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The 100% owned Trans-Canada Project consists of several claim groups with a cumulative strike length of more than 50 kilometres along the district's most prospective geological trends from which more than 4.0 million ounces of gold has been produced. The Project is host to four primary deposits (Hardrock, Kailey, Key Lake, and Brookbank) with resources estimated in the millions of ounces (including measured, indicated and inferred categories). Trans-Canada is the largest project, in terms of budgeted expenditures, in Premier's portfolio for 2012. Consistent with Premier's business model to develop deposits located in proven gold camps with existing infrastructure, Trans-Canada is a core holding within the Company's portfolio. The project lies in close proximity to several towns that are serviced by the Trans-Canada Highway, Trans-Canada Pipeline, and existing powerlines. Like several other past-producing mine sites in Canada that are undergoing a renaissance and being recognized for their exceptional potential to host future world class discoveries, the Trans-Canada Project continues to demonstrate its potential to be recognized as a top-tier Canadian gold project.

Since inception, Premier’s 49% interest in the Rahill-Bonanza joint venture has been the Company’s flagship project. The project, with Red Lake Gold Mines (RLGM), an affiliate of Goldcorp Inc., occurs along the least-explored portion of the prolific Red Lake “Mine Trend” and resides immediately west of the world class Red Lake Gold Mine complex and east of the camp’s newest mine, the Cochenour (Bruce Channel) Mine complex. The property is host to the Bonanza gold deposit and two historic gold deposits: the past-producing Wilmar Gold Mine and the West Granodiorite deposit. Goldcorp is in the process of constructing a haulage drift to connect its mines in order to begin operations from the Cochenour complex. In April 2012, the drift crossed onto the joint venture property marking the first active underground development on a Premier project. The drift will intersect several kilometres of some of the highest potential and untested geology in the camp and will provide a prime exploration platform to seek new discoveries. Drilling is expected to commence during the second half of 2012. The strategic location of the Rahill-Bonanza Project has the potential to represent a major catalyst for future growth and highlights Premier as a compelling investment opportunity.

The Carlin Trend in northeastern Nevada forms one of the largest and most productive accumulation of gold deposits in North America, boasting more than 110 million ounces of production, reserves, resources and mineral inventory. Premier's South Carlin Project is host to the Saddle Deposit, representing the down-plunge, Northwest extension of the Rain Mine orebody that was previously mined by open pit and underground methods. The South Carlin is one of the least explored portions of the Carlin Trend and is believed to have high potential to host new gold zones. In early 2012, Premier announced that it had entered into a Letter of Intent with Newmont Mining Corporation to consolidate the Rain and Saddle projects. At the time of writing, discussions are ongoing.

The acquisition of the Cove Project adheres with Premier's strategy to grow its United States based project portfolio in proven, accessible and low-risk jurisdictions. Cove represents a major opportunity for Premier with the potential to become a "flagship" property. The project has excellent potential for the discovery of high-grade gold deposits in addition to the existing Helen Zone that is host to an inferred mineral resource of 231,300 ounces of gold at an average grade of 20.23 grams per tonne gold (g/t Au) or 0.59 ounces per ton (oz/t). A major exploration campaign is planned in 2012, not only for resource expansion, but also to test new prospective target areas. The large 6,972 hectare property (17,252 acres) has seen only limited surface exploration away from the historic Cove open pit mine and offers excellent infrastructure (including paved roads & power), secure land tenure in mining-friendly Nevada, and the potential to advance permitting that was previously initiated by Victoria Gold.

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Largest exploration budget in Company history. Updated NI 43-101 compliant mineral resource to be received for the Trans-Canada Project. (Hardrock) Plans to initiate a Preliminary Economic Assessment for the Trans-Canada Project. Begin advanced exploration program at the Hardrock deposit. Red lake haulage drift crossed onto the Rahill-Bonanza joint venture project. Underground drilling from the haulage drift to commence. Acquired the high-grade Cove Project strengthening, our US portfolio. Premier Royalty Spin-out

More than 130,000 metres drilled on 5 projects. Second NI 43-101 compliant mineral resource announced at Hardrock. Acquired Goldstone Resources to create the Trans-Canada project and control 100% of the Hardrock, Key Lake and Brookbank Deposits. Initial focused Nevada based exploration program at Saddle Added to the S&P Composite Index. Enhanced our Management team with the addition of Paul Huet and Brian Morris. Created a Royalty Subsidiary to be spun out in 2012. Continued high grade results from drilling at Trans-Canada, Red Lake and Saddle.

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Building Opportunity – Since Premier was created in 2006, our goal has been to build one of the mining industry’s most aggressive explorers. Moving into a new year, we strongly believe that we have surpassed this goal, advancing several exciting high-grade projects from ideas and dreams to reality. Our never-ending focus on growth has resulted in continued successes on numerous fronts and, in 2012, is expected to culminate in underground development on multiple projects. Our strategic move to create a United States division continues to evolve. First, with the acquisition of a project portfolio along the prolific Carlin Trend, and since year-end, the acquisition of the highly prospective Cove Project on the Battle Mountain/Eureka Trend. Nevada remains one of the world’s most favourable political environments for mine construction, and its reputation for proven mine development is unparalleled. Our ability to secure land packages in the heart of two proven districts highlights Management’s ability to identify and acquire world class assets. Our Canadian portfolio continues to evolve on an accelerated basis. The consolidation of the Trans-Canada assets in 2011, through the acquisition of Goldstone, has resulted in a district-scale project comprised of multiple deposits, significant gold resources, and huge expansion potential. Continued exploration success at both Red Lake joint venture projects is expected to include underground development in 2012 with the expectation that the Red Lake haulage drift will pass onto the Rahill-Bonanza joint venture. We expect to continue to deliver value to our shareholders by commitment to achievement, continuing to build upon our past successes, and the evolution of our Management team by attracting and developing an “industry best” team of professionals. Ontario Projects Moving into an exciting new year, underground development in Red Lake has crossed onto Premier held property. This development will provide a platform from which to test some of the most underexplored, yet highly fertile, land in the heart of the Red Lake camp. Significant resource expansion was gained through the consolidation of the Hardrock Property and the acquisition of a large land package that now makes up the Trans-Canada project. Drilling continues to expand known mineralized zones and has resulted in new high-grade gold discoveries that will be the focus of future Advanced Exploration and initial studies aimed at assessing the potential economics of the Project. Premier Gold Mines U.S.A. Acquisitions in Nevada highlight Management’s focus on creating a project portfolio in the heart of proven gold districts with existing infrastructure. First, a move into the prolific Carlin Trend, and since year-end, the acquisition of the highly prospective Cove Project are expected to provide much excitement in the years to come. These land packages are located in the heart of gold districts where some of the industry’s major gold companies have been built. Building Opportunity The Company’s portfolio continues to mature as we move to a new phase of growth with multiple projects moving from exploration, to advanced-exploration, and expected future development. However, we will not forget our roots – maintaining an aggressive exploration focus to yield sustained growth. It is with sincere appreciation that we need to recognize the substantial input of corporate members who will be departing Premier in 2012. Mr. Richard Hall, John Pollock, and Tim Twomey should be thanked by all shareholders for the substantial input that each has contributed in Premier’s growth. I would also like to take this opportunity to personally thank Mr. Pollock for playing a pivotal role in providing me with the opportunity to start my career in the public sector. It is with a humble gratitude and great sadness that I see him retire from our board and hope that he recognizes my thanks for the opportunity. With the support of you, our shareholders, we have been able to create a dynamic company having the financial wherewithal to pursue growth opportunities and quickly build value through the relentless pursuit of gold. Ewan S. Downie President & Chief Executive Officer May 8, 2012

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& Analysis 05 Financial Statements 29 Auditors’ Report 30 Notes to Financial Statements 36 P

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2011

The following Management's Discussion and Analysis (“MD&A”) of Premier Gold Mines Limited (the “Corporation” or “Premier” or “PG”) should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2011, with a comparative period for the year ending December 31, 2010, and the notes thereto. The Corporation’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”). Unless otherwise stated, all amounts discussed herein are denominated in Canadian dollars. This MD&A was prepared as of March 26, 2012, and all information is current as of such date. Readers are encouraged to read the Corporation’s public information filings on SEDAR at www.sedar.com. This discussion provides management's analysis of Premier’s historical financial and operating results and provides estimates of Premier’s future financial and operating performance based on information currently available. Actual results will vary from estimates and the variances may be significant. Readers should be aware that historical results are not necessarily indicative of future performance. Certain information set forth in this MD&A, including management's assessment of the Corporation's future plans and operations, contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond the Corporation’s control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be inaccurate and, as such, reliance should not be placed on forward-looking statements. Premier’s actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, if any, that Premier will derive there from. Premier disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise except as required by applicable law. Highlights Completes bought-deal financings of common shares and flow-through common shares.

• $31.6 million share offering completed in October 2011 • $54.5 million share offering completed in February 2012

Strong results at Trans-Canada Project and Saddle

• Both Hardrock and Key Lake drill programs updated; secured services of JDS Mining and Energy for Preliminary Economic Assessment.

Close the purchase of 100% of Goldstone Resources Ltd.

• Includes 100% of Brookbank Deposit and remaining 30% of Hardrock Project. Premier secures key management for US Operations.

• Paul Huet and Brian Morris fill COO and VP Exploration, USA positions respectively

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Company Overview Premier is a Canadian-based mineral exploration company, focused on exploring for and developing gold deposits within the Americas. Premier has a diverse portfolio of advanced-stage gold exploration properties in Northwestern Ontario, Canada and a joint venture in Mexico. Premier is active in three districts of Canada: Red Lake, Geraldton and the Musselwhite Mine area. In Red Lake, Premier is involved in 3 projects, the flagship of which is the Rahill-Bonanza Joint Venture with Red Lake Gold Mines, an affiliate of Goldcorp Inc. The Red Lake Mining District is world renowned for high-grade gold with Goldcorp’s Red Lake Gold Mines (RLGM) considered to be one of the highest grade producing gold mines in the world. The mines of Red Lake have produced tens of millions of ounces of gold, making it one of the world’s most prolific gold camps. The Rahill-Bonanza Property (49% PG) is located immediately adjacent to, and along strike from, the RLGM complex. Premier’s East Bay Project, also joint ventured with Red Lake Gold Mines (35% PG), is being assessed for potential underground development subsequent to aggressive diamond drilling completed in the third quarter, to follow-up on the discovery of a new zone from February 2010 drilling. The PQ North Property is strategically located just north of, and along strike from, Goldcorp’s Musselwhite Gold Mine. Premier has signed a Letter of Intent with the North Caribou Lake First Nation that paves the way for future exploration programs on the property. The PQ North Property encompasses a major fold structure along strike from and within the main rock unit (Northern Banded Iron Formation) that hosts the gold-bearing ore zones at Musselwhite. Drilling on the Property by Premier in 2009 has returned several significant intersections and has identified structural units similar to those at the mine. The Transcanada Project is located in the heart of the Beardmore-Geraldton Greenstone Belt, a highly prospective high-grade gold district that has seen relatively little exploration over the past several decades. The Project area covers approximately 15 kilometres strike length of some of the most strategic ground in the region and is host to three past-producing mines and numerous exploration targets in a district that has more than 4.1 Million ounces of historic gold production. Premier is operator of and has a 70% interest in the Hardrock Project. During the third quarter of 2011 Premier secured the purchase of Goldstone Resources, including the outstanding 30% interest in the Hardrock Project. In 2010, Premier purchased Saddle Gold Inc., whose major asset included a significant portion of the underground and high grade Saddle deposit as well as a 1.5% NSR on the Emigrant Springs Mine project of Newmont Mining Inc. The purchase positions Premier with an important project within a world class and stable jurisdiction, to complement its Ontario assets in Red Lake and at Hardrock. Premier continues to evaluate other high quality, high grade Americas-based gold projects with the strong belief that “A World of Opportunity” lies before it and aggressive exploration in proven districts will repeatedly reward our shareholders.

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Acquisition of Goldstone Resources Inc. On August 15, 2011 the Corporation completed an acquisition ("the Acquisition") of Goldstone Resources Inc ("Goldstone"). Under the Acquisition, each common share of Goldstone was exchanged for 0.16 of one Premier common share and $0.0001 in cash. As a result, Premier issued 16,814,553 common shares, plus cash consideration of $10,513 in exchange for 105,092,864 common shares of Goldstone. Holders of Goldstone stock options received a fully vested option granted by Premier to acquire 0.16 of a common share of Premier plus the fractional amount of a common share that, immediately prior to the effective time of the Acquisition, had a fair market value equal to $0.0001 in cash in exchange for each outstanding Goldstone stock option. Goldstone's outstanding warrants remained outstanding in accordance with their terms, which terms provide each warrant will be exercisable to acquire 0.16 of a common share of Premier plus $0.0001 in cash for each such warrant exercised. Pursuant to the Acquisition, all of the outstanding common shares of Goldstone were then transferred from Premier to a wholly-owned subsidiary of Premier, and Goldstone was amalgamated into that subsidiary to form a new amalgamated corporation, wholly owned by Premier. As Goldstone did not meet the definition of a business under IFRS, the Acquisition has been accounted for as an asset acquisition whereby all of the Goldstone assets acquired and liabilities assumed are recorded at fair value. The following table summarizes the net assets acquired as a result of the Acquisition: The purchase consideration totaling CDN $112,256,010 was allocated as follows:

Purchase consideration:

Cash and cash equivalents $ 1,961,979

Accounts receivable 661,758

Prepaids and deposits 36,345

Financial assurance in trust 34,076

Investments 2,592,000

Buildings and equipment 4,837,409

Exploration and evaluation assets 107,093,819

Accounts payable and accrued liabilities (1,579,000)

Long term tax payable (1,159,838)

Provision for environmental rehabilitation Deferred premium on flow-through shares

(2,051,858) (169,800)

$112,256,010

Fair value of 16,814,553 Premier common shares $108,958,303

Cash 10,513

Fair value of replacement options granted 750,609

Fair value of warrants 583,295

Transaction costs 1,953,290 $112,256,010

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Acquisition of South Africa Platinum Ltd.

On June 16, 2011 the Corporation acquired South Africa Platinum Ltd. ("SAP") by way of a merger transaction whereby a wholly-owned Delaware, USA, subsidiary of Premier merged with and into SAP pursuant to the applicable provisions of the Delaware General Corporation Law. SAP owns, among other things, the mineral rights in respect of a majority portion of the Blue Sage mineral claims, located in Elko County, Nevada. The aggregate purchase price was CDN$1,806,000, which is comprised of 350,000 common shares of Premier at a fair value of CDN$5.16 per share. Included in purchase consideration were CDN$32,941 paid in transactions costs. Following completion of the acquisition, Premier holds all of the assets and liabilities of SAP, including outstanding debt in the principal amount of US$215,000. As SAP did not meet the definition of a business under IFRS, the Acquisition has been accounted for as an asset acquisition whereby all of the SAP assets acquired and liabilities assumed are recorded at fair value. The following table summarizes the net assets acquired as a result of the Acquisition: The purchase consideration totaling CDN $1,838,941, has been allocated as follows:

Purchase consideration:

Cash and cash equivalents $ 832

Exploration and evaluation assets 2,106,817

Accounts payable and accrued liabilities (55,736)

Long term debt (212,972)

$1,838,941

Fair value of 350,000 common share issued $ 1,806,000

Cash 32,941

$1,838,941

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Results of Operations Red Lake District, Northwestern Ontario Some 6,811 metres of diamond drilling, completed at a cost to Premier of $737,000, was drilled on it’s Red Lake Joint Ventures during the quarter. The exploration programs, operated by Red Lake Gold Mines (RLGM) on behalf of the joint venture, focused on expanding the Wilmar 2E Zone discovery at Rahill-Bonanza and the Footwall Zone at the East Bay Project..

Late in 2010, hole PG10082 was drilled to test the down-plunge extension of the historically mined 2E Zone at the Wilmar Mine. This intercept, approximately 250 metres down-plunge of the historic workings, intersected bonanza grade gold with 68.87 g/t Au across 3.5 m (2.01 oz/t across 11.5 ft uncut) including 207.43 g/t Au across 1.15 m (6.06 oz/t across 3.8 ft). The first follow-up hole completed in 2011 (PG11090) returned multiple high-grade intercepts mid-way between PG10082 and the mine workings. The 2E Zone remains open for expansion. Significant results include:

• 42.59 g/t Au across 1.5 m (1.33 oz/t across 4.9 ft) from 715.0-716.5 metres • 46.15 g/t Au across 4.5 m (1.35 oz/t across 14.8 ft) from 719.0-723.5 metre • 12.77 g/t Au across 4.5 m (0.37 oz/t across 14.8 ft) from 744.5-749.0 metres

Drilling completed from the ice of Red Lake in 2011 tested several other targets including testing for extensions of the West Granodiorite Zone, a bulk tonnage target, to define controls of mineralization within the recently identified PG70 Zone, and drilling the Footwall Zone on the East Bay Joint Venture Project (PG 35%). The PG70 Zone is located several hundred metres to the west of the Wilmar Mine and likely represents the on-strike extension of mineralization, suggesting a south westerly plunge to the gold zones. During Q4 of 2011, some 6 holes and 4,504 metres of drilling were completed on the 2E Zone. At the East Bay Project, a total of 2,277 metres of drilling were completed in 5 holes . During the second quarter of 2011, Premier announced that diamond drilling had intersected a high grade gold vein located at the Footwall Vein Target. Highlights from 2011 drilling include:

• Step-out drilling has extended the strike length of the high-grade core of the zone to 400 metres and it remains open in all directions.

• The first two holes of the 2011 program, drilled from the same set-up returned intersections of 22.35 grams per tonne gold (g/t Au) across 1.0 metre (m) or 0.65 ounces per ton (oz/t) across 3.3 feet (ft), 56.54 g/t Au across 0.9m (1.65 oz/ton across 3.0 ft), and 44.82 g/t Au across 1.5m (1.31 oz/ton across 4.9 ft).

In all, results in the remaining six holes reported intercepts, typically between 0.5m and 1.0m long, with grades occurring up to 35 g/t. Several of the holes were unable to reach the FW2 target in their planned holes. Invoices totalling some $155,000 were received during the fourth quarter. No new exploration results were reported on in either the Rahill-Bonanza or East Bay Project during the fourth quarter. Geraldton-Beardmore District, Northwestern Ontario A total of 24,893 metres of diamond drilling was completed during the quarter on the Trans-Canada Project at a cost of $4.50 million. Diamond drilling focussed primarily on testing specific target areas and the deep extensions of the HGN and F2 Zones. At Key Lake, drilling focussed at the west end of the project. Four zones are currently being drilled including the HGN, F2, North Shear and Key Lake (West Extension). The HGN and F2 zones are located proximal to the historic mine workings and remain open both up and down plunge.

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The North Shear is a new discovery located between the Hardrock and Little Long Lac Mines and the West Extension target is a high grade target along strike from the Key Lake deposit that was acquired through Premier's acquisition of Goldstone Resources earlier in 2011. These zones have characteristics similar to the high-grade past producing Little Long Lac (600,000 ounces gold produced at a grade of 11.7 g/t) and Leitch (847,900 ounces produced at a grade of 31.5 g/t) Gold Mines that are located on the Trans-Canada Project Highlights from Q4 drilling included: • F2 Zone - up-dip drilling returns 147.01 grams per tonne gold (g/t Au) across 2.0 metres (m) or 4.29

ounces per ton (oz/t) across 6.6 feet (ft) and 54.26 g/t Au across 3.0 m (1.58 oz/t across 9.8 ft)

• HGN Zone - 28.78 g/t Au across 3.5 m (0.84 oz/t across 11.5 ft)

• North Shear - 53.67 g/t Au across 2.5 m (1.57 oz/t across 8.2 ft)

• Key Lake (West Extension) - 12.70 g/t Au across 1.0m (0.37 oz/t across 3.3 ft)

Additional drilling has intersected significant mineralization in other zones including: the Tenacity South (TNS) Zone where recent intercepts included 37.49 g/t Au across 2.1 m (1.09 oz/t across 6.9 ft) in HR053, 10.89 g/t Au across 10.0 m (0.32 oz/t across 32.8 ft) in HR054, 44.39 g/t Au across 5.3 m (1.29 oz/t across 17.4 ft) in HR058 and 10.90 g/t Au across 2.0 m (0.32 oz/t across 6.6 ft) in HR076; the Porphyry Zone (P Zone) with new intercepts of up to 29.10 g/t Au across 1.0 m (0.85 oz/t across 3.3 ft) in MM233A and 96.90 g/t Au across 1.0 m (2.83 oz/t across 3.3 ft) in MM204A; and the South Porphyry Zone (SP) with new intercepts of up to 8.28 g/t Au across 7.0 m (0.24 oz/t across 23.0 ft) in EP156. Exploration drilling costs, on a per metre basis, have been very favourable to Premier. Saddle Gold Project, Carlin District, Nevada, USA On November 10, 2010, Premier announced that it was activating exploration on it’s newly acquired Saddle Gold Project. The Saddle Gold Project is 100%-held by Premier's wholly-owned subsidiary (Premier Gold Mines USA Inc.) and includes the mineral rights in respect of a majority portion of the Saddle/NW Tess Gold Deposit ("Saddle Deposit" or "Saddle") and a 1.5% production royalty on the nearby Emigrant Springs Gold Deposit ("Emigrant Springs" or "Emigrant"). Both Emigrant Springs and the minority portion of the Saddle Deposit are owned by Newmont Mining Corporation ("Newmont"). The Saddle Gold Project is located in Elko County, Nevada (See Figure 1 below), some eleven miles southeast of Newmont's 25 million ounce Gold Quarry/Tusc operation, two miles west of Emigrant Springs and adjacent to Evolving Gold Corporation's high grade "Carlin Project". During the fourth quarter of 2011, a total of 6,140 metres of core and RC drilling combined was completed at a cost of $2.45 million. In 2011, drilling has intersected high-grade gold mineralization over substantial core intervals that will be used in conjunction with historic drilling to prepare a NI43-101 compliant gold resource for the Saddle deposit (see Figure 1) following the completion of the current program. Highlight intercepts from recent drilling at Saddle include: • 0.57 ounce per ton gold (oz/t Au) across 48.4 feet (19.36 grams per tonne (g/t) Au across 14.75 metres)

including 2.35 oz/t Au across 9.5 feet (80.50 g/t Au across 2.9 m) in SA008A • 0.24 oz/t across 25.6 feet (8.37 g/t Au across 7.8 m) within 0.07 oz/t Au across 292.0 feet (2.34 g/t Au

across 89.0 m) in SA022 These drill intercepts continue to confirm the potential to define a significant gold resource on the existing land position held by Premier. Recent step-out drilling along strike to the northwest has also intersected significant intervals of mineralized breccia (assays pending) and confirm Premier's belief that the Saddle Deposit represents one of the most prospective undeveloped high-grade gold deposits in North America. Construction activity at the nearby Emigrant Springs Project, owned by Newmont Mining, was reported to be robust during the quarter. Premier holds a 1.5% NSR on the property.

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On November 2, 2011 Premier signed a Letter of Intent (LOI) with Ashburton Ventures Inc. (TSX-V:ABR) in which Ashburton will have the right to purchase a 50% interest in the Golden Edge Project, located 50 kilometres east of Winnemucca, Nevada. The agreement requires Ashburton to make total payments of $130,000 to Premier and spend $3 million over a 3-year period. Premier has retained the right to buy back an additional 1% interest in the project. The Golden Edge property resides 26 km SSE of Barrick's Turquoise Ridge Mine and 8 km NNE of Newmont Gold Lone Tree Gold mine, along the prolific Battle Mountain -- Eureka Trend. The Lone Tree Mine is associated with a north-south fracture zone called the Valmy Fault Zone, which is about 90 metres wide, can be identified in regional aeromagnetic surveys and is believed to pass through the western portions of the Golden Edge Property. Also on November 2nd, Premier signed an LOI to jointly conduct exploration at the Golden Wonder Mine, located near Lake City, Colorado and owned by at LKA International, Inc. (OTCQB:LKAI). Under the terms of the arrangement, Premier will design and manage a $2 million, LKA funded, Phase I exploration program over a period not to exceed two years from commencement of field operations. Upon completion of Phase I, Premier will be entitled, but not obligated, to enter into a joint venture agreement with LKA and earn up to a 60% interest in the Golden Wonder by spending $15 million in mine exploration and development over an additional six-year period. Between 1998 and 2006, the Golden Wonder mine produced over 133,000 ounces of gold with an aver-age grade of 16.01 oz/ton. PQ North Project – Musselwhite District, Ontario The PQ North Project was active during Q4 with diamond drilling being completed at a total project cost of $1.08 million. Premier's 100%-owned PQ North Property is strategically located on the PQ limb of the key iron formation that is host to Goldcorp's Musselwhite Gold Mine. In 2010, Goldcorp announced a new discovery at Musselwhite (the Lynx Zone) where early indications suggest that it could be the largest and highest grade deposit discovered at Musselwhite. To date, Premier has discovered several gold zones in a geological setting nearly identical to that at Musselwhite but has yet to test the deeper portions of the host iron formation where the more significant gold deposits are located at Musselwhite. In 2011, two drills will be active at PQ North further delineating existing zones and focusing on testing the deeper portions of the host iron formation. The Musselwhite Mine has produced more than 2.0 million ounces of gold and has reserves and resources totalling in excess of 3.0 Million ounces. PQ North drilling tested for mineralization along strike from the new Lynx Zone discovery at Goldcorp's Musselwhite Gold Mine. No news has been released at PQ North during the year.

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Selected Financial Data The following table provides selected financial information and should be read in conjunction with the Corporation’s audited consolidated financial statements for the periods below.

The fiscal year ended December 31, 2011 is the fourth reporting period completed using International financial reporting standards (“IFRS”). Previously, the Corporation prepared its consolidated annual and consolidated interim financial statements in accordance with Canadian GAAP. An explanation of the impact of the transition from Canadian GAAP to IFRS is included below. Quarterly Information The following is a summary of selected financial information of the Corporation for the quarterly periods indicated.

2011 2011 2011 2011 2010 2010 2010 2010 Quarter

Fourth

Third

Second

First

Fourth

Third

Second

First ($) ($) ($) ($) ($) ($) ($) ($) Under IFRS Revenue 180,928 110,184 124,444 135,620 117,012 112,125 88,972 17,372

Income (loss) from continu-ing operations

(3,828,472)

(6,496,733)

(829,727)

(784,952)

(230,399)

(775,845)

(7,507,506)

(2,894,567)

Loss from continuing operations per Common share (basic and diluted)

(0.03)

(0.06)

(0.01)

(0.01)

(0.00)

(0.00)

(0.07)

(0.02)

Comprehensive income (Loss)

(4,822,688) (5,225,962) (4,756,825) (1,875,244) (209,774) (423,814) (7,452,880) (2,877,195)

Comprehensive income (Loss) per Common share (basic and diluted)

(0.04)

(0.05)

(0.04)

(0.02)

(0.00)

(0.01)

(0.08)

(0.02)

Total long-term liabilities

31,747,891 28,161,503 29,131,860 25,616,513 24,235,867 28,008,718 29,163,282 11,165,107

Cash dividends Nil Nil Nil Nil Nil Nil Nil Nil

Year ended December 31,

Year ended December 31.

Year ended December 31,

2011 $

2010 $

2009 $

(Under IFRS) (Under IFRS) (Under CDN GAAP) Operations Total revenue 551,176 335,481 88,215 Loss and comprehensive

loss for the year

(16,680,719)

(10,963,663)

(3,684,592)

Basic and diluted loss per share

(0.16) (0.11) (0.05)

Balance Sheet Working capital 32,446,996 44,026,829 19,746,427

Total assets 315,983,355 177,143,886 88,851,746 Total liabilities 39,828,954 32,515,326 8,953,599

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Overall performance Comprehensive loss for the year ended December 31, 2011 was $16,680,719 compared to comprehensive loss of $10,963,663 for the same period of the previous year, an increase of 52%. It should be noted that as a result of the transition to IFRS, the loss for the period ending December 31, 2010 was $906,788 higher than what was reported using GAAP, due to the derecognition of previously reported foreign exchange loss and future tax assets. Overall, the increase in comprehensive loss compared to the previous year is mainly the result of change in unrealized loss on investments of $1,754,710 compared with unrealized gain on investment of $2,224,543 in previous year, and deferred tax expense of $1,674,994 compared with deferred tax recovery of $147,705 in previous year. Operating expenditures slightly increased from $11,408,317 to $11,939,884. Excluding the decrease in share-based payments from $8,411,220 to $7,503,142 and the decrease in flow-through interest penalty, most of the operating expenditures have increased, as the Corporation completed significant acquisitions during the year and has been integrating the combined operations. Going forward, management expects that general and administrative expenditures will increase slightly, and that professional fees and stock based compensation will fluctuate independent of the operating activities as they are dependent on period specific decisions and activities. During the year ended December 31, 2011, the most significant operating expenses include $3,491,627 related to general and administrative expenses, which were 60% higher than the previous year, $633,689 related to professional fees, which were 21% higher than the previous year, $28,409 related to flow-through interest penalty, which were 89% lower than the previous year, and $7,503,142 related to stock-based compensation, which were 11% lower than the previous year. General and administrative expenses on an overall basis were higher, which is reasonable given the growth the Corporation experienced, and this trend can be expected to continue at a pace relative to the expansion of the Corporation. The most significant amounts included in general and administrative expenses are: listing fees of $340,703 which were 26% higher than the previous year; executive and office salaries of $617,319 which was 57% higher than previous year; and investor relations of $512,997, which were 36% higher than the previous year. Exploration and evaluation programs during the year ended December 31, 2011 resulted in a net increase in mineral properties to $269,287,498 as compared to $122,494,158 in the same period of the previous year. Details of the exploration and evaluation expenditures during the year are included in the following table:

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Balance January 01,

2010 Expenditures

Balance December 31,

2010 Expenditures

Balance December 31,

2011

BONANZA Deferred Exploration:

Analytical $ 735,253 $ 9,037 $ 744,290 $ 11,105 $ 75,5395

Geological 338,819 - 338,819 (180) 338,639

Fuel 2,956 846 3,801 - 3,801 Transportation/accommodation 93,619 12,160 105,779 12,983 118,762

Exploratory drilling 3,392,551 - 3,392,551 - 3,392,551

Property work 56,420 448 56,868 - 56,868

Advanced property work 58 - 58 - 58

Operations support 187,773 17,473 205,246 22,555 227,801

Administration 386,470 19,557 406,027 58,260 464,287 A/R - Cash Call - Rahill- Bonanza Joint Venture

(1,867,245) -

(1,867,245) -

(1,867,245)

A/P - Cash Call - Rahill- Bonanza Joint Venture 4,125,129 1,369,901 5,495,030 1,859,630 7,354,660

7,451,802 1,429,422 8,881,224 1,964,353

10,845,577 Deferred Development: Acquisition costs and

option payment paid 19,267,617 - 19,267,617 - 19,267,617

Option payment received (440,000) - (440,000) - (440,000)

19,267,617 - 18,827,617 - 18,827,617 26,279,419 1,429,422 27,708,841 1,964,353 29,673,194

EAST BAY Deferred Exploration: Analytical 5,401 - 5,401 - 5,401 Geological 8,530 - 8,530 - 8,530 Transportation/accommodation 446 - 446 - 446

Exploratory drilling 44,659 - 44,659 - 44,659

Operations support 540 - 540 - 540 Administration 7,144 1,614 8,758 - 8,758

A/P - Cash Call - East Bay Joint Venture - 284,661 284,661 417,110 701,771

66,720 286,275 352,995 417,110 770,105 Deferred Development:

Acquisition costs and option payments paid 6,225,083 - 6,225,083 - 6,225,083

6,225,083 - 6,225,083 - 6,225,083 6,291,803 286,275 6,578,078 417,110 6,995,188

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Balance January 01,

2010 Expenditures

Balance December 31,

2010 Expenditures

Balance December 31,

2011

PQ NORTH Deferred Exploration: Analytical 64,364 71,618 135,982 64,124 200,106 Geological 163,946 42,144 206,090 213,483 419,573

Geophysical 203,500 - 203,500 928 204,428 Fuel 27,243 3,672 30,915 76,109 107,024 Transportation/accommodation 510,354 167,404 667,758 444,362 1,122,120 Exploratory drilling 1,683,712 734,509 2,418,221 3,113,665 5,531,886

Property work 175,788 - 175,788 (3,421) 172,367 Operations support 515,571 203,431 719,002 1,006,338 1,725,340 Administration 111,058 49,352 160,410 50,349 210,759

3,455,536 1,272,130 4,727.666 4,965,937 9,693,603 Deferred Development: Acquisition costs and option

payments paid 100,000 - 100,000 1,489,473 1,589,473

100,000 - 100,000 1,489,473 1,589,473 3,555,536 1,272,130 4,827,666 6,455,410 11,283,076

TRANS-CANADA Deferred Exploration: Analytical 1,729,054 877,035 2,606,089 1,064,820 3,670,909 Geological 1,033,181 1,092,111 2,125,292 1,684,507 3,809,799 Geophysical 102,690 1,750 104,440 3,175 107,615

Geochemical - 74,200 74,200 88,535 162,735 Fuel 27,628 17,154 44,782 17,512 62,294 Transportation/accommodation 231,956 88,932 320,888 128,010 448,898 Exploratory drilling 14,842,505 10,643,882 25,486,387 12,684,397 38,170,784 Property work 307,861 245,646 553,507 751,707 1,305,214 Advanced property work 31,557 68,538 100,095 128,403 228,498 Operations support 1,102,872 262,674 1,365,546 351,426 1,716,972 Administration 843,635 1,032,392 1,876,027 1,293,656 3,169,683

20,252,939 14,404,314 34,657,253 18,196,148 52,853,401

Deferred Development: Acquisition costs and option

payments paid 4,699,395 - 4,699,395 107,246,878 111,946,273

4,699,395 - 4,699,395 107,246,878 111,946,273 24,952,334 14,404,314 39,356,648 125,443,026 164,799,674

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Balance January 01,

2010

Expenditures Balance December 31,

2010

Expenditures

Balance

December 31, 2011

LENNIE

Deferred Exploration:

Analytical 60,104 18,345 78,449 - -

Geological 48,524 (1,062) 47,462 - -

Fuel 805 962 1,767 - -

Transportation/accommodation 16,988 9,252 26,240 - -

Exploratory drilling 871,846 235,968 1,107,814 - -

Property work 9,523 - 9,523 - -

Operations support 37,855 23,095 60,950 - -

Administration 118,534 45,507 164,041 - -

1,164,179 332,067 1,496,246 - -

Deferred Development: Acquisition costs and option

payments paid 188,400 - 188,400 - -

188,400 - 188,400 - -

Property write-off - (1,684,64) (1,684,646) - -

1,352,579 (1,352,579) - - -

REDGOLD Deferred Exploration: Analytical - 7,550 7,550 9,200 16,750 Geological - 1,524 1,524 9,705 11,229 Geophysical - 411,672 411,672 - 411,672 Fuel - 380 380 3,607 3,987 Transportation/accommodation - 64,288 64,288 - 64,288 Exploratory drilling - 598,987 598,987 200,045 799,032 Property work - 129,492 129,492 - 129,492 Advanced property work - 851 851 - 851 Operations support - 20,318 20,318 16,786 37,104 Administration - 74 74 177 251

- 629,315 629,315 239,520 1,474,658 Deferred development: Acquisition costs and option

payments paid - 909,500 859,500 - 909,500 - 859,500 859,500 - 909,500

Property write-off - - - (1,576,662) (1,576,662) - 1,488,815 1,488,815 (681,321) 807,496

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SADDLE GOLD, NEVADA

Balance January 01, 2010

Expenditures

Balance December 31,

2010

Expenditures Balance December 31, 2011

Deferred Exploration: Analytical - 25,587 25,587 404,425 430,012 Geological - 253,549 253,549 569,726 823,275 Geophysical - 228,980 228,980 13,616 242,596 Fuel - 36,992 36,992 511,054 548,046

Transportation/accommodation - 4,752 4,752 82,673 87,425 Exploratory drilling - 296,674 296,674 8,073,830 8,370,504 Property work - 10,799 10,799 910,990 921,789 Operations support - 2,537 2,537 69,662 72,199 Administration - 2,112 2,112 22,925 25,037

- 861,982 861,982 10,658,901 11,520,883 Deferred Development: Acquisition costs and option

payments paid - 38,065,938 38,065,938 177,243 38,243,181 - 38,065,938 38,065,938 177,243 38,243,181 - 38,927,920 38,927,920 8,640,172 49,764,064

OTHER AREAS

Deferred Exploration: Analytical 141,826 4,718 146,544 12,546 159,090 Geological 515,911 21,702 537,613 55,293 592,906 Geophysical 5,836 - 5,836 - 5,836 Fuel 1,018 - 1,018 - 1,018

Transportation/accommodation 43,224 - 43,224 709 43,933 Exploratory drilling 1,568,510 226,296 1,794,806 122,844 1,917,650 Property work 1,619 33,283 34,902 641 35,543 Operations support 1,244 - 1,244 19,665 20,909 Administration 97,945 29 97,974 26,002 123,976

2,377,133 286,028 2,663,161 237,700 2,900,861 Deferred Development: Acquisition costs and option

payments paid 891,017 93,512 984,529 2,079,415 3,063,944 Option payments received - (41,500) (41,500) 41,500 -

891,017 52,012 943,029 2,120,915 3,063,944 3,268,150 338,040 3,606,190 2,358,615 5,964,805

TOTAL EXPENDITURES 65,699,821 56,794,337 122,494,158 146,933,340 269,287,498

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Liquidity and capital resources Current assets at December 31, 2011 were $40,033,135 compared to $52,306,288 at December 31, 2010 and total assets were $315,983,355 compared to $177,143,886. The increase in total assets relates to a couple of items: cash and cash equivalents are down from $51,476,694 to $39,012,006, due to spending on exploration and operations; this is offset by an increase in exploration and evaluation assets from $122,494,158 to $269,287,498, which is attributable to the acquisition of Goldstone and South Africa Platinum. The Corporation also held $699,100 in long term investments at December 31, 2011 compared to $2,208,815 at December 31, 2010. The Corporation is very comfortable with its cash position at period end. The money currently held in treasury is sufficient to complete the ambitious drill program for 2012 and cover operating expenditures for a minimum of 3 years. Cash used in operating activities was $4,552,894 for the year ended December 31, 2011. The most significant non-cash charges to earnings include share-based payments of $7,503,142 change in unrealized loss on investments of $1,754,710, write-down of exploration and evaluation assets of $1,576,662, and future tax expense of $1,674,994. Cash used in investing activities was $38,569,057 for the year ended December 31, 2011 which relates to exploration and evaluation related expenditures and the purchase of investments. This was 88% higher than the previous year, as the Corporation has significantly increased work on the exploration and evaluation properties. Cash provided by financing activities was $30,657,263 for the year ended December 31, 2011 which relates to shares issued in private placement, proceeds from the exercise of stock options, proceeds from the exercise of purchase warrants, share issue costs, and repayment of long term debt. The Corporation has financed the majority of its exploration activities with flow-through share issuances. Resource expenditure deductions for income tax purposes related to exploration and development activities funded by flow-through share issuances are renounced to investors in accordance with income tax legislation. The Corporation applies Canada Revenue Agency’s look-back rule when accounting for the tax consequences of Flow-Through Share Issuance. Interest penalties accrued during the year ended December 31, 2011 in relation to resource expenditures renounced to investors under Canada Revenue’s look-back rule, totalled $28,409 As at December 31, 2011, the financial instruments of the Corporation consisted of cash and cash equivalents, accounts receivable, investments, accounts payable and accrued liabilities and long term debt. Unless otherwise noted, the Corporation does not expect to be exposed to significant interest, currency or credit risks arising from these financial instruments. The Corporation estimates that the fair value of the financial instruments approximate the carrying values. The Corporation is authorized to issue an unlimited number of Common Shares of which 137,436,855 are outstanding as of March 26, 2012. As at March 26, 2012 the Corporation had options outstanding to purchase an aggregate of 9,169,884 Common Shares under its share incentive plan with exercise prices ranging between $1.50 and $7.45 per share and expiry dates between August 8, 2012 and March 5, 2017 As of December 31, 2011 there are 1,115,000 unvested stock options. As at March 20, 2012 the Corporation had 50,000 common share purchase warrants outstanding, with an exercise price of $6.62 and expiry date of April 5, 2014. Maturing investments and new financing arrangements will continue to be the major sources of cash flow for the Corporation, as the Corporation is still in the exploration stage without revenue from operations.

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Commitments The following is a summary of the commitments of the Corporation as at March 26, 2012:

Mineral property held for sale Newman Madsen Mineral property held for sale includes the Newman Madsen property with a book value of $13,064. As at December 31, 2011 the Corporation was in discussions with other parties regarding the possible sale of the Corporation's interest in these mineral properties. Property write-downs and agreements 2011 On May 16, 2011, the Corporation decided to no longer pursue its option to acquire a 100% interest in the Bobjo property located in Red Lake, Ontario, and as such, $655,822 has been charged against earnings in the period. On November 1, 2011 the Corporation signed a Letter of Intent ("LOI") with LKA International Inc. ("LKA") for Premier to acquire up to a 60% interest in the Golden Wonder property ("Property") located in Colorado, USA. To earn an initial 51% interest Premier will expend a minimum of US$8.0 million on exploration, and pay to LKA US$150,000 in cash and the equivalent of CDN$300,000 in cash or shares of Premier over a period of 3 years. Of the US$8.0 million in exploration expenditures, LKA will fund the initial US$2.0 million drill program to be operated by Premier, 51% of which will be refunded by Premier as a part of the initial earn-in. Premier can earn an additional 9% interest in the Joint Venture by paying an additional CDN$100,000 in cash and/or shares to LKA, and funding an additional US$7 million for exploration, including the completion of a feasibility study on the Property prior to the sixth anniversary date. On November 1, 2011 the Corporation signed a Letter of Intent ("LOI") with Ashburton Ventures Inc. ("Ashburton") to establish a 50/50 joint venture to explore and develop Premier's Golden Edge Project ("Project") located in Humboldt County, Nevada, USA. In consideration for Ashburton acquiring a 50% interest in the Project, Ashburton will need to spend $3.0 million on exploration expenditures, and pay $110,000 cash to Premier over 3 years. On November 23, 2011, the Corporation decided to no longer pursue its option to acquire a 100% interest in the Woco Lake property located in Red Lake, Ontario, and as such, $920,841 has been charged against earnings in the period.

2012 2013 2014 2015 2016 Total Contracts and operating leases $162,623 $194,548 $181,399 $185,584 $155,367 $879,521 Exploration agreements $0 $0 $0 $0 $0 $0 Exploration expenditure commitment from the issuance of flow through shares $19,154,537 $0 $0 $0 $0 $19,154,537

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Provision The Corporation's provision results from net ownership interests in mineral properties and mining claims. The provision consists primarily of costs associated with mine reclamation and closure activities. These activities, which tend to be site specific, generally include costs for earthworks, including detoxification and re-contouring, re-vegetation, water treatment and demolition. In determining the estimated costs, the Corporation considers such factors as changes in laws and regulations and requirements under existing permits. Such analysis is performed on an ongoing basis. The Corporation estimates the total discounted cash flows required to settle its provision requirements is approximately $2,051,858. The majority of these costs are expected to be incurred in 2012. In calculating the fair value of the Corporation's provision, management used a risk free interest rate of 1.5046%. A reconciliation of the provision is provided below: 2011 2010 $ $ Balance, beginning of the year - - Liabilities incurred 2,051,858 Accretion expense - - 2,051,858 -

Transactions with related parties The Corporation's related parties include key management personnel and entities over which they have control or significant influence as described below.

DSA Corporate services Corporate secretarial D & R Filing services Filing services The Alyris Group Accounting, management and facilities rental Hall Mineral Services LLP Consulting Unless otherwise stated, none of the transactions incorporate special terms and conditions and no guarantees were given or received. Outstanding balances are usually settled in cash. The following are the related party transactions, recorded at the exchange amount as agreed to by the parties: [a] Included in general and administrative expenses are amounts totaling $46,958 (2010 - $37,199) for corporate secretarial services provided by companies related to the Corporation through a common officer. [b] Included in general and administrative expenditures are amounts totaling $339,050 (2010 - $265,832) and included in the exploration and evaluation assets are amounts totaling $125,544 (2010 - $112,102) for rent, facilities related charges, and accounting and management services provided by a company related to the Corporation through common officer and an officer and director. [c] Included in other revenue are amounts totaling $34,650 (2010 - $31,800) for rental of a core shack to a company related to the Corporation though a common director. [d] Included in general and administrative expenses are amounts totaling $64,411 (2010 - $38,846) for consulting fees paid to a company related to the Corporation by a common director.

Nature of transactions

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Transactions with key management personnel Key management personnel remuneration includes the following expenses:

Subsequent events On January 16, 2012 the Corporation sold its interest in the Newman-Madsen property in Red Lake to Sabina Silver Corporation. Terms of the agreement include payment to Premier of $500,000, and Premier will retain a 0.50% net smelter return royalty on the property. On January 26, 2012 the Corporation announced that it had signed a Letter of Intent to enter into a joint venture with Newmont USA Limited, a subsidiary of Newmont Mining Corporation (NYSE:NEM, TSX:NMC) (“Newmont”) to consolidate the Saddle and Rain projects within the Rain Sub-district of Nevada’s prolific Carlin Trend. Highlights of the proposed joint venture include: Premier and Newmont will each contribute lands held along the “Rain Trend” to consolidate the prospective

horizon that is host to the Rain Mine, and the Saddle and Tess gold Deposits;

Premier will acquire a 55% operating interest by contributing one land Section, waiving its existing right of payment under the Rain and Emigrant royalties, and contributing an initial $20 million in development expenditures over two years;

Newmont will acquire a 45% non-operating interest by contributing three land Sections, full site access to

the joint venture including roads, infrastructure and power, and access to contractor/supplier relationships/discounts; and

The Joint Venture will secure a favourable milling agreement such that ore from the project will be processed at Newmont’s milling facilities that are located within 20 miles of the Property at a pre-arranged milling rate, subject to Newmont’s processing and displacement priorities. If the joint venture is able to secure toll milling on more favourable terms, it may engage the alternative milling subject to Newmont’s right to match the alternative milling terms.

On February 6, 2012 the Corporation announced that it had entered into agreements to acquire 100% interest in two key patented claim groups located on the East Bay Ultramafic Trend in Red Lake. These claim groups are located proximal to the Footwall Zone on the East Bay Project, one of two active joint ventures Premier has with Red Lake Gold Mines ("RLGM"), a partnership between Goldcorp Inc. and Goldcorp Canada Ltd., in the heart of the prolific Red Lake gold mining district, and north of Rubicon Minerals' Phoenix Gold Project. On February 27, 2012 the Corporation completed a previously announced bought deal public offering of 10,000,000 common shares (the "Common Shares") at a price of $5.75 per Common Share for net proceeds of approximately $54.5 million (the "Offering") through a syndicate of underwriters led by RBC Capital Markets and including Canaccord Genuity Corp., Scotia Capital Inc., CIBC World Markets Inc., Goldman Sachs Canada Inc., Stonecap Securities Inc., Octagon Capital Corporation and Versant Partners Inc. The Offering included the issue of 1,000,000 Common Shares at the offering price upon the exercise of the over-allotment option granted by the Company to the Underwriters under the Offering. Pursuant to the over-allotment option, the Underwriters have the right to purchase up to an additional 350,000 Common Shares at the Common Share offering price, exercisable in whole or in part, at any time prior to March 28, 2012. Subsequent to year end the Corporation entered into a $1,769,649 standby letter of credit outstanding in favour of the Ontario Ministry of Northern Development and Mines relating reclamation obligations of the Trans-Canada property in Ontario.

2011 2010

Salary and wages $714,281 $625,239 Share-based payments $3,701,995 $4,042,840

Other compensation $17,206 $33,483 Total $4,433,482 $4,701,562

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Contingencies Legal claims

In October 2010, prior to the Goldstone Arrangement, Patrick Sheridan, the former President and Chief Executive Officer and a director of Goldstone, and Gary Conn, a former senior officer and director of Goldstone, together with their respective management companies, commenced legal actions against Goldstone. Mr. Sheridan alleged breach of contract and is seeking damages of up to $1.4 million, including punitive damages, plus costs and interest. Mr. Conn alleged breach of a consulting agreement or, alternatively, wrongful dismissal and other causes of action and is seeking damages of up to approximately $3.4 million, plus costs and interest. Goldstone dismissed Messrs. Sheridan and Conn for cause on September 25, 2010 and October 1, 2010, respectively. In its counterclaim against Mr. Conn (the “Conn Counterclaim”), Goldstone is seeking damages from Mr. Conn and his management company in the amount of $5 million for breach of fiduciary duty and duty of care, fraud, misrepresentation, conflict of interest, unjust enrichment, gross negligence, negligence and breach of contract; and $100,000 in punitive damages. Goldstone has also alleged other causes of action, plus costs and interest. In its counterclaim against Mr. Sheridan, Goldstone is seeking damages from Mr. Sheridan and his management company in the amount of $1 million for breach of fiduciary duty and duty of care, unjust enrichment, breach of contract; and $100,000 in punitive damages. Goldstone has also alleged other causes of action, plus costs and interest. Goldstone has also commenced third party claims against Mr. Conn and three former directors in order to seek contribution and indemnity for any amounts that it may be found liable to pay Mr. Sheridan and his management company.

With respect to the Conn action, Goldstone has launched a summary judgment motion on the basis that the certain allegations which are relied upon to justify cause for Mr. Conn’s dismissal have already been proven in a related proceeding (refer to “Defamation Claim” below). Pursuant to a preliminary motion argued on February 15, 2012, certain affidavit evidence which Mr. Conn seeks to rely upon in defence of the summary judgment motion was ruled admissible. Goldstone is now preparing responding affidavit evidence, and it is anticipated that cross examinations on the various affidavits will be scheduled sometime in April or May. The motion would be scheduled sometime thereafter.

With respect to the Sheridan action, the parties have recently exchanged documentary productions, and it is expected that examinations for discovery will be scheduled sometime in the near future.

In January 2011, Mr. Conn commenced a legal action (the “Defamation Claim”) against Goldstone, four of its directors, and other individuals, seeking damages of $2.5 million based on alleged conspiracy, libel, defamation and intentional infliction of mental suffering arising from alleged improper publication of certain allegations contained in the Conn Counterclaim. On May 24, 2011, the Superior Court of Justice (Ontario) granted Goldstone’s motion for summary judgment. The summary judgment concluded that the allegations in the Conn Counterclaim which, in Goldstone’s view justified Mr. Conn’s termination for cause, but which according to Mr. Conn were allegedly defamatory, were true. However, Mr. Conn has filed a notice of appeal of the summary judgment with respect to the Defamation Claim. Goldstone has also brought a motion for summary judgment in respect of Conn’s initial claim. Mr. Conn sought to appeal the judgment, but the Ontario Court of Appeal dismissed his appeal on November 18, 2011.

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Financial instruments and related risks The Corporation's operations include the acquisition and exploration of mineral properties in United States. The Corporation examines the various financial risks to which it is exposed and assesses the impact and likelihood of occurrence. These risks may include credit risk, liquidity risk, currency risk, interest rate risk and other risks. Where material, these risks are reviewed and monitored by the Board of Directors. [a] Credit Risk Counterparty credit risk is the risk that the financial benefits of contracts with a specific counterparty will be lost if a counterparty defaults on its obligations under the contract. This includes any cash amounts owed to the Corporation by those counterparties, less any amounts owned to the counterparty by the Corporation where a legal right of set-off exists and also includes the fair values of contracts with individual counterparties which are recorded in the financial statements. i) Trade credit risk

The Corporation is in the exploration stage and has not yet commenced commercial production or sales. Therefore, the Corporation is not exposed to significant credit risk and overall the Corporation's credit risk has not changed significantly from the prior year.

ii) Cash and cash equivalents In order to manage credit and liquidity risk the Corporation invests only in highly rated investment grade instruments that have maturities of six months or less. Limits are also established based on the type of investment, the counterparty and the credit rate.

iii) Derivative financial instruments

As at December 31, 2011, the Corporation has no derivative financial instruments. It may in the future enter into derivative financial instruments and in order to manage credit risk, it will only enter into deriva-tive financial instruments with highly rate investment grade counterparties.

[b] Liquidity risk Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they fall due. The Corporation manages liquidity risk through the management of its capital structure. Accounts payable and accrued liabilities are due within the current operating period. [c] Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The risk that the Corporation will realize a significant loss as a result of a decline in the fair market value of investments and other items held within cash and cash equivalents is limited given that the majority of investments have a relatively short maturity. The Corporation manages its interest rate risk with investments by investing the majority of funds in short-term investments and therefore is not exposed to significant fluctuations in interest rates. The interest rate risk associated with the Corporation's long term debt relates to the fixed nature of the interest rate. Should there be a significant decrease in the market interest rate, there is potential exposure due to the Corporation locking in at a higher rate. [d] Currency risk The Corporation is exposed to the financial risk related to the fluctuation of foreign exchange rates. The functional and reporting currency of the Corporation is the Canadian dollar. The functional currency of the subsidiaries is the U.S. dollar and Mexican Peso. As at December 31, 2011 the Corporation's subsidiary Premier Gold Mines USA Inc. holds a long term promissory note denominated in U.S. dollars valued at USD$9,400,000, or CDN$9,468,118. Additionally, the Corporation's subsidiary Premier Gold Mines Nevada inc. holds a promissory note denominated in U.S. dollars valued at US$350,000, or CDN$355,943. There are no significant financial instruments denominated in Mexican Pesos. Changes in the currency exchange rates between the Canadian dollars relative to the U.S. dollar could have an effect on the Corporation's results of operations, financial position or cash flows. The Corporation has not hedged its exposure to currency fluctuations. At December 31, 2011 a 100 basis point decrease/increase in the U.S. dollar would result in a foreign exchange gain/loss of CDN$242,670. The Corporation does not invest in derivatives to mitigate these risks.

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Management of capital risk The Corporation manages its cash and cash equivalents, common shares, stock options and warrants as capital. The Corporation's objectives when managing capital are to safeguard the Corporation's ability to continue as a going-concern in order to pursue the exploration of its mineral properties and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk. The Corporation manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Corporation may attempt to issue new shares and, acquire or dispose of assets. In order to maximize ongoing exploration efforts, the Corporation does not pay out dividends. The Corporation's investment policy is to invest its short-term excess cash in highly liquid short-term interest-bearing investments with short-term maturities, selected with regard to the expected timing of expenditures from continuing operations. The Corporation expects its current capital resources will be sufficient to carry out its exploration plans and operations through 2012. IFRS 7 establishes a fair value hierarchy that prioritizes the input to valuation techniques used to measure fair value as follows: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs). The following table sets forth the Corporation's financial assets measured at fair value by level within the fair value hierarchy. Level 1 Level 2 Level 3 Total $ $ $ $ Assets Cash and cash equivalents 40,074,341 - - 40,074,341 Investments 589,600 109,500 - 699,100 40,663,941 109,500 - 40,773,441

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Changes in accounting policy including initial adoption of IFRS These are the Corporation's first annual consolidated financial statements prepared in accordance with IFRS. The accounting polices have been applied in preparing the consolidated financial statements for the year ended December 31, 2011, the comparative financial statements for the year ended December 31, 2010 and the preparation of an opening IFRS statement of financial position on the Transition Date, January 1, 2010. In preparing its opening IFRS statement of financial position, comparative information for the year ended December 31, 2011 and financial statements for the year ended December 31, 2010, the Corporation has adjusted amounts reported previously in financial statements prepared in accordance with GAAP. The guidance for the first time adoption of IFRS is set out in IFRS 1. IFRS 1 provides for certain mandatory exceptions and optional exemption for first time adopters of IFRS. The Corporation elected to take the following IFRS 1 optional exemptions: [a] Basis of Consolidations In accordance with IFRS 1, if a company elects to apply IFRS 3 Business Combinations retrospectively, IAS 27 Consolidated and Separate Financial Statements must also be applied retrospectively. As the Corporation elected to apply IFRS 3 prospectively, the Corporation has also elected to apply IAS 27 prospectively. [b] Cumulative translation differences IFRS requires that the functional currency of each entity of the Corporation be determined separately. The Corporation has determined that as at the Transition Date the Canadian dollar was the functional currency of all entities in the Corporation. For the year ended December 31, 2011, there was a $nil foreign exchange. For the year ended December 31, 2010, the foreign exchange resulting from the consolidation amounted to a loss of $68,186, resulting in a decrease in the current year's loss in the statement of operations and the recording of an "Exchange Reserve" in the Statement of Equity. [c] Share-based payment Under GAAP, the Corporation measured share-based compensation related to share purchase options at the fair value of the options granted using the Black-Scholes option pricing formula and recognized its expense over the vesting period for the options. For the purposes of accounting for share based payment transactions an individual is classified as an employee when he individual is consistently represented to be an employee under law. The fair value of the options granted to employees were measured on the date of grant. The fair value of options granted to contractors and consultants were measured on the date the services were completed. Forfeitures were recognized as they occurred. IFRS 2 Share-based payment requires the Corporation to measure share-based compensation related to share purchase options granted to employees at the fair value of the options on the grant date and to recognize such expense over the vesting period of the options. However, under IFRS 2, the recognition of such expense must be done with a “graded vesting” methodology as opposed to the straight-line vesting method allowed under Canadian GAAP. In addition, under IFRS, forfeitures estimates are recognized in the period they are estimated, and are revised for actual forfeitures in subsequent periods, whereas under Canadian GAAP forfeitures are recognized as they occur. Furthermore, for options granted to non-employees, IFRS requires that share-based compensation be measured at the fair value of the services received unless the fair value cannot be reliably measured. For the purpose of accounting for share based payment transactions an individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee. This definition of an employee is broader then that previously applied by the Corporation and resulted in certain contractors and consultants being classified as employees under IFRS. The Corporation has elected to apply the requirements of IFRS 2, Share-based payments, only to equity instruments granted after November 7, 2002 which had not vested as of the Transition Date. There was no impact on the financial statements. Under GAAP, the Corporation measured share-based compensation related to share purchase options at the fair value of the options granted using the Black-Scholes option pricing formula and recognized its expense over the vesting period for the options. For the purposes of accounting for share based payment transactions an individual is classified as an employee when he individual is consistently represented to be an employee under law. The fair value of the options granted to employees is measured on the date of grant. The fair value of options granted to contractors and consultants are measured on the date the services are completed. Forfeitures are recognized as they occur.

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For the share purchase options granted to the individuals reclassified, change in fair value after the grant date previously recognized for GAAP purposes did not require any adjustment. There were no unvested options issued and outstanding as of and after the Transition Date. [d] Reclassification within equity section IFRS requires an entity to present for each component of equity, reconciliation between the carrying amount at the beginning and end of the period, separately disclosing each change. The Corporation reviewed its contributed surplus account and concluded that as at the Transition Date, the entire amount of $7,329,340 relates to "Equity settled employee benefit reserve". As a result, the Corporation believes a reclassification would be necessary in the equity section between "Contributed surplus" and the "Equity settled employee benefit reserve" account. For comparatives, as at December 31, 2010, the entire $12,353,460 "Contributed surplus" account was reclassified into "Equity settle employee benefit reserve". [e] Deferred Tax on Mineral Properties Under GAAP, the Corporation, in accounting for its subsidiary, recognized a future income tax liability on temporary differences arising on the initial recognition of the Saddle Gold Inc. mineral property interest (where the fair value of the asset acquired exceeded its tax basis) in a transaction which was not a business combination and affected neither accounting profit nor loss. IAS 12, Income Taxes does not permit the recognition of deferred taxes on such transactions. As at December 31, 2010, the Corporation has derecognized the impacts of all future income tax liabilities which had previously been recognized on the initial acquisition of Saddle Gold Inc. through transactions deemed not to be business combinations and affecting neither accounting profit or loss nor taxable profit or loss. [f] Deferred flow through premium Under GAAP, the Corporation, in accounting for flow through funds received, recorded the funds to share capital. IFRS requires that excess to market value upon issuance of flow through common shares be recorded in the statement of loss and comprehensive loss (deferred liability for flow through raised funds at time of issuance of flow through common shares and charged to the statement of loss and comprehensive loss as the necessary expenditures to be renounced under flow through common share agreements are spent). [g] Deferred income tax assets Under GAAP, the Corporation, in accounting for future income tax assets, recognized future income tax assets to the extent that it had taxable temporary differences resulting from the issuance of flow through shares in accordance with EIC-146. IFRS requires that the Corporation consider it probable that taxable profit will be available against which a deductible temporary difference can be utilized. As at January 1, 2010, the Corporation derecognized the impact of deductible temporary differences related to future income tax assets.

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Off-Balance Sheet Arrangements The Corporation has not participated in any off-balance sheet or income statement arrangements. Changes in Internal Control Over Financial Reporting (“ICFR”) No changes occurred in the current period of the Corporation’s ICFR that have materially affected, or are reasonably likely to materially affect the Corporation’s ICFR. Controls and Procedures In accordance with the requirements of National Instrument 52-109 Certification of Disclosure in Issuer’s Annual and Interim Filings, the Corporation’s management, including Chief Executive Officer (CEO) and Chief Financial Officer (CFO), have evaluated the operating effectiveness of the Corporation’s internal control over financial reporting. Management of the Corporation is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under, the supervision of, the CEO and CFO and effected by management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Management assessed the effectiveness of the Corporation’s internal control over financial reporting as of December 31, 2011. Based on this assessment, management believes that, as of December 31, 2011, the Corporation’s internal control over financial reporting is designed effectively. Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management, including the CEO and CFO, on a timely basis so that appropriate decisions can be made regarding annual and interim financial statement disclosure. Management believes these disclosure controls and procedures have been effective during the year ended December 31, 2011. Additional Information

Additional information relating to the Corporation can be found on SEDAR at www.sedar.com, or on the Corporation’s web-site at www.premiergoldmines.com.

“John Seaman”

(Signed) John Seaman Chief Financial Officer

Thunder Bay, Canada March 26, 2012

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Consolidated Financial Statements (Stated in Canadian Dollars)

December 31, 2011 and 2010

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(Incorporated under the laws of Ontario)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Stated in Canadian Dollars)

For the year ended December 31, 2011 2010 $ $ EXPENSES Amortization [note 14] 8,723 11,917 Stock-based compensation [note 10] 7,503,142 8,411,220 Flow-through interest penalty 28,409 243,376 General and administrative [note 16] 3,491,627 2,186,934 Professional fees 633,689 522,544 Exploration expenses 274,294 32,326 11,939,884 11,408,317 Loss before the following (11,939,884) (11,408,317) Investment income 404,018 286,462 Other income 147,158 49,019 Change in unrealized gain (loss) on investments (1,754,710) 2,224,543 Gain (loss) on sale of investments 32,954 (160,917) Write-down of mineral properties [note 12] (1,576,662) (1,767,943) Foreign exchange loss 4,886 - Interest expense (498,370) 266,029) Gain on sale of mineral property [note 12] 10,250 - Loss before income taxes (15,170,360) (11,043,182)Current (23,845) - Deferred tax expense (recovery) [note 15] 1,674,994 (147,705) Loss for the period (16,821,509) (10,895,477) Exchange differences on translation of foreign operations 140,790 (68,186) Loss and comprehensive loss for the year (16,680,719) (10,963,663) Basic and diluted loss per share [note 11] (0.15) (0.11) See accompanying notes to the consolidated financial statements

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(Incorporated under the laws of Ontario)

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Stated in Canadian Dollars)

As of December 31, December 31, January 1, 2011 2010 2010 [note 23] [note 23] ASSETS Non-current assets Financial assurance in trust [note 6] 34,076 - - Restricted cash and cash equivalents [note 5] 1,062,335 - - Investments [note 9] 699,100 2,208,815 1,490,150 Property, plant and equipment [note 14] 4,854,147 32,561 44,478 Exploration and evaluation assets [note 12] 269,287,498 122,494,158 65,700,001 Mineral properties held for sale [note 13] 13,064 102,064 102,064 Total non-current assets 275,950,220 124,837,598 67,336,693 Current assets Cash and cash equivalents 39,012,006 51,476,694 21,226,978 Accounts receivable 924,144 770,029 259,188 Prepaids and deposits 96,985 59,565 28,887 Total current assets 40,033,135 52,306,288 21,515,053 Total Assets 315,983,355 177,143,886 88,851,746 EQUITY Share capital [note 10] 291,498,818 151,458,002 73,267,823 Reserves [note 10] 20,591,808 12,285,274 7,329,340 Deficit (35,936,225) (19,114,716) (8,219,239) Total equity 276,154,401 144,628,560 72,377,924 LIABILITIES Non-current liabilities Long term tax payable 62,457 93,643 124,829 Deferred taxes [note 15] 21,525,288 14,691,188 10,226,007 Long term debt [note 9] 8,108,288 9,451,036 - Provision for environmental rehabilitation [note 17] 2,051,858 - - Total non-current liabilities 31,747,891 24,235,867 10,350,836 Current liabilities Accounts payable and accrued liabilities 3,448,444 3,424,259 1,622,016 Taxes payable 22,917 131,925 146,610 Current portion of long term debt [note 9] 1,662,912 1,407,601 - Deferred premium on flow-through shares 2,946,790 3,315,674 4,354,360 Total current liabilities 8,081,063 8,279,459 6,122,986 Total equity and liabilities 315,983,355 177,143,886 88,851,746 Commitments [note 18] Contingencies [note 19] See accompanying notes to condensed consolidated interim financial statements These condensed consolidated interim financial statements are authorized for issue by the Board of Directors on March 26, 2012 They are signed on the Corporation's behalf by: "John Seaman" "Ewan Downie" Director Director

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(Incorporated under the laws of Ontario)

CONSOLIDATED STATEMENTS OF CASH FLOWS (Stated in Canadian Dollars)

For the year ended December 31, 2011 2010 $ $ OPERATING ACTIVITIES Loss and comprehensive loss for the year (16,680,719) (10,963,663) Add charges (deduct credits) to earnings not involving a current payment (receipt) of cash Amortization 17,082 11,917 Stock-based compensation 7,503,142 8,411,220 Change in unrealized (gain) loss on investments 1,754,710 (2,224,543) Write-down of mineral properties 1,576,662 1,767,943 Loss (gain) on sale of investments (32,954) 160,917 Deferred tax expense (recovery) 1,674,994 (147,705) Unrealized foreign exchange loss (gain) (145,676) (68,186) (4,332,759) (3,052,100) Net change in non-cash working capital balances related to operations (698,672) (528,635) Cash used in operating activities (5,031,431) (3,580,735) INVESTMENT ACTIVITIES Mineral exploration and development expenditures, net 37,630,624) (17,928,346) Acquisition of Saddle Gold - (4,187,368) Acquisition of Goldstone Resources (1,824) - Proceeds from the sale of investments, net (1,099,675) 1,344,961 Acquisition of South Africa Platinum Ltd. (32,109) - Cash used in investment activities (38,764,232) (20,770,753) FINANCING ACTIVITIES Shares issued in private placements 3,425,000 54,942,020 Proceeds from the exercise of stock options 1,123,577 3,597,327 Proceeds from the exercise of share purchase warrants 105,000 696,121 Share issue costs (1,921,668) (3,121,115) Repayment of long term debt (1,400,934) (1,513,149) Cash provided by financing activities 31,330,975 54,601,204 Increase (decrease) in cash and cash equivalents during the year (12,464,688) 30,249,716 Cash and cash equivalents, beginning of the year 51,476,694 21,226,978 Cash and cash equivalents, end of the year 39,012,006 51,476,694 See accompanying notes to the consolidated financial statements

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(Incorporated under the laws of Ontario)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Stated in Canadian Dollars)

Share Capital Reserves

Issued and outstanding: Number of Shares Share Capital Shares subscribed Warrants

Equity Settled Employee Benefits

Agents Options

Availa-ble�for�sale

financial assets

Foreign currency

translation Deficit Total Equity

Balance as at January 01, 2010 84,497,179 73,259,843 7,980 224,436 7,104,904 - - - (8,219,239) 72,377,924

Private placements [note 10] 11,660,000 51,375,800 - - - - - - - 51,375,800

Exercise of stock options 1,878,960 5,579,689 - - (1,982,363) - - - - 3,597,326

Exercise of warrants 252,162 920,557 - (224,436) - - - - - 696,121

Shares issued for mineral properties 95,000 493,500 - - - - - - - 493,500

Share issue costs - (3,121,115) - - - - - - - (3,121,115)

Shares issued for Saddle Gold Corp. 5,442,357 21,769,428 - - - - - - - 21,769,428

Comprehensive income (loss) for the period - - - - - - - (68,186) (10,895,477) (10,963,663)

Share�based payments 290,000 1,180,300 (1,180,300) - 7,230,919 - - - - 7,230,919

Share subscriptions - - 1,172,320 - - - - - - 1,172,320

Balance as at December 31, 2010 104,115,658 151,458,002 - - 12,353,460 - - (68,186) (19,114,716) 144,628,560

Exercise of options 489,267 1,779,547 - - (655,990) - - - - 1,123,557

Shares issued for South Africa Platinum Ltd. 350,000 1,806,000 - - - - - - - 1,806,000

Equity issued for acquisition of PQ North royalty 150,000 1,188,000 - 181,750 - - - - - 1,369,750

Private placement 5,450,000 29,975,000 - - - - - - - 29,975,000

Share�based payments - - - - 7,320,192 - - - - 7,320,192

Shares issued as compensation 35,000 182,950 - - - - - - - 182,950

Shares issued for Goldstone Resources Inc. 16,814,553 106,366,303 - 583,295 750,609 - - - - 107,700,207

Exercise of warrants 16,000 119,112 - (14,112) - - - - - 105,000

Share issue costs - (1,921,661) - - - - - - - (1,921,661)

Other capital transactions - 545,565 - - - - - - - 545,565

Comprehensive loss for the period - - - - - - - 140,790 (16,821,509) (16,680,719)

Balance as at December 31, 2011 127,420,478 291,498,818 - 750,933 19,768,271 - - 72,604 (35,936,225) 276,154,401

See accompanying notes to the consolidated financial statements

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

1. NATURE OF BUSINESS Premier Gold Mines Limited (the "Corporation" or "Premier") was incorporated under the laws of the Province of Ontario on May 29, 2006, and was inactive until August 18, 2006. On August 18, 2006 the Corporation entered into an agreement with Wolfden Resources Inc. ("Wolfden") whereby Wolfden completed a re�organization by way of a statutory plan of arrangement (the "Arrangement"). Pursuant to the Arrangement, Wolfden transferred certain of its mineral property interests in Ontario and $2,000,000 cash to the Corporation and each registered holder of Wolfden common shares was entitled to receive one New Wolfden common share and 0.7 of a Premier common share in exchange for each Wolfden common share held by the shareholder immediately prior to the effective date. The mineral properties transferred were recorded at the carrying value of Wolfden immediately prior to the re�organization. On October 5, 2008 Premier incorporated a Mexican subsidiary referred to as Oro Premier de Mexico, S.A. de C. V. ("Oro Premier"), in connection with the acquisition of certain mineral claims located in the El Alamo Mining District, Baja California, Mexico. On June 14, 2010 Premier incorporated a United States subsidiary referred to as Premier Gold Mines USA Inc., in connection with the acquisition of Saddle Gold Inc. On June 16, 2011 Premier incorporated a United States subsidiary referred to as Premier Gold Mines Nevada Inc., in connection with the acquisition of South Africa Platinum Ltd. On August 16, 2011 Premier acquired Goldstone Resources Inc. During the period, the Corporation incorporated 2295196 Ontario Inc. and 2295197 Ontario Inc., in connection with the acquisition of Goldstone Resources Inc. On November 18, 2011 the Corporation incorporated a Canadian subsidiary Premier Royalty Corporation. The Corporation is in the exploration stage and its principal business activity is the acquisition, exploration and development of mineral properties that it believes contain mineralization that will be economically recoverable in the future.

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2. ACQUISITIONS Acquisition of Goldstone Resources Inc. On August 16, 2011 the Corporation completed an acquisition ("the Acquisition") of Goldstone Resources Inc ("Goldstone"). Under the Acquisition, each common share of Goldstone was exchanged for 0.16 of one Premier common share and $0.0001 in cash. As a result, Premier issued 16,814,553 common shares, plus cash consideration of $10,513 in exchange for 105,092,864 common shares of Goldstone. Holders of Goldstone stock options received a fully vested option granted by Premier to acquire 0.16 of a common share of Premier plus the fractional amount of a common share that, immediately prior to the effective time of the Acquisition, had a fair market value equal to $0.0001 in cash in exchange for each outstanding Goldstone stock option. Goldstone's outstanding warrants remained outstanding in accordance with their terms, which terms provide each warrant will be exercisable to acquire 0.16 of a common share of Premier plus $0.0001 in cash for each such warrant exercised. Pursuant to the Acquisition, all of the outstanding common shares of Goldstone were then transferred from Premier to a wholly�owned subsidiary of Premier, and Goldstone was amalgamated into that subsidiary to form a new amalgamated corporation, wholly owned by Premier. As Goldstone did not meet the definition of a business under IFRS, the Acquisition has been accounted for as an asset acquisition whereby all of the Goldstone assets acquired and liabilities assumed are recorded at fair value. The following table summarizes the net assets acquired as a result of the Acquisition: Purchase Price

Purchase price allocation

Fair value of 16,814,553 Premier common shares 108,958,303 Cash 10,513 Fair value of replacement options granted 750,609 Fair value of warrants 583,295 Transaction costs 1,953,290 112,256,010

Cash and cash equivalents 1,961,979 Accounts receivable 661,758 Prepaids and deposits 36,345 Financial assurance in trust 34,076 Investments 2,592,000 Buildings and equipment 4,837,409 Exploration and evaluation assets 107,093,819 Accounts payable and accrued liabilities (1,579,880) Long term tax payable (1,159,838)

Provision for environmental rehabilitation (2,051,858)

Deferred premium on flow�through shares (169,800)

112,256,010

(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Acquisition of South Africa Platinum Ltd. On June 16, 2011 the Corporation acquired South Africa Platinum Ltd. ("SAP") by way of a merger transaction whereby a wholly�owned Delaware, USA, subsidiary of Premier merged with and into SAP pursuant to the applicable provisions of the Delaware General Corporation Law. SAP owns, among other things, the mineral rights in respect of a majority portion of the Blue Sage mineral claims, located in Elko County, Nevada. The aggregate purchase price was CDN$1,806,000, which is comprised of 350,000 common shares of Premier at a fair value of CDN$5.16 per share. Included in purchase consideration were CDN$32,941 paid in transactions costs. Following completion of the acquisition, Premier holds all of the assets and liabilities of SAP, including outstanding debt in the principal amount of US$215,000. As SAP did not meet the definition of a business under IFRS, the Acquisition has been accounted for as an asset acquisition whereby all of the SAP assets acquired and liabilities assumed are recorded at fair value. The following table summarizes the net assets acquired as a result of the Acquisition: Purchase price allocation

Purchase price

3. SIGNIFICANT ACCOUNTING POLICIES Statement of Compliance and Conversion to International Financial Reporting Standards These are the Corporation's first International Financial Reporting Standards ("IFRS") consolidated annual financial statements to be presented in accordance with IFRS for the year ending December 31, 2011. Previously, the Corporation prepared its consolidated annual financial statements in accordance with Canadian generally accepted accounting principles.

Cash and cash equivalents 832 Exploration and evaluation assets 2,106,817 Accounts payable and accrued liabilities (55,736) Long term debt (212,972)

1,838,941

350,000 common shares issued 1,806,000 Cash 32,941 1,838,941

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Basis of Presentation The consolidated annual financial statements have been prepared using the measurement bases specified by IFRS for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies below. The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. These consolidated financial statements including comparatives have been prepared on the basis of IFRS standards that are effective or available for early adoption on December 31, 2011, the Corporation's first annual reporting date. The preparation of these consolidated financial statements resulted in changes to the accounting policies as compared with the most recent annual financial statements prepared under GAAP. The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements. They also have been applied in preparing an opening IFRS balance sheet at January 1, 2010 for the purposes of the transition to IFRS, as required by IFRS 1, First Time Adoption of International Financial Reporting Standards (IFRS 1). The impact of the transition from GAAP to IFRS is explained in Note 22. Basis of Consolidation The Corporation's financial statements consolidate those of the parent Corporation and all of its subsidiary undertakings drawn up to December 31, 2011. Subsidiaries are all entities over which the Corporation has the power to control the financial and operating policies. The Corporation obtains and exercises control through more than half of the voting rights. All subsidiaries have a reporting date of December 31. The Corporation's subsidiaries are:

Percentage of ownership

Jurisdiction Principal activity

Premier Gold Mines USA Inc. 100% United States Mineral exploration

Premier Gold Mines Nevada Inc. 100% United States Mineral exploration

Premier Royalty Corporation

100% Canada Mineral exploration

Goldstone Resources Inc. 100% Canada Mineral exploration

Roxmark Mines Ltd. 100% Canada Mineral exploration

2295196 Ontario Inc. 100% Canada Mineral exploration

2295197 Ontario Inc. 100% Canada Mineral exploration

Oro Premier de Mexico S.A. de C.V. 100% Mexico Mineral exploration

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

All transactions and balances between the Corporation and its subsidiaries are eliminated on consolidation, including unrealized gains and losses on transactions between the companies. Where unrealized losses on intra�group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Corporation. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. Business Combinations Business combinations that occurred prior to January 1, 2010 were not accounted for in accordance with IFRS 3, Business Combinations ("IFRS 3") or IAS 27, Consolidated and Separate Financial Statements, as the Company in the transition year chose to apply the IFRS 1 exemption discussed in Note 22. For business combinations occurring since January 1, 2010, the requirements of IFRS 3 have been applied. The consideration transferred by the Corporation to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Corporation, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred. The Corporation recognizes identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquiree's financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition�date fair values. Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of a) fair value of consideration transferred, b) the recognised amount of any non-controlling interest in the acquiree and c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognised in profit or loss immediately. JOINT OPERATIONS Operations that are jointly owned or jointly controlled by the Corporation and other ventures independent of the Corporation (joint ventures) are accounted for using the proportionate consolidation method, whereby the Corporation's share of the assets, liabilities, income and expenses is included line by line in the consolidated financial statements. Unrealized gains and losses on transactions between the Corporation and its joint ventures are eliminated to the extent of the Corporation's interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment. Amounts reported in the financial statements of jointly controlled entities have been adjusted where necessary to ensure consistency with the accounting policies of the Corporation.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Foreign currency translation The consolidated financial statements are presented in Canadian dollars (CDN), which is also the functional currency of the parent Corporation. Foreign currency transactions are translated into the functional currency of the respective Corporation, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items at year�end exchange rates are recognised in profit or loss. Non-monetary items measured at historical cost are translated using the exchange rates at the date of the transaction (not retranslated). Non-monetary items measured at fair value are translated using the exchange rates at the date when fair value was determined. In the Corporation's financial statements, all assets, liabilities and transactions of Corporation entities with a functional currency other than the CDN (the Corporation's presentation currency) are translated into CDN upon consolidation. The functional currency of the entities in the Corporation have remained unchanged during the reporting period. On consolidation, assets and liabilities have been translated into CDN at the closing rate at the reporting date. Income and expenses have been translated into the Corporation's presentation currency at the average rate over the reporting period. Exchange differences are charged/credited to other comprehensive income and recognised in the currency translation reserve in equity. On disposal of a foreign operation the cumulative translation differences recognised in equity are reclassified to profit or loss and recognised as part of the gain or loss on disposal. Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets and liabilities of the foreign entity and translated into CDN at the closing rate. Financial instruments Financial assets and financial liabilities are recognised when the Corporation becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or expires. Financial assets and financial liabilities are measured initially at fair value adjusted by transactions costs, and subsequently accounted for at amortized cost, except for financial assets and financial liabilities carried at fair value through profit or loss, which are measured initially at fair value. Financial assets and financial liabilities are measured subsequently as described below.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Financial assets For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition: • loans and receivables • financial assets at fair value through profit or loss • held-to-maturity investments • available-for-sale financial assets. The category determines subsequent measurement and whether any resulting income and expense is recognised in profit or loss or in other comprehensive income. All financial assets except for those at fair value through profit or loss are subject to review for impairment at least at each reporting date. Financial assets are impaired when there is any objective evidence that the recoverable amount of a financial asset or a group of financial assets exceeds its carrying amount. Different criteria to determine impairment are applied for each category of financial assets, which are described below. All income and expenses relating to financial assets that are recognised in profit or loss are presented within 'general and administrative costs', 'investment income' or 'other income''. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Corporation's cash and cash equivalents, trade and most other receivables fall into this category of financial instruments. Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty may default. Receivables that are not considered to be individually impaired are reviewed for impairment in groups, which are determined by reference to the industry and region of a counterparty and other shared credit risk characteristics. The impairment loss estimate is then based on recent historical counterparty default rates for each identified group. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets that are either classified as held for trading or that meet certain conditions and are designated at fair value through profit or loss upon initial recognition. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply. The Corporation's investments fall into this category of financial instrument. Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of derivative financial instruments are determined by reference to active market transactions or using a valuation technique where no active market exists.

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity other than loans and receivables. Investments are classified as held-to-maturity if the Corporation has the intention and ability to hold them until maturity. The Corporation currently does not hold any investments designated into this category. Held-to-maturity investments are measured subsequently at amortised cost using the effective interest method. If there is objective evidence that the investment is impaired, determined by reference to external credit ratings, the financial asset is measured at the present value of estimated future cash flows. Any changes to the carrying amount of the investment, including impairment losses, are recognised in profit or loss. Available-for-sale financial assets Available-for-sale ("AFS") financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. The Corporation does not hold any available-for-sale financial assets. All other available-for-sale financial assets are measured at fair value. Gains and losses are recognised in other comprehensive income and reported within the available-for-sale reserve within equity, except for impairment losses and foreign exchange differences on monetary assets, which are recognised in profit or loss. When the asset is disposed of or is determined to be impaired the cumulative gain or loss recognised in other comprehensive income is reclassified from the equity reserve to profit or loss and presented as a reclassification adjustment within other comprehensive income. Interest calculated using the effective interest method and dividends are recognised in profit or loss within 'finance income'. Reversals of impairment losses are recognised in other comprehensive income, except for financial assets that are debt securities which are recognised in profit or loss only if the reversal can be objectively related to an event occurring after the impairment loss was recognised. Financial liabilities The Corporation's financial liabilities include borrowings, and trade and other payables. Financial liabilities are measured subsequently at amortised cost using the effective interest method, except for financial liabilities held for trading or designated at fair value through profit or loss, that are carried subsequently at fair value with gains or losses recognised in profit or loss. All derivative financial instruments that are not designated and effective as hedging instruments are accounted for at fair value through profit or loss. All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included within 'general and administrative costs'.

44

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Impairment of financial assets Financial assets are assessed for indicators of impairment at each financial position reporting date. Financial assets are impaired where there is objective evidence that, a a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flow of the investment have been impacted. For unlisted shares classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment. For all other financial assets objective evidence of impairment could include: • significant financial difficulty of the issuer or counterparty; or • default of delinquency in interest or principal payments; or • it becoming probable that the borrower will enter bankruptcy or financial re-organization. For certain categories of financial assets, such as amounts receivable and deposits, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of amounts receivable, where the carrying amount is reduced through the use of an allowance account. When an amount receivable is considered uncollectable, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credit against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss. With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decreases can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized. In respect of AFS equity securities, impairment loses previously recognized through profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized directly in equity.

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Exploration and Evaluation Exploration and evaluation assets include the costs of acquiring rights and licenses, costs associated with exploration and evaluation activity (e.g. geological, geophysical studies, exploratory drilling and sampling), and the fair value (at acquisition date) of exploration and evaluation assets acquired in a business combination or asset purchase. The Corporation follows the practice of capitalizing all costs related to the acquisition of, exploration for and evaluation of mineral claims and crediting all revenue received against the cost of related claims. Costs incurred before the Corporation has obtained the legal rights to explore an area are recognized in the statement of comprehensive loss. Capitalized costs, including general and administrative costs, are only allocated to the extent that these costs can be related directly to operational activities in the relevant area of interest where it is considered likely to be recoverable by future exploitation or sale or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine technical feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount. The aggregate costs related to abandoned mineral claims are charged to operations at the time of any abandonment or when it has been determined that there is evidence of a permanent impairment. Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to the that area of interest are first tested for impairment and then reclassified to mining property and development assets. Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.

46

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Equipment Buildings and equipment are stated at historical cost less accumulated depreciation and any provision for impairment in value. Cost includes the purchase price, any directly attributable costs of bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management, and the present value of the estimated costs of decommissioning and restoration, if applicable. Costs relating to major upgrades are included in buildings and equipment if it is probable that future economic benefits associated with the expenditure will flow to the Corporation. Depreciation is recognised on a declining balance basis to write down the cost or valuation less estimated residual value of equipment. The rates generally applicable are: Buildings and structures 4% Furniture and computer equipment 30% Exploration equipment and vehicle 20% Depreciation will be provided over the estimated useful lives of the mill and mining equipment using the unit-of-production method once commercial production begins. There has been no depreciation recorded on the mill and mining assets as the Corporation has not started commercial production. Other equipment is depreciated based on their estimated useful lives. Material residual value estimates and estimates of useful life are updated as required, but at least annually, whether or not the asset is revalued. Gains or losses arising on the disposal of equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss within 'other income' or 'other expenses'. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Impairment At each financial position reporting date the carrying amounts of the Corporation's assets are reviewed to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair values less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm's length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre�tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less that its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in the profit or loss for the period. For the purposes of impairment testing, exploration and evaluation assets are allocated to cash�generating units to which the exploration activity relates. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs. When an impairment loss subsequently reverses, the carrying amount of the asset (or cash�generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash�generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss. Share capital Share capital represents the fair value of consideration received. Share-based payment transactions The Corporation operates equity-settled share-based remuneration plans for its employees, directors and consultants. None of the Corporation's plans feature any options for a cash settlement. All goods and services received in exchange for the grant of any share-based payment are measured at their fair values. Where employees are rewarded using share-based payments, the fair values of employees' services are determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date. All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to 'reserves'. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting. Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued are allocated to share capital with any excess being recorded as share premium. Income taxes Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity.

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit or other current tax activities, which differs from profit or loss in the financial statements. Calculation of current tax expense is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with investments in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Corporation and it is probable that reversal will not occur in the foreseeable future. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realization, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised against future taxable income. To the extent that the Corporation does not consider it probable that a future tax asset will be recovered, it provides a valuation allowance against the excess. Deferred tax assets and liabilities are offset only when the Corporation has a right and intention to offset current tax assets and liabilities from the same taxation authority. Changes in deferred tax assets or liabilities are recognised as a component of taxable income or expense in profit or loss, except where they relate to items that are recognised in other comprehensive income or directly in equity, in which case the related deferred tax is also recognised in other comprehensive income or equity, respectively.

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Provisions Provisions are recognized when the Corporation or its subsidiaries have a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost. Contingent liabilities are not recognized in the financial statements, if not estimable and probable, and are disclosed in notes to the financial information unless their occurrence is remote. Contingent assets are not recognized in the financial statements, but are disclosed in the notes if their recovery is deemed probable. Environmental rehabilitation Provisions for environmental rehabilitation are made in respect of the estimated future costs of closure and restoration and for environmental rehabilitation costs (which include the dismantling and demolition of infrastructure, removal of residual materials and remediation of disturbed areas) in the accounting period when the related environmental disturbance occurs. The provision is discounted using a pre-tax rate, and the unwinding of the discount is included in finance costs. At the time of establishing the provision, a corresponding asset is capitalized and is depreciated over future production from the mining property to which it relates. The provision is reviewed on an annual basis for changes in cost estimates, discount rates and operating lives. Changes to estimated future costs are recognized in the statement of financial position by adjusting the rehabilitation asset and liability. If, for mature mines, the revised mine assets net of rehabilitation provisions exceeds the carrying value, that portion of the increase is charged directly to expenses. For closed sites, changes to estimated costs are recognized immediately in the profit and loss. Loss per share The Corporation presents basic and diluted loss per share data for its common shares, calculated by dividing the loss attributable to common shareholders of the Corporation by the weighted average number of common shares outstanding during the period. Diluted loss per share is determined by adjusting the profit or loss attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all dilutive potential common shares. Segment reporting An operating segment is a component of an entity (i) that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), (ii) whose operating results are regularly reviewed by the entity's management, and (iii) for which discrete financial information is available. The Corporation's operating segments are its seperately identifiable exploration and evaluation properties. The Corporation also discloses information on a geographic basis.

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Significant accounting judgements and estimates The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. The consolidated financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods. Significant assumptions about the future and other sources of estimation uncertainty that management has made at the balance sheet date that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following: i. the recoverability of amounts receivable and deposits which are included in the consolidated statement of financial position; ii. the estimated useful lives of property, plant and equipment which are included in the consolidated statement of financial position and the related depreciation included in the consolidated statement of comprehensive loss; iii. the inputs used in accounting for share purchase option expense in the consolidated statement of comprehensive loss; and iv. the provision for income taxes which is included in the consolidated statements of comprehensive loss and composition of deferred income tax assets and liabilities included in the consolidated statement of financial position. v. the provision for environmental rehabilitation which is included in the consolidated statement of financial position. Interest Interest income and expenses are reported on an accrual basis using the effective interest method. Operating expenses Operating expenses are recognised in profit or loss upon utilization of the service or at the date of their origin. Flow through shares Under Canadian income tax legislation, a company is permitted to issue flow through shares whereby the company agrees to incur qualifying expenditures and renounce the related income tax deductions to the investors. The Corporation allocates the proceeds from the issuance of these shares between the offering of shares and the sale of tax benefits. The allocation is made based on the difference between the quoted price of the shares and the amount the investor pays for the shares. A deferred flow through premium liability is recognized for the difference. The liability is reversed when the expenditures are made and is recorded in the statement of loss and comprehensive loss. The spending also gives rise to a deferred tax timing difference between the carrying value and tax value of the qualifying expenditure.

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

4. RECENT ACCOUNTING PRONOUNCEMENTS The Corporation has reviewed new and revised accounting pronouncements that have been issued but are not yet effective. The Corporation has not yet early adopted any of these standards and is currently evaluating the impact, if any, that these standards might have on its consolidated financial statements. a) Accounting Standards Issued and Effective January 1, 2012 IAS 12, Income Taxes (Amended), introduces an exception to the general measurement requirements of IAS 12 in respect of investment properties measured at fair value. IFRS 7, Financial Instruments: Disclosures (Amended), requires additional disclosures on transferred financial assets. b) Accounting Standards Issued and Effective January 1, 2013 IFRS 9, Financial Instruments, replaces the current standard IAS 39, Financial Instruments: Recognition and Measurement, replacing current classification and measurement criteria for financial assets and liabilities with only two classification catego-ries: amortized cost and fair value. IFRS 10, Consolidated Financial Statements, establishes principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities. This standard:

- Requires a parent entity (an entity that controls one or more other entities) to present consolidated financial statements;

- Defines the principle of control, and establishes control as the basis for consolidated; - Sets out how to apply the principle of control to identify whether an investor controls an investee and therefore must consolidate the investee; and - Sets out the accounting requirements for the preparation of consolidated financial statements IFRS 10 supersedes IAS 27 and SIC-12, Consolidation - Special Purpose Entities. IFRS 11, Joint Arrangements, establishes the core principle that a party to a joint arrangement determines the type of joint arrangements in which it is involved by assessing its rights and obligations and accounts for those rights and obligations in accordance with the type of joint arrangement. IFRS 12, Disclosure of Involvement with Other Entities, requires the disclosure of information that enables users of consolidated financial statements to evaluate the nature of and risks associated with, its interests in other entities and the effects of those interests on its financial position, financial performance and cash flows. IFRS 13, Fair Value Measurement, defines fair value, sets out in a single IFRS a framework for measuring fair value and requires disclosures about fair value measurements. IFRS 13 applies when another IFRS requires or permits fair value measurements or disclosures about fair value measurements (and measurements, such as fair value less costs to sell, based on fair value or disclosures about those measurements), except for the following: - Share-based payment transactions within the scope of IFRS 2, Share�based Payment; - Leasing transactions within the scope of IAS 17, Leases; - Measurements that have some similarities to fair value but that are not fair value, such as net realizable value in IAS2, Inventories, or value in use in IAS 36, Impairment Assets. IAS 27, Separated Financial Statements, has the objective of setting standards to be applied in accounting for investments in subsidiaries, jointly ventures, and associates an entity elects, or is required by local regulations, to present separate (non-consolidated) financial statements. IAS 28, Investments in Associates and Joint Ventures, prescribes the accounting for investments in associates and sets out the requirements for the application of the equity method when accounting for investments in

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

associates and joint ventures. IAS 28 applies to all entities that are investors with joint control of, or significant influence over, an investee (associated or joint venture). IFRIC Interpretation 20, Stripping Costs in the Production Phase of a Surface Mine, summarizes the method of accounting for waste removal costs incurred as a result of surface mining activity during the production phase of a mine. 5. RESTRICTED CASH AND CASH EQUIVALENTS (a) The Corporation has a $633,089 standby letter of credit outstanding in favour of the Ontario Ministry of Northern Development and Mines relating reclamation obligations of the Transcanada property in Ontario. Security for the standby letter of credit is held with Royal Bank of Canada. (b) The Corporation's wholly owned subsidiary, Premier Gold Mines USA Inc., has a $250,385USD ($254,246 CDN) standby letter of credit outstanding in favour of the State of Nevada Department of Conservation and Natural Resources Division of Environmental Protection relating to reclamation obligations associated with the Blue Sage Property in Nevada. Security for the standby letter of credit is held with Wells Fargo Bank N.A. (c) The Corporation's wholly owned subsidiary, Roxmark Mines Ltd. ("Roxmark"),has a $175,000 standby letter of credit outstanding in favour of the Ministry of Northern Development, Mines and Forestry regarding closure costs for the Northern Empire Mine Site. Security for the standby letter of credit is held with the Toronto Dominion Bank (see Note 22 - Subsequent events). 6. FINANCIAL ASSURANCE IN TRUST The Goldstone acquisition included a 200 ton-per-day milling plant on the Northern Empire property as part of the assets acquired. As part of the transaction, the Corporation's subsidiary, Roxmark, is committed to pay a levy of $5.00 per ton on processed mill feed up to a maximum combined sum of $600,000, to provide for possible reclamation costs associated with the property. A total of $60,005 has been paid to date towards the $450,000 cash component. As of December 31, 2011, the Company had $34,076 in Financial Assurance in Trust, which represents previous amounts paid to the Province of Ontario.

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

7. INVESTMENTS 2011 2010 Market Cost Market Cost $ $ $ $ Equities Canadian equities (*) 589,600 1,048,660 1,717,565 800,000 Other Financial Assets Warrants (**) 109,500 689,900 491,250 412,500 699,100 1,738,560 2,208,815 1,212,500 (*) Canadian equities consist of common shares held in a Canadian publicly traded corporation. Fair values of equities is determined as the bid price at December 31, 2011. (**) On December 8, 2010 Premier participated in a private placement with Ashburton Ventures Inc. Premier invested $600,000 in Ashburton through the purchase of 7,500,000 units at $0.08. Each unit consisted of one common share in the capital of the Ashburton and one-half a common share purchase warrant. Each full warrant entitles Premier to purchase one additional share at a price of $0.13 cents per share for a period of 18 months from the date of issuance. On the date of grant the warrants had an estimated fair value of $412,500, which was based on an expected volatility of 119%, risk free rate of 1.2866%, no dividends to be paid, and remaining life of 18 months. These warrants were revalued to a fair value of $52,500 on December 31, 2011. The fair value on December 31, 2011 was based on an expected volatility of 201%, risk free rate of 0.87%, no dividends to be paid, and remaining life of 174 days. On July 15, 2011 Premier participated in a private placement with Golden Dory Inc. Premier invested $494,000 in Golden Dory through the purchase of 3,800,000 units at $0.13. Each unit consisted of one common share in the capital of the Golden Dory and one common share purchase warrant. Each full warrant entitles Premier to purchase one additional share at a price of $0.20 cents per share for a period of 18 months from the date of issuance. On the date of grant the warrants had an estimated fair value of $277,400, which was based on an expected volatility of 123%, risk free rate of 1.16%, no dividends to be paid, and remaining life of 18 months. These warrants were revalued to a fair value of $57,000 on December 31, 2011. The fair value on December 31, 2011 was based on an expected volatility of 129%, risk free rate of 0.91%, no dividends to be paid, and remaining life of 380 days. 8. SEGMENTED INFORMATION The Corporation’s significant segments are represented by its separately identifiable exploration and evaluation properties (see Note 12 for disclosure by property). The Corporation also operates in three distinct geographic areas. The Canadian operations, which are located in Ontario, are managed from the Corporation’s head office in Thunder Bay. The U.S. operations are managed from an office in Delaware. The Mexican operations are managed from an office in Mexico City.

NON-CURRENT ASSETS LOSS AND COMPREHENSIVE LOSS

Country / As at Year ended Region December 31, 2011 December 31, 2011 December 31, 2010

$ $ $

Canada 222,584,982 (16,534,296) (10,454,122)

U.S.A. 50,012,128 (81,520) (486,371)

Mexico 3,353,110 (64,903) (23,170)

275,950,220 (16,680,719) (10,963,663)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

9. LONG-TERM DEBT Following completion of the acquisition of Saddle Gold Inc., Premier holds all of the assets and liabilities of Saddle, including outstanding debt in the principal amount of US$9,400,000 pursuant to a 5% promissory note issued by Saddle, through its wholly owned Delaware subsidiary, Premier Gold Mines USA Inc. The promissory note is secured against, among other things, the Saddle property and the Emigrant Springs Royalty, and is payable on a declining balance from August 5, 2010, with the last principal and accrued interest payment due on August 5, 2016. The following table outlines the future principal payments required over the life of the loan:

Following completion of the acquisition of South Africa Platinum Inc., Premier holds all of the assets and liabilities of SAP, including outstanding debt in the principal amount of US$350,000 pursuant to a non�interest bearing promissory note issued by various parties, through the wholly owned Delaware subsidiary, Premier Gold Mines Nevada Inc. The promissory note is secured by a deed of trust on the Blue Sage property. The value of the promissory note of US$350,000 (the present value of the promissory note, using a discount rate of 15% is US$208,021) will be repaid over the next seven years. The value of the debt is being accreted to the face value of the promissory note at its maturity date, with the charge to the statement of comprehensive loss as a form of interest expense over the term of the note.

Anniversary Date Principal Payment ($USD)

Principal Payment ($CDN)

Interest Payment ($CDN)

August 5, 2012 1,600,000 1,627,174 477,982

August 5, 2013 1,800,000 1,830,571 396,624

August 5, 2014 2,000,000 2,033,967 305,095

August 5, 2015 2,200,000 2,237,364 203,397

August 5, 2016 1,800,000 1,830,570 91,529

Total 9,400,000 9,559,646 1,474,626

Anniversary Date Total payment ($USD)

Total payment ($CDN)

Discounted Princi-pal ($CDN)

Accredited interest ($CDN)

July 19, 2012 50,000 50,849 19,115 31,734

July 19, 2013 50,000 50,849 21,983 28,866

July 19, 2014 50,000 50,849 25,007 25,842

July 19, 2015 50,000 50,849 29,073 21,776

July 19, 2016 50,000 50,849 33,433 17,416

Thereafter 100,000 101,698 82,943 18,755

Total 350,000 355,943 211,554 141,978

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

10. CAPITAL AND RESERVES i. Authorized The Corporation is authorized to issue an unlimited number of common shares. ii. Details of share issuances 2011 Private Placement On October 31, 2011 the Corporation completed a bought deal public offering of 2,000,000 common shares (the "Common Shares") at a price of $5.50 per Common Share and 3,450,000 flow-through common shares (the "Flow-through Shares") at a price of $6.50 per Flow-through Share for aggregate net proceeds of approximately $31.65 million. Shares issued for mineral property On April 4, 2011 the Corporation issued 150,000 common shares, valued at $1,188,000, for the acquisition of the net smelter royalty held on the PQ North Property, Ontario. On June 17, 2011 the Corporation issued 350,000 common shares, valued at $1,806,000, for the acquisition of South Africa Platinum Ltd. On August 16, 2011 the Corporation issued 16,814,553 common shares, valued at $108,958,303 for the acquisition of Goldstone Resources Inc. Shares issued as compensation On October 19, 2011 the Board approved the issuance of 25,000 common shares to an employees as compensation, accordingly, $127,250 was included in stock based compensation during the period. On November 9, 2011 the Board approved the issuance of 10,000 common shares to an employees as compensation, accordingly, $55,700 was included in stock based compensation during the period 2010 Private Placement #1 On February 2, 2010 the Corporation issued 8,000,000 common shares, on a "bought deal" basis, at a price of $4.00 per common share for gross proceeds of $32,000,000. In consideration of the agents' services in connection with the offering, the agents were paid an aggregate cash fee equal to 5 per cent of the gross proceeds raised in the offering. Private Placement #2 On July 15, 2010 the Corporation completed a private placement of 3,000,000 flow-through common shares at a price of $6.00 per Flow-Through Common Share for aggregate gross proceeds of $18,000,000. Private Placement #3 On December 2, 2010 the Corporation completed a private placement of 660,000 flow-through common shares at a price of $7.50 per Flow-Through Common Share for aggregate gross proceeds of $4,950,000 Shares issued for mineral property

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

On April 4, 2010 the Corporation issued 20,000 common shares, valued at $84,000, to Newcastle Resources Ltd. as an early termination penalty for ending the agreement on the Lennie property. On October 28, 2010 the Corporation issued 25,000 shares, valued at $136,500, to Centaur Mining Exploration Ltd. in connection with the definitive acquisition of the Raingold Property. On October 28, 2010 the Corporation issued 50,000 shares, valued at $273,000, to Dollard Mines Ltd. in connection with the definitive option and acquisition agreement of the Woco property. Shares issued as compensation On March 24, 2010 the Board approved the issuance of 290,000 common shares to various employees as compensation, accordingly, $1,180,301 was included in stock based compensation during the period. iii. Warrants The following table reflects the continuity of warrants: 2011 December 31, Exercise Opening Warrants Warrants Warrants 2011 Closing Expiry Date Price Balance Issued Exercised Expired Balance $ # # # # # April 5, 2014 [note 12] 6.62 - 50,000 - - 50,000 December 31, 2011 [note 2] 6.56 - 661,332 (16,000) (645,332) - - 711,332 (16,000) (645,332) 50,000 The Corporation applies the fair value method of accounting for all warrants issued. As such, a warrant valuation of $765,045 was recorded for the 711,332 warrants issued during the period (2010 - there were no warrants issued during the period). For purposes of the warrants issued, the fair value of each warrant was estimated on the date of issuance using the Black-Scholes option pricing model, with the following assumptions: 2011 Risk-free interest rate 1.07% - 1.91% Annualized volatility 57.28% - 58.20% Expected dividend yield nil Expected option life 138 days - 3 years

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

iv. Share purchase option compensation plan The Corporation has a share incentive plan (the "Plan") which is restricted to directors, officers, key employees and consultants of the Corporation. The number of common shares subject to options granted under the Plan (and under all oth-er management options and employee stock purchase plans) is limited to 10% in the aggregate and 5% with respect to any one optionee of the number of issued and outstanding common shares of the Corporation at the date of the grant of the op-tion. Options issued under the Plan may be exercised during a period determined by the Board of Directors which cannot exceed ten years. The following table reflects the stock options outstanding as at December 31, 2011: 2011 2011 Exercise Opening Expired/ Closing Expiry Date Price Balance Granted Exercised Cancelled Balance $ # # # # # September 15, 2011 1.00 240,000 - (240,000) - - May 17, 2012 5.39 - 12,801 - - 12,801 June 8, 2012 6.00 - 10,667 - - 10,667 August 8, 2012 1.95 295,000 - - - 295,000 March 10, 2013 4.00 100,000 - - - 100,000 April 25, 2013 2.00 445,000 - (25,000) - 420,000 July 24, 2013 6.00 - 53,338 - - 53,338 July 29, 2013 2.59 37,500 - - - 37,500 October 15, 2013 2.00 10,000 - - - 10,000 November 7, 2013 2.34 - 7,413 (4,267) - 3,146 December 24, 2013 1.50 125,750 - - - 125,750 January 6, 2014 2.34 - 34,136 - - 34,136 April 13, 2014 4.20 2,935,000 - (165,000) - 2,770,000 May 27, 2014 2.50 67,640 - (10,000) - 57,640 June 17, 2014 2.66 1,791,500 - (45,000) - 1,746,500 November 21, 2014 4.95 - 200,000 - - 200,000 September 17, 2015 3.44 - 48,003 - - 48,003 October 5, 2015 3.69 - 22,401 - - 22,401 October 16, 2015 4.25 - 20,001 - - 20,001 December 8, 2015 7.45 60,000 - - - 60,000 June 24, 2016 5.25 - 16,001 - - 16,001 July 28, 2016 6.01 - 1,327,000 - - 1,327,000 August 10, 2016 6.05 - 630,000 - - 630,000 August 25, 2016 6.20 - 615,000 - - 615,000 October 19, 2016 5.27 - 325,000 - - 325,000 December 20, 2016 4.43 - 60,000 - - 60,000 6,107,390 3,381,761 (489,267) - 8,999,884 Weighted average exercise price 3.29 5.78 2.33 - 4.28

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

The Corporation applies the fair value method of accounting for all stock based compensation awards and accordingly, $7,503,142 was recorded as compensation for the 2,266,761 options that vested during the period (2010 - $8,411,220 was recorded as compensation for the 3,065,000 stock options that were granted during the period and 290,000 shares awarded as compensation during the period). As of December 31, 2011 there are 1,115,000 unvested stock options. For purposes of the options granted, the fair value of each option was estimated on the date of grant using the Black-Scholes option pricing model, with the following assumptions: 2011 2010 Risk-free interest rate 1.05% - 2.35% 0.73% - 2.92% Annualized volatility 47% - 70% 62% - 66% Expected dividend yield Nil Nil Expected option life 276 days - 5 years 1 - 5 years v. Treasury shares Roxmark Mines Ltd., a wholly owned subsidiary of Premier, owns 400,000 shares of the Corporation. 11. LOSS PER SHARE Both the basic and diluted earnings per share have been calculated using the loss attributable to shareholders of the Corporation as the numerator. No adjustments to loss were necessary in 2011 or 2010. 2011 2010 $ $ Numerator: Net loss (16,680,719) (10,963,663) Denominator: Weighted average number of common shares 111,926,339 97,273,127 Basic and diluted loss per share (0.15) (0.11)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

12. EXPLORATION AND EVALUATION ASSETS Accumulated costs with respect to the Corporation's interest in mineral properties owned, leased or under option, consisted of the following: 2011 2010

The amounts shown represent costs incurred to date, and do not necessarily represent present or future values as these are entirely dependent upon the economic recovery of future ore reserves. A summary of current property interests is as follows: Rahill-Bonanza Project The Bonanza property, located in Dome township within the Red Lake mining district of Ontario, is comprised of 12 patented mining claims; 6 of which were formerly known as the Follansbee property. The property is subject to a 1.7% net smelter return (NSR) in favour of Pure Gold Minerals Inc. ("Pure Gold"), a 0.3% NSR in favour of Eugenic Corp ("Eugenic") which relate to the 6 Bonanza claims, and a 2% NSR in favour of Interquest Incorporated relating to the 6 Follansbee claims. The Corporation has retained a right to purchase a portion, namely a 1% NSR for $1,000,000 and a first right of refusal to purchase the remaining 0.7% NSR from Pure Gold. The Corporation has also retained a first right of refusal to purchase Eugenic's 0.3% NSR. On March 1, 2007 the Corporation acquired the Meunier Claim in Red Lake, Ontario from an unrelated party. As consideration, the Corporation paid $50,000 on execution and issued 50,000 common shares, valued at the trading price of the Corporation's shares at the time the agreement was entered into. An additional $50,000 cash and 50,000 common shares was paid on the 18th month anniversary of the agreement. Costs associated with this acquisition are included within the Rahill-Bonanza Project.

Deferred Exploration

Expenditures

Option Payments

and acquisition

costs

Option Payments Received

Mineral Property

Write- downs

Total Total

$ $ $ $ $ $

Rahill-Bonanza, Ontario

10,845,577 19,267,617 (440,000) - 29,673,194 27,708,841

East Bay, Ontario

770,105 6,225,083 - - 6,995,188 6,578,078

PQ North, Ontario

9,693,604 1,589,473 - - 11,283,077 4,827,666

Trans-Canada, Ontario

78,972,402 85,827,272 - - 164,799,674 39,356,648

Lennie, Ontario

- - -

Redgold, Ontario

1,474,658 909,500 - (1,576,662) 807,496 1,488,815

Saddle, Nevada

11,520,883 38,243,181 - - 49,764,064 38,927,920

Other areas 2,900,861 3,063,944 - - 5,964,805 3,606,190

116,178,090 155,126,070 (440,000) (1,576,662) 269,287,498 122,494,158

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

On May 9, 2007 the Corporation signed an Asset Exchange Agreement (the "Agreement") with Red Lake Gold Mines, an affiliate of Goldcorp Inc. Under the terms of the Agreement, Red Lake Gold Mines agreed to transfer to Premier an undivided 50% interest in and to certain mining claims in the Red Lake District known as the Rahill-Wilmar and Kostynuk Properties, and Premier agreed to transfer to the Partnership an undivided 50% interest in and to certain mining claims in the Red Lake District known as the Bonanza and Marathon Properties. On May 29, 2007 the Corporation signed the definitive Joint Venture Agreement. Pursuant to the agreement, Premier funded the initial $1,000,000 in exploration on the project commencing December 1, 2006; the date the original letter of intent was signed. Exploration expenditures in excess of the initial $1,000,000 have been funded on a 50:50 basis. Premier was the operator during the initial period of $5,000,000 in exploration. On January 18, 2008, Goldcorp exercised its option pursuant to the joint venture agreement to increase its interest in the joint venture by 1% to 51% by paying Premier $440,000. By doing this, Goldcorp took over as primary operator of the joint venture. The Corporation now holds a 49% interest in the property and will continue to participate in the ongoing exploration program. East Bay Project The East Bay property, a joint venture with Goldcorp Canada Ltd. ("Goldcorp"), is comprised of 68 unpatented mineral claims located in Bateman township within the Red Lake mining district of Ontario. Pursuant to the joint venture agreement, Goldcorp increased its proportionate interest in the joint venture from 50% to 65% by completing, at its own expense, a feasibility study during the year ended December 31, 2007. PQ North The PQ North Project is located in the Musselwhite District of Northwestern Ontario, some 300 kilometres northeast of Red Lake, proximal to Goldcorp's Musselwhite Mine. The property is within 10 kilometres of the Musselwhite Mine surface infrastructure and is accessed by road in winter and by road and lake in summer. Premier holds the right to a 100% interest in the PQ North Property. On April 4, 2011 the Corporation exercised its option to acquire the 2% Net Smelter Returns Royalty from the vendor. As compensation, the Corporation paid $100,000 cash, issued 150,000 shares, and 50,000 common share purchase warrants exercisable at $6.62 with a term to expiry of three years. Trans-Canada Project The Trans-Canada project is located in the Greenstone district of Northwestern Ontario, some 300 kilometers east of Thunder Bay Ontario. The Trans-Canada project has a cumulative strike�length of more than 50 kilometres and is in close proximity to Geraldton and Beardmore Ontario. The project which is host to a permitted mill is adjacent to the Trans-Canada Highway, Trans-Canada Pipeline and hydro electric transmission lines. The project is comprised of Premier’s Hardrock property and the recently acquired Key Lake, Brookbank, and Cherbourg- Fox Ear properties. Details of the component properties are as follows: Hardrock The Hardrock property was acquired from Lac Properties Inc. ("Lac"), a wholly-owned subsidiary of Barrick Gold Corporation in 2008. The property which is comprised of the mining claims commonly known as Geraldton, Ozone Creek and Eva Summers is subject to a 3.0% net smelter return royalty (the "NSR Royalty") on production from the property.

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Key Lake The Corporation retains a 100% interest in the Key Lake property located in Lindsley Township near Geraldton, Ontario. The property is contiguous to the Hardrock property and is subject to a varying NSR in the range of 1.0% to 2.25% under certain conditions. Brookbank The Corporation has a 100% interest in the Brookbank property subject to a 1% NSR in favour of Metalore Resources Limited on certain mineral claims. Cherbourg-Fox Ear The Corporation has a 74% interest in the Cherbourg-Fox Ear property. The remaining 26% interest which is held by Metalore can be acquired by the Corporation at the incremental rate of 1% for each $20,000 in exploration expenditures incurred by the Corporation for which Metalore does not remit its proportionate share of the expenditures. The Corporation and Metalore are currently in discussion regarding adjustments to the relative ownership percentages in relation to exploration expenditures incurred in 2009 and 2010. The Corporation has a 79% interest in certain Staked Claims (the "Staked Claim Option"). The remaining 21% interest which is held by Metalore can be acquired by the Corporation at the incremental rate of 1% for each $20,000 in exploration expenditures incurred by the Corporation for which Metalore does not remit its proportionate share of the expenditures. The Corporation and Metalore are currently in discussion regarding adjustments to the relative ownership percentages in relation to exploration expenditures incurred in 2009 and 2010. The Corporation also has a right of first refusal with respect to the mineral rights for six leased claims in Walters Township owned by Metalore. Other Properties Northern Empire West Extension The Corporation has a 100% interest the Northern Empire West Extension property subject to a 3% NSR for which the Corporation has retained the right to purchase up to 2% of NSR under certain conditions. Northern Empire The Corporation has a 100% interest in the Northern Empire property located in McComber and Summers Townships in the Thunder Bay Mining District. The property is contiguous and located east to the Northern Empire West Extension and is subject to a 2.75% NSR. Leitch-Sand River The Corporation has a 100% interest in the Leitch property located near Beardmore, Ontario. The property is subject to a varying NSR in the range of 1% - 2% on certain claims under certain conditions, for which the Corporation has retained the right to purchase up to one half of the ranging NSR’s under prescribed conditions.

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Redgold Project In October 2010 the Corporation entered into a Letter of Intent and Option and Purchase Agreements to acquire interests in three adjoining properties located in the Red Lake Mining Division, in the Province of Ontario. The combined property package is called the Redgold Project. The Redgold Project is located 80 km east of the Red Lake Gold Mines complex, within the Birch-Uchi greenstone belt. A Letter of Intent with Mainstream Minerals (TSX.V:MJO) provided Premier the opportunity to earn up to a 70% interest in the Bobjo Prospect. A definitive option agreement was signed February 11, 2011. Premier can earn its interest by making certain cash and share payments to Mainstream and performing exploration on the Property. During the year the Corporation decided to no longer pursue its interest in the Bobjo property [see Property Dispositions and Agreements]. An Option and Purchase Agreement was signed on October 15, 2010 providing Premier the option to acquire a 100% interest in the Woco Prospect from Dollard Mines Ltd., a private Corporation, by paying to Dollard $250,000 cash on signing and issuing to Dollard 150,000 shares of Premier over a two year period (50,000 shares on signing and 50,000 shares each on the 12 and 24 month anniversary dates). The Property is subject to a 2% Net Smelter Royalty payable to Dollard, plus an underlying 1% NSR. During the year the Corporation decided to no longer pursue its interest in the Woco Lake property [see Property Dispositions and Agreements]. A Purchase agreement was signed on October 21, 2010 providing for Premier to acquire 100% of the Raingold Property, comprised of 6 Patented mining claims contiguous with the other two properties that make up the Redgold Project, by paying Centaur Mining Exploration Ltd. (the beneficial owner of the property) $200,000 cash on signing and issuing 25,000 shares on signing. Saddle Property, Nevada On June 14, 2010 the Corporation acquired Saddle Gold Inc. ("Saddle"). Saddle owns, among other things, the mineral rights in respect of a majority portion of the Saddle Gold Deposit (the "Saddle Property"). The Saddle Property is located in the heart of the Carlin Trend in Elko, County, Nevada. Blue Sage Property, Nevada On June 16, 2011 the Corporation acquired South Africa Platinum Ltd. ("SAP"). SAP owns, among other things, the Blue Sage mineral claim rights within the Rain Sub-district of the Carlin Trend, in Elko County, Nevada. The Blue Sage mineral claim rights are subject to a one percent (1.0%) net smelter return royalty. Other areas Other mineral interests held by the Corporation include the Santa Teresa Mineral Concession and Quasaro located in Mexico. The Corporation holds a 100% interest in the Faymar property located in Deloro Township in the Timmins Gold Camp. The claims are subject to a 1% NSR. The Corporation holds a 100% interest in the Bartec property located in Barraute township, in the Val d’Or district of Quebec. The Corporation retains a 100% interest in the Nortoba-Tyson property located in Dorothea Township in the Thunder Bay Mining District.

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Property dispositions and agreements 2011 On May 16, 2011, the Corporation decided to no longer pursue its option to acquire a 100% interest in the Bobjo property located in Red Lake, Ontario, and as such, $655,822 has been charged against earnings in the period. On November 1, 2011 the Corporation signed a Letter of Intent ("LOI") with LKA International Inc. ("LKA") for Premier to acquire up to a 60% interest in the Golden Wonder property ("Property") located in Colorado, USA. To earn an initial 51% interest Premier will expend a minimum of US$8.0 million on exploration, and pay to LKA US$150,000 in cash and the equivalent of CDN$300,000 in cash or shares of Premier over a period of 3 years. Of the US$8.0 million in exploration expenditures, LKA will fund the initial US$2.0 million drill program to be operated by Premier, 51% of which will be refunded by Premier as a part of the initial earn-in. Premier can earn an additional 9% interest in the Joint Venture by paying an additional CDN$100,000 in cash and/or shares to LKA, and funding an additional US$7 million for exploration, including the completion of a feasibility study on the Property prior to the sixth anniversary date. On November 1, 2011 the Corporation signed a Letter of Intent ("LOI") with Ashburton Ventures Inc. ("Ashburton") to establish a 50/50 joint venture to explore and develop Premier's Golden Edge Project ("Project") located in Humboldt County, Nevada, USA. In consideration for Ashburton acquiring a 50% interest in the Project, Ashburton will need to spend $3.0 million on exploration expenditures, and pay $110,000 cash to Premier over 3 years. On November 23, 2011, the Corporation decided to no longer pursue its option to acquire a 100% interest in the Woco Lake property located in Red Lake, Ontario, and as such, $920,841 has been charged against earnings in the period. 2010 As at March 31, 2010, the Corporation decided to no longer pursue its option to acquire a 100% interest in the Lennie project, and as such $1,684,646 was charged against earnings in the period. As well, 20,000 common shares valued at $84,000 were insured to Newcastle Resources Ltd. as an early termination penalty for ending the agreement. 13. MINERAL PROPERTY HELD FOR SALE Newman Madsen Mineral property held for sale includes the Newman Madsen Property with a book value of $13,064 [2010 - $102,064]. Subsequent to year end the sale of the property was completed (see Subsequent Events).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

14. PROPERTY, PLANT AND EQUIPMENT Buildings Exploration Mill and Office Total equipment mining equipment equipment Cost Balance, January 1, 2010 - - - 102,528 102,528 Assets acquired - - - - - Assets disposed - - - - - Balance, December 31, 2010 - - - 102,528 102,528 Assets acquired 168,194 107,922 2,509,817 85,554 2,871,487 Provision for rehabilitation - - 2,051,858 - 2,051,858 Balance, December 31, 2011 168,194 107,922 4,561,675 188,082 5,025,873 Accumulated depreciation Balance, January 1, 2010 - - - 58,050 58,050 Depreciation for the year - - - 11,917 11,917 Balance, December 31, 2010 - - - 69,967 69,967 Depreciation for the period 1,659 4,231 - 11,192 17,082 Assets acquired 7,218 24,187 - 53,272 84,677 Balance, December 31, 2011 8,877 28,418 - 134,431 171,726 Carrying amounts January 01, 2010 - - - 44,478 44,478 December 31, 2010 - - - 32,561 32,561 December 31, 2011 159,317 79,504 4,561,675 53,651 4,854,147

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

15. INCOME TAXES (a) The major components of income tax benefit are as follows: 2011 2010 $ $ Origination and reversal of temporary differences (518,938) (906,630) Deferred tax liability incurred on renouncement expenses 7,147,263 5,113,285 Reversal of deferred flow through premium (3,818,885) (4,354,360) Recognition of previously unrecognized tax assets (672,062) - Other (462,384) - 1,674,994 (147,705) (b) The Corporation's income tax benefit differs from the amount computed by applying the combined federal and provincial income tax rates to loss before income taxes as a result of the following: 2011 2010 $ $ Loss for the year (15,170,360) (11,043,182) Statutory rates (i) 28.54% 31.00 Income tax recovery computed at statutory rates (4,329,990) 3,423,386) Increase in deferred tax assets not recognized 1,421,269 444,286 Non�deductible items 2,075,012 2,615,417 Effect of change in tax rates 537,926 (121,687) Reversal of future tax liability on investments (125,154) - Unrealized gain/loss on sale of marketable securities (98,000) (125,154) Impact of attributes renounced to shareholders (flow –through shares) 7,147,263 5,113,285 Impact of flow-through share premium (3,818,885) (4,354,360) Recognition of previously unrealized deferred tax assets from renouncement of flow-through shares (672,062) - Other (462,385) (296,106) 1,674,994 (147,705) (i)The Corporation operates in multiple industries and jurisdictions, and the related income is subject to varying rates of taxation. The combined Canadian federal and provincial tax rate reflects the tax rates in effect in Ontario, Canada for each applicable tax year. The combined rate declined in 2011 to reflect (1) a 1.5% decrease in the federal tax rate from 18% to 16.5%, effective January 1, 2011 and (2) a 0.5% decrease in the Ontario tax rate from 12% to 11.5%, effective July 1, 2011. As well, the company operates in Nevada, USA and reflects a 35% tax rate for each applicable tax year.

66

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

(c) The deferred income tax assets (liabilities) reported on the balance sheet are comprised of temporary differences as presented below: 31-Dec-11 31-Dec-10 01-Jan-10 $ $ $ Deferred income tax assets Non capital losses - - 1,062,352 Other - - 276 Gross deferred tax assets - - 1,062,628 Deferred tax assets set off against deferred tax liabilities - - (1,062,628) - - - Deferred income tax liabilities Exploration and evaluation (21,525,288) (14,566,035) (11,288,635) Investments - (125,154) - Gross deferred tax liabilities (21,525,288) (14,691,189) (11,288,635) Deferred tax assets set off against deferred tax liabilities - - 1,062,628 Deferred tax liabilities per balance sheet (21,525,288) (14,691,189) (10,226,007) Balance at the beginning of the year (14,691,188) (10,226,007) - Recognized in P & L (1,674,994) 147,705 - Deferred premium on flow�through shares (3,983,304) (4,354,360) - Deferred tax liability not subject to initial recognition exemption (1,175,802) - - Other - (258,526) - Balance at the end of the year (21,525,288) (14,691,188) (10,226,007)

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

(d) Deferred tax assets not recognized Management believes that it is not probable that sufficient taxable profits will be available in future years to allow the benefit of the following deferred tax assets to be utilized: 31-Dec-11 31-Dec-10 01-Jan-10 $ $ $ Non-capital losses 6,362,040 3,188,027 741,284 Common share issue costs 1,134,783 939,244 475,227 Exploration and evaluation - 3,575 - Other (184,306) - 119,828 Deferred tax assets not recognized 7,312,517 4,130,846 1,336,339 Unused operating tax losses Canada 23,368,433 12,035,486 2,965,136 U.S.A 1,434,412 486,161 - Mexico 63,325 32,140 - Total unused operating tax losses 24,866,170 12,553,787 2,965,136 Potential tax benefit at tax rate between 25% and 35% 6,361,884 3,188,027 741,284 Total unused operating tax losses not recognized 6,361,884 3,188,027 741,284

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

16. RELATED PARTY TRANSACTIONS The Corporation's related parties include key management personnel and entities over which they have control or significant influence as described in Note 3 and below. Nature of Transactions DSA Corporate services Corporate secretarial D & R Filing services Filing services The Alyris Group Accounting, management and facilities rental Hall Mineral Services LLP Consulting Mega Precious Metals Inc. Facilities rental Unless otherwise stated, none of the transactions incorporate special terms and conditions and no guarantees were given or received. Outstanding balances are usually settled in cash. The following are the related party transactions, recorded at the exchange amount as agreed to by the parties: [a] Included in general and administrative expenses are amounts totaling $46,958 (2010 - $37,199) for corporate secretarial services provided by companies related to the Corporation through a common officer. [b] Included in general and administrative expenditures are amounts totalling $339,050 (2010 - $265,832) and included in the exploration and evaluation assets are amounts totalling $125,544 (2010 - $112,102) for rent, facilities related charges, and accounting and management services provided by a company related to the Corporation through common officer and an officer and director. [c] Included in other revenue are amounts totaling $34,650 (2010 - $31,800) for rental of a core shack to a company related to the Corporation though a common director. [d] Included in general and administrative expenses are amounts totalling $64,411 (2010 - $38,846) for consulting fees paid to a company related to the Corporation by a common director. Transactions with key management personnel Key management personnel remuneration includes the following amounts: 2011 2010 $ $ Salary and wages 714,281 625,239 Share-based payments 3,701,995 4,042,840 Other compensation 17,206 33,483 4,433,482 4,701,562

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

17. PROVISION FOR ENVIRONMENTAL REHABILITATION The Corporation's provision results from net ownership interests in mineral properties and mining claims with a mill and mining equipment. The provision consists primarily of costs associated with mine reclamation and closure activities. These activities, which tend to be site specific, generally include costs for earthworks, including detoxification and re-contouring, re�vegetation, water treatment and demolition. In determining the estimated costs, the Corporation considers such factors as changes in laws and regulations and requirements under existing permits. Such analysis is performed on an ongoing basis. The Corporation estimates the total discounted cash flows required to settle its provision requirements is approximately $2,051,858. In calculating the fair value of the Corporation's provision, management used a risk free interest rate of 1.5046%. A reconciliation of the provision is provided below: 2011 2010 $ $ Balance, beginning of the year - - Liabilities incurred 2,051,858 - Accretion expense - - 2,051,858 - 18. COMMITMENTS (i) The Corporation has commitments relating to operating, and facilities leases extending to 2016. The minimum annual contractual and lease payments for the five years are as follows: $ 2012 162,623 2013 194,548 2014 181,399 2015 185,584 2016 155,367 879,521 (ii) The Corporation has $19,154,537 in remaining flow-through obligations to be spent by December 31, 2012.

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

19. CONTINGENCIES Legal claims In October 2010, prior to the Goldstone Arrangement, Patrick Sheridan, the former President and Chief Executive Officer and a director of Goldstone, and Gary Conn, a former senior officer and director of Goldstone, together with their respective management companies, commenced legal actions against Goldstone. Mr. Sheridan alleged breach of contract and is seeking damages of up to $1.4 million, including punitive damages, plus costs and interest. Mr. Conn alleged breach of a consulting agreement or, alternatively, wrongful dismissal and other causes of action and is seeking damages of up to approximately $3.4 million, plus costs and interest. Goldstone dismissed Messrs. Sheridan and Conn for cause on September 25, 2010 and October 1, 2010, respectively. In its counterclaim against Mr. Conn (the “Conn Counterclaim”), Goldstone is seeking damages from Mr. Conn and his management company in the amount of $5 million for breach of fiduciary duty and duty of care, fraud, misrepresentation, conflict of interest, unjust enrichment, gross negligence, negligence and breach of contract; and $100,000 in punitive damages. Goldstone has also alleged other causes of action, plus costs and interest. In its counterclaim against Mr. Sheridan, Goldstone is seeking damages from Mr. Sheridan and his management company in the amount of $1 million for breach of fiduciary duty and duty of care, unjust enrichment, breach of contract; and $100,000 in punitive damages. Goldstone has also alleged other causes of action, plus costs and interest. Goldstone has also commenced third party claims against Mr. Conn and three former directors in order to seek contribution and indemnity for any amounts that it may be found liable to pay Mr. Sheridan and his management company. With respect to the Conn action, Goldstone has launched a summary judgment motion on the basis that the certain allegations which are relied upon to justify cause for Mr. Conn’s dismissal have already been proven in a related proceeding (refer to “Defamation Claim” below). Pursuant to a preliminary motion argued on February 15, 2012, certain affidavit evidence which Mr. Conn seeks to rely upon in defence of the summary judgment motion was ruled admissible. Goldstone is now preparing responding affidavit evidence, and it is anticipated that cross examinations on the various affidavits will be scheduled sometime in April or May. The motion would be scheduled sometime thereafter. With respect to the Sheridan action, the parties have recently exchanged documentary productions, and it is expected that examinations for discovery will be scheduled sometime in the near future. In January 2011, Mr. Conn commenced a legal action (the “Defamation Claim”) against Goldstone, four of its directors, and other individuals, seeking damages of $2.5 million based on alleged conspiracy, libel, defamation and intentional infliction of mental suffering arising from alleged improper publication of certain allegations contained in the Conn Counterclaim. On May 24, 2011, the Superior Court of Justice (Ontario) granted Goldstone’s motion for summary judgment. The summary judgment concluded that the allegations in the Conn Counterclaim which, in Goldstone’s view justified Mr. Conn’s termination for cause, but which according to Mr. Conn were allegedly defamatory, were true. However, Mr. Conn has filed a notice of appeal of the summary judgment with respect to the Defamation Claim. Goldstone has also brought a motion for summary judgment in respect of Conn’s initial claim. Mr. Conn sought to appeal the judgment, but the Ontario Court of Appeal dismissed his appeal on November 18, 2011.

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(Incorporated under the laws of Ontario)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

20. FINANCIAL INSTRUMENTS AND RELATED RISKS The Corporation's operations include the acquisition and exploration of mineral properties in United States and Mexico. The Corporation examines the various financial risks to which it is exposed and assesses the impact and likelihood of occurrence. These risks may include credit risk, liquidity risk, currency risk, interest rate risk and other risks. Where material, these risks are reviewed and monitored by the Board of Directors. [a] Credit Risk Counterparty credit risk is the risk that the financial benefits of contracts with a specific counterparty will be lost if a counterparty defaults on its obligations under the contract. This includes any cash amounts owed to the Corporation by those counterparties, less any amounts owned to the counterparty by the Corporation where a legal right of set-off exists and also includes the fair values of contracts with individual counterparties which are recorded in the financial statements. i) Trade credit risk

The Corporation is in the exploration stage and has not yet commenced commercial production or sales. Therefore, the Corporation is not exposed to significant credit risk and overall the Corporation's credit risk has not changed significantly from the prior year.

ii) Cash and cash equivalents

In order to manage credit and liquidity risk the Corporation invests only in highly rated investment grade instruments that have maturities of six months or less and are cashable or readily convertible to cash. Limits are also established based on the type of investment, the counterparty and the credit rate.

iii) Derivative financial instruments

As at December 31, 2011, the Corporation has no derivative financial instruments. It may in the future enter into derivative financial instruments and in order to manage credit risk, it will only enter into derivative financial instruments with highly rate investment grade counterparties.

[b] Liquidity risk Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they fall due. The Corporation manages liquidity risk through the management of its capital structure. Accounts payable and accrued liabilities are due within the current operating period. [c] Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The risk that the Corporation will realize a significant loss as a result of a decline in the fair market value of investments and other items held within cash and cash equivalents is limited given that the majority of investments have a relatively short maturity. The Corporation manages its interest rate risk with investments by investing the majority of funds in short�term investments and therefore is not exposed to significant fluctuations in interest rates. The interest rate risk associated with the Corporation's long term debt relates to the fixed nature of the interest rate. Should there be a significant decrease in the market interest rate, there is potential exposure due to the Corporation locking in at a higher rate. [d] Currency risk The Corporation is exposed to the financial risk related to the fluctuation of foreign exchange rates. The functional and reporting currency of the Corporation is the Canadian dollar. The functional currency of the subsidiaries is the U.S. dollar and Mexican Peso. As at December 31, 2011 the Corporation's subsidiary Premier Gold Mines USA Inc. holds a long term promissory note denominated in U.S. dollars valued at USD$9,400,000, or CDN$9,468,118. Additionally, the Corporation's subsidiary Premier Gold Mines Nevada inc. holds a promissory note denominated in U.S. dollars valued at US$350,000, or CDN$355,943. There are no significant financial instruments denominated in Mexican Pesos. Changes in the currency exchange rates between the Canadian dollar relative to the U.S. dollar could have an effect on the Corporation's results of operations, financial position or cash flows. The Corporation has not hedged its exposure to currency fluctuations. At December 31, 2011 a 100 basis point decrease/increase in the U.S. dollar would result in a foreign exchange gain/loss of CDN$242,670. The Corporation does not invest in derivatives to mitigate these risks.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

21. MANAGEMENT OF CAPITAL RISK The Corporation manages its common shares, stock options and warrants as capital. The Corporation's objectives when managing capital are to safeguard the Corporation's ability to continue as a going-concern in order to pursue the exploration of its mineral properties and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk. The Corporation manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Corporation may attempt to issue new shares and, acquire or dispose of assets. In order to maximize ongoing exploration efforts, the Corporation does not pay out dividends. The Corporation's investment policy is to invest its short-term excess cash in highly liquid short-term interest-bearing investments with short-term ma-turities, selected with regard to the expected timing of expenditures from continuing operations. The Corporation expects its current capital resources will be sufficient to carry out its exploration plans and operations through 2012. IFRS 7 establishes a fair value hierarchy that prioritizes the input to valuation techniques used to measure fair value as follows: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs). The following table sets forth the Corporation's financial assets measured at fair value by level within the fair value hierarchy. Level 1 Level 2 Level 3 Total $ $ $ $ Assets Cash and cash equivalents 40,074,341 - - 40,074,341 Investments 589,600 109,500 - 699,100 40,663,941 109,500 - 40,773,441

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

22. SUBSEQUENT EVENTS On January 16, 2012 the Corporation sold its interest in the Newman�Madsen property in Red Lake to Sabina Silver Corporation. Terms of the agreement include payment to Premier of $500,000, and Premier will retain a 0.50% net smelter return royalty on the property. On January 26, 2012 the Corporation announced that it had signed a Letter of Intent to enter into a joint venture with Newmont USA Limited, a subsidiary of Newmont Mining Corporation (NYSE:NEM, TSX:NMC) (“Newmont”) to consolidate the Saddle and Rain projects within the Rain Sub-district of Nevada’s prolific Carlin Trend. Highlights of the proposed joint venture include: • Premier and Newmont will each contribute lands held along the “Rain Trend” to consolidate the prospective horizon that is host to the Rain Mine, and the Saddle and Tess gold Deposits; • Premier will acquire a 55% operating interest by contributing one land Section, waiving its existing right of payment under the Rain and Emigrant royalties, and contributing an initial $20 million in development expenditures over two years; • Newmont will acquire a 45% non-operating interest by contributing three land Sections, full site access to the joint venture including roads, infrastructure and power, and access to contractor/supplier relationships/discounts; and • The Joint Venture will secure a favourable milling agreement such that ore from the project will be processed at Newmont’s milling facilities that are located within 20 miles of the Property at a pre-arranged milling rate, subject to Newmont’s processing and displacement priorities. If the joint venture is able to secure toll milling on more favourable terms, it may engage the alternative milling subject to Newmont’s right to match the alternative milling terms. On February 6, 2012 the Corporation announced that it had entered into agreements to acquire a 100% interest in two key patented claim groups located on the East Bay Ultramafic Trend in Red Lake. These claim groups are located proximal to the Footwall Zone on the East Bay Project, one of two active joint ventures Premier has with Red Lake Gold Mines ("RLGM"), a partnership between Goldcorp Inc. and Goldcorp Canada Ltd., in the heart of the prolific Red Lake gold mining district, and north of Rubicon Minerals' Phoenix Gold Project. On February 27, 2012 the Corporation completed a previously announced bought deal public offering of 10,000,000 common shares (the "Common Shares") at a price of $5.75 per Common Share for net proceeds of approximately $54.5 million (the "Offering") through a syndicate of underwriters led by RBC Capital Markets and including Canaccord Genuity Corp., Scotia Capital Inc., CIBC World Markets Inc., Goldman Sachs Canada Inc., Stonecap Securities Inc., Octagon Capital Corporation and Versant Partners Inc. The Offering included the issue of 1,000,000 Common Shares at the offering price upon the exercise of the over-allotment option granted by the Company to the Underwriters under the Offering. Pursuant to the over-allotment option, the Underwriters have the right to purchase up to an additional 350,000 Common Shares at the Common Share offering price, exercisable in whole or in part, at any time prior to March 28, 2012. Subsequent to year end the Corporation issued a $1,769,649 standby letter of credit outstanding in favour of the Ontario Ministry of Northern Development and Mines relating to reclamation obligations of the Northern Empire Mill in Ontario.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

23. TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS As stated in note 3, these are the Corporation's first consolidated financial statements for the year ended December 31, prepared in accordance with IFRS. The accounting policies in note 3 have been applied in preparing the consolidated financial statements for the year ended December 31, 2011, the comparative information for the year ended December 31, 2010, the financial statements for the year ended December 31, 2010 and the preparation of an opening IFRS statement of financial position on the Transition Date, January 1, 2010. In preparing its opening IFRS statement of financial position, and comparative information for the year ended December 31, 2010, the Corporation has adjusted amounts reported previously in financial statements prepared in accordance with GAAP. An explanation of how the transition from previous GAAP to IFRS has affected the Corporation's financial position, financial performance and cash flows is set out in the following tables. The guidance for the first time adoption of IFRS are set out in IFRS 1. IFRS 1 provides for certain mandatory exceptions and optional exemptions for first time adopters of IFRS. The Corporation elected to take the following IFRS 1 optional exemptions: • to apply the requirements of IFRS 3, Business Combinations, prospectively from the Transition Date; • to apply the requirements of IFRS 2, Share-based payments, only to equity instruments granted after November 7, 2002

which had not vested as of the Transition Date;

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Reconciliation of Assets, Liabilities and Equity As at January 1, 2010

Effect of transition GAAP to IFRS IFRS

Notes (a) - (g) $ $ $ ASSETS Non-current assets Equipment 44,478 - 44,478 Mineral properties interest 65,700,001 - 65,700,001 Mineral properties held for sale 102,064 - 102,064 Investment 1,490,150 - 1,490,150 Total non-current assets 67,336,693 - 67,336,693 Current assets Accounts receivable 259,188 - 259,188 Prepaids and deposits 28,887 - 28,887 Cash and cash equivalents 21,226,978 - 21,226,978 Total current assets 21,515,053 - 21,515,053 88,851,746 - 88,851,746 EQUITY Common shares 79,084,467 (5,816,644) 73,267,823 Share purchase warrants 224,436 (224,436) - Contributed surplus 7,104,904 (7,104,904) - Obligation to issue shares 7,980 (7,980) - Reserves - 7,329,340 7,329,340 Deficit (6,523,640) (1,695,599) (8,219,239) Total equity 79,898,147 (7,520,223) 72,377,924 LIABILITIES Current liabilities Accounts payable and accrued liabilities 1,622,016 - 1,622,016 Taxes payable 146,610 - 146,610 Deferred premium on flow through shares - 4,354,360 4,354,360 Total current liabilities 1,768,626 4,354,360 6,122,98 Long-term liabilities Deferred taxes 7,060,144 3,165,863 10,226,007 Long term tax payable 124,829 - 124,829 Total long-term liabilities 7,184,973 3,165,863 10,350,836 Total equity and liabilities 88,851,746 - 88,851,746

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Reconciliation of Assets, Liabilities and Equity (continued) As at December 31, 2010 Effect of transition GAAP to IFRS IFRS Notes (a) - (g) $ $ $ ASSETS Non-current assets Equipment 32,561 - 32,561 Mineral properties interest 128,874,203 (6,380,045) 122,494,158 Mineral properties held for sale 102,064 - 102,064 Investments 2,208,815 - 2,208,815 Total non-current assets 131,217,643 (6,380,045) 124,837,598 Current assets Accounts receivable 770,029 - 770,029 Prepaids and deposits 59,565 - 59,565 Cash and cash equivalents 51,476,694 - 51,476,694 Total current assets 52,306,288 - 52,306,288 183,523,931 (6,380,045) 177,143,886 EQUITY Share capital 156,523,820 (5,065,818) 151,458,002 Contributed surplus 12,353,460 (12,353,460) - Reserves - 12,353,460 12,353,460 Exchange reserve - (68,186) (68,186) Deficit (16,580,515) (2,534,201) (19,114,716) Total equity 152,296,765 (7,668,205) 144,628,560 LIABILITIES Current liabilities Accounts payable and accrued liabilities 3,424,259 - 3,424,259 Taxes payable 131,925 - 131,925 Current portion of long term debt 1,407,601 - 1,407,601 Deferred premium on flow through shares - 3,315,674 3,315,674 Total current liabilities 4,963,785 3,315,674 8,279,459 Long-term liabilities Deferred taxes 16,718,702 (2,027,514) 14,691,188 Long term tax payable 93,643 - 93,643 Long term debt 9,451,036 - 9,451,036 Total long-term liabilities 26,263,381 (2,027,514) 24,235,867 Total equity and liabilities 183,523,931 (6,380,045) 177,143,886

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Reconciliation of Loss and Comprehensive Loss (continued) Year ended December 31, 2010 Effect of transition GAAP to IFRS IFRS Notes (a) - (g) $ $ $ Expenses (income) Amortization 11,917 - 11,917 Stock-based compensation 8,411,220 - 8,411,220 Flow-through interest penalty 243,376 - 243,376 General and administrative 2,186,934 - 2,186,934 Professional fees 522,544 - 522,544 Exploration expenses 32,326 - 32,326 Foreign exchange loss 68,186 (68,186) - Loss before the following (11,476,403) (68,186) (11,408,317) Investment income 286,462 - 286,462 Other income 49,019 - 49,019 Change unrealized gain on investment 2,224,543 - 2,224,543 Loss on sale of investments (160,917) - (160,917) Write down of mineral properties (1,767,943) - (1,767,943) Interest expense (266,029) - (266,029) Loss before income taxes (11,111,268) (68,186) (11,043,182) Deferred tax recovery (1,054,493) 906,788 (147,705) Loss for period (10,056,775) 838,602 (10,895,477) Exchange difference on translation of foreign operations - (68,186) (68,186) Loss and comprehensive loss for the year (10,056,775) (906,788) (10,963,663)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Reconciliation of Cash Flows Year ended December 31, 2010 Effect of transition GAAP to IFRS IFRS Notes (a) - (g) $ $ $ Operating activities Loss and comprehensive loss for year (10,056,875) (906,788) (10,963,663) Add charges (deduct credits) to earnings not involving a current payment (receipt) of cash - - - Amortization 11,917 - 11,917 Stock-based compensation 8,411,220 - 8,411,220 Change in unrealized gain on investments (2,224,543) - (2,224,543) Write down of mineral properties 1,767,943 - 1,767,943 Loss on sale of investments 160,917 - 160,917 Deferred tax recovery (1,054,493) 906,788 (147,705) Foreign exchange loss 68,186 - 68,186 Net change in non-cash working capital balances related to operations (665,007) - (665,007) Cash and equivalents provided by (used in) operating activities (3,580,735) - (3,580,735) Investing activities Mineral exploration and development expenditures, net (17,928,346) - (17,928,346) Acquisition of Saddle Gold (4,187,368) - (4,187,368) Proceeds from the sale of investments, net 1,344,961 - 1,344,961 Cash and equivalents used for investing activities (20,770,753) - (20,770,753) Financing activities Share issued in private placements 54,942,020 - 54,942,020 Proceeds from the exercise of stock options 3,597,327 - 3,597,327 Proceeds from the exercise of share purchase warrants 696,121 - 696,121 Share issue costs (3,121,115) - (3,121,115) Repayment of long term debt (1,513,149) - (1,513,149) Cash provided from financing activities 54,601,204 - 54,601,204 Increase (decrease) in cash and cash equivalents 30,249,716 - 30,249,716 Cash and cash equivalents, beginning of period 21,226,978 - 21,226,978 Cash and cash equivalents, end of period 51,476,694 - 51,476,694

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

Notes to Reconciliation [a] Basis of Consolidations In accordance with IFRS 1, if a company elects to apply IFRS 3 Business Combinations retrospectively, IAS 27 Consolidated and Separate Financial Statements must also be applied retrospectively. As the Corporation elected to apply IFRS 3 prospectively, the Corporation has also elected to apply IAS 27 prospectively. [b] Cumulative translation differences IFRS requires that the functional currency of each entity of the Corporation be determined separately. The Corporation has determined that as at the Transition Date the Canadian dollar was the functional currency of all entities in the Corporation. For the year ended December 31, 2010, the foreign exchange resulting from the consolidation amounted to a loss of $68,186, resulting in a decrease in the current year's loss in the statement of operations and the recording of an "Exchange Reserve" in the Statement of Equity. [c] Share-based payment Under GAAP, the Corporation measured stock-based compensation related to share purchase options at the fair value of the options granted using the Black-Scholes option pricing formula and recognized its expense over the vesting period for the options. For the purposes of accounting for share based payment transactions an individual is classified as an employee when the individual is consistently represented to be an employee under law. The fair value of the options granted to employees were measured on the date of grant. The fair value of options granted to contractors and consultants were measured on the date the services were completed. Forfeitures were recognized as they occurred. IFRS 2 Share-based payment requires the Corporation to measure share-based compensation related to share purchase options granted to employees at the fair value of the options on the grant date and to recognize such expense over the vesting period of the options. However, under IFRS 2, the recognition of such expense must be done with a “graded vesting” methodology as opposed to the straight-line vesting method allowed under Canadian GAAP. In addition, under IFRS, forfeitures estimates are recognized in the period they are estimated, and are revised for actual forfeitures in subsequent periods, whereas under Canadian GAAP forfeitures were recognized as they occur. Furthermore, for options granted to non-employees, IFRS requires that share-based compensation be measured at the fair value of the services received unless the fair value cannot be reliably measured. For the purpose of accounting for share based payment transactions an individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee. This definition of an employee is broader then that previously applied by the Corporation and resulted in certain contractors and consultants being classified as employees under IFRS. The Corporation has elected to apply the requirements of IFRS 2, Share�based payments, only to equity instruments granted after November 7, 2002 which had not vested as of the Transition Date. There was no impact on the financial statements. Under GAAP, the Corporation measured share-based compensation related to share purchase options at the fair value of the options granted using the Black-Scholes option pricing formula and recognized its expense over the vesting period for the options. For the purposes of accounting for share based payment transactions an individual is classified as an employee when the individual is consistently represented to be an employee under law. The fair value of the options granted to employees is measured on the date of grant. The fair value of options granted to contractors and consultants are measured on the date the services are completed. Forfeitures are recognized as they occur. For the share purchase options granted to the individuals reclassified, change in fair value after the grant date previously recognized for GAAP purposes did not require any adjustment. There were no unvested options issued and outstanding as of and after the Transition Date.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Stated in Canadian Dollars)

For the year ended December 31, 2011 and 2010

[d] Reclassification within equity section IFRS requires an entity to present for each component of equity, a reconciliation between the carrying amount at the beginning and end of the period, separately disclosing each change. The Corporation reviewed its contributed surplus account and concluded that as at the Transition Date, the entire amount of $7,104,904 relates to "Equity settled employee benefit reserve". As a result, the Corporation believes a reclassification would be necessary in the equity section between "Contributed surplus" and the "Equity settled employee benefit reserve" account. For comparatives, as at December 31, 2010, $12,353,460 "Contributed surplus " account was reclassified as "Equity settled employee benefit reserve". [e] Deferred Tax on Mineral Properties Under GAAP, the Corporation, in accounting for its subsidiary, recognized a future income tax liability on temporary differences arising on the initial recognition of the Saddle Gold Inc. mineral property interest (where the fair value of the asset acquired exceeded its tax basis) in a transaction which was not a business combination and affected neither accounting profit or loss. IAS 12, Income Taxes does not permit the recognition of deferred taxes on such transactions. As at December 31, 2010, the Corporation has derecognized the impacts of all future income tax liabilities which had previously been recognized on the initial acquisition of Saddle Gold Inc. through transactions deemed not to be business combinations and affecting neither accounting profit or loss nor taxable profit or loss. [f] Deferred flow through premium Under GAAP, the Corporation, in accounting for flow through funds received, recorded the funds to share capital. IFRS requires that any excess to market value realized upon the issuance of flow through common shares be recorded in the statement of financial position (deferred liability for flow through raised funds at time of issuance of flow through common shares and charged to the statement of loss and comprehensive loss as the necessary expenditures are renounced under flow through common share agreements are spent). [g] Deferred income tax assets Under GAAP, the Corporation, in accounting for future income tax assets, recognized future income tax assets to the extent that it had taxable temporary differences resulting from the issuance of flow through shares in accordance with EIC-146. IFRS requires that the Corporation consider it probable that taxable profit will be available against which a deductible temporary difference can be utilized. As at January 1, 2010, the Corporation derecognized the impact of deductible temporary differences related to future income tax assets.

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

Cautionary Note Regarding Forward-Looking Statements

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CORPORATE DIRECTORY HEAD OFFICE Suite 200, 1100 Russell Street Thunder Bay, ON P7B 5N2 Telephone: (807) 346-1390 Fax: (807) 346-1381 Website: www.premiergoldmines.com INVESTOR RELATIONS Matthew Gollat (888) 346-1390 info@premiergoldmines.com DIRECTORS John Begeman Jean-Pierre Colin Ewan S. Downie Richard J. Hall (Chairman) Henry J. Knowles, Q.C. John A. Pollock John W. Seaman OFFICERS Ewan S. Downie President & CEO Stephen McGibbon Executive VP Paul Huet COO John W. Seaman CFO Steve Filipovic VP Finance Brian Morris VP Exploration Shaun Drake Secretary AUDITORS Grant Thornton LLP Chartered Accountants Thunder Bay, Ontario LEGAL ADVISORS Fraser Milner Casgrain LLP Toronto, Ontario Carrel & Partners LLP Thunder Bay, Ontario TRANSFER AGENT Equity Transfer & Trust Company 200 University Avenue, Suite 400 Toronto, ON M5H 4H1 BANKERS Royal Bank of Canada Toronto, Ontario STOCK LISTINGS PG:TSX P20:FSX PIRGF:OTO [USA] SHARES OUTSTANDING 127,420,478 (as at December 31, 2011) FULLY DILUTED 136,470,362 (as at December 31, 2011)

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200-1100 Russell Street Thunder Bay, Ontario, Canada, P7B 5N2

t. (807) 346-1390 t.f. (888) 346-1390 f. (807) 346-1381 info@premiergoldmines.comwww.premiergoldmines.com

“With the support of you, our shareholders, we have been able to create a dynamic company having the financial

wherewithal to pursue growth opportunities and quickly build value through the relentless pursuit of gold.”

Ewan Downie President and CEO Premier Gold Mines Limited