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Legal*10184613.1

Management’s Discussion and Analysis For the Three and Nine Months Ended September 30, 2015

TOREX GOLD RESOURCES INC.MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015

TABLE OF CONTENTS

Company Overview and Strategy ....................................................................................................... 2Third Quarter 2015 Highlights ............................................................................................................ 2Overview of the Third Quarter 2015 Financial Results ....................................................................... 4Objectives for 2015............................................................................................................................. 5Morelos Gold Property ....................................................................................................................... 5

El Limón Guajes Mine Update ........................................................................................................ 6Morelos Gold Property Exploration Update................................................................................... 7Media Luna Project Update............................................................................................................ 8

Debt Financing.................................................................................................................................... 8Results of Operations ......................................................................................................................... 9Summary of Quarterly Results............................................................................................................ 11Liquidity and Capital Resources .......................................................................................................... 12Economic Trends and Liquidity and Capital Resources Outlook ......................................................... 14Off-Balance Sheet Arrangements ....................................................................................................... 14Financial Risk Management................................................................................................................ 14Transactions with Related Parties....................................................................................................... 16Outstanding Share Data...................................................................................................................... 16Critical Accounting Policies and Estimates.......................................................................................... 17Accounting Pronouncements ............................................................................................................. 19Risks and Uncertainties ...................................................................................................................... 19Internal Control Over Financial Reporting .......................................................................................... 21Qualified Person ................................................................................................................................. 21Cautionary Note Regarding Forward-Looking Statements ................................................................. 22

This management’s discussion and analysis of the financial condition and results of operations (“MD&A”)for Torex Gold Resources Inc. (“Torex” or the “Company”) was prepared as at November 5, 2015 and isintended to supplement and complement the Company’s unaudited condensed consolidated interimfinancial statements and related notes for the three and nine months ended September 30, 2015. Theunaudited condensed consolidated interim financial statements have been prepared in accordance withInternational Financial Reporting Standards (“IFRS”). All dollar figures included therein and in the followingMD&A are stated in United States dollars (“U.S. dollar”) unless otherwise stated. This MD&A should alsobe read in conjunction with the Company’s audited consolidated financial statements and annualinformation form for the year ended December 31, 2014 available on SEDAR at www.sedar.com. Additionalinformation, including other Company filings, can also be viewed on SEDAR at www.sedar.com.

For further details regarding the El Limón Guajes (“ELG”) mine (the “ELG Mine”) and the Media Luna Project(the “Media Luna Project”), please refer to the updated ELG mine plan and the Media Luna ProjectPreliminary Economic Assessment (“PEA”), dated effective August 17, 2015, and titled “NI 43-101 TechnicalReport - El Limón Guajes Mine Plan and Media Luna Preliminary Economic Assessment, Guerrero State,

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Mexico” (the “Technical Report”). The updated mine plan for the ELG Mine was undertaken in connectionwith the preliminary economic assessment (the “PEA”) for the Media Luna Project, which are both locatedon the Morelos gold property (the “Morelos Gold Property”). The PEA considers the potential economicviability of developing the Media Luna resource by making use of the infrastructure, social capital, andsecure work area which has been developed for the ELG Mine. As such, one technical report was completedto include the updated mine plan for the ELG Mine and the PEA for the Media Luna Project in accordancewith National Instrument 43-101 (“NI 43-101”). The Technical Report was filed on SEDAR at www.sedar.comon September 3, 2015, and is available on the corporate website.

COMPANY OVERVIEW AND STRATEGY

The Company is a Canadian-based resource company engaged in the exploration and development of theMorelos Gold Property. The Morelos Gold Property includes a large land package of approximately29,000 hectares and contains, among other things, two projects, the ELG Mine, currently underconstruction, and the Media Luna Project that is in an advanced stage of exploration.

The Company’s strategy is to transition to a mid-tier gold producer in the near term by completing theconstruction of the ELG Mine, preparing for the development of the Media Luna Project, and adding ouncesto the mineral resources and mineral reserves of the Morelos Gold Property. The Company expects tocontinue exploration, with a goal of identifying future deposits within the Morelos Gold Property.

THIRD QUARTER 2015 HIGHLIGHTS

Advancement of the ELG Mine

The Company continued the development of the ELG Mine:

• Overall construction was 91% complete at the end of the third quarter of 2015, commissioning isadvancing well and construction of the ELG Mine remains on schedule and on budget for first gold latein the fourth quarter of 2015.

• The resettlement of all 102 families of the village of La Fundición has been completed. Work is continuingon the construction of the second village for the resettlement of the Real de Limón community, expectedin the first quarter of 2016.

• There are 1.2 million tonnes of ore stockpiled as of September 30, 2015. Mining of the Guajes andNorth Nose pits continued ahead of schedule with approximately 605,000 tonnes of Guajes ore and630,000 tonnes of North Nose ore stockpiled at September 30, 2015.

• Water and grid power were available at the processing plant at the end of the third quarter of 2015.

• Achieving full production of 14,000 tonnes per day requires the second pit, El Limón, to be in production.After the resettlement of La Fundición village, waste stripping and the building of haul roads are nowunderway for the El Limón pit. Construction of the El Limón crusher and the Rope Conveyor (“RopeCon”)continues, both of which are tracking ahead of schedule. The conveyor on the RopeCon was installedin October 2015.

• The Company has signed a letter of intent with the Ministry of Public Safety of the State Governmentof Guerrero, endorsed by the Federal Government, for the provision of permanent police presence inthe areas adjacent to the Company’s Morelos Gold Property.

• The operations and maintenance teams have been hired and are working with commissioning specialiststo bring the processing plant into operation.

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• As at September 30, 2015, 11.7 million hours had been worked on the ELG Mine with eight lost timeaccidents.

Estimated Expenditures for the ELG Mine

The ELG Mine project cost is budgeted at $800 million (excluding capitalized interest costs and feesassociated with funding the ELG Mine). As at September 30, 2015, the total amount spent on thedevelopment of the ELG Mine was $604 million with a current estimated amount to complete of anadditional $196 million. Effectively 100% of the budget had been committed (excluding pre-productioncosts) and 81% had been invoiced. Further, the Company has identified areas where the majority of theremaining contingency of $25 million will likely be required.

• $119 million had been spent on Mine Capital, which includes costs for the acquisition of miningequipment, the development of haul roads and pre-production stripping of the open pits. It is estimatedthat a further $23 million will be spent on Mine Capital before reaching commercial production.

• $417 million had been spent on Process Plant Capital, which includes costs in connection with theacquisition of process plant equipment, materials and labour to erect the process plant and relatedinfrastructure, engineering, procurement, and construction management (“EPCM”) fees to oversee theconstruction period, and the resettlement of two villages. It is estimated that a further $163 million ofProcess Plant Capital will be spent before reaching commercial production.

• $68 million had been spent on Owner’s Costs, which includes costs in connection with the Company’sproject team, insurance, and certain land lease costs. It is estimated that an additional $10 million ofOwner’s Costs will be spent before reaching commercial production.

Exploring the Morelos Gold Property

A 1,733 metre in-fill drilling program in the El Limón East area within the El Limón resource was completedin June 2015, with geological logging undertaken during the third quarter of 2015.

Continued Evaluation of the Media Luna Project

During the third quarter of 2015, the Company released a positive PEA for the Media Luna Project, as wellas a new inferred mineral resource estimate, prepared in accordance with NI 43-101, of 7.42 million goldequivalent ounces, including 3.98 million ounces of gold, at a cut-off grade of 2 g/t gold equivalent. ThePEA considers the potential economic viability of developing the Media Luna resource by making use ofthe infrastructure, social capital and secure work area developed for the ELG Mine. As such, the TechnicalReport includes both an updated mine plan for the ELG Mine and the PEA for the Media Luna Project.

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

Financing

During the third quarter of 2015, the Company received three additional draws totaling $80 million fromits $375 million 8-year senior secured project finance facility (the “Loan Facility”). The total amount drawnon the Loan Facility was $315 million as at September 30, 2015. In October 2015, a further $35 million was

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drawn, leaving $25 million yet to be drawn at the date of filing this report. See “Debt Financing” for furtherdetails on the Credit Agreement and Loan Facility. The total cost estimate remains at $800 million. Thiscost to complete estimate anticipates the spending of the full contingency.

As at September 30, 2015, the Company had cash and cash equivalents of $74.4 million on a consolidatedbasis, with a further $44.6 million in restricted cash.

OVERVIEW OF THE THIRD QUARTER 2015 FINANCIAL RESULTS

The net loss for the three and nine months ended September 30, 2015 totaled $4.8 million and $24.8 million,respectively, an increase from the net loss for the three and nine months ended September 30, 2014 of$1.1 million and $10.5 million, respectively. Exploration and evaluation expenditures relating to the MediaLuna Project totaled $1.7 million and $8.1 million, for the three and nine months ended September 30,2015, compared to $1.8 million and $6.7 million in the comparable prior year periods. The increase in netloss in the third quarter of 2015 compared to the third quarter of 2014 is primarily related to a foreignexchange loss of $9.0 million recognized in the three months ended September 30, 2015. As the Companyhas significant cash and cash equivalents, value added tax receivable and accounts payable denominatedin Mexican pesos and Canadian dollars, foreign exchange gains and losses fluctuate with the movement ofthese currencies relative to the U.S. dollar. In the third quarter of 2015, the Mexican peso and Canadiandollar devalued by 9% and 8% respectively, relative to the U.S. dollar, resulting in a foreign exchange lossin the quarter. This foreign exchange loss was more than offset by a gain on the Company’s gold derivativecontracts, reflecting the downward trend in gold prices during 2015.

During the third quarter of 2015, in addition to the additional draws totaling $80.0 million as noted above,the Company collected $9.2 million in Value Added Tax receivable (“VAT”) or “Impuesto al ValorAgregado” (“IVA”), for a total collected of $24.4 million in the first nine months of 2015 (excluding interestof $1.1 million). The Company’s cash and cash equivalents position as at September 30, 2015 was$74.4 million, with a further $44.6 million of restricted cash pursuant to the Loan Facility, as discussed in“Debt Financing”. At September 30, 2015, the Company had $1,047.5 million in total assets, and had aworking capital balance of $76.8 million, compared with $773.6 million in assets and a working capitalbalance of $83.9 million as at December 31, 2014.

As at September 30, 2015, the Company had recognized a discounted decommissioning liability of$12.7 million relating to its ELG Mine, which is currently under construction, and has determined that nosignificant decommissioning liabilities exist in connection with the exploration activities at the Media LunaProject. The Company has calculated the fair value of the decommissioning liability at September 30, 2015using a pre-tax discount rate of 3.73% and has estimated that payments will be made between 2019 and2044. The estimated total future undiscounted cash flows to settle the decommissioning liability atSeptember 30, 2015 is $29.0 million, an increase of $5.2 million compared to June 30, 2015.

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

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OBJECTIVES FOR 2015

The following highlights the Company’s primary objectives for 2015:

Safety and Health:• Achieve zero lost time injuries.

Production:• Achieve first gold pour before year-end.• Mine 1.5 million cumulative tonnes of ore by year-end.• Guajes waste stripping, Guajes East pit down to bench 826 by year-end.• Complete El Limón waste stripping of 4.0 million tonnes by year-end.• Resettle La Fundición village by August 1, 2015. (See “El Limón Guajes Mine Update - Community”)

Cost Control:• Remain on plan to deliver commercial production status for less than $800 million. (See “Estimated

Expenditures for the ELG Mine”)

Financing:• Recover cumulative value-added taxes receivable balance of $40 million by year-end.• Arrange for $25 million in equipment leasing by year-end.

Project Development:• Release a PEA for the Media Luna Project in July 2015. (See “Media Luna Project Update”)• Receive permits for exploration tunneling for the Media Luna Project.

Resource Expansion:• Release an updated resource estimate for the Media Luna Project in the second quarter of 2015.

(See “Media Luna Project Update”)

Resource Modelling:• Release an updated Guajes geological model in the third quarter of 2015.• Complete the drill program required to update the El Limón geological model in 2016. (See “Morelos

Gold Property Exploration Update”)

MORELOS GOLD PROPERTY

Overview

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

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

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El Limón Deep. Drilling areas located south of the Balsas River include Media Luna, El Cristo, Naranjo andLa Fe.

El Limón Guajes Mine Update

EPCM Activities

EPCM activities by M3 Engineering & Technological Corporation (“M3”) continued during the third quarterof 2015 with regular updates to the ELG Mine schedule, engineering and procurement as well as with weeklyand monthly progress reports. Approximately 99% of the engineering for the process plant is complete,and substantially all materials and equipment required for the first pour at the ELG Mine have been orderedas at the end of the third quarter of 2015.

Mine Development

Open pit mining continued ahead of schedule in several areas of the Guajes and North Nose pits. There are1.2 million tonnes of ore stockpiled at the end of the third quarter of 2015, with 605,000 tonnes from Guajesand 630,000 tonnes from North Nose.

The stockpile is of sufficient size to take mining off the critical path for commercial production in the secondquarter of 2016. With an adequate stockpile available, the focus of the mining team has shifted to wastestripping to avoid future re-handling costs.

Construction Progress

Overall construction progress was at approximately 91% at the end of the third quarter of 2015.

Construction continues in all the key areas:

• Mining continues ahead of schedule with over 1.2 million tonnes in stockpile. First gold pour is expectedin the fourth quarter of 2015, and commercial production is expected to be achieved in the secondquarter of 2016.

• With water and grid power available at the processing plant, the focus of construction is on finishingup the piping, electrical, and instrumentation work in preparation for initial commissioning of theprocessing plant circuits with water.

• The operations and maintenance teams have been hired and are working with commissioning specialiststo bring the processing plant into production. There continues to be approximately 3,000 workers onsite. This number will start to decrease since the road construction is drawing to a close, as is ancillaryconstruction such as the permanent camp.

• Achieving full production of 14,000 tonnes per day requires the second pit, El Limón, to be in production.The access road to El Limón has been in place for some time now and has been used for the constructionof the El Limón Crusher and the RopeCon, both of which are tracking ahead of schedule.

• With respect to the RopeCon, the towers have been installed and the three pairs of cables have beenmounted on the towers and tensioned. The frames that maintain the three pairs of cables in consistentalignment are installed and the conveyor belt was installed in October 2015. 

• The resettlement of the village of La Fundición has been completed. The relocation of this village hasmade it safe to begin working above the former village, which has allowed for the start of waste strippingfor El Limón. 

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• Construction on the Guajes primary crusher was effectively completed in the second quarter of 2015,and turned over to the operations team in July 2015.

• The permanent camp commissioning was completed and turned over to the operations team in August2015.

• The East Service Road was completed and turned over to the operations team and will subsequentlybe handed over to the State.

• From a social perspective, during the quarter, there was some blockade activity in September 2015 onone of two access roads to the plant site. The blockade was initiated by a group of fishermen thatbelieve that the Company’s activities have resulted in lower fish catches in the Caracol Reservoir. TheCompany has committed to hiring an independent third party to prepare a study and determine whetherthere is legitimacy to their claim. The blockade has been lifted and there is no anticipated impact tothe schedule of first gold in the fourth quarter of 2015. 

Community

During the quarter, the Company completed the resettlement of all 102 families of the village of La Fundición.

Regarding the resettlement of the second village, Real De Limón, concrete work continues on the foundationof new houses, while water and drainage systems are being installed. The Company expects to resettle thiscommunity in the first quarter of 2016.

Security

The Company has signed a letter of intent with the Ministry of Public Safety of the State Government ofGuerrero, endorsed by the Federal Government, for the provision of permanent police presence in theareas adjacent to the Company's Morelos Gold Property. In the first stage, the Ministry will establish threecheck points with permanent police presence which, along with regular patrols, will control access to thecommunities in the areas adjacent to the ELG Mine. The Media Luna Project, will receive some securitybenefits from this pilot program, with more comprehensive coverage planned for later programs. TheCompany will support the program with infrastructure including lodging for the police force, and goods andservices in the form of transportation and vehicle maintenance. The program will come into effectimmediately upon settling and signing a formal agreement on terms and conditions mutually acceptableto the parties and may be renewed on a yearly basis by agreement of the parties.

Morelos Gold Property Exploration Update

An in-fill drilling program totaling 1,733 metres was completed in the El Limón East area during June 2015.The purpose of the drill program was to provide additional geological information to assist mine planning.Geological logging was completed during the third quarter of 2015 and this information is currently beingincorporated into an updated geological model for the El Limón deposit.

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

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Media Luna Project Update

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

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

During the third quarter of 2015, the Company released the Technical Report. The results of the TechnicalReport demonstrate the positive economics for both the ELG Mine plan as well as the Media Luna Project.The economics for the ELG Mine plan were completed to a feasibility study level of detail while the MediaLuna Project were completed to a PEA level of detail. The PEA is a conceptual study of the potential viabilityof the mineral resources of the Media Luna Project; the economic and technical viability of the Media LunaProject has not been demonstrated at this time.

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

DEBT FINANCING

In August 2014, the Company announced the signing, through its subsidiary Minera Media Luna S.A. deC.V., of the Credit Agreement with Bank of Montreal, BNP Paribas, Commonwealth Bank of Australia, INGBank N.V., Société Génerale, and The Bank of Nova Scotia (the “Lenders”) and other definitivedocumentation giving effect to its previously announced $375 million senior secured project finance LoanFacility that is due to mature June 30, 2022. The Loan Facility is being used to fund the development of theELG Mine.

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

On March 30, 2015, the Company concluded an amendment of the Credit Agreement which addressedpotential impacts that the change in the anticipated commencement of production may have on certainrequirements under the Loan Facility. While the Company anticipates that first gold production will occurin the fourth quarter of 2015, certain of the amendments to the Credit Agreement are based on moreconservative assumptions relating to production schedule, capital expenditures and production ramp-up.A copy of the amendment was filed on March 31, 2015 and is available on SEDAR at www.sedar.com.

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As part of the amendment to the Credit Agreement, the Company advanced $10.0 million to the ELG Mineand placed $30.9 million in a reserve account to fund the conservative assumptions, in case they occur and,as a result, the Lenders agreed to make the full cost overrun facility of $75 million (the “COF”) availableimmediately. The Company is able, in the absence of the conservative assumptions occurring, to withdrawfunds from the account under certain conditions.

During the third quarter of 2015, the Company received additional draws totaling $80.0 million from theLoan Facility, bringing the total amount drawn in the first nine months of 2015 to $270.0 million. The totalamount drawn on the Loan Facility as at September 30, 2015 is $315.0 million. Net of transaction costs,the Loan Facility presented on the Statement of Financial Position as at September 30, 2015 totaled$305.1 million. A further $35.0 million was drawn in October 2015, leaving $25.0 million remaining to bedrawn at the date of filing this report.

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

RESULTS OF OPERATIONS

The Company is in the exploration stage at the Media Luna Project and in the development stage at theELG Mine. The Company has not generated operating revenue to date, and will continue to incur operatingexpenses related to its corporate and exploration activities in the fourth quarter of 2015. The expendituresdirectly attributable to the development of the ELG Mine will continue to be capitalized, while developmentexpenditures related to the Media Luna Project, exploration expenses, and other corporate activities willcontinue to be expensed.

For the three months ended September 30, 2015 compared to the three months ended September 30,2014

The net loss for the quarter ended September 30, 2015 increased to $4.8 million ($0.01 per common share)compared to $1.1 million ($0.00 per common share) for the quarter ended September 30, 2014.

General and administrative costs totaled $2.8 million for the third quarter ended September 30, 2015,compared to $3.0 million for the quarter ended September 30, 2014. Corporate general and administrativeexpenses were relatively consistent with those incurred in the third quarter of 2014, however benefitedfrom the devaluation of the Canadian dollar relative to the U.S. dollar as the majority of expenses relatedto salaries, benefits and share-based compensation are denominated in Canadian dollars. In the quarterended September 30, 2015, the Company issued 3,530,400 stock options compared to 310,000 options inthe quarter ended September 30, 2014. No restricted share units were issued in the third quarters of 2015or 2014.

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For the third quarter of 2015, expenditures on the Company’s exploration program at the Media LunaProject totaled $1.7 million, compared to $1.8 million for the third quarter of 2014, which includesexpenditures in relation to the PEA for the Media Luna Project. There was no exploration drilling conductedduring the quarter. In comparison, in the third quarter of 2014, the Company completed in-fill drilling onEl Limón Sur and continued the design work on the Media Luna Project.

The Company recognized a foreign exchange loss of $9.0 million for the third quarter ended September 30,2015, compared to a gain of $4.2 million for the quarter ended September 30, 2014. As the Company holdsa portion of its cash balances, as well as certain accounts payable and its VAT receivable in Mexican pesoor Canadian dollar, the foreign exchange gains and losses fluctuate with the movement of the Canadiandollar and Mexican peso exchange rate relative to the U.S. dollar, the Company’s functional currency. Aweakening of the Mexican peso or Canadian dollar would result in a foreign exchange loss on non-U.S.denominated net monetary assets.

In connection with the Loan Facility, in October 2014, the Company entered into commitments to deliver204,360 ounces of gold over an 18-month period commencing in January 2016 to the Lenders, at an averageflat forward gold price of $1,241 per ounce. The gold hedges provide price protection for the Company’sdebt obligations and represents approximately 6% of the Company’s expected total gold production for theELG Mine. These contracts are marked-to-market at each reporting period as they are considered non-designated hedges. Based on the forward prices for gold at September 30, 2015, the Company hasrecognized an asset of $24.7 million as at September 30, 2015 (December 31, 2014 - $11.4 million), andhas recorded an unrealized gain of $12.9 million for the three months ended September 30, 2015. As thesederivative contracts were not in place as at September 30, 2014, there were no similar gains or losses inthe quarter ended September 30, 2014.

In October 2014, the Company also executed the required foreign exchange currency hedges which cover75% of the Company’s non-U.S. dollar denominated capital expenditures for the ELG Mine from November2014 to the second quarter of 2017. The Company recognized a realized loss of $3.1 million for the threemonths ended September 30, 2015 in relation to contracts settled during the period. Similar to the goldcontracts, these currency contracts are marked-to-market at each reporting period. The resulting liabilityas at September 30, 2015 remained relatively consistent when compared to June 30, 2015, at $8.5 million(December 31, 2014 - $8.0 million).

The Company recognized income tax expense of $1.6 million in third quarter of 2015. The increase comparedto the comparable period in 2014 relates to the deferred income tax liability on the decommissioning liabilityof the ELG Mine recognized as at September 30, 2015.

For the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014

The net loss for the nine months ended September 30, 2015 was $24.8 million ($0.03 per common share)compared to $10.5 million ($0.01 per common share) for the nine months ended September 30, 2014.

General and administrative costs totaled $8.4 million for the nine months ended September 30, 2015,compared to $9.9 million for the nine months ended September 30, 2014. General and administrative costswere higher in the nine months ended September 30, 2014 due to the higher number of stock options andrestricted share units issued in that year, a depreciating Canadian dollar, as well as higher severance costs

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in 2014. Share-based compensation expense totaled $1.3 million for the nine months ended September 30,2015 compared to $2.5 million in the nine months ended September 30, 2014. For the nine months ended September 30, 2015, exploration and evaluation expenditures totaled$8.1 million, compared to $6.7 million in the comparable period in 2014. The increase reflects expendituresin relation to the PEA for the Media Luna Project, as well as 13,150 metres that were drilled in the first ninemonths of 2015. Comparatively, 6,100 metres were drilled at the El Limón Sur and the Media Luna Projectin the comparable period in 2014.

The Company recognized a foreign exchange loss of $10.9 million for the nine months ended September 30,2015, compared to a gain of $6.8 million gain for the nine months ended September 30, 2014, reflectingthe impact of a weakened Mexican Peso and Canadian Dollar on non-U.S. dollar denominated monetaryassets and liabilities.

For the nine months ended September 30, 2015, the Company recognized an unrealized gain of $13.3 millionon the mark-to-market of its derivative gold contacts and an unrealized loss of $0.5 million on its derivativecurrency contracts, as well as a realized loss of $7.6 million on contracts settled in the nine months endedSeptember 30, 2015. There were no derivative gold or currency contracts in the nine months endedSeptember 30, 2014.

The Company recognized income tax expense of $3.5 million in the nine months ended September 30,2015, compared to $1.5 million in the comparable period in 2014. The increase compared to 2014 relatesto the deferred income tax liability on the decommissioning liability of the ELG Mine recognized during2015.

SUMMARY OF QUARTERLY RESULTS

Table 1: Quarterly Results for the Eight Most Recently Completed Quarters

in millions, except pershare amounts

2015 2014 2013

Sept 30 Jun 30 Mar 31 Dec 31 Sept 30 Jun 30 Mar 31 Dec 31

Operating revenues $ — $ — $ — $ — $ — $ — $ — $ —General & administrative 2.8 2.7 2.9 4.5 3.0 3.6 3.4 2.9Exploration and evaluation 1.7 2.7 3.7 5.5 1.8 0.5 4.3 8.9

Net loss $ 4.8 $ 9.2 $ 10.7 $ 15.7 $ 1.1 $ 6.2 $ 3.3 $ 26.7Basic and diluted

loss per share $ 0.01 $ 0.01 $ 0.01 $ 0.02 $ — $ 0.01 $ 0.01 $ 0.04

The net loss in all quarters includes costs for exploration, evaluation, corporate general and administrativecost, and foreign exchange gains and losses. The net loss also includes derivative and financing costs, asapplicable.

The Company’s policy is to expense all mineral property exploration and evaluation costs when incurredand to capitalize its development expenditures. Exploration expenditures, including drilling, sampleprocessing, road maintenance, water consumption, security, and personnel costs, were lowest in the secondand third quarters of 2014 when the Company suspended the drilling program at the ELG Mine and the

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Media Luna Project. The number of drills in operation during those quarters was reduced from 14 to 0 drillswith the conclusion of the drilling program at the Media Luna Project and exploration expenses havedecreased accordingly.

Corporate general and administrative expenses, which include depreciation on corporate assets, remainedrelatively consistent for the eight most recent quarters, however share-based compensation expense andsalaries and benefits varied during that time. In general, share purchase options vest over a two-year termwith one-third of the options vesting immediately and one-third vesting on each of the two subsequentanniversary dates. The related expense is based on the vesting dates, with one third of the expense recordedimmediately, one-third of the expense amortized equally over the first year, and one­third of the expenseamortized equally over two years. Restricted share units are expensed from the issue date over the vestingperiod. As a result, quarterly share based compensation expense was the greatest during the quarters inwhich options were granted. Further, the majority of expenses related to salaries, benefits and share-basedcompensation are denominated in Canadian dollars. A weakening of the Canadian dollar will result in lowerU.S. dollar equivalent amounts.

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

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

The Company’s deferred income tax expense rose significantly in the fourth quarter of 2013, as the Companyrecognized a deferred tax liability relative to the new Mexican mining royalty regime. The deferred taxliability for income tax withholding increased with the interest accrued on the intercompany loans. Thedeferred tax liability relative to the Mexican mining royalty fluctuates with the revaluation of the initiallyrecognized Mexican peso-denominated liability.

LIQUIDITY AND CAPITAL RESOURCES

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

The total assets of the Company as at September 30, 2015 were $1,047.5 million (December 31, 2014 –$773.6 million), which includes $74.4 million in cash and cash equivalents (December 31, 2014 –$99.4 million), excluding restricted cash of $44.6 million (December 31, 2014 – $15.0 million). The Companyhad working capital of $76.8 million as at September 30, 2015, compared to $83.9 million at December 31,2014.

Cash flow used in operating activities, including a change in non-cash working capital, for the nine monthsended September 30, 2015 totaled $19.6 million, compared to $3.9 million for the nine months endedSeptember 30, 2014. The increase in cash flows used in operations is primarily a result of the realized losson the derivative currency contracts of $7.6 million. This was partly offset by an increase in accounts payableand accrued liabilities during the nine months ended September 30, 2015 compared to the same periodin 2014.

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Investing activities resulted in cash outflows of $270.0 million for the nine months ended September 30,2015, compared with cash outflows of $198.6 million for the nine months ended September 30, 2014. Inboth periods, the outflows include the purchase of equipment and the capitalization of expenditures directlyrelated to the development of the ELG Mine. Development activity has been increasing steadily since thefourth quarter of 2013 when the final construction decision was made. Cash flows used in investing activitiesinclude the collection of $24.4 million in VAT refund, excluding interest, partly offsetting the increase in VATpaid of $35.6 million relating to construction activities. Investing activities also reflect the investment of$30.9 million of restricted cash which has been set aside for potential cost overruns, as described in “DebtFinancing”. This was partly offset by the release of $1.3 million in the amount restricted for potentialobligations in the event of an unplanned temporary closure of the ELG Mine.

Financing activities resulted in cash inflows of $269.4 million for the nine months ended September 30,2015, compared with $201.9 million for the nine months ended September 30, 2014. Cash flows fromfinancing activities in the first nine months of 2015 relate to further draws from the Loan Facility totaling$270.0 million. Comparatively, in the nine months ended September 30, 2014, the Company completed apublic bought deal offering of 119,830,000 Units at a price of CDN $1.20 per Unit, for aggregate grossproceeds of approximately CDN $143.8 million (or $130.0 million) and net proceeds net of approximatelyCDN $136.9 million (or $123.8 million).

As discussed under “Debt Financing,” an amendment to the Facility was completed on March 30, 2015. Theamendment includes adjustments to accommodate the financing impacts of a change in the plannedschedule, as well as additional conservatism in the event that the schedule for the first gold pour slips intothe first quarter of fiscal 2016. Consequently, additional funding may be required to be injected into theELG Mine’s reserve fund for potential project cost overruns. The Company continues to expect that firstgold will occur in the fourth quarter of 2015. Furthermore, as set out in the Credit Agreement, the Companyis restricted from repatriating funds from Minera Media Luna, S.A. de C.V., the borrower under the CreditAgreement, until Final Completion pursuant to the Loan Facility.

As at September 30, 2015, the Company’s contractual obligations included a head office lease agreement,office equipment leases, long-term land lease agreements with the Rio Balsas, the Real del Limón, and theValerio Trujano Ejidos and the individual owners of land parcels within certain of those Ejido boundaries,a five-year exploration access agreement with the Puente Sur Balsas Ejido, and contractual commitmentsrelated to the ongoing construction of the ELG Mine. All of the long-term land lease agreements and theexploration agreement can be terminated at the Company’s discretion at any time without penalty. Thefive-year exploration access agreement includes access to the new discoveries at the Media Luna Project.These agreements are not included in the contractual commitments reported below. In addition, theCompany has entered into several exploration-related agreements, none of which are expected to extendbeyond a one-year term. The Company has entered into development-related agreements for the ELG Minethat extend through 2016.

Table 2: Contractual Commitments (in thousands)

TotalLess than 1

year 1-3 years 4-5 yearsGreater than

5 years

Long-term leases $ 767 $ 169 $ 321 $ 276 $ —

ELG Mine commitments 72,663 72,663 — — —

Total $ 73,430 $ 72,832 $ 321 $ 276 $ —

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ECONOMIC TRENDS AND LIQUIDITY AND CAPITAL RESOURCES OUTLOOK

As at September 30, 2015, the total amount spent on the development of the ELG Mine was $604 million,with a current estimated amount to complete of $196 million. The remaining costs to complete are expectedto be funded through the Company’s existing cash resources, remaining undrawn amounts under the LoanFacility, restricted cash reserves if necessary, funds from the collection of VAT receivables, proceeds frompre-production sales, and proceeds from potential leasing arrangements. In October 2015, the Companydrew an additional $35 million under the Loan Facility. See “Debt Financing” for a description of theCompany’s debt financing.

The average trading price of a troy ounce of gold for the three and nine months ended September 30, 2015was $1,124 and $1,179, respectively, compared with $1,282 and $1,288 for the three and nine monthsended September 30, 2014, representing a decrease of 12% and 8%, respectively, period over period. Themarket price of gold continues to exhibit significant volatility. Although the Company does not yet have aproducing mine, the average price of gold will impact the valuation and financial models of the ELG Mineas well as the Company’s share price.

OFF-BALANCE SHEET ARRANGEMENTS

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

FINANCIAL RISK MANAGEMENT

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

Credit risk

Credit risk is the risk of a loss associated with a counterparty’s inability to fulfill its contractual paymentobligations. The Company’s financial assets are primarily composed of cash and cash equivalents, restrictedcash, and VAT receivable. To mitigate exposure to credit risk, the Company has adopted strict investmentpolicies, which prohibit any equity or money market investments. All of the Company’s cash, cashequivalents, and restricted cash are held with reputable financial institutions.

Liquidity risk

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financialobligations as they come due. The Company has a history of operating losses and has traditionally obtainedcash from its financing activities and as a result the Company’s liquidity may be adversely affected if theCompany’s access to the capital market is hindered, whether as a result of a downturn in stock marketconditions generally or related to matters specific to the Company. In the opinion of management, theCompany’s working capital balance, along with remaining undrawn amounts under the Loan Facility, issufficient to carry out its near term exploration, development, construction and planned corporate activities.

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meetliabilities when due. At September 30, 2015, the Company had a cash balance of $74.4 million (excludingrestricted cash of $44.6 million) (December 31, 2014 – cash balance of $99.4 million, excluding restricted

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cash of $15.0 million). The Company holds its cash in fully liquid Schedule A bank business investmentsavings accounts.

As at September 30, 2015, the Company had drawn down a total of $315.0 million on its Loan Facility, withan additional $35.0 million drawn in October 2015. Subsequent draws on the Loan Facility are subject tosatisfaction of certain customary conditions precedent.

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

Cash flows that are expected to fund, in part, the ELG Mine construction are dependent on, among otherthings, pre-production revenues and recovery of the Company’s VAT receivables. The Company is exposedto liquidity risk with respect to its VAT receivables if the Mexican tax authorities are unable or unwilling tomake payments in a timely manner in accordance with Company’s monthly filings. Timing of collection onVAT receivables is uncertain as VAT refund procedures require a significant amount of information andfollow-up. As at September 30, 2015, the Company expects to recover $28.7 million over the next twelvemonths and a further $21.5 million thereafter.  Significant delays in the collection of VAT receivables mayaffect the Company's ability to fund the completion of the construction of the ELG Mine. The Company’sapproach to managing liquidity risk with respect to its VAT receivables is to file its refund requests on atimely basis, monitor actual and projected collections of its VAT receivables, and cooperate with the Mexicantax authorities in providing information as required. Although the Company expects a full recovery, thereremains risk on the timing of collection of the Company’s VAT receivables, which may affect the Company’sliquidity and ability to fund other priorities.

Commodity Price Risk

Gold prices have fluctuated widely in recent years and the market price of gold has decreased significantlysince 2013. There is no assurance that, even as commercial quantities of gold may be produced in thefuture, a profitable market will exist for them. Under requirements from the Loan Facility, the Companyentered into commitments to deliver 204,360 ounces of gold over an 18-month period commencing inJanuary 2016 to the Lenders, at an average flat forward gold price of $1,241 per ounce. A 10% appreciationor depreciation of gold prices would result in an increase or decrease of $22.8 million (using spot rate asat September 30, 2015) in the Company’s net loss for the period relating to the derivative gold contracts.

Foreign Currency Risk

The Company is exposed to financial risk related to foreign exchange rates. The Company operates in Canadaand Mexico and has foreign currency exposure to non-U.S dollar denominated transactions. Managementexpects the majority of exploration on the Media Luna Project and development expenditures associatedwith the ELG Mine to be paid in U.S. dollars and Mexican pesos. A significant change in the currency exchangerates between the Canadian dollar and Mexican peso compared with the U.S. dollar is expected to have aneffect on the Company’s results of operations in the future periods. As at September 30, 2015, the Companyhad cash and cash equivalents, VAT receivables, accounts payable and liabilities and income tax payablethat are in Mexican pesos and in Canadian dollars. As at September 30, 2015, a 10% appreciation ordepreciation of the Mexican peso and Canadian dollar relative to the U.S. dollar would have resulted in adecrease or increase of $4.9 million and $1.2 million in the Company’s net loss for the period, respectively.

For the three months ended September 30, 2015, the Mexican peso and Canadian dollar depreciated by9% and 8% relative to the U.S. dollar, respectively, resulting in a foreign exchange loss of $9.0 million. For

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the nine months ended September 30, 2015, the depreciation for both the Mexican peso and the Canadiandollar was 15% relative to the U.S. dollar, resulting in a foreign exchange loss of $10.9 million.

At September 30, 2015, the Company has hedged its exposure to foreign currency exchange fluctuationsthrough the execution of foreign exchange currency hedges which cover 75% of the Company’s non-U.S.dollar denominated capital expenditures from November 2014 to the second quarter of 2017. An operatingexpenditures foreign exchange currency hedge to cover exposure for 75%, 50% and 25% annually, on athree year rolling basis, of the Company’s non-U.S. dollar denominated operating expenditures for the ELGMine, will be required upon the start of commercial production. As at September 30, 2015, a 10%appreciation or depreciation of the Mexican peso relative to the U.S. dollar would have resulted in a decreaseor increase of $3.0 million (using spot rate as at September 30, 2015) in the Company’s net loss for theperiod.

Interest Rate Risk

Interest rate risk is the risk that the future cash flows of a financial instrument or is fair value will fluctuatebecause of changes in market interest rates. Amounts outstanding under the PFF of the Loan Facility bearinterest at a rate of LIBOR + 4.25% to 4.75% and advances under the COF bear interest at the same rate +1% until project completion. As at September 30, 2015, a 100 basis point change in the LIBOR rate wouldresult in a $3,150 change per annum in interest expense. The Company has not entered into any agreementsto hedge against unfavourable changes in interest rates.

The Company deposits cash in fully liquid Schedule A bank business accounts. As such, the Company doesnot consider its interest rate risk exposure to be significant at September 30, 2015 with respect to its cashand cash equivalent positions.

TRANSACTIONS WITH RELATED PARTIES

The Company did not have any transactions with related parties in the three and nine months endedSeptember 30, 2015.

OUTSTANDING SHARE DATA

Table 3: Outstanding Share Data at November 5, 2015

Number

Common shares 785,446,918

Share purchase options 33,456,918

Restricted share units 1,821,460

In the three months ended September 30, 2015, the Company granted 3,530,400 stock options, issued75,000 shares of common stock as a result of the exercise of stock options, and had 102,000 stock optionsforfeited.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

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

Development Expenditures

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

The Company uses several criteria to determine when an asset is able to operate at expected levels. Theseare complex, and depend on each development property’s plan and its economic, political andenvironmental condition. Criteria can include:

• Producing saleable material;• Completion of a reasonable period of testing of the plant and mine/mill equipment;• Achieving certain level of recoveries from the ore mined and processed; and• Sustaining ongoing production and reaching a certain level of production.

Taxes

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

VAT receivable is generated on the purchase of supplies and services, which are refundable from the Mexicangovernment. As of September 30, 2015 the amount of VAT due from the Mexican tax authorities is $50,229(or Mexican Pesos 854,260) (December 31, 2014 – $46,433) of which $28,699 is expected to be collectedwithin the next year and is presented as a current asset, with the remainder of $21,530 presented as a non-current asset. Refund claims have all been filed with the Mexican tax authorities. To date, the Company hasreceived a formal assessment only on claims filed for the fourth quarter of 2011 and 2012. For the ninemonths ended September 30, 2015, the Company received $24,435 (excluding interest of $1,138) (orMexican Pesos 387,980 excluding interest of 17,917) for VAT claims for fiscal years 2012, 2013, 2014 and2015. Each reporting period, VAT receivables are reviewed for collectability. Any allowance is based ondetermination that the Mexican government may not allow the complete refund of these taxes. A fullrecovery is expected by the Company.

Functional Currency

The determination of a subsidiary’s functional currency often requires significant judgment where theprimary economic environment in which the subsidiary operates may not be clear. This can have a significantimpact on the consolidated results of the Company.

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Impairment of Assets

The carrying value of property, plant and equipment is reviewed each reporting period to determine whetherthere is any indication of impairment. If a triggering event occurs, the carrying value of the asset is comparedto the recoverable amount. If the carrying amount of an asset exceeds its recoverable amount, the assetis impaired and an impairment loss is recognized in the consolidated statement of operations. Theassessment of the recoverability of an asset’s carrying value requires judgment about future productionand sales volumes, future commodity prices, recoverable mineral reserves, discount rates, foreign exchangerates, and future operating and capital costs.

Deferred Income Taxes

The Company recognizes the deferred tax benefit related to deferred income to the extent recovery isprobable. Assessing the recoverability of deferred income tax assets require management to makesignificant estimates of future taxable profit. To the extent that future cash flows and taxable profit differsignificantly from estimates, the ability of the Company to realize the net deferred tax assets recorded onthe reporting date could be impacted. In addition, future changes in tax laws could limit the ability of theCompany to obtain tax deductions in future periods from deferred income tax assets.

Decommissioning Liabilities

A decommissioning liability is recognized by the Company when a legal or constructive obligation to incurrestoration, rehabilitation and environmental costs arises as a result of environmental disturbance causedby the exploration, development or ongoing production of a mineral property. Decommissioning liabilitiesare measured at the present value of the expected expenditures required to settle the obligation using apre-tax rate that reflects current market assessments of the time value of money and the risks specific tothe obligation. The effect of any changes to the decommissioning liability, including changes to theunderlying estimates and changes in market interest rates used to discount the obligation, is added to ordeducted from the cost of the related assets.

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ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements Issued But Not Yet Adopted

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

IFRS 9 - Financial Instruments

IFRS 9 Financial Instruments (“IFRS 9”) was issued by the IASB on July 24, 2014 and will replace IAS 39,Financial Instruments: Recognition and Measurement (“IAS 39”). IFRS 9 utilizes a single approach todetermine whether a financial asset is measured at amortized cost or fair value and a new mixedmeasurement model for debt instruments having only two categories: amortized cost and fair value. Theapproach in IFRS 9 is based on how an entity manages its financial instruments in the context of its businessmodel and the contractual cash flow characteristics of the financial assets. Final amendments released onJuly 24, 2014 also introduce a new expected loss impairment model and limited changes to the classificationand measurement requirements for financial assets. IFRS 9 is effective for annual periods beginning on orafter January 1, 2018. The Company is currently evaluating the impact of this standard and amendmentson its consolidated financial statements.

IFRS 15 - Revenue from Contracts and Customers

IFRS 15 Revenue from Contracts and Customers (“IFRS 15”) was issued by the IASB on May 28, 2014, andwill replace IAS 18, Revenue, IAS 11 Construction Contracts, and related interpretations on revenue. IFRS15 sets out the requirements for recognizing revenue that apply to all contracts with customers, except forcontracts that are within the scope of the standards on leases, insurance contracts and financial instruments.IFRS 15 uses a control based approach to recognize revenue which is a change from the risk and rewardapproach under the current standard. Companies can elect to use either a full or modified retrospectiveapproach when adopting this standard and it is effective for annual periods beginning on or afterJanuary 1, 2018. The Company is currently evaluating the impact of IFRS 15 on its consolidated financialstatements.

RISKS AND UNCERTAINTIES

The most significant risks and uncertainties the Company faces are: the Company’s reliance on its principalassets, the ELG Mine and the Media Luna Project that form part of its 100% owned Morelos Gold Property;key issues relating to the development of the ELG Mine, including matters pertaining to the substantialcapital requirements to complete the ELG Mine and conduct further exploration of other properties, safetyand security of operations. Risks inherent in mineral exploration, mine development and mining operations,the negative operating cash flow of the Company, risks associated with the potential construction and start-up of a new mine, political and country risk, foreign taxation, the timing and receipt of the Company’santicipated refunds of value-added taxes, recent increases in demand for and cost of mining contractservices and equipment, availability of all applicable permits and licenses and adequate infrastructure, risksassociated with land title, reliability of mineral resource and reserve estimates, environmental risks andhazards, the absence of history of mineral production by the Company, dependence on key executives andemployees, competition within the industry, exchange rate fluctuations, the absence of any hedging policyby the Company, litigation and insurance risks, volatility of the market price of the common shares of theCompany, potential conflicts of interest with directors and officers, dilution risk, risks associated withcompliance with anti-corruption laws and enforcement of legal rights under the laws of Mexico and Canada,

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no certainty of economically viable mining operations, and volatility and fluctuations in gold prices whichaffect ongoing economic evaluations connected with project development and financing, and the volatilityof global markets, the impact of which is to cause volatility in the Company’s stock price and may have aresulting effect on the Company’s ability to obtain and secure financing for project advancement. For adetailed description of risks and uncertainties refer to the Company’s annual information form for the yearended December 31, 2014, which is available on SEDAR at www.sedar.com. See also “Cautionary NoteRegarding Forward-Looking Statements.”

Security Risks in the State of Guerrero

Social acceptance remains strong and supportive of the ELG Mine; however, in September 2014 there weretwo blockades of the ELG Mine that lasted two days each. The blockades were not supported by thecommunity at large and were quickly resolved with the assistance of mediation by the state government.These events are disruptive to the flow of work on the ELG Mine and are unsettling for the constructionworkers.

Of larger significance to the construction workforce was that the municipal police initiated violence thatoccurred in September 2014 in the City of Iguala against protesting students about 60 km from the ELGMine site. Municipal police fired on protesting college students, killing six and then abducting another 43.Those students have not been seen since. The incident has resulted in a national and international outcryand the federal government has responded by taking over the policing of the City of Iguala and some othermunicipalities in Guerrero.

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

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

In the third quarter of 2015, the Company signed a letter of intent with the Ministry of Public Safety of theState Government of Guerrero , endorsed by the Federal Government, for the provision of permanent policepresence in the areas adjacent to the Company's Morelos Gold Property. In the first stage, the Ministry willestablish three check points with permanent police presence which, along with regular patrols, will controlaccess to the communities in the areas adjacent to the ELG Mine. The Media Luna Project, will receive somesecurity benefits from this program, with more comprehensive coverage planned for later programs. TheCompany will support the program with infrastructure including lodging for the police force, and goods andservices in the form of transportation and vehicle maintenance. The program will come into effect

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immediately upon settling and signing a formal agreement on terms and conditions mutually acceptableto the parties and may be renewed on a yearly basis by agreement of the parties.

Mexican Tax Reform

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

INTERNAL CONTROL OVER FINANCIAL REPORTING

The Chief Executive Officer and Chief Financial Officer of the Company are responsible for designing internalcontrols over financial reporting or causing them to be designed under their supervision in order to providereasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with IFRS. The Company’s internal control framework wasdesigned based on the framework issued by the Committee of Sponsoring Organizations of the TreadwayCommission (“COSO,” 1992).

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

Disclosure Controls and Procedures

Disclosure controls and procedures have been designed to provide reasonable assurance that all relevantinformation required to be disclosed by the Company is accumulated and communicated to seniormanagement as appropriate to allow timely decisions regarding required disclosure. The Company’s ChiefExecutive Officer and Chief Financial Officer have concluded that as of September 30, 2015, the Company’sdisclosure controls and procedures provide reasonable assurance that material information is made knownto them by others within the Company are appropriately designed.

Limitations of Controls and Procedures

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

QUALIFIED PERSON

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

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This MD&A contains “forward-looking statements” and “forward-looking information” within the meaningof applicable Canadian securities legislation. Forward-looking information includes, but is not limited to,information with respect to the future exploration and development plans concerning the Morelos GoldProperty, the adequacy of the Company’s financial resources, business plans and strategy and other eventsor conditions that may occur in the future, and the results set out in the Technical Report including the PEA(including with respect to mineral resource and mineral reserve estimates, the ability to realize estimatedmineral reserves, the Company’s expectation that the ELG Mine will be profitable with positive economicsfrom mining, recoveries, grades, annual production, receipt of all necessary approvals and permits, theparameters and assumptions underlying the mineral resource and mineral reserve estimates and thefinancial analysis, and gold prices). Generally, forward-looking information can be identified by the use offorward-looking terminology such as “plans,” “expects,” or “does not expect,” “is expected,” “budget,”“scheduled,” “estimates,” “forecasts,” “intends,” “anticipates,” or “does not anticipate,” or “believes” orvariations of such words and phrases or statements that certain actions, events or results “may,” “could,”“would,” “might,” or “will be taken,” “occur,” or “be achieved.” Forward-looking information is subject toknown and unknown risks, uncertainties and other factors that may cause the actual results, level of activity,performance or achievements of the Company to be materially different from those expressed or impliedby such forward-looking information, including risks associated with the exploration, development andmining industry generally such as economic factors as they effect exploration, development and mining,future commodity prices, satisfaction of conditions precedent of further draws under the Loan Facility,government policies and practices in respect of the administration of value-added tax refunds, marketconditions, changes in interest rates, safety and security, access to the Morelos Gold Property, actual resultsof current exploration and development activities not being consistent with expectations, unexpectedevents and delays impacting exploration and development activities, parameters and assumptionsunderlying mineral resource and mineral reserve estimates and financial analyses being incorrect,government regulation, political, social or economic developments, environmental matters, insurance,capital expenditures, operating or technical difficulties in connection with development activities, hiringthe required personnel and maintaining personnel relations, ability to realize estimated mineral reserves,annual production, recoveries, grades, receipt of all necessary approvals and permits, the speculative natureof gold exploration and development, including the risks of diminishing quantities of grades of mineralresources and mineral reserves, contests over property title, and changes in project parameters as plansfor the Morelos Gold Property continue to be refined as well as those risk factors included herein andelsewhere in the Company’s public disclosure. Forward-looking information is based on the reasonableassumptions, estimates, analysis and opinions of management made in light of its experience and itsperception of trends, current conditions and expected developments, as well as other factors thatmanagement believes to be relevant and reasonable in the circumstances at the date that such statementsare made, but which may prove to be incorrect. Although the Company believes that the assumptions andexpectations reflected in such forward-looking information are reasonable, undue reliance should not beplaced on forward-looking information because the Company can give no assurance that such expectationswill prove to be correct. In addition to other factors and assumptions which may be identified in this MD&A,assumptions have been made regarding, among other things: the Company’s ability to carry on itsexploration and development activities planned for the Morelos Gold Property, the timely completion ofdevelopment and construction of the ELG Mine to bring it into commercial production, the receipt of anyrequired approvals and permits, the price of gold, the ability of the Company to obtain qualified personnel,equipment and services in a timely and cost-efficient manner, the ability of the Company to operate in asafe, efficient and effective manner, the ability of the Company to obtain financing on acceptable terms,the ability of the Company to access the Morelos Gold Property, the accuracy of the Company’s mineral

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

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

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

November 5, 2015

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