andregistration statements of United States companies filed with the SEC. Investors are cautioned not to assumethat any part or all of the mineral deposits in these categories will ever be converted into mineral reserves.“Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertaintyas to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineralresource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineralresources may not form the basis of feasibility or pre-feasibility studies, except in limited circumstances.Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or iseconomically or legally mineable. Disclosure of “contained ounces” in a mineral resource is permitteddisclosure under Canadian regulations. In contrast, the SEC only permits U.S. companies to reportmineralization that does not constitute “mineral reserves” by SEC standards as in place tonnage and gradewithout reference to unit measures. Accordingly, information contained in this MD&A may not becomparable to similar information made public by U.S. companies subject to the reporting and disclosurerequirements under United States securities laws and the rules and regulations of the SEC.

March 30, 2016

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