Golden Queen Mining Co. Ltd.: Schedule 14A

GOLDEN QUEEN MINING CO. LTD.
(Name of Registrant as Specified In Its Charter)

Not Applicable
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

I am pleased to invite you to Golden Queen’s 2015 Annual Meeting of Shareholders.

Please read this Circular as it contains important information about the meeting, who is eligible to vote, how to vote, the nominated directors, our governance practices, and compensation of our executives and directors.

2014 was a momentous year for Golden Queen. After almost three decades of effort, the Soledad Mountain gold and silver mining project is under construction and on track to start commissioning in late 2015. By far, the greatest achievement of 2014 was the completion of a joint venture financing of the Soledad Mountain Project, which injected a gross $110 million of equity capital in exchange for a 50% interest in the Project. Golden Queen’s 50% JV partner at Soledad Mountain is an entity called Gauss, which is owned 67.5% by Leucadia National Corporation and 32.5% by my family.

The Soledad Mountain project has raced forward. Working with experienced, local contractors wherever possible, we have completed all earthmoving projects on site. As I write this letter in April 2015, we have completed the workshop-warehouse and assay laboratory and have started taking delivery of our Komatsu mining equipment fleet. One of our major reasons for choosing a Komatsu fleet is that the Komatsu dealer in the south-western United States has committed to build a maintenance facility in Mojave, which both promises good service for Golden Queen and expands the economic benefit to the community. That facility’s construction should track our own. We are currently pouring concrete for the crushing-screening plant and ready to begin laying the impervious heap leach pad liner. Our longest lead-time item, the high-pressure grinding roll or HPGR, was ordered in summer 2014 and should not impact construction’s critical path. Of our remaining capital costs as of April 2015, approximately 70% are now locked in under fixed-price, turn-key contracts. Most importantly, we have been assembling an outstanding, experienced team in Mojave that is excited to be part of a new operation that will have a lasting impact on the community.

To increase our mine planning confidence, we took a fresh look at our geological model of the Soledad Mountain deposit in 2014. The analysis done by an independent consulting geologist suggested that we should expect narrower vein systems than we had previously anticipated, which led to a disappointing reduction in our reported resources and reserves and an increased stripping ratio. Nevertheless, the exercise was a useful one. In mining, vein systems in an open pit scenario, careful ore from waste separation will be critical, and we expect the new interpretation to help us considerably in that effort.

The analysis also reminded us of how prospective the Soledad Mountain ore body remains. Because we have had an economic resource since the 1990’s, in recent years Golden Queen has prioritized spending shareholders’ funds on advancing the permitting process and on construction rather than on new drilling. We have completed an infill drill program in the areas we expect to mine over the next 18-24 months and will provide an update as soon as all assays have been received and the analysis and interpretation of the results have been completed.

Without question, Golden Queen’s mission in 2015 is to construct the Soledad Mountain project on time and on budget and to transition smoothly into production. To date, we are proceeding well.

Near term milestones will include the start of pre-production mining, the delivery and installation of the HPGR during the summer, and the commissioning of the processing facilities in late 2015. While it is hard to estimate a timeline, we will also work to secure a commercial agreement with an experienced industry partner for our aggregates business.

Over the course of the year, we will be going through a major transformation as we staff up from around a dozen to nearly 170 employees. We are thrilled to be joined by our new colleagues, and they seem equally excited.

2014 was the most significant year in Golden Queen’s 30 year history, and this year should see us complete our long-awaited journey into production. On behalf of the Board and management team, I thank you for your continued confidence in Golden Queen.

Caution Regarding Forward-Looking Information and “Safe Harbor” Statement

Certain statements contained in this Chairman’s letter to shareholders constitute forward-looking information and forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and applicable Canadian securities legislation (collectively, “forward-looking statements”. The use of any of the words “promise”, “should”, “approximately”, “will”, “suggest”, “expect”, “believe” and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors relating to Golden Queen’s operations and business environment that are difficult to predict and beyond Golden Queen’s control. Such factors and assumptions may cause actual results or events to differ materially from those anticipated in such forward-looking statements. In particular, this Chairman’s letter to shareholders contains forward-looking statements pertaining to: (i) Golden Queen’s business strategy and focus; (ii) development and construction activities planned for the Soledad Mountain project; (iii) expectations regarding Golden Queen’s staffing levels; and (iv) expectations regarding Golden queen’s future working capital position. Golden Queen believes the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct. Such forward-looking statements included in this Chairman’s letter to shareholders should not be unduly relied upon. Golden Queen cautions that the foregoing list of important factors that may affect future results in not exhaustive. When relying on forward-looking statements to make decisions with respect to Golden Queen, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Golden Queen undertakes no obligation to update or revise any forward-looking statements, except as required by law.

Golden Queen uses Canadian Institute of Mining, Metallurgy and Petroleum definitions for the terms “proven reserves”, “probable reserves”, “measured resources”, “indicated resources” and “inferred resources”. U.S. investors are cautioned that while these terms are recognized and required by Canadian regulations, including National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”), the U.S. Securities and Exchange Commission (“SEC”) does not recognize them. Accordingly, information contained in this Chairman’s letter to shareholders contains descriptions of Golden Queen’s mineral deposits that may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the U.S. federal securities laws and the rules and regulations thereunder.

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD AT 10:00 A.M. ON JUNE 3, 2015

NOTICE IS HEREBY GIVEN that the 2015 Annual General Meeting of Shareholders (the “Meeting”) of Golden Queen Mining Co. Ltd. (the “Company”) will be held at 10:00 a.m. (Pacific Standard Time) on Wednesday, June 3, 2015 at the Pan Pacific Hotel, Gazebo 1, 999 Pan Pacific Way, Vancouver, BC, V6C 3B5, for the following purposes:

The specific details of the matters proposed to be put before the Meeting are set forth in the Management Information Circular accompanying and forming part of this Notice.

The board of directors has fixed April 28, 2015 as the record date for determining shareholders entitled to receive notice of, and to vote at, the Meeting or any adjournment or postponement thereof. Only shareholders of record at the close of business on that date will be entitled to receive notice of and to vote at the Meeting.

All shareholders are invited to attend the Meeting in person, but even if you expect to be present at the Meeting, you are requested to mark, sign, date and return the enclosed proxy card as promptly as possible in the envelope provided to ensure your representation. All proxies must be received by our transfer agent not less than 48 hours, excluding Saturdays, Sundays, and holidays, before the time of the Meeting in order to be counted. The address of our transfer agent is as follows: Computershare Trust Company of Canada, Proxy Dept., 100 University Ave., 8^thFloor, Toronto, ON, M5J 2Y1. Shareholders of record attending the Meeting may vote in person even if they have previously voted by proxy.

“H. Lutz Klingmann”
H. Lutz Klingmann, President & Chief Executive Officer

In this Proxy Statement, all references to “$” are references to United States dollars and all references to “C$” are references to Canadian dollars. As at April 28, 2015, one Canadian dollar was equal to approximately $0.8319 in United States dollars.

The enclosed proxy (this “Proxy Statement” or “Proxy”) is solicited by the Board of Directors (the “Board”) of Golden Queen Mining Co. Ltd., a British Columbia corporation (the "Company" or “Golden Queen”), for use at the Annual General Meeting of Shareholders (the “Meeting”) of Golden Queen to be held at 10:00 a.m. (Pacific Standard Time) on Wednesday, June 3, 2015, at the Pan Pacific Hotel, Gazebo 1, 999 Pan Pacific Way, Vancouver, BC, V6C 3B5, and at any adjournment or postponement thereof.

In this Proxy Statement, “Registered Shareholders” means shareholders whose names appear on the records of the Company as the registered holders of shares. “Beneficial Shareholders” means shareholders who do not hold shares in their own name, as further explained under “Voting by Beneficial Shareholders” below.

This Proxy Statement and the accompanying proxy card are being mailed to our shareholders on or about May 6, 2015. The Company is sending proxy-related materials directly to Registered Shareholders, as well as non-objecting Beneficial Shareholders under Canadian National Instrument 54-101 (“NI 54-101”). Management of the Company does not intend to pay for intermediaries to forward the proxy-related materials to objecting Beneficial Shareholders under NI 54-101. As a result, objecting Beneficial Shareholders will not receive the materials unless the objecting Beneficial Shareholder’s intermediary assumes the cost of delivery.

The cost of solicitation will be paid by the Company. The solicitation will be made primarily by mail. Proxies may also be solicited personally or by telephone by certain of the Company’s directors, officers and regular employees, who will not receive additional compensation therefore. In addition, the Company will reimburse brokerage firms, custodians, nominees and fiduciaries for their expenses in forwarding solicitation materials to non-objecting Beneficial Shareholders. The total cost of proxy solicitation, including legal fees and expenses incurred in connection with the preparation of this Proxy Statement, is estimated to be $20,000.

Our administrative offices are located at 2300 – 1066 West Hastings Street, Vancouver, BC, V6E 3X2.

The persons named as proxyholder in the accompanying Proxy or Voting Instruction Form (“VIF”) were designated by the management of the Company (“Management Proxyholder”). A shareholder desiring to appoint some other person (“Alternate Proxyholder”) to represent him or her at the Meeting may do so by inserting such other person's name in the space indicated on the Proxy or VIF, or by completing another proper form of proxy. A person appointed as an Alternate Proxyholder need not be a shareholder of the Company.

The proxyholder will vote for or against or withhold from voting the shares, as directed by a shareholder on the proxy, on any ballot that may be called for. In the absence of any such direction, the Management Proxyholder will vote in favour of matters described in the Proxy or VIF. In the absence of any direction as to how to vote the shares, an Alternate Proxyholder has discretion to vote them as he or she chooses.

The enclosed Proxy or VIF confers discretionary authority upon the Proxyholder with respect to amendments or variations to matters identified in the attached Notice of Meeting and other matters which may properly come before the Meeting. At present, management of the Company knows of no such amendments, variations or other matters.

If you are a Registered Shareholder, you may wish to vote by proxy whether or not you attend the Meeting in person. Registered Shareholders electing to submit a proxy may do so by completing the enclosed Proxy and returning it to the Company’s transfer agent, Computershare, in accordance with the instructions on the Proxy. You should ensure that the Proxy is received by Computershare at least 48 hours (excluding Saturdays, Sundays and holidays) before the Meeting or the adjournment thereof at which the Proxy is to be used. The chairman of the Meeting may elect to exercise his discretion to accept proxies received after the due date.

The following information is of significant importance to Beneficial Shareholders (shareholders who do not hold shares in their own name). Beneficial Shareholders should note that the only proxies that can be recognized and acted upon at the Meeting are those deposited by Registered Shareholders (those whose names appear on the records of the Company as the registered holders of shares).

If shares are listed in an account statement provided to a shareholder by a broker, then in almost all cases those shares will not be registered in the shareholder's name on the records of the Company. Such shares will more likely be registered under the name of the shareholder's broker or an agent of that broker. In the United States, the vast majority of such shares are registered under the name of Cede & Co. as nominee for The Depository Trust Company (which acts as depositary for many U.S. brokerage firms and custodian banks), and in Canada, under the name of CDS & Co. (the registration name for The Canadian Depository for Securities Limited, which acts as nominee for many Canadian brokerage firms).

If you have consented to disclosure of your ownership information, you will receive a VIF from the Company (through Computershare). If you have declined to disclose your ownership information, you may receive a VIF from your intermediary if they have assumed the cost of delivering the Proxy Statement and associated meeting materials. Every intermediary has its own mailing procedures and provides its own return instructions to clients. However, most intermediaries now delegate responsibility for obtaining voting instructions from clients to Broadridge Financial Solutions, Inc. (“Broadridge”) in the United States and in Canada.

By returning the VIF in accordance with the instructions noted on it, a Beneficial Shareholder is able to instruct the Registered Shareholder (the intermediary) how to vote on behalf of the Beneficial Shareholder. VIF’s, whether provided by the Company or by an intermediary, should be completed and returned in accordance with the specific instructions noted on the VIF. In either case, the purpose of this procedure is to permit Beneficial Shareholders to direct the voting of the shares which they beneficially own.

The VIF will name the same persons as named on the Company's Proxy to represent you at the Meeting. Although as a Beneficial Shareholder you may not be recognized at the Meeting for the purposes of voting shares registered in the name of your intermediary, you, or a person designated by you (who need not be a shareholder), may attend the Meeting as proxyholder for your intermediary and vote your shares in that capacity. To exercise this right to attend the Meeting or appoint a proxyholder of your own choosing, you should insert the name of the desired representative in the blank space provided in the VIF. Alternatively, you may provide other written instructions requesting that you or your desired representative attend the Meeting as proxyholder for your intermediary. The completed VIF or other written instructions must then be returned in accordance with the instructions on the VIF.

If you receive a VIF from the Company or Broadridge, you cannot use it to vote shares directly at the Meeting – the VIF must be completed and returned in accordance with its instructions, well in advance of the Meeting in order to have the shares voted.

In addition to revocation in any other manner permitted by law, a Registered Shareholder who has given a Proxy may revoke it by:

A revocation of a Proxy will not affect a matter on which a vote is taken before the revocation.

Only Registered Shareholders have the right to revoke a Proxy. Beneficial Shareholders who wish to change their vote must, at least seven days before the Meeting, arrange for their respective intermediaries to revoke the Proxy on their behalf.

A quorum for the transaction of business at the Meeting is one person present at the meeting representing in person or by proxy not less than 10% of the votes eligible to cast at such meeting. Broker non-votes occur when a person holding shares through a bank or brokerage account does not provide instructions as to how his or her shares should be voted and the bank or broker does not exercise discretion to vote those shares on a particular matter. Abstentions and broker non-votes will be included in determining the presence of a quorum at the Meeting. However, an abstention or broker non-vote will not have any effect on the outcome for the election of directors.

Shares for which Proxies are properly executed and returned will be voted at the Meeting in accordance with the directions noted thereon or, in the absence of directions, will be voted "FOR" fixing of the number of directors at five (5), “FOR” the election of each of the nominees to the Board of Directors named on the following page, "FOR" the resolution to ratify the appointment of BDO Canada LLP as independent auditors of the Company for the fiscal year ending December 31, 2015, and “FOR” the approval of the Company’s stock option plan. It is not expected that any matters other than those referred to in this Proxy Statement will be brought before the Meeting. If, however, other matters are properly presented, the persons named as proxies will vote in accordance with their discretion with respect to such matters.

In the United States, brokers and other intermediaries, holding shares in street name for their customers, are generally required to vote the shares in the manner directed by their customers. If their customers do not give any direction, brokers may vote the shares at their discretion on routine matters, but not on non-routine matters. All of the matters to be voted on at the Meeting are non-routine matters and brokers may not vote shares held in street name for their customers in relation to these items of business without direction from their customers.

To be effective, each matter which is submitted to a vote of shareholders, other than for the approval of auditors, must be approved by a majority of the votes cast by the shareholders voting in person or by proxy at the Meeting.

On April 28, 2015 (the “Record Date”) there were 99,928,683 shares of our common stock (the "Common Stock"), issued and outstanding, each share carrying the right to one vote. Only shareholders of record at the close of business on the Record Date will be entitled to vote in person or by proxy at the Meeting or any adjournment thereof.

To the knowledge of the directors and officers of the Company, no person or corporation beneficially owns directly or indirectly, or exercises control or direction over, more than 5% of the outstanding Common Shares as of April 28, 2015, except as described below:

Except as disclosed herein, no Person has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in matters to be acted upon at the Meeting other than the election of directors and the appointment of auditors and as set out herein. For the purpose of this paragraph, “Person” shall include each person: (a) who has been a director, senior officer or insider of the Company at any time since the commencement of the Company’s last fiscal year; (b) who is a proposed nominee for election as a director of the Company; or (c) who is an associate or affiliate of a person included in subparagraphs (a) or (b).

The Board proposes that the following five (5) nominees be elected as directors at the Meeting, each of whom will hold office until the expiration of their term or until his or her successor shall have been duly appointed or elected and qualified: H. Lutz Klingmann, Thomas M. Clay, Bryan A. Coates, Bernard Guarnera and Guy Le Bel.

Unless otherwise instructed, it is the intention of the persons named as proxies on the accompanying proxy card to vote shares represented by properly executed proxies for the election of such nominees. Although the Board anticipates that the five (5) nominees will be available to serve as directors of Golden Queen, if any of them should be unwilling or unable to serve, it is intended that the proxies will be voted for the election of such substitute nominee or nominees as may be designated by the Board.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH NOMINEE.

As part of its ongoing review of corporate governance policies, on March 5, 2014, the Board adopted a policy providing that in an uncontested election of directors, any nominee who receives a greater number of votes “withheld” than votes “for” will tender his or her resignation to the Chairman of the Board promptly following the shareholders’ meeting. The Board will consider the offer of resignation and will make a decision whether or not to accept it. In considering whether or not to accept the resignation, the Board will consider all relevant factors. The Board will be expected to accept the resignation except in situations where the considerations would warrant the applicable director continuing to serve on the Board. The Board will make its final decision and announce it in a press release within 90 days following the shareholders’ meeting. A director who tenders his or her resignation pursuant to this policy will not participate in any meeting of the Board at which the resignation is considered.

The affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the Meeting and entitled to vote is required.

The following table sets out the names of the nominees, their positions and offices in the Company, principal occupations, the period of time that they have been directors of the Company, whether or not they are considered independent or non-independent, the number of shares of the Company which each beneficially owns or over which control or direction is exercised, Board/Committee membership and attendance, and other public board of directorships information:

The Board seeks to ensure that it is composed of members whose particular experience, qualifications, attributes and skills, when taken together, will allow the Board to satisfy its oversight responsibilities effectively. The Board as a whole is responsible for identifying, screening and/or appointing persons to serve on the Board. In identifying Board candidates, it is the Board’s goals to identify persons whom it believes have appropriate expertise and experience to contribute to the oversight of a company of the Company’s nature while also allowing for other appropriate factors. The Board believes that the process in place to identify candidates and elect directors allows the most qualified candidates to be appointed independently.

The Company believes that each of the persons standing for election to the Board at the Meeting has the experience, qualifications, attributes and skills that, when taken as a whole, will enable the Board to satisfy its oversight responsibilities effectively.

The Board is responsible for overseeing management of the Company and determining the Company’s strategy and for determining whether or not a director is independent. In making this determination, the Board has adopted the definition of “independence” as set forth in NI 58-101 and NP 58-201 with the recommendation that a majority of the Board be considered “independent”. In applying this definition, the Board considers all relationships of the directors of the Company, including business, family and other relationships.

As at the date of this Proxy Statement, there are five (5) directors on the Board, H. Lutz Klingmann, Thomas M. Clay, Bryan A. Coates, Bernard Guarnera, and Guy Le Bel. Of the five directors, Bryan A. Coates, Bernard Guarnera, and Guy Le Bel are considered independent. Lutz Klingmann, President and CEO of the Company, and Thomas M. Clay, Chairman of the Board, are not considered independent. Following the Meeting, the Board, as proposed by management in this Proxy Statement, will consist of H. Lutz Klingmann, Thomas M. Clay, Bryan A. Coates, Bernard Guarnera and Guy Le Bel.

The Board does not have a policy regarding a Board members’ attendance at annual meetings of shareholders. Four (4) directors attended the Company’s 2014 annual meeting of shareholders.

H. Lutz Klingmann - President and Chief Executive Officer. Lutz Klingmann has been involved with Golden Queen Mining Co. Ltd. since 2001 and has been instrumental in the development and permitting process of the Soledad Mountain Project. He is a former Director and President of Minto Explorations Ltd. as well as a former director and president of a number of mid-tier and junior mining and exploration companies. He has developed six mines, four of which were in the southwestern United States, since mid-1981. His development and operating experience spans the globe, including Africa, Venezuela, Canada and the United States.

Andrée St-Germain - Chief Financial Officer and Corporate Secretary. Ms. St-Germain was previously an investment banker with Dundee Capital Markets where she worked exclusively with mining companies on a variety of financings and merger and acquisition advisory assignments. She holds an International Master of Business Administration degree (Honours) from Schulich School of Business (York University).

BDO Canada LLP was appointed as Golden Queen’s independent auditors on November 13, 1996. BDO Canada LLP served as Golden Queen’s independent auditors for the fiscal year ended December 31, 2014. The shareholders of the Company (the “Shareholders”) will be asked at the Meeting to vote for the appointment of BDO Canada LLP as auditors of the Company until the next annual general meeting of Shareholders or until a successor is appointed, at a remuneration to be fixed by the directors.

Representatives of BDO Canada LLP are expected to be present at the Meeting, will have the opportunity to make a statement if they desire to do so, and are expected to be available to respond to questions from Shareholders.

Although the appointment of BDO Canada LLP is not required to be submitted to a vote of shareholders, the Board believes it appropriate as a matter of policy to request that shareholders ratify the appointment of the independent auditors for the fiscal year ending December 31, 2015. The affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the Meeting and entitled to vote is required. In the event a majority of the votes cast at the meeting are not voted in favor of ratification, the adverse vote will be considered as a direction to the Board to select other independent auditors for the fiscal year ending December 31, 2016.

Section 10(A)(i) of the Exchange Act prohibits the Company’s independent auditors from performing audit services for the Company as well as any services not considered to be “audit services” unless such services are pre-approved by the Audit Committee of the Board, or unless the services meet certain de minimis standards.

Under the Company’s Audit Committee Charter, all non-audit services to be performed by the Company’s independent auditors must be approved in advance by the Audit Committee. All of the 2014 audit related fees, and tax fees were pre-approved by the Audit Committee.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF BDO CANADA LLP AS GOLDEN QUEEN'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2015.

In accordance with the requirements of the Toronto Stock Exchange (the “Exchange”), every three (3) years after institution, all unallocated options, rights and other entitlements under a security based compensation arrangement which does not have a fixed maximum number of securities issuable thereunder (commonly referred to as “rolling plans” or “evergreen plans”) must be approved by a majority of the an issuer’s security holders. Since the Stock Option Plan provides for replenishment of the number of securities reserved when options or other awards are exercised, the Exchange considers the Stock Option Plan an “evergreen plan” and therefore, subject to approval every three (3) years.

The Board adopted a 2013 stock option plan (the “Stock Option Plan” or the “Plan”) for the benefit of the Company’s Directors, executives, employees and consultants, and Shareholders most recently approved the Stock Option Plan on May 30, 2013. The Board also adopted a house keeping amendment to the Plan on April 27, 2015 to clarify the procedure for fixing the earlier termination date of stock options. A copy of the amendment is annexed to this Proxy Statement as Appendix “B”. Shareholders are required to approve all unallocated options issuable pursuant to the Stock Option Plan no later than May 30, 2016. The Stock Option Plan has been established to assist the Company in the recruitment and retention of highly qualified executives, employees and eligible consultants by providing a means to reward performance, to motivate participants to achieve important corporate and personal objectives and, to align the interests of participants with the long-term interests of Shareholders. At the Meeting, Shareholders will be asked to approve all unallocated entitlements under the Stock Option Plan. The Board has approved the unallocated options under the Stock Option Plan.

As at April 28, 2015, the Company had 99,928,683 Common Shares issued and outstanding and a maximum of 7,200,000 Common Shares were available for issuance pursuant to options granted under the Stock Option Plan as at such date. As at April 28, 2015, there were 700,000 options granted and outstanding under the Stock Option Plan (representing 0.7% of the Common Shares), leaving 6,500,000 Common Shares (representing 6.5% of the Common Shares) available for grant of further options. As of April 28, 2015, no stock options had been exercised under the Stock Option Plan.

If the resolution approving unallocated options, rights and entitlements under the Stock Option Plan is not approved by the Shareholders at the Meeting, then currently outstanding options will continue in full force and be unaffected, provided that certain amendments may be made in accordance with the Stock Option Plan. However, no new grants of options will be made pursuant to the Stock Option Plan and currently outstanding options that are subsequently cancelled or terminated will not be available to be re-granted by the Company.

Therefore, Shareholders will be asked at the Meeting to pass the following ordinary resolution, with or without variation, relating to the approval as described above. In order to be approved, the resolution must be passed by a majority of the votes cast by the holders of Common Shares present in person or represented by proxy at the Meeting. Abstentions and broker non-votes will not be counted either in favor of or against this proposal and, therefore, will have no effect on the outcomes of such proposal.

“BE IT RESOLVED THAT all unallocated entitlements issuable under the Stock Option Plan be hereby approved until the date that is three (3) years from the date hereof, being June 3, 2018.”

The Board has unanimously concluded that the approval of the continuation of the Stock Option Plan is in the best interest of the Company and its Shareholders, and recommends that Shareholders vote IN FAVOR of the approval of the Stock Option Plan. The Company has been advised that the Directors and senior officers of the Company intend to vote all Common Shares held by them in favor of the approval of the Stock Option Plan. In the absence of a contrary instruction, the person(s) designated by management of the Company in the form of proxy intend to vote FOR the approval of the Stock Option Plan.

A copy of the Stock Option Plan was filed on SEDAR at www.sedar.com on May 2, 2013 as a schedule to the Company’s Management Information Circular and on EDGAR at www.sec.gov on April 30, 2013 as a schedule to the Company’s Proxy Statement. Shareholders may request additional copies by (i) mail to: 2300 – 1066 West Hastings Street, Vancouver, BC V6E 3X2 or (ii) telephone to: (778) 373-1557.

The following table contains information regarding the members and nominees of the Board of Directors and the Executive of Golden Queen as of the Record Date:

All of the officers identified above serve at the discretion of the Board of Directors and have consented to act as directors of the Company.

There are no family relationships among any of the existing directors or executive officers of Golden Queen.

The following table sets forth certain information regarding the beneficial ownership of the Company’s Common Stock as of April 28, 2015 by:

Except as noted below, Golden Queen believes that the beneficial owners of the Common Stock listed below, based on information furnished by such owners, have sole voting and investment power with respect to such shares, except as noted in the footnote below the table.

Section 16(a) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) requires Golden Queen's directors, executive officers and persons who own more than 10% of a registered class of Golden Queen’s securities to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of Golden Queen. Directors, executive officers and greater than 10% shareholders are required by SEC regulation to furnish Golden Queen with copies of all Section 16(a) reports they file.

To the Company’s knowledge, based solely on a review of Forms 3 and 4, as amended, furnished to it during its most recent fiscal year, and Form 5, as amended, furnished to it with respect to such year, the Company believes that during the year ended December 31, 2014, its directors, executive officers and greater than 10% shareholders complied with all Section 16(a) filing requirements of the Securities Exchange Act of 1934.

The following table sets out the compensation provided to the members of the Board during the Company’s year ended December 31, 2014:

It is currently the policy of the Company to grant options to purchase Common Shares to its directors under the Company’s 2013 Stock Option Plan.

Other than as disclosed in this Proxy Statement and Management Information Circular, there are no other arrangements under which directors of the Company were compensated by the Company during the year ended December 31, 2014 for their services in their capacity as directors and, without limiting the generality of the foregoing, no additional amounts are payable under any standard arrangements for committee participation or special assignments, except that the Articles of the Company provide that the directors are entitled to be paid reasonable traveling, hotel and other expenses incurred by them in the performance of their duties as directors. The Company’s Articles also provide that if a director is called upon to perform any professional or other services for the Company that, in the opinion of the directors, is outside of the ordinary duties of a director, such director may be paid a remuneration to be fixed by the directors and such remuneration may be either in addition to or in substitution for any other remuneration that such director may be entitled to receive.

The following table sets forth information concerning the total compensation of Golden Queen’s president and chief executive officer, chief financial officer, and the chief operating officer (the “Named Executive Officers”) during the last three completed fiscal years for services rendered to Golden Queen in all capacities.

The Board approves the issuance of stock options to our directors, officers, employees and consultants. Unless otherwise provided by the Board of Directors, all vested options are exercisable for a term of five (5) years from the date of grant. During the fiscal year ended December 31, 2014, there were no options granted to the Named Executive Officers.

The following table sets forth the information concerning all option-based awards outstanding for each of Golden Queen’s Named Executive Officers as of December 31, 2014:

[1] Laurence Morris was appointed the Chief Operating Officer on May 22, 2013 and resigned on November 11, 2014.

The following table sets out information as of the end of the fiscal year ended December 31, 2014 with respect to compensation plans under which equity securities of the Company are authorized for issuance. Subsequent to the year-end, 50,000 options have expired:

AGGREGATED STOCK OPTION EXERCISES DURING THE MOST RECENTLY COMPLETED FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES

There were no stock options exercised by the Named Executive Officers during the Company’s fiscal year ended December 31, 2014.

TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND EMPLOYMENT CONTRACTS

The Company has entered into consulting or employment contracts with each of the Named Executive Officers as follows:

The Company entered into a consulting services agreement in 2004 with Mr. H. L. Klingmann, the President and Chief Executive Officer of the Company, which was amended in May of 2010. Under the original agreement, upon receipt by the Company of a feasibility study and a production decision made by the Company, a bonus of 150,000 common shares would be issued and upon commencement of commercial production on the Property, a bonus of 150,000 common shares would be issued. Pursuant to the amended agreement, an alternative 300,000 bonus shares would be issuable upon a change of control transaction or upon a sale of all or substantially all of the Company’s assets, having a value at or above C$1.00 per share of the Company, with a further 300,000 bonus shares being issuable in the event the change of control transaction or asset sale occurred at a value at or above C$1.50 per share. As at December 31, 2014, no commitment to issue the common shares has been recorded in connection with these arrangements. Subsequent to the year-end, the Company issued 150,000 common shares to Mr. Klingmann following the receipt by the Company of an updated feasibility study and a production decision having been made.

The Company entered into an employment contract on September 18, 2013 with Andrée St-Germain, the Chief Financial Officer and Corporate Secretary of the Company. Ms. St-Germain is entitled to an annual salary of C$150,000 and a one-time bonus target of C$150,000 to be payable as to 50% after six (6) months and 50% after twelve (12) months, subject to a performance review by the Compensation Committee. This bonus target was paid to Ms. St-Germain in 2014. Thereafter, Ms. St-Germain may be paid bonuses at the sole discretion of the Board. Pursuant to the contract, if Ms. St-Germain is terminated by the Company without cause during the first twelve (12) months of her employment, she will be entitled to six (6) months base salary being C$75,000. If Ms. St-Germain is terminated by the Company without cause after the first twelve (12) months of her employment, she will be entitled to twelve (12) months base salary being C$150,000. In the event that the employment of Ms. St-Germain is terminated by the Company or its successor without cause, or is terminated by Ms. St-Germain for good reason, in either case within six (6) months following a change of control, she will be entitled to receive a lump-sum severance payment equal to twenty-four (24) months base salary, being C$300,000, and two (2) times her annual bonus, being C$300,000. Ms. St-Germain’s contract continues indefinitely, unless and until terminated.

The Company entered into a letter agreement dated April 28, 2013 with Laurence Morris as the Chief Operating Officer of the Company. Under the letter agreement, Mr. Morris is entitled to an annual salary of $150,000 and a bonus of up to 200% of the base salary as determined on review at twelve (12) months and eighteen (18) months, and at the discretion of the Board. Pursuant to the agreement, in the event Mr. Morris’ employment is terminated in connection with or within six (6) months following an acquisition of the Company by another unrelated company, then Mr. Morris will be entitled to receive a one-time termination payment of 100% of his base salary, being $150,000, and all of his stock options will vest immediately. Mr. Morris’ contract continues indefinitely, unless and until terminated. Mr. Morris submitted his resignation effective November 11, 2014.

The Canadian Securities Administrators have adopted National Instrument 58-101 Disclosure of Corporate Governance Practices (“NI 58-101”) and National Policy 58-201 Corporate Governance Guidelines (“NP 58-201”) (the “Guidelines”), both of which came into force as of June 30, 2005 and effectively replaced the corporate governance guidelines and disclosure policies of the Exchange. NI 58-101 requires issuers such as the Company to disclose the corporate governance practices that they have adopted, while NP 58-201 provides guidance on corporate governance practices. In this regard, a brief description of the Company’s system of corporate governance, with reference to the items set out in NI 58-101 and NP 58-101 is set forth below.

The Board and management recognize that effective corporate governance is important to the direction and operation of the Company in a manner in which ultimately enhances shareholder value. As a result, the Company has developed and implemented, and continues to develop, implement and refine formal policies and procedures which reflect its ongoing commitment to good corporate governance. The Company believes that the corporate governance practices and procedures described below are appropriate for a company such as the Company.

NP 58-201 recommends that boards of directors of reporting issuers be composed of a majority of independent directors. With three (3) of the five (5) current directors considered independent, the Board is currently composed of a majority of independent directors. Messrs. Klingmann and Clay, in their roles as President and CEO and the Chairman of the Board, respectively, are not deemed independent. The Board holds regular meetings. Between the scheduled meetings, the Board meets as required. The independent directors met at several occasions to discuss the joint venture transaction. Management also communicates informally with directors on a regular basis, and solicits advice from directors on matters falling within their special knowledge or experience.

Thomas M. Clay, a non-independent director, was appointed Chairman of the Board on June 10, 2014. Mr. Clay’s primary roles as Chairman are to chair all meetings of the Board and to manage the affairs of the Board, including ensuring the Board is organized properly, functions effectively and meets its obligations and responsibilities. The Chairman’s responsibilities include, among other things, ensuring effective relations and communications among Board members.

The Company does not have a chairman that is independent or a lead independent director. Given the size of the Board, the Board believes that the presence of three (3) independent directors out of the five (5) directors currently on the Board, each of whom sits on the Board’s committees, is sufficient independent oversight of the Chairman of the Board and Chief Executive Officer. The independent directors work well together in the current Board structure and the Board does not believe that selecting an independent chairman or a lead independent director would add significant benefits to the Board oversight role.

The Board meets on a regular basis and holds additional meetings as considered appropriate to deal with the matters arising from developments in the business and affairs of the Company from time to time. During the fiscal year ended December 31, 2014, the Board held five (5) regular meetings, including an in-person Board meeting held on site. In addition to the business conducted at such meetings, various other matters were discussed by phone and approved by written resolution signed by all members of the Board.

The Company does not have a policy with regard to Board member’s attendance at annual meetings of Shareholders.

The Board is responsible for the overall stewardship of the Company. The Board discharges this responsibility directly and through the delegation of specific responsibilities to committees of the Board. The Board works with management to establish goals and strategies for the Company, to identify principal risks, to select and assess senior management and to review significant operational and financial matters. The Board’s mandate is available on the Company’s website at www.goldenqueen.com.

The Board has developed written position descriptions for the Chairman of the Board, the Directors of the Board, each chair of each board committee, and for the Chief Executive Officer of the Company, which are available on the Company’s website at www.goldenqueen.com.

The Company provides new directors with an overview of their role as a member of the Board and its Committees, and the nature and operation of the Company’s business and affairs. New directors also have the opportunity to discuss the Company’s affairs with legal counsel and with the Company’s independent auditors. New directors are also provided with opportunities to visit the mine site in Mojave and are invited to have discussions with the Company’s operating personnel. In 2014, all of the directors visited the Soledad Mountain Project and had the opportunity to meet with local stakeholders.

The Company does not provide formal continuing education to its Board members, but does encourage them to communicate with management, independent auditors and consultants. Board members are also encouraged to participate in industry-related conferences, meetings and education events to maintain their skills and knowledge necessary to meet their obligations as directors of the Company.

The Board has adopted a Code of Business Conduct (the “Code”), which is distributed to officers, management and employees of the Company. To ensure and monitor compliance with the Code, the Board has adopted a Whistle-blower Policy. A request for a waiver of any provision of the Code can be made in writing to the Audit Committee, however, such waiver must be approved by the Board. During the recently completed fiscal year, there was no conduct by an officer, by management or an employee that constituted a departure from the Code. The Board has also adopted a Code of Ethics for Senior Financial Officers. The Company’s Code of Business Conduct and Code of Ethics for Senior Financial Officers are available on the Company’s website at www.goldenqueen.com.

If a director or senior officer has a material interest in a transaction or agreement being considered by the Company, such individual is precluded from voting on the matter and the Board considers such matter without the individual present.

Based upon the Company's size, its current stage of development and the number of individuals on the Board, the Board considers a formal process for assessing the effectiveness and contribution of the Board as a whole, its committees or individual directors to be unnecessary at this time. The Board and its committees meet on numerous occasions during each year, each director having regular opportunity to assess the Board as a whole, its committees, and other directors in relation to assessment of the competencies and skills that the Board as a whole, its committees and directors should possess. The Board will continue to evaluate its own effectiveness and the effectiveness of its committees and individual directors in such manner.

The Board does not have an express policy regarding the separation of the roles of the Chairman of the Board and Chief Executive Officer, as the Board believes that it is in the best interests of the Company to make that determination based on the position and direction of the Company and the membership of the Board. The Board has reviewed the Company’s current Board leadership structure. H. Lutz Klingmann has been the Company’s Chief Executive Officer since May 2009, while Thomas M. Clay has been the Company’s Chairman of the Board since May 2013. In light of the composition of the Board, the Company’s size, the nature of the Company’s business, the regulatory framework under which the Company operates, the Company’s shareholder base, the Company’s peer group and other relevant factors, the Board believes that the current leadership structure is appropriate. Mr. Clay and Mr. Klingmann bring complimentary attributes to the Company’s business operations and strategic plans and generally are focused on somewhat different aspects of the Company’s operations.

The Company does not have a lead independent director. Given the size of the Board, the Board believes that the presence of three (3) independent directors out of the five (5) directors currently on the Board, each of whom sits on the Board’s committees, is sufficient independent oversight of the Chairman of the Board and Chief Executive Officer. The independent directors work well together in the current Board structure and the Board does not believe that selecting a lead independent director would add significant benefits to the Board oversight role.

Also, the Board does not have a formal policy with respect to the consideration of diversity when assessing directors and director candidates, but considers diversity as part of its overall assessment of the Board’s functions and needs.

The understanding, identification and management of risk are essential elements for the successful management of the Company. Management is charged with the day-to-day management of the risks the Company faces. However, the Board, directly and indirectly through its committees, is actively involved in the oversight of the Company’s risk management policies. The Board is charged with overseeing enterprise risk management, generally, and with reviewing and discussing with management the Company’s major risk exposure (whether financial, operating or otherwise) and the steps management has taken to monitor, control and manage these exposures, including the Company’s risk assessment and risk management guidelines and policies. Additionally, the Compensation Committee oversees the Company’s compensation policies generally, in part to determine whether or not they create risks that are reasonably likely to have a material adverse effect on the Company.

The Company has not adopted term limits for the directors on the Board or other mechanisms of board renewal because the Company believes that the imposition of term limits for its directors may lead to the exclusion of potentially valuable members of the Board. While there is a benefit to adding new perspectives to the Board from time to time, there are also benefits to having continuity and directors having in-depth knowledge of the Company’s business. The Company’s Nominating Committee considers, among other factors, skills, experience, and tenure when identifying potential director nominees.

The Company has not adopted a written policy relating to the identification and nomination of women directors and the Company has not adopted a target regarding the representation of women on the Board or in executive officer positions. The Company’s Nominating Committee identifies, evaluates and recommends candidates to become members of the Board with the goal of creating a Board that, as a whole, consists of individuals with various and relevant career experience, industry knowledge and experience, and financial and other specialized experience, while taking diversity into account. The consideration of the level of representation of women on the Board and in executive officer positions is one factor among many that plays a role in the Company’s Nominating Committee’s decision-making process.

As at the date hereof, there are no female directors on the Board and one female executive officer (50% of the total executive officers) of the Company.

The following table summarizes the particular areas of expertise for each member of the Board:

The Board of Directors has established an Audit Committee, a Compensation Committee, a Nominating Committee, and a Technical Committee. Each of the Audit Committee, Compensation Committee, Nominating Committee, and Technical Committee is responsible to the full Board of Directors. The functions performed by these committees are summarized below:

Audit Committee. The Audit Committee considers the selection and retention of independent auditors and reviews the scope and results of the audit. In addition, it reviews the adequacy of internal accounting, financial and operating controls and reviews Golden Queen’s financial reporting compliance procedures. As of the Record Date, the members of the Audit Committee are Bryan A. Coates, Bernard Guarnera and Guy Le Bel, all independent directors. Bryan A. Coates is the Chair and the “financial expert” of the Audit Committee. The Board of Directors has adopted a written charter for the Audit Committee. The Audit Committee charter is available on the Company’s website at www.goldenqueen.com. During the fiscal year ended December 31, 2014, the Audit Committee held four (4) meetings, during which all audit committee members were present.

As part of its oversight of our financial reporting process, the directors have: (1) reviewed and discussed with management our audited financial statements for the year ended December 31, 2014; (2) received a report from BDO Canada LLP our independent auditors, on the communications pursuant to the applicable standards and discussed the same with BDO Canada LLP; (3) received the written disclosures and the letter from the auditors required by Public Company Accounting Oversight Board Rule 3526 regarding the independent accountant’s communications with the audit committee concerning independence, and discussed with the independent accountant the independent accountant’s independence; and (4) considered whether or not the provision of non-audit services by the auditors is compatible with maintaining their independence and has concluded that it is compatible at this time.

Based on the foregoing review and discussions, the Audit Committee recommended to the Board that the audited financial statements should be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on March 16, 2015.

Compensation Committee. The Compensation Committee reviews and approves the compensation of Golden Queen’s senior management and officers, reviews and administers Golden Queen’s stock option plan and makes recommendations to the Board of Directors regarding such matters. As of the Record Date, the members of the Compensation Committee are Bernard Guarnera, Bryan A. Coates and Guy Le Bel, composed entirely of independent directors. The Board of Directors has adopted a written charter for the Compensation Committee. The Compensation Committee charter is available on the Company’s website at www.goldenqueen.com. During the fiscal year ended December 31, 2014, the Compensation Committee held one (1) meeting.

Nominating Committee. The Nominating Committee assists the Board in providing effective corporate governance. As of the Record Date, the members of the Nominating Committee are Bryan A. Coates, Bernard Guarnera and Guy Le Bel, composed entirely of independent directors. The Board of Directors has adopted a written charter for the Nominating Committee. The Nominating Committee charter is available on the Company’s website at www.goldenqueen.com. The Nominating Committee does not have a policy with regards to the consideration of any director candidate recommend by shareholders of the Company and the Board is of the view that it is appropriate for the Company to not have such a policy at this time. During the fiscal year ended December 31, 2014, the Nominating Committee did not hold a meeting.

Technical Committee. The Technical Committee reviews technical information on the Company’s Soledad Mountain project and makes recommendations to the Board. The Technical Committee was formed in March of 2014 and held two (2) formal meetings. The Board adopted a written charter for the Technical Committee in May 2014. As of the Record Date, the members of the Technical Committee are Guy Le Bel, Bernard Guarnera, and Lutz Klingmann.

Pursuant to National Instrument 52-110 Audit Committees of the Canadian Securities Administrators, the Company is required to disclose annually in its Information Circular certain information concerning the constitution of its audit committee and its relationship with its independent auditor, as set forth in the following:

The primary function of the audit committee (the “Committee”) is to assist the board of directors in fulfilling its financial oversight responsibilities by reviewing (a) the financial reports and other financial information provided by the Company to regulatory authorities and shareholders; (b) the systems for internal corporate controls which have been established by the Board and management; and (c) overseeing the Company’s financial reporting processes generally. In meeting these responsibilities the Committee monitors the financial reporting process and internal control system; reviews and appraises the work of external auditors and provides an avenue of communication between the external auditors, senior management and the company’s Board. The Committee is also mandated to review all material related party transactions.

The Company has adopted an Audit Committee Charter, the text of which can be found on the Company’s website at www.goldenqueen.com.

The Committee is comprised of Bryan A. Coates, Bernard Guarnera, and Guy Le Bel. All of the Audit Committee members are independent and considered to be financially literate in that each Committee member has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can presumably be expected to be raised by the Company’s financial statements.

Bryan A. Coates currently serves as President of Osisko Gold Royalties since June 2014. Prior to that, he was the Vice President, Finance and Chief Financial Officer of Osisko Mining. He was responsible for all activities related to financing, financial reporting, marketing relating to the gold industry, risk management and government relations. Mr. Coates has more than 30 years of progressive experience within the international and Canadian mining industry. Mr. Coates has an understanding of the accounting principles used by the Company to prepare its financial statements.

Bernard Guarnera has over 40 years of experience in the global mining industry and is currently President of Broadlands Mineral Advisory Services Ltd. Mr. Guarnera was the former Chairman of the Board of Behre Dolbear Group Inc., a mining consulting firm founded in 1991. Mr. Guarnera has an understanding of the accounting principles used by the Company to prepare its financial statements.

Guy Le Bel is a merger and acquisitions, and business development consultant to Canadian mining companies and has over 30 years of international experience in strategic and financial planning. He currently serves as Vice President Evaluations for Capstone Mining Corp. and is a Director of RedQuest Capital Corp. Mr. Le Bel has an understanding of the accounting principles used by the Company to prepare its financial statements.

Since the commencement of the Company’s most recently completed financial year, the Company has not relied on the exemptions contained in sections 2.4, 3.2, 3.3(2), 3.4, 3.5, 3.6, 3.8 or Part 8 of NI 52-110.

Since the commencement of the Company’s most recently completed financial year, the Company’s Board has not failed to adopt a recommendation of the Audit Committee to nominate or compensate an external auditor.

The Audit Committee pre-approves the specific audit and non-audit engagement to the rendered by the Company’s independent auditor. The Audit Committee has not adopted specific policies and procedures for the engagement of non-audit services. Subject to the requirements of NI 52-110, the engagement of non-audit services is considered by the Company’s Board, and where applicable the Audit Committee, on a case-by-case basis.

The fees for services provided by BDO Canada LLP to us in each of the fiscal years ended 2013 and 2014 were as follows:

[1] “Audit Fees” include fees necessary to perform the annual audit of the Company’s consolidated financial statements. Audit Fees include fees for review of tax provisions and for accounting consultations on matters reflected in the financial statements. Audit Fees also include audit or other attest services required by legislation or regulation, such as comfort letters, consents, reviews of securities filings and statutory audits. Audit fees also include services related to the review of the Company’s quarterly financial reports. The 2014 audit fees include C$76,916 in fees related to quarterly reviews of the Company's consolidated financial statements and C$60,745 in fees related to the audit of the Company's 50%-owned subsidiary, GQM LLC. The 2013 audit fees include C$50,397 in fees related to quarterly reviews of the Company's consolidated financial statements.

[2] “Audit-Related Fees” include services that are traditionally performed by the auditor. These audit-related services include employee benefit audits, due diligence assistance, accounting consultations on proposed transactions, internal control reviews and audit or attest services not required by legislation or regulation.

[3] “Tax Fees” include fees for all tax services other than those included in “Audit Fees” and “Audit-Related Fees”. This category includes fees for tax compliance, tax planning and tax advice. Tax planning and tax advice includes assistance with tax audits and appeals, tax advice related to mergers and acquisitions, and requests for rulings or technical advice from tax authorities. Included in the 2013 tax fees is a credit memo of C$30,281 issued in 2014 for invoices issued in 2013.

The members of the Compensation Committee during the year ended December 31, 2014 were Bernard Guarnera who serves as the Committee’s Chairman, Bryan A. Coates, and Guy Le Bel. Each Compensation Committee member is an independent director.

The Compensation Committee of the Board of Directors is responsible for reviewing and approving the remuneration of the senior management of the Company, including the President and Chief Executive Officer and the Chief Financial Officer.

The guiding philosophy of the Compensation Committee in the determination of executive compensation is ensuring that the Company is able to attract the best possible candidates for management positions, given the high level of competition for competent management in the mining industry, and to align the interests of management with those of the Company’s shareholders.

The Company’s executive compensation policies are designed to recognize and reward individual contribution, performance and level of responsibility and ensure that the compensation levels remain competitive with other precious metals development and mining companies. The key components of total compensation are base salary and incentives.

The Compensation Committee has no formal process for determining appropriate base salary ranges. Currently the Company pays compensation in the form of a base salary to its President and its Chief Financial Officer. The base salary to the President was based on a proposal from the President, which was accepted by the Company after considering his experience and expected responsibility and contribution to the Company. The base salary of the Chief Financial Officer was negotiated based on industry comparables and the Chief Financial Officer’s experience.

Stock options are granted to senior management to align the financial interests of management with the interests of shareholders of the Company and to encourage senior management to focus on strategies and results that enhance shareholder value in the longer term. The number of options to purchase Common Shares granted to each individual will depend largely on his level of responsibility and contribution to the Company’s performance.

The Compensation Committee is responsible for considering the appropriateness and effectiveness of the Company’s executive compensation policies, given prevailing circumstances. Although the shareholder vote on executive compensation, which is submitted to shareholders every three (3) years, is non-binding, the Compensation Committee will review the voting results in connection with the on-going evaluation of the Company’s compensation program.

The Compensation Committee may not delegate any of its authority to other persons.

None of the members of the Compensation Committee served as an officer or employee of the Company during the fiscal year ended December 31, 2014 (or subsequently). No current member of the Compensation Committee formerly served as an officer of the Company, and none of the current members of the Compensation Committee have entered into a transaction with the Company in which they had a direct or indirect interest that is required to be disclosed pursuant to Item 404 of Regulation S-K.

The Compensation Committee hereby reports to the Board that, in connection with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and this Proxy Statement, we have:

Submitted by the Compensation Committee.
Bernard Guarnera, Chair
Bryan A. Coates, Member
Guy Le Bel, Member

The performance graph depicts the Company’s cumulative total Shareholder returns over the five (5) most recently completed financial years based on an initial investment of $100 in the Company’s Common Stock, compared to an equal investment in the S&P/TSX Global Gold Index. The Company does not currently issue dividends. The Common Stock performance as set out in the graph does not necessarily indicate future Common Stock price performance.

Pursuant to its written charter, our Audit Committee has the responsibility to review all related party transactions on an ongoing basis.

The following is in addition to disclosure contained elsewhere herein respecting transactions involving management.

On July 26, 2013, the Company entered into agreements to issue convertible debentures for aggregate proceeds of C$10,000,000 ($9,710,603). The convertible notes are unsecured and bear interest at 2% per annum, calculated on the outstanding principal balance, payable annually. The principal amounts of the notes are convertible into shares of the Company at a price of C$1.03 per share for a period of two years. If the notes are not converted by the holder prior to the maturity date, then the Company may convert them at the lower of C$1.03 or the market price as at the maturity date. The market price on the maturity date will be determined based on the volume-weighted average price of the shares traded on the Toronto Stock Exchange for the five trading days preceding the maturity date. A total of C$7,500,000 of the offering was subscribed for by an investment vehicle managed by Thomas M. Clay, a Director and insider of the Company.

On January 1, 2014, the Company entered into an agreement to secure a $10,000,000 loan (the “January Loan”). The January Loan is provided by members of the Clay family including $7,500,000 to be provided by an investment vehicle managed by Thomas M. Clay, a Director and insider of the Company. The January Loan has a twelve-month term and bears an annual interest rate of 5%, payable on the maturity date. If the January Loan is repaid on a date that is less than 183 days before the maturity date, the Company will pay the Lenders an amount of 105% of the principal amount plus interest on the principal amount at the rate of 5% per annum accrued to the date the January Loan is repaid. The January Loan was repaid in full on the maturity date from the proceeds of new loan agreements with the lenders. For more detail, see the description of the December 31, 2014 transaction below.

On June 9, 2014, Golden Queen announced it had entered into an agreement with Gauss LLC (“Gauss”) to form a joint venture to develop and operate the Project. At the Company’s special meeting of shareholders held on September 9, 2014, the Company’s shareholders voted overwhelmingly in support of the resolution approving the Joint Venture Transaction. The Joint Venture Transaction subsequently closed on September 15, 2014. Pursuant to the agreement, the Company converted its wholly-owned subsidiary, Golden Queen Mining Co,, Inc. that was developing the Project, into a California limited liability company; Golden Queen Mining Company, LLC (“GQM LLC”). On closing of the Joint Venture Transaction, Gauss acquired 50% of GQM LLC in exchange for a $110 million investment. Golden Queen Mining Holdings, a newly incorporated subsidiary of Golden Queen holds the other 50% of GQM LLC. Gauss is a funding vehicle owned by entities controlled by Leucadia National Corporation (“Leucadia”) and certain members of the Clay family (the “Clay Group”), a shareholder group, which, at the time of the Joint Venture Transaction, collectively owned approximately 27% of the issued and outstanding shares of Golden Queen. Gauss is owned 67.5% by Gauss Holdings LLC (Leucadia’s investment entity) and 32.5% by Auvergne LLC (“Auvergne”, the Clay Group’s investment entity).

In July 2014, Golden Queen Mining Co., Inc. (the predecessor of GQM LLC) entered into an agreement for a $10,000,000 short-term loan (the “Advance”) with Leucadia and Auvergne,with the Company as guarantor. Leucadia provided $6,500,000 and Auvergne provided $3,500,000 of the Advance respectively. The Advance had an interest rate of 10.0% per annum, compounded monthly. Auvergne is managed by Thomas M. Clay, a Director and insider of the Company. On closing of the Joint Venture Transaction on September 15, 2014, GQM LLC applied part of the investment of $110,000,000 to repayment of principal and accrued interest on the Advance.

On December 31, 2014, the Company entered into an agreement with members of the Clay family to secure a $12,500,000 loan (the “December Loan”) including approximately $9,375,000 provided by an investment vehicle managed by Thomas M. Clay. Golden Queen issued two (2) promissory notes, each due July 1, 2015, with an annual interest rate of 10.0%, payable quarterly on the first business day of each quarter. A portion of the proceeds of the December Loan was used to retire the January Loan, including principal, accrued interest and an additional charge, for an aggregate payment of approximately $11,000,000. Golden Queen paid the lenders a closing fee of $1,000,000, and the balance of the proceeds of the December Loan will be used for expenses and general corporate purposes.

During the past ten years, none of the persons currently serving as executive officers and/or directors of the Company has been the subject matter of any of the following legal proceedings that are required to be disclosed pursuant to Item 401(f) of Regulation S-K including: (a) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two (2) years prior to that time; (b) any criminal convictions; (c) any order, judgment, or decree permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; (d) any finding by a court or the SEC to have violated a federal or state securities or commodities law, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud; or (e) any sanction or order of any self-regulatory organization or registered entity or equivalent exchange, association or entity. Further, no such legal proceedings are believed to be contemplated by governmental authorities against any director or executive officer.

Other than as disclosed herein, the Company is not aware of any claims, actions, proceedings or investigations pending against the Company, any director, officer or affiliate of the Company, any owner of record or beneficially of more than five percent (5%) of the Common Stock, or any associate of any such director, officer, affiliate of the Company, or security holder that, individually or in the aggregate, are material to the Company. Neither the Company nor its assets and properties is subject to any outstanding judgment, order, writ, injunction or decree that has had or would be reasonably expected to have a material adverse effect on the Company. Furthermore, the Company is not aware of any threatened lawsuits.

On January 31, 2014, the Center for Biological Diversity (the “Center”) filed an emergency petition (the “Petition”) with the United States Fish and Wildlife Service (“USFWS”) asking the USFWS to list the Mojave Shoulderband snail as a threatened or endangered species. Citing a report published more than 80 years ago, the Petition claims that the snail exists in only three places, and that most of the snail habitat occurs on Soledad Mountain, where the Company is developing its fully permitted mining operation, known locally as the Soledad Mountain Project.

On April 22, 2014, the Company learned that the USFWS had determined that there is no emergency to justify listing the Mohave Shoulderband snail as threatened or endangered under the Endangered Species Act of 1973, as amended. The USFWS has reviewed the Petition filed by the Center and has concluded that there is no imminent threat to the snail that would cause them to believe an emergency listing is required.

Even though an emergency listing was not warranted, the USFWS is required by the Endangered Species Act to continue processing the listing petition. On April 10, 2015, the USFWS announced the commencement of a 60-day public comment period as part of its decision to study the merits of the assertions made in the Petition. As USFWS states in its notice, taking this step does not mean that a listing will be warranted at the end of the 12-month study period.

The Company worked with its environmental and legal advisors to prepare a detailed response to the petition, which was filed with the USFWS on March 31, 2014. The Company’s response is available on the Company’s website at www.goldenqueen.com.

The Project has received all necessary regulatory approvals. The decision by USFWS to engage in a study does not affect the Project’s regulatory approvals or prevent the Project from moving forward.

During the second quarter of 2014, the Company filed a complaint with the National Labor Relations Board (the “NLRB”) against the Building and Construction Trades Council of Kern, Inyo, and Mono Counties (the “Union”). The complaint was in response to action taken by the Union related to a 1997 project labor agreement (the “PLA”) that the Company believes is not applicable to the current Project and, in any event, unenforceable under federal labor law.

The NLRB informed the Company that the NLRB’s General Counsel had found in favor of the Company in the above matter in early October 2014. The NLRB next informed the Company that the Union had decided not to sign the Settlement Agreement offered by the NLRB. The NLRB has issued a Complaint against the Union with the NLRB in the role of prosecutor. In the case the NLRB, Region 31, will be acting as a representative of the NLRB General Counsel and will be prosecuting this unfair labor practice charge against the Union.

A Field Attorney for the NLRB reported that he had his first substantive conversation with legal counsel for the Union on December 4, 2014. The Field Attorney explored the possibility of a settlement whereby the Union would agree not to enforce the 1997 PLA. Legal counsel for the Union indicated that they were not interested in a settlement because the Unions believed that the PLA was lawful and enforceable. The Field Attorney then asked the Company’s legal counsel about the possibility of a “non-Board” settlement, meaning a settlement between the Company and the Union. Our legal counsel’s response was that we had made several attempts to settle this issue and a likelihood of a settlement at this point was low. A hearing with the NLRB originally scheduled for February 2, 2015 has now been set for June 22, 2015.

We received notice that a complaint was filed on April 22, 2015, in United States District Court, District of Massachusetts, seeking recovery, pursuant Section 16(b) of the Exchange Act of alleged short-swing trading profits. The complaint was filed by Ryan T. Darby, as plaintiff, and named Landon T. Clay, a shareholder of the Company (“Clay”), and the Company as defendants, and alleges that Mr. Clay realized short-swing profits in connection with transactions in Company securities within six month periods. There can be no assurance that the Company will receive any funds as a result of this suit. Although the Company is only a nominal defendant in this action, time and money may be required to resolve it. The Company is unable to predict the timing or outcome of this litigation. Each of Mr. Clay and the Company believes that the allegations are without merit and intend to vigorously defend against the claims.

Shareholders can send communications to the Board of Directors by email at info@goldenqueen.com or through the Company’s website at www.goldenqueen.com.

Nominations and proposals which shareholders wish to be considered for inclusion in the Proxy Statement and proxy card for the 2016 Meeting of Shareholders must be received by the Secretary of Golden Queen by December 1, 2015, and must comply with the requirements of Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and Division 7 of Part 5 of the B.C. Business Corporations Act. After this date, any shareholder nomination or proposal will be considered untimely. The Company reserves the right to reject, rule out of order, or take other appropriate action with respect to any nomination or proposal that does not comply with these and other applicable requirements. If the Company changes the date of next year’s annual meeting by more than thirty days from the date of this year’s meeting, then the deadline is a reasonable time before the Company begins to print and mail its proxy materials.

Management is not aware of any matters to come before the Meeting other than those set forth in the Notice of Meeting. If any other matter properly comes before the Meeting, it is the intention of the person named in the proxy to vote the shares represented thereby in accordance with their best judgment on such matter.

A copy of Golden Queen’s combined annual report to shareholders and annual report on Form 10-K for the year ended December 31, 2014 accompanies this Proxy Statement and is in the form annexed to this Proxy Statement as Appendix “A”. An additional copy will be furnished without charge to beneficial shareholders or shareholders of record upon request to Investor Relations, Golden Queen Mining Co. Ltd. At 2300 - 1066 West Hastings Street, Vancouver, BC V6E 3X2.

Additional information relating to the Company is available on the Company’s website at www.goldenqueen.com, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Shareholders may request additional copies by (i) mail to: 2300 – 1066 West Hastings Street, Vancouver, BC V6E 3X2 or (ii) telephone to: (778) 373-1557.

Financial information is provided in the Company’s comparative financial statements and management’s discussion and analysis for its most recently completed financial year.

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Securities registered under section 12(g) of the Exchange Act: Common shares without par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer [ ] Smaller reporting company [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $92,437,373 as at June 30, 2014.

Indicate the number of shares outstanding of each of the registrant’s classes of common equity, as of the latest practicable date: 99,778,683 common shares as at March 16, 2015.

Portions of the registrant's Proxy Statement for the Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K, which Proxy Statement is to be filed within 120 days after the end of the registrant's fiscal year ended December 31, 2014. If the definitive Proxy Statement cannot be filed on or before the 120 day period, the issuer may instead file an amendment to this Form 10-K disclosing the information with respect to Items 10 through 14.

Certain statements contained in this Form 10-K and the documents incorporated by reference herein constitute forward-looking information and forward-looking statements within the meaning section 27A of the Securities Act of 1933 (as amended), section 21E of the Securities Exchange Act of 1934 (as amended), the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation (collectively “forward-looking statements”). The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, “may”, “will”, “projected”, “propose”, “should”, “believe”, “intend”, “subject to” and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct. Such forward-looking statements included in this Form 10-K and the documents incorporated herein by reference should not be unduly relied upon. References in this Form 10-K are to December 31, 2014, unless another date is stated, or in the case of documents incorporated herein by reference, are as of the dates of such documents.

In particular, this Form 10-K and the documents incorporated herein by reference contain forward-looking statements pertaining to the following:

With respect to forward-looking statements contained in this Form 10-K and the documents incorporated by reference herein, assumptions have been made regarding, among other things:

Actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and elsewhere in this Form 10-K and in the documents incorporated by reference:

Readers are cautioned that the foregoing lists of factors are not exhaustive. The forward-looking statements contained in this Form 10-K and documents incorporated by reference herein are expressly qualified by this cautionary statement. Except as required under applicable securities laws, the Company does not undertake or assume any obligation to publicly update or revise any forward-looking statements.

The Company uses Canadian Institute of Mining, Metallurgy and Petroleum definitions for the terms “proven reserves”, “probable reserves”, “measured resources”, “indicated resources” and “inferred resources”. U.S. investors are cautioned that while these terms are recognized and required by Canadian regulations, including National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”), the U.S. Securities and Exchange Commission (“SEC”) does not recognize them.

Canadian mining disclosure standards, including NI 43-101, differ significantly from the requirements of the SEC and SEC Guide 7, and reserve and resource information contained or incorporated by reference in this Form 10-K and in the documents incorporated by reference herein may not be comparable to similar information disclosed by companies reporting under U.S. standards. In particular, and without limiting the generality of the foregoing, the term “resource” does not equate to the term “reserve”. Under United States standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. The SEC’s disclosure standards normally do not permit the inclusion of information concerning “measured mineral resources”, “indicated mineral resources” or “inferred mineral resources” or other descriptions of the amount of mineralization in mineral deposits that do not constitute “reserves” by U.S. standards in documents filed with the SEC. U.S. investors should also understand that “inferred mineral resources” have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. It cannot be assumed that all or any part of an “inferred mineral resource” will ever be upgraded to a higher category. Under Canadian rules, estimated “inferred mineral resources” may not form the basis of pre-feasibility or feasibility studies. Investors are cautioned not to assume that all or any part of an “inferred mineral resource” exists or is economically or legally mineable. Disclosure of “contained ounces” in a resource estimate is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC standards as tonnage and grade without reference to unit measures. The requirements of NI 43-101 for identification of “reserves” are also not the same as those of the SEC, and reserves in compliance with NI 43-101 may not qualify as “reserves” under SEC standards.

Accordingly, information contained in this Form 10-K and the documents incorporated herein by reference contain descriptions of our mineral deposits that may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the U.S. federal securities laws and the rules and regulations thereunder. See Item 1A. Risk Factors.

In addition, financial information in this Form 10-K and the Company’s financial statements is presented in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The Company’s financial statements have been prepared in accordance with U.S. GAAP, and are subject to Public Company Accounting Oversight Board (United States), (“PCAOB”), and PCAOB and Canadian auditor independence standards, which are comparable to financial statements of U.S. companies. The Company prepares its financial statements in U.S. dollars.

Advance minimum royalty - Payment made before the start of commercial production under a mining lease agreement with landholders.

Exploration Stage Company – A company engaged in the search for or exploration of mineral deposits, which is not in either the development or production stage.

Development Stage Company – A company engaged in the preparation of a mineral deposit with reserves for production and which is not in the production stage.

Production Stage Company – A company engaged in the exploitation of a mineral deposit with reserves.

Fault or faulting - A fracture in the earth’s crust caused by tectonic forces with displacement along the fracture.

Grade - A term used to assign metal value to resources and reserves, such as gram per tonne (g/t) or troy ounces per ton (oz/ton). Grades are reported both in Imperial and Metric units in this Form 10-K.

Heap leaching – A process which uses dilute sodium-cyanide solutions to percolate through run-of-mine or crushed ore heaped on lined pad to dissolve gold and/or silver.

Mineral deposit - A mineral deposit is a mineralized body, which has been intersected by a sufficient number of drill holes or by underground workings to give an estimate of grade(s) of metal(s) and thus to warrant further exploration or development. A mineral deposit does not qualify as a commercially viable mineral deposit with reserves under standards set by the U.S. Securities and Exchange Commission until a final, comprehensive, economic, technical and legal feasibility study has been completed.

Mineral Resource - A mineral resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic exploitation. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral resources are sub-divided, in order of increasing geological confidence, into inferred, indicated and measured categories.

Mineral Reserve - A mineral reserve is the economically mineable part of an indicated or measured mineral resource as demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, metallurgy, processing, economic factors and other relevant factors that demonstrate, at the time of reporting, that economic exploitation can be justified. A mineral reserve includes diluting materials and allowance for losses that may occur when the material is mined. Mineral reserves are sub-divided in order of increasing confidence into probable and proven categories.

Ore - A natural aggregate of one or more minerals which, at a specified time and place, may be mined and processed and the product(s) sold at a profit or from which some part may be profitably separated.

Qualified Person or QP - An individual who (a) is an engineer or geoscientist with a university degree, or equivalent accreditation, in an area of geoscience, or engineering, relating to mineral exploration or mining; (b) has at least five years of experience in mineral exploration, mine development or operation, or mineral project assessment, or any combination of these, that is relevant to his or her professional degree or area of practice; (c) has experience relevant to the subject matter of the mineral project and the technical report; (d) is in good standing with a professional association; and (e) in the case of a professional association in a foreign jurisdiction, has a membership designation that (i) requires attainment of a position of responsibility in their profession that requires the exercise of independent judgment; and (ii) requires A. a favourable confidential peer evaluation of the individual’s character, professional judgement, experience, and ethical fitness; or B. a recommendation for membership by at least two peers, and demonstrated prominence or expertise in the field of mineral exploration or mining;

Volcanics - Rock composed of clasts or pieces that are of volcanic composition.

References to the “Company”, “Golden Queen”, “we”, “us”, “our” and words of similar meaning refer to Golden

Queen Mining Co. Ltd. The U.S. dollar (“$") is used in this Form 10-K and quantities are reported in Imperial units with Metric units in brackets.

Mr. H.L. Klingmann, P.Eng., the President of the Company, is a Qualified Person for the purposes of NI 43-101 and has reviewed and approved the technical information contained in this Form 10-K.

The Company was incorporated under the laws of the Province of British Columbia, Canada in November 1985 and has been exploring its mineral properties (the “Property”) located just south of Mojave in Kern County in southern California since that time.

The Company acquired its initial interest in the Property in 1985 and has since added to its holdings in the area. Work on the Property and on the Soledad Mountain project (the “Project”) was done, until September 10, 2014, by Golden Queen Mining Co., Inc. (“GQM Inc.”), a California corporation and the wholly-owned subsidiary of the Company. GQM Inc. was converted into a limited liability company, Golden Queen Mining Company, LLC (“GQM LLC”) on September 10, 2014 in preparation for the formation of the joint venture (the “Joint Venture”) between a newly formed entity, Golden Queen Mining Holdings, Inc. (“GQM Holdings”), a wholly owned subsidiary of the Company, and Gauss LLC (“Gauss”). The transaction to form the Joint Venture (the “Joint Venture Transaction”) was completed on September 15, 2014. Upon formation of the Joint Venture, both GQM Holdings and Gauss each owned, and continue to own, 50% of GQM LLC. See Project Financing - Joint Venture Transaction below for further details on the Joint Venture. In February 2015, the Company incorporated Golden Queen Mining Canada Ltd. (“GQM Canada”), a wholly-owned British Columbia subsidiary, to hold the Company’s interest in GQM Holdings.

As a result of the changes made in connection with the Joint Venture and the incorporation of GQM Canada, the names, place of formation and ownership of the Company’s subsidiaries and the Project as at March 16, 2015 are as follows:

The registered office of the Company is located at 1200 - 750 West Pender Street, Vancouver, BC, Canada V6C 2T8 and its executive offices are located at 6411 Imperial Ave., West Vancouver, BC, Canada, V7W 2J5. The California office of GQM LLC is located at 15772 K Street, Mojave, California, 93501.

The Company engaged Mine Development Associates (“MDA”) in 2014 to update the Project's geological model from first principles and to provide updated mineral resource estimates. The Company also engaged Norwest Corporation (“Norwest”) and Kappes, Cassiday & Associates (“KCA”) to update the reserve estimates and prepare a feasibility study and economic analysis based upon current information. The updated mineral resource and reserve estimates and results of the feasibility study were disclosed in a news release on February 10, 2015. The Company filed a technical report pursuant to National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) titled “Soledad Mountain Technical Report and Updated Feasibility Study” with an effective date of February 25, 2015 (the “Technical Report”) on the System for Electronic Document Analysis and Retrieval (“SEDAR”) on February 27, 2015 and with the U.S. Securities And Exchange Commission (“SEC”) on March 2, 2015. The Technical Report was prepared by Carl E. Defilippi of KCA, Sean Ennis of Norwest, Michael M. Gustin of MDA and Peter Ronning of New Caledonian Geological Consulting, each of whom are Qualified Persons and independent of the Company pursuant to NI 43-101. See Item 2. Properties below for detailed information regarding the Technical Report and the Project.

The Project is fully permitted. The Company expects GQM LLC to start commissioning the facilities in late 2015.

It is expected that the Project will produce two different types of materials with overlapping time frames. Open pit mining and heap leaching as presently planned is approximately twelve years of mining and leaching for the production of gold and silver, and a further two years of rinsing and drain-down. The processing and sale of waste rock as aggregate is expected to commence early in the mine life and continue for up to thirty years or until the stockpile of quality waste rock has been exhausted. Reclamation will proceed concurrently where feasible, but is nonetheless expected to require two years following the end of all mining, and a further three years of post-closure monitoring. Monitoring will continue until the reclamation success criteria are met.

There are a number of risks associated with the Project and readers are urged to consider these risks and possible other risks, in order to obtain an understanding of the Project (see Item 1A. Risk Factors below).

Construction of the basic infrastructure such as the widening of Silver Queen Road and adding turning lanes, a dip-crossing to provide access to site, a paved employee parking lot, a guard house, diesel and gasoline storage tanks and site grading began in mid-2013 and was completed in mid-2014.

Extensive site preparation such as a number of access roads, the overland conveyor route, an upper level haul road, the area where the crushing-screening plant and the Merrill-Crowe plant will be constructed, and the excavation of the events pond was completed in 2014.

Construction of the workshop-warehouse was completed as a turn-key project in the third quarter of 2014. The workshop has been equipped with lubrication equipment, waste oil storage, a compressor, work benches and shelving.

An order was placed for a high-pressure grinding roll (“HPGR”) in July 2014. Fabrication and machining at the factory in Germany is well-advanced and the HGPR is on target for early delivery in June 2015.

A contract was let for the construction of the assay laboratory as a turn-key project in September 2014. The building construction was completed in early March 2015.

Water supply and water storage – the Phase 1 project has been completed and the first production well (PW-1) was connected to site in 2014. Phases 2, 3 and 4 are underway and completion is expected in May 2015. The Company also expects GQM LLC to drill an additional production well (PW-4) in the second quarter of 2015 and complete the connection to the site water distribution system in August 2015.

A number of additional contracts for turn-key projects such as the conveying and stacking system and the Merrill-Crowe plant were negotiated with local contractors in 2014 with the last contract for the design, procurement and construction of the crushing-screening plant as a turn-key project concluded in January 2015.

Road Machinery LLC delivered a water truck and a grader in 2014. An excavator, two 40 ton haul trucks, two track dozers and a blast hole drill required for pre-production mining will be delivered in the first quarter of 2015.

On June 9, 2014, Golden Queen announced it had entered into an agreement (the “Transaction Agreement”) with Gauss to form the Joint Venture to develop and operate the Project. At Golden Queen’s special meeting of shareholders held on September 9, 2014, the Company’s shareholders voted overwhelmingly in support of the resolution approving the Joint Venture Transaction. Of the 28,416,591 shares voted at the meeting, approximately 99.6% voted in favour of the resolution. The number of shares voted at the meeting and the voting results exclude any shares held by Clay family members having an interest in the transaction. Details of the voting results were filed on SEDAR (www.sedar.com). The Joint Venture Transaction subsequently closed on September 15, 2014.

Pursuant to the Transaction Agreement with Gauss, Golden Queen converted its wholly-owned subsidiary, GQM Inc. that is developing the Project, into a California limited liability company, GQM LLC. On closing of the Joint Venture Transaction, Gauss acquired 50% of GQM LLC in exchange for its $110 million investment. GQM Holdings, a newly incorporated subsidiary of Golden Queen, holds the other 50% of GQM LLC.

Gauss and GQM Holdings entered into a joint venture agreement (the “JV Agreement”) that provides, inter alia, details of how GQM LLC will be managed and the obligations of each of the parties in connection with further funding requirements. GQM LLC is managed by a board of managers comprising an equal number of representatives of each of Gauss and GQM Holdings. The initial officers of GQM LLC are Lutz Klingmann as Chief Executive Officer, and Andrée St-Germain as Chief Financial Officer. In addition, GQM LLC made a distribution of $5 million each to Gauss LLC and GQM Holdings and paid $2.275 million to Leucadia and Auvergne as a transaction fee.

On closing of the Joint Venture Transaction, GQM LLC applied part of the investment of $110 million to repayment of principal and accrued interest on a $10 million bridge loan advanced by Leucadia National Corporation (“Leucadia”) and Auvergne, LLC (“Auvergne”) in July 2014. The repayment was for a total of $10.2 million. GQM LLC is applying the remainder of the investment to the continued development of the Project and additional fees related to the Joint Venture Transaction as described under the heading Transactions with Related Parties. Golden Queen is currently evaluating financing alternatives to fund its capital contribution to GQM LLC that is required pursuant to the terms of the JV Agreement (see Transactions with Related Parties below).

Gauss is a funding vehicle owned by entities controlled by Leucadia and certain members of the Clay family, a shareholder group which, at the time of the Joint Venture Transaction, collectively owned approximately 27% of the issued and outstanding shares of Golden Queen (the “Clay Group”). Gauss is owned 67.5% by Gauss Holdings LLC (“Gauss Holdings”, Leucadia’s investment entity) and 32.5% by Auvergne (the Clay Group’s investment entity).

Pursuant to the JV Agreement, GQM Holdings will have the right to make a single capital contribution to GQM LLC of between $15 million and $25 million, with each such threshold to be reduced by 50% of the amount of any proceeds received by GQM LLC from any debt financing transaction (the “Top-Up Contribution”). Pursuant to the JV Agreement, if Golden Queen (through GQM Holdings) makes the Top-Up Contribution, Gauss is committed to fund an amount equal to the Top-Up Contribution to GQM LLC, and the aggregate amount of such contributions are anticipated to provide GQM LLC with the necessary funds to fully develop the Project. If GQM Holdings does not make the Top-Up Contribution, Gauss will be obligated to make up to a $40 million capital contribution to GQM LLC, in which case GQ Holdco’s ownership interest in GQM LLC will be diluted and GQM Holdings will surrender one of its board seats at GQM LLC.

In connection with the Joint Venture Transaction, Golden Queen also entered into a standby purchase agreement with the members of Gauss (the “Backstop Agreement”) under which Golden Queen may, in its sole discretion, elect to require the Gauss members to purchase, under the terms of the Backstop Agreement, any common shares which have not been acquired pursuant to the exercise of rights under a potential rights offering at a price per common share not to exceed $1.10, up to a maximum amount of $45 million in the aggregate. In consideration for entering into the Backstop Agreement, Golden Queen paid Gauss a standby guarantee fee of $2.25 million (see Transactions with Related Parties below). The Transaction Agreement and Backstop Agreement contemplated that the Company would file a registration statement in connection with the rights offering by October 15, 2014, however, the Company is conducting a full review of available financing alternatives, and as a result, whether the Company will proceed with a possible rights offering (if any), and the size of any such rights offering, is not known at this time.

In connection with the Backstop Agreement Golden Queen also entered into registration rights agreements with Gauss Holdings and with Auvergne and certain members of the Clay family, under which we granted to the members of Gauss two demand registration rights and piggyback registration rights with respect to (i) common shares of Golden Queen that the members of Gauss purchase in accordance with the Backstop Agreement and (ii) common shares that the holders own as of the closing date of the transaction under the Transaction Agreement. The demand registration rights are only exercisable if Golden Queen elects to have Gauss Holdings and Auvergne purchase common shares under the Backstop Agreement. The registration rights will continue until the earlier of (i) being fully exercised in the case of the two demand rights or (ii) when all securities that may be registered under the agreements cease to be covered due to being sold under effective registration statements, transferred to persons not eligible for transfer of the registration rights or otherwise cease to be restricted from resale under Rule 144(b)(1)(i).

Following closing of the Joint Venture Transaction, Golden Queen has been treating GQM LLC as a variable interest entity (“VIE”), with Golden Queen considered to be the primary beneficiary. A VIE is an entity in which the investor, Golden Queen, holds a controlling interest, or in this case, is a primary beneficiary, that is not based on the majority of the voting rights. As a result, Golden Queen continues to reflect 100% of the financial results of GQM LLC in its consolidated financial statements, along with a non-controlling interest representing Gauss’ 50% interest in GQM LLC.

Please refer to the transaction documents filed on EDGAR on June 12, 2014, July 31, 2014 and September 16, 2014 for further details on the Joint Venture Transaction.

On January 1, 2014, the Company entered into an agreement to secure a $10 million loan (the “January Loan”). The January Loan was provided by members of the Clay family, who are shareholders of the Company, including $7.5 million provided by an investment vehicle managed by Thomas M. Clay, a Director and insider of the Company. The January Loan had a twelve-month term and an annual interest rate of 5%, payable on the maturity date.

On December 31, 2014, the Company entered into an agreement with members of the Clay family to secure $12.5 million loan (the “December Loan”) including approximately $9.4 million provided by an investment vehicle managed by Thomas M. Clay. Golden Queen issued two promissory notes, each due July 1, 2015, with an annual interest rate of 10%, payable quarterly on the first business day of each quarter. A portion of the proceeds of the December Loan was used to retire the January Loan, including principal, accrued interest and an additional charge, for an aggregate payment of approximately $11 million. Golden Queen paid the lenders a closing fee of $1 million, and the balance of the proceeds of the December Loan will be used for expenses and general corporate purposes.

The December Loan is guaranteed by GQM Holdings, under the terms of a guaranty, and secured by a pledge of Golden Queen’s interest in GQM Canada, GQM Canada’s interest in GQM Holdings, and GQM Holdings’ 50% interest in GQM LLC, under the terms of a pledge agreement. Under the terms of the December Loan, Golden Queen entered into a registration rights agreement with the lenders, under which Golden Queen granted certain registration rights to allow the lenders to register the common shares of Golden Queen held by the Clay family under the Securities Act of 1933, as amended.

The Company has a single reportable operating segment, and all mining operations and assets are located in the United States. See Item 6. Selected Financial Data, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the attached financial statements for all financial information.

The mining industry is intensely competitive. The Company and GQM LLC compete with other mining companies in the recruitment and retention of qualified managerial and technical employees, for supplies and equipment, as well as for capital. As a result of this competition in the mining industry, some of which is with large established mining companies with substantial capabilities and with greater financial and technical resources than ours, we may be unable to effectively develop the Project or obtain financing on terms we consider acceptable.

Our current and planned operations are subject to state and federal environmental laws and regulations. Those laws and regulations provide strict standards for compliance, and potentially significant fines and penalties for non-compliance. These laws address emissions, waste discharge requirements, management of hazardous substances, protection of endangered species and reclamation of lands disturbed by mining. Compliance with environmental laws and regulations requires significant time and expense, and future changes to these laws and regulations may cause material changes or delays in the development of our Project or our future activities on site.

See Environmental Issues, Permits & Approvals below for a detailed description of the effects of federal, state and local environmental regulations and permitting on the Company, GQM LLC and the Project, as well as Item 1A. Risk Factors for a discussion of the related risks.

As of March 16, 2015, the Company and GQM LLC share two executive managers. In addition, GQM LLC has currently sixteen employees. The Company works with an accounting firm, which is independent from our auditors, on a contract basis for the preparation of its consolidated financial statements, and engages various part-time consultants and contractors as needed for administrative services. Technical services related to Project permitting, development and land matters are performed by consultants and contractors on an as-needed basis.

We make available, free of charge, our annual report on Form 10-K, our quarterly reports on Form 10-Q and any amendments to those reports, on our website at www.goldenqueen.com. Our current reports on Form 8-K are available at the SEC’s website at www.sec.gov, or we will provide electronic copies of these filings free of charge upon request. Our website and the information on it is not intended to be, and is not incorporated into this Form 10-K. Additional information and filings related to the Company can be found at www.sec.gov and www.sedar.com.

The following is a brief discussion of distinctive or special characteristics of our operations and the industry in which we operate, which may have a material impact on, or constitutes risk factors in respect of, our future financial performance and in respect of an investment in the Company. These risk factors should be read in conjunction with disclosure on business and risks appearing in this Form 10-K.

The likelihood of continued losses from operations and ability to continue as a going concern

We have had no revenues from operations and negative operating cash flow since inception, and as at December 31, 2014 had a deficit of approximately $74.4 million. At December 31, 2014, on a non-consolidated basis, the parent entity had cash of approximately $8.1 million and current liabilities of approximately $23.1 million, including the December Loan of $12.5 million, which is due in July 2015 and is guaranteed by GQM Holdings and secured by a pledge of the Company’s equity interests in GQM Canada, GQM Canada’s interest in GQM Holdings and GQM Holdings’ 50% interest in GQM LLC. In addition, we have outstanding convertible debentures in the principal amount of C$10 million maturing and payable in July 2015, unless otherwise converted. The Company holds the right to decide whether to convert or pay back the debenture. Losses are expected to continue and we do not expect any cash flow from operations until such time as GQM LLC can economically produce and sell gold and silver from the Project. Our working capital obligations will require us to raise additional funds through equity or debt financing, failing which we will not be able to continue operations. The ability of the Company to obtain financing for its debt obligations, or to fund its attributable portion of capital requirements under the Joint Venture, is dependent on equity market conditions, the market for precious metals, and the willingness of other parties to lend the Company money. In order to secure the necessary funds to meet its $12.5 million debt obligation due in July 2015 and mitigate the going concern issue, management is actively exploring several financing options including debt and equity.

There are significant risks associated with developing and establishing a mining operation, and since we do not have a history of producing gold and silver from the Project, we have no proof that we will be able to develop a profitable mining operation on the Property

Through GQM LLC we are advancing the Project towards production and to date we have not produced gold or silver from the Project and do not currently generate operating earnings. Advancing the Project to the production stage will involve significant capital and time, and successful commercial production (if any) will be subject to receiving additional construction-related permits and completion of construction of the facilities required for a mining operation. As a result, we are subject to risks associated with developing and establishing a mining operation on the Property, including:

It is common for mine development programs to experience unexpected problems and delays during construction and commencement of operations. As a result, the Company and GQM LLC may not be successful in establishing a mining operation or profitably producing gold and silver from the Project.

Completion of the Joint Venture with Gauss means that the Company only has a 50% interest in the Project and our interest could be diluted further if we are not able to meet our funding obligations

The Project is our only mineral property. The 2015 updated feasibility study estimated that a capital cost of $144 million was required to develop the Project into an operating mine, which includes contingency of $15 million, working capital of $10 million and $19 million for mobile mining equipment. With closing of the Joint Venture, the Company received a portion of the funds required to continue our operations. However, our ability to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions, our business performance, as well as the market price of gold and silver. Pursuant to the JV Agreement, GQM Holdings will have a right to make a single capital contribution to GQM LLC of between $15 million and $25 million, with each such threshold to be reduced by 50% of the amount of any proceeds received by GQM LLC from any debt financing transaction, and Gauss LLC is committed to fund an equivalent amount. If GQM Holdings fails to make this Top-Up Contribution, Gauss LLC will be required to make a $40 million contribution, which will dilute GQM Holdings ownership interest in GQM LLC and GQM Holdings will be required to surrender a board seat.

The recent volatility in global equities, commodities, foreign exchange, precious metals and a lack of market liquidity, may adversely affect our development and our ability to obtain financing. There is no assurance that sources of financing will be available to us on acceptable terms, if at all. In addition, if we undertake a rights offering and not all of the rights are exercised by holders of the rights, and we exercise the right to have Gauss Holdings and Auvergne purchase Common Shares pursuant to the Backstop Agreement, Gauss Holdings and Auvergne may acquire a significant number of Common Shares, which could result in Gauss Holdings and Auvergne holding a significant ownership stake in us. In such circumstances, the liquidity of the Common Shares may be negatively impacted. However, we may not be able to exercise the right to require Gauss Holdings and Auvergne to purchase common shares pursuant to the rights offering backstop agreement. Failure to obtain additional financing on a timely basis will cause our interest in the Joint Venture to be diluted.

If we are unable to meet our funding obligations under the Joint Venture such that our interest in the Project is diluted further, the market price of our common shares may be adversely affected. In addition, we could fail to meet the listing requirements of the TSX, and would run the risk of being delisted from the TSX. While the majority of our trading volume occurs on the OTCQX International Exchange, if the TSX delists our common shares, investors may face material adverse consequences, including, but not limited to, a lack of a trading market for our securities, reduced liquidity, decreased analyst coverage of our securities, and an inability for us to obtain additional financing to fund our operations.

The board of managers and officers of the Joint Venture have discretion regarding the use and allocation of funds for the development of the Project.

The board of managers and officers of the Joint Venture have discretion concerning the use of the proceeds of the Joint Venture, as well as the timing of the application of the proceeds. As a result, shareholders are relying on the judgment of the managers and officers of the Joint Venture for the application of the proceeds. Golden Queen understands that the intention of the board of managers and officers of the Joint Venture is to spend available funds on the work program described in this Form 10K. However, due to the nature of the mining industry and operations, budgets are regularly reviewed in light of the success of the expenditures, and the work program on the Project may not develop exactly as set out in this Form 10K. In addition, GQM LLC’s ability to carry out operations will depend on the other Joint Venture participants. There may be circumstances where, for sound business reasons, a reallocation of funds or change in work program may be necessary.

Holders of common shares may suffer dilution as a result of any financing by us in order to meet our funding obligations under the Joint Venture

We will be required to raise additional capital in 2015. Further financing by us may include issuances of equity, instruments convertible into equity (such as the issuance of rights pursuant to a rights offering) or various forms of debt. We have issued common shares or other instruments convertible into equity in the past and cannot predict the size or price of any future issuances of common shares or other instruments convertible into equity, and the effect, if any, that such future issuances and sales will have on the market price of our securities. Any additional issuances of common shares or securities convertible into, or exercisable or exchangeable for, common shares may ultimately result in dilution to the holders of common shares, dilution in any future earnings per share and may have a material adverse effect upon the market price of the common shares.

Since completion of the Joint Venture, we have been reflecting 100% of the financial results of GQM LLC in our consolidated financial statements based on certain assumptions of management, which assumptions, if incorrect, may require us to account for the Joint Venture differently

Following completion of the Joint Venture Transaction, Golden Queen has been treating GQM LLC as a variable interest entity with Golden Queen considered the primary beneficiary. As a result, we continue to reflect 100% of the financial results of GQM LLC in our consolidated financial statements, along with a non-controlling interest representing Gauss’ 50% interest in GQM LLC. Although no individual investor holds a controlling financial interest in GQM LLC, GQM LLC is controlled by a related party group. Accordingly, one member of the group must be identified as the primary beneficiary. As the member of the related party group most closely associated with GQM LLC, Golden Queen has determined it is the primary beneficiary. Future changes in the capital or voting structure of GQM LLC could change that outcome. If this is the case, the presentation of the information in Golden Queen’s financial statements would change, which could be perceived negatively by investors, and could have an adverse effect on the market price of Golden Queen’s common shares.

There are significant risks inherent in mineral production activities, and the possibility that losses will be uninsured

Development and production of minerals is highly speculative and involves a significant degree of risk. Mineralization of the Project may turn out to be insufficient in quantity or quality to be profitably mined. GQM LLC is also subject to significant operating hazards and risks that are normally associated with development and production of minerals, including:

Any of these hazards and risks can materially and adversely affect, among other things, the development of the Project, production quantities and rates, costs and expenditures, potential revenues and production dates. They may also result in damage to, or destruction of, production facilities, environmental damage, monetary losses and legal liability.

GQM LLC currently maintains insurance within ranges of coverage consistent with industry practice in relation to some of these risks, but there are certain risks against which GQM LLC cannot insure, or against which GQM LLC cannot maintain insurance at affordable premiums. Insurance against environmental risks (including pollution or other hazards resulting from the disposal of waste products generated from production activities) is not generally available to GQM LLC. If subjected to environmental liabilities, the costs incurred would reduce funds available for other purposes, and GQM LLC may have to suspend operations or undertake costly interim compliance measures to address environmental issues.

Mineral resource and reserve estimates are based on interpretation and assumptions, and the Project may yield lower production of gold and silver under actual operating conditions than is currently estimated

Unless otherwise indicated, mineral resource and reserve figures presented in this Annual Report on Form 10-K and in our filings with securities regulatory authorities, press releases and other public statements that may be made from time to time, are based upon estimates made by independent consulting geologists and mining engineers. When making determinations about whether or not to develop the Project, we must rely upon such estimates as to the mineral resources and reserves, as well as grades of such mineral resources and reserves. Until GQM LLC is actually mining and processing material, mineral resources and reserves and grades of mineral resources and reserves must be considered as estimates only.

Estimates can be imprecise and depend upon geological interpretation and statistical inferences drawn from drilling and sampling, which may prove to be unreliable. We cannot assure you that the estimates are accurate or that mineralized materials from the Project can be mined or processed profitably.

Any material changes in mineral resource or reserve estimates and grades of resources and reserves will affect the economic viability of placing the Project into production and the Project’s return on capital

As GQM LLC has not commenced actual production from the Project, mineral resources and reserves may require adjustments or downward revisions. In addition, the grade of mineralized material ultimately mined, if any, may differ from that indicated by our 2015 updated feasibility study. Gold and silver recovered in small scale tests may not be duplicated on a production scale.

The mineral resource and reserve estimates contained in this Form 10-K have been determined and valued based on assumed future prices for gold and silver, cut-off grades and operating costs that may prove to be inaccurate. Extended declines in prices for gold or silver may render our estimates uneconomic and result in reduced reported mineralization or adversely affect our determinations of commercial viability. Any material reductions in estimates of mineralization, or of our ability to profitably extract gold and silver from our resources and reserves, could have a material adverse effect on our share price and the value of the Project.

There are differences in U.S. and Canadian practices for reporting mineral resources and reserves

Our mineral resource and reserve estimates are not directly comparable to those made in filings subject to SEC reporting and disclosure requirements, as we generally report mineral resources and reserves in accordance with Canadian practices. These practices differ from the practices used to report resource and reserve estimates in reports and other materials filed with the SEC.

It is Canadian practice to report measured, indicated and inferred mineral resources, which are generally not permitted in disclosure filed with the SEC by United States issuers. In the United States, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into reserves. Further, “inferred mineral resources” have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Disclosure of “contained ounces” is permitted disclosure under Canadian regulations, however, the SEC only permits issuers to report “resources” as in place, tonnage and grade without reference to unit measures.

We are subject to significant governmental regulations, which affect our operations and costs of conducting our business

The Company’s and GQM LLC’s current and future operations are and will be governed by laws and regulations, including, among others, those relating to:

Companies engaged in development and production activities often experience increased costs and delays as a result of the need to comply with applicable laws, regulations, and permits. Failure to comply with these may result in enforcement actions, orders issued by regulatory or judicial authorities requiring operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or costly remedial actions. The Company or GQM LLC may be required to compensate those suffering loss or damage by reason of our activities and may have civil or criminal fines or penalties imposed for violations of such laws, regulations and permits.

Existing and possible future laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation, could have a material adverse impact on GQM LLC’s business and cause increases in capital expenditures or require abandonment or delays in development of the Project.

GQM LLC could incur substantial costs or disruptions to its business if it cannot renew or maintain necessary approvals and permits

GQM LLC must maintain existing approvals and permits and obtain construction-related permits from regulatory authorities. Delays in obtaining any required construction-related permits, failure to obtain a construction-related permit, or receipt of a construction-related permit with unreasonable conditions or costs, could have a material adverse effect on GQM LLC’s ability to develop the Project. The failure to obtain necessary construction-related permits could result in an impairment in the carrying value of the Project.

GQM LLC’s activities are subject to California state and federal environmental laws and regulations that may increase the costs of doing business and restrict operations

GQM LLC’s current and planned operations are subject to state and federal environmental laws and regulations. Those laws and regulations provide strict standards for compliance, and potentially significant fines and penalties for non-compliance. These laws address air emissions, waste discharge requirements, management of hazardous substances, protection of endangered species and reclamation of lands disturbed by mining. Compliance with environmental laws and regulations requires significant time and expense, and future changes to these laws and regulations may cause material changes or delays in the development of the Project or future activities.

U.S. Federal Laws: The Comprehensive Environmental, Response, Compensation, and Liability Act (CERCLA), and comparable state statutes, impose strict, joint and several liability on current and former owners and operators of sites and on persons who disposed of or arranged for the disposal of hazardous substances found at such sites. It is not uncommon for the government to file claims requiring cleanup actions, demands for reimbursement for government incurred cleanup costs, or natural resource damages, or for neighbouring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances released into the environment. The Federal Resource Conservation and Recovery Act (RCRA), and comparable state statutes, govern the disposal of solid waste and hazardous waste and authorize the imposition of substantial fines and penalties for noncompliance, as well as requirements for corrective actions. CERCLA, RCRA and comparable state statutes can impose liability for clean-up of sites and disposal of substances found on exploration, mining and processing sites long after activities on such sites have been completed.

The Clean Air Act, as amended, and comparable state statutes, restrict the emission of air pollutants from many sources, including mining and processing activities. GQM LLC’s mining operations may produce air emissions, including fugitive dust and other air pollutants from stationary equipment, storage facilities and the use of mobile sources such as trucks and heavy construction equipment, which are subject to review, monitoring and/or control requirements under the Clean Air Act and comparable state air quality laws. New facilities may be required to obtain permits before work can begin, and existing facilities may be required to incur capital costs in order to remain in compliance. In addition, permitting rules may impose limitations on GQM LLC’s production levels or result in additional capital expenditures in order to comply with the rules. The Clean Air Act and comparable state statutes provide for civil, criminal and administrative penalties for unauthorized emissions of pollutants.

The Clean Water Act (CWA), and comparable state statutes, impose restrictions and controls on the discharge of pollutants into waters of the United States, or to the surface or ground waters of the state. The CWA regulates storm water runoff from mining facilities and requires a storm water discharge permit for certain activities. Such a permit requires the regulated facility to monitor and sample storm water run-off from its operations. The CWA and comparable state statutes provide for civil, criminal and administrative penalties for unauthorized discharges of pollutants and impose liability on parties responsible for those discharges for the costs of cleaning up any environmental damage caused by the release and for natural resource damages resulting from the release. Violation of these regulations and/or contamination of groundwater by mining related activities may result in fines, penalties, and remediation costs, among other sanctions and liabilities under state laws. In addition, third party claims may be filed by landowners and other parties claiming damages for alternative water supplies, property damages, and bodily injury.

The Endangered Species Act and comparable state laws are designed to protect critically imperiled species from extinction as a consequence of development. GQM LLC filed a response to statements made in a petition filed on January 31, 2014 with the United States Fish and Wildlife Service (USFWS), which petition sought to list the Mojave Shoulderband snail as a threatened or endangered species (see Item 3. Legal Proceedings in this report for additional information). In April 2014, USFWS concluded that there was no imminent threat to the snail that would cause them to believe an emergency listing was required, but that USFWS may address the petition in the future, subject to funding. Under the Endangered Species Act if the USFWS determines that the petition contains information that the species is imperiled, it then will proceed with a 90 day screening process to determine if the petition presents substantial information to support listing the subject species as endangered, and if such information exists, the USFWS has a further 12 month period to conduct a detailed assessment of the listing request to approve or deny the listing. The existence of any species listed as endangered under those laws, including as a result of the petition, on Project lands that are to be disturbed as part of the development and operation of the Project could increase the costs associated with the Project or require changes or limitations to the planned project development.

California Laws: At the state level, mining operations are also regulated by the California Department of Conservation, Office of Mine Reclamation. State law requires mine operators to hold a permit, which dictates operating controls and closure and post-closure requirements directed at protecting surface and ground water. In addition, state law requires operators to have an approved mine reclamation plan. Local ordinances require the operators to hold Conditional Use Permits. These permits mandate concurrent and post-mining reclamation of mines and require the posting of reclamation financial assurance sufficient to guarantee the cost of closure and reclamation. Any changes to these laws and regulations could have an adverse impact on our financial performance and results of operations by, for example, requiring changes to operating constraints, technical criteria, fees or financial assurance requirements.

Regulations and pending legislation governing issues involving climate change could result in increased operating costs

A number of governments or governmental bodies have introduced or are contemplating regulatory changes in response to various climate change interest groups and the potential impact of climate change. Legislation and increased regulation regarding climate change could impose significant costs on GQM LLC and its suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting and other costs to comply with such regulations. Given the current emotion, political significance and uncertainty around the impact of climate change and how it should be dealt with, we cannot predict how legislation and regulation will affect our financial condition and operating performance. Furthermore, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change by GQM LLC or other companies in our industry could harm our reputation. The potential physical impacts of climate change on our operations are highly uncertain, and may include changes in rainfall and storm patterns and intensities, water shortages and changing temperatures. These impacts may adversely impact the cost, production and financial performance of our operations.

The Company and GQM LLC monitors the status of agreements with landholders on a regular basis in order to protect GQM LLC’s interests in the Property. There can be no assurance that the Company and GQM LLC will continue to be able to retain all of GQM LLC’s interests in the Property through negotiations with landholders, or that the cost of retaining GQM LLC’s interests will not increase significantly as a result of current and future negotiations. The value of the Project may be significantly reduced if GQM LLC cannot access or mine areas of the Property that are material to the Project, due to the inability to retain the interests in the Property, acquire additional interests within the Approved Project Boundary, or to expand the Approved Project Boundary. While each and every property has its own value and unique purpose in the overall mine plan, the feasibility of the Project will depend on GQM LLC’s ability to maintain control of the portions of the Property that are material to the Project. Failure to keep property agreements in good standing may result in a loss of control of the corresponding interest in the Property, which, if material to the Project, would prevent GQM LLC from developing the Project.

Title to the Property may be subject to other claims, which could affect our property rights

There are risks that title to the Property may be challenged or impugned. The Property is located in California and may be subject to prior unrecorded agreements or transfers and title may be affected by undetected defects. There may be valid challenges to the title to the Property which, if successful, could affect development of the Project and/or operations. This is particularly the case in respect of those portions of the Property in which GQM LLC holds its interest solely through a lease with landholders, as such interests are substantially based on contract and have been subject to a number of assignments (as opposed to a direct interest in the Property).

GQM LLC holds a number of unpatented mining claims created and maintained in accordance with the General Mining Law of 1872 (the “General Mining Law”). Unpatented lode mining claims and millsites are unique property interests, and are generally considered to be subject to greater title risk than other real property interests because the validity of unpatented mining claims is often uncertain. This uncertainty arises, in part, out of the federal laws and regulations under the General Mining Law. Also, unpatented mining claims may be subject to possible challenges by third parties or validity contests by the federal government. The validity of an unpatented mining claim or millsite, in terms of both its location and its maintenance, is dependent on strict compliance with a body of U.S. federal law. Should the federal government impose a royalty or additional tax burdens on the properties that lie within public lands, the resulting mining operations could be seriously impacted, depending upon the type and amount of the burden.

Legislation has been proposed in the past that could significantly affect the mining industry

Members of the United States Congress have repeatedly introduced bills which would supplant or alter the provisions of the United States General Mining Law. If enacted, such legislation could change the cost of holding unpatented mining claims and could significantly impact our ability to mine mineralized material on unpatented mining claims. Such bills have proposed, among other things, to either eliminate or greatly limit the right to a mineral patent and to impose a federal royalty on production from unpatented mining claims. Although we cannot predict what legislated royalties might be, the enactment of these proposed bills could adversely affect GQM LLC’s potential to mine mineralized material on unpatented mining claims. Passage of such legislation could adversely affect our financial performance.

The price of gold and silver could adversely affect GQM LLC’s future operations and ability to continue development, and eventually operation, of the Project

The potential for profitability of operations on the Project, the value of the Project, the market price of our common stock and our ability to raise funding to conduct continued development, are directly related to the price of gold and silver. GQM LLC’s decision to develop the Project must be made long before the first revenue from production would be received. A decrease in the price of gold and silver may prevent the Project from being economically mined or result in the write-off of assets whose value is impaired as a result of lower gold and silver prices.

The price of gold and silver is affected by numerous factors beyond our control, including inflation, fluctuation of the U.S. dollar and foreign currencies, global and regional demand, the sale of gold and silver by central banks, and the political and economic conditions of major gold and silver producing countries throughout the world. The volatility of mineral prices represents a substantial risk which no amount of planning or technical expertise can fully eliminate. If gold or silver prices decline or remain low for prolonged periods of time, GQM LLC might be unable to continue development of the Project, which would adversely affect us.

We believe that we may be a “passive foreign investment company” for the current taxation year which would likely result in materially adverse United States federal income tax consequences for United States investors

We generally will be designated as a “passive foreign investment company” under the meaning of Section 1297 of the United States Internal Revenue Code of 1986, as amended (a “PFIC”) if, for a tax year, (a) 75% or more of our gross income for such year is “passive income” (generally, dividends, interest, rents, royalties, and gains from the disposition of assets producing passive income) or (b) if at least 50% or more of the value of our assets produce, or are held for the production of, passive income, based on the quarterly average of the fair market value of such assets. United States shareholders should be aware that we believe we were classified as a PFIC during our tax year ended December 31, 2014, and based on current business plans and financial expectations, believe that we may be a PFIC for the current and future taxable years. If we are a PFIC for any taxable year during which a United States person holds our securities, it would likely result in materially adverse United States federal income tax consequences for such United States person. The potential consequences include, but are not limited to, re-characterization of gain from the sale of our securities as ordinary income and the imposition of an interest charge on such gain and on certain distributions received on our Common Shares. Certain elections may be available under U.S. tax rules to mitigate some of the adverse consequences of holding shares in a PFIC.

Land reclamation requirements for our properties may be burdensome and expensive

Reclamation requirements are imposed on GQM LLC in order to minimize long term effects of land disturbance, and this includes a requirement to re-establish pre-disturbance land forms.

In order to carry out reclamation obligations imposed on GQM LLC in connection with development activities, GQM LLC must allocate financial resources that might otherwise be spent on further exploration and development. GQM LLC has set up and plans to set up a provision for our reclamation obligations on the Project, as appropriate, but this provision may not be adequate. If GQM LLC is required to carry out unanticipated reclamation work, our financial position could be adversely affected.

As a result of competition in the mining industry, some of which is with large established mining companies with substantial capabilities and with greater financial and technical resources than ours, GQM LLC may be unable to effectively develop the Project or obtain financing on terms we consider acceptable.

We compete with other mining companies in the recruitment and retention of qualified managerial and technical employees. If we are unable to successfully compete for qualified employees, GQM LLC’s development of the Project may be slowed down or suspended. We also compete with other mining companies for capital. If we are unable to raise sufficient capital, our interest in GQM LLC may be diluted.

We rely extensively on the services of our President, Mr. H. Lutz Klingmann, P.Eng., who has considerable current knowledge of our operations, including the Project, and the loss of his services would likely result in delay and cost associated with acquiring and training additional management

Mr. Klingmann has been largely responsible for the operations of the Company and GQM LLC, including work on the Project since 2002. The successful development of the Project as currently envisioned by management is dependent to a significant extent on the efforts and abilities of Mr. Klingmann. Investors must be willing to rely to a significant extent on management’s discretion and judgment. We do not maintain key employee insurance on Mr. Klingmann and the loss of his services would likely have an adverse effect on the Company’s and GQM LLC’s operations and plans, until such time as a replacement can be located and brought current on such plans and operations.

We have not included contributions from the sale of aggregate in the 2015 updated feasibility study cash flow projections. However, aggregate sales over a period of thirty years are important for the Project as it will permit GQM LLC to meet its closure and reclamation requirements. If no sale of waste rock as aggregate is ever achieved, the initial mine life would be reduced.

Three of our directors are ordinarily resident outside of the United States and accordingly it may be difficult to effect service of process on them, or to enforce any legal judgment against them

Three of our directors namely, Bryan A. Coates, Guy Le Bel and H. Lutz Klingmann are residents of Canada. Consequently, it may be difficult for U.S. investors to effect service of process within the U.S. upon these directors, or to realize in the U.S. upon judgments of U.S. courts predicated upon civil liabilities under the U.S. securities laws. A judgment of a U.S. court predicated solely upon such civil liabilities would probably be enforceable in Canada by a Canadian court if the U.S. court in which the judgment was obtained had jurisdiction, as determined by the Canadian court, in the matter. There is substantial doubt whether or not an original action could be brought successfully in Canada against any of such directors predicated solely upon such civil liabilities.

Our directors and officers may have conflicts of interest as a result of their relationships with other companies

Our directors and officers are, or may in the future be, directors, officers or shareholders of other companies that are similarly engaged in the business of acquiring, developing and exploiting natural resource properties. Consequently, there is a possibility that our directors and/or officers may be in a position of conflict in the future.

Members of the Clay family own a substantial interest in Golden Queen and are represented on our board of directors, and thus may exert significant influence on our corporate affairs and actions, including those submitted to a shareholder vote

Thomas M. Clay, a director of the Company is a member of the Clay Group. The Clay Group also controls Auvergne, which holds a 32.5% interest in Gauss, the joint venture that holds a 50% interest in GQM LLC and half the Project. For so long as the Clay Group beneficially owns at least 25% of our common shares, at least one of Golden Queen’s representatives on the board of managers of the Joint Venture will be designated by Auvergne. Accordingly, the Clay Group has considerable influence on our corporate affairs and actions, including those submitted to a shareholder vote, and GQM LLC’s development and operation of the Project. The interests of the Clay family may be different from your interests.

Members of the Clay family also hold a C$10 million convertible debenture of the Company, of which approximately C$5.8 million is held by an investment vehicle managed by Mr. Clay. The debenture may be converted, at the option of the Company, into common shares at a price of C$1.03 per common share. Conversion of the debenture would result in dilution to the holders of common shares.

Members of the Clay family have also provided the Company with a loan of $12.5 million, including approximately $9.4 million provided by an investment vehicle managed by Thomas M. Clay. The loan is guaranteed by GQM Holdings and secured by a pledge of the Company’s interest in GQM Canada, GQM Canada’s interest in GQM Holdings, and GQM Holdings’ 50% interest in GQM LLC. As a result, a default on the loan could result in the Company losing its interest in the Project, which would have a material adverse effect on our share price.

GQM LLC may incur increased construction costs if a 1997 project labor agreement is found to be enforceable

The Company filed a complaint with the National Labor Relations Board (the “NLRB”) against the Building and Construction Trades Council of Kern, Inyo, and Mono Counties (the “Union”) on May 23, 2014. The complaint was in response to the action taken by the Union related to a 1997 project labor agreement (“PLA”) that the Company believes is not applicable to the Project and unenforceable under federal labor law.

The NLRB informed the Company that the NLRB’s General Counsel had found in favor of the Company in the above matter in early October 2014. The NLRB next informed the Company that the Union had decided not to sign the Settlement Agreement offered by the NLRB. The NLRB has issued a Complaint against the Union with the NLRB in the role of prosecutor. In this case the NLRB, Region 31, will be acting as a representative of the NLRB General Counsel and will be prosecuting this unfair labor practice charge against the Union.

A Field Attorney for the NLRB reported that he had his first substantive conversation with legal counsel for the Building Trades Council on December 4, 2014. The Field Attorney explored the possibility of a settlement whereby the Building Trades Council would agree not to enforce the PLA. Legal counsel for the Building Trades Council indicated that they were not interested in a settlement because the Unions believed that the PLA was lawful and enforceable.

The Field Attorney then asked the Company’s legal counsel about the possibility of a "non-Board" settlement, i.e., a settlement between the Company and the Building Trades Council. Our legal counsel’s response was that we had made several attempts to settle this issue and a likelihood of a settlement at this point was low.

A hearing with the NLRB originally scheduled for February 2, 2015, has now been set for April 6, 2015.

If the complaint is unsuccessful, there is a risk that the Union may pursue legal action, which if successful, may result in increased construction costs and a material impact on the Company’s and GQM LLC’s results of operations. See Item 3. Legal Proceedings in this report for additional information.

Our properties and operations may be subject to litigation or other claims

From time to time the Project or our operations may be subject to disputes which may result in litigation or other legal claims. We may be required to assert or defend against these claims which will divert resources and management time from operations. The costs of these claims or adverse filings may have a material effect on our business and results of operations.

Our share price may be volatile and as a result you could lose all or part of your investment

In addition to volatility associated with equity markets in general, the value of your investment could decline due to the impact of any of the following factors upon the market price of our common shares:

Over the past few years, stock markets have experienced extreme price and volume fluctuations and the market prices of securities have been highly volatile. These fluctuations are often unrelated to operating performance and may adversely affect the market price of our common shares. As a result, you may be unable to resell your shares at a desired price.

Because our common shares trade at prices below $5.00 per share, and because we will not be listed on a national U.S. exchange, there are additional regulations imposed on U.S. broker-dealers trading in our shares that may make it more difficult for you to buy and resell our shares through a U.S. broker-dealer.

Because of U.S. rules that apply to shares with a market price of less than $5.00 per share, known as the “penny stock rules”, investors will find it more difficult to sell their securities in the U.S. through a U.S. broker dealer. The penny stock rules will probably apply to trades in our shares. These rules in most cases require a broker-dealer to deliver a standardized risk disclosure document to a potential purchaser of the securities, along with additional information including current bid and offer quotations, the compensation of the broker-dealer and its salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the customer’s account, and to make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction.

A failure to satisfy the continued listing criteria of the TSX could result in our common shares being delisted

Our common shares are currently listed on the TSX. In order to maintain the listing, we must maintain certain share prices, financial, and share distribution targets, including maintaining a minimum amount of shareholders’ equity and a minimum number of public shareholders. In addition to objective standards, the TSX may delist the securities of any issuer in a variety of circumstances including if, in its opinion, the issuer’s financial condition and/or operating results appear unsatisfactory; if it appears that the extent of public distribution or the aggregate market value of the security has become so reduced as to make continued listing on the TSX inadvisable; if the issuer sells or disposes of principal operating assets or ceases to be an operating company; if an issuer fails to comply with the listing requirements of the TSX; or if any other event occurs or any condition exists which makes continued listing on the TSX, in their opinion, inadvisable or unwarranted.

If the TSX delists our common shares, investors may face material adverse consequences, including, but not limited to, a lack of a trading market for our securities, reduced liquidity, decreased analyst coverage of our securities, and an inability for us to obtain additional financing to fund our operations.

Issuing additional equity may have a negative impact on the trading price of our securities and our current shareholders may suffer dilution

Any future sale of equity capital in financing transactions or through the exercise of warrants or options or conversion of convertible securities will result in dilution to existing shareholders. In addition, even the perception that an issuance of equity capital may occur could have a negative impact on the trading price of our securities. We may pursue other alternatives for financing through offering a share of our interest in the Project to another party or parties.

The Company acquired its initial property interests in 1985 and has since acquired additional properties in the area. GQM LLC holds directly or controls via agreement a total of 33 patented lode mining claims, 189 unpatented lode mining claims, one patented millsite, 17 unpatented millsites, one unpatented placer claim and owns upwards of 980 acres (400 hectares) of fee land, which together make up the Property. The Property is located west of California State Highway 14 and lies largely south of Silver Queen Road covering all of Section 6 and portions of Sections 5, 7 and 8 in Township 10 North, Range 12 West; portions of Sections 1 and 12 in Township 10 North, Range 13 West; portions of Section 18 in Township 9 North, Range 12 West, and portions of Section 32 in Township 11 North, Range 12 West, all from the San Bernardino Baseline and Meridian. Some of the ancillary facilities required for a mining operation will be located in Section 6, T10N, R12W. Two production water wells were drilled in Section 32, T11N, R12W and a third production water well was drilled in Section 1, T11N, R12W.

GQM LLC holds the properties either directly or under mining lease agreements with a number of individual landholders, two groups of landholders and three incorporated entities. The land required for the Project has therefore either been secured under one of the mining lease agreements or is controlled by GQM LLC through ownership of the land in fee or where GQM LLC owns or holds patented and unpatented mining claims or millsites directly. The mining lease agreements were entered into from 1986 onwards. Refer to section Property Interests Are In Good Standing below for key information.

Fee land surrounding Section 6 is required for the construction of the ancillary facilities for a mining operation, for the construction of the heap leach pad and for construction of two pads for storing quality waste rock. The area that will be disturbed by the Project is a 912 acre block (369 hectare) within the total area of approximately 1,700 acres (689 hectares) owned, held or controlled by GQM LLC. GQM LLC also owns six residential properties with buildings north of Silver Queen Road.

GQM LLC is continuing to purchase additional land that will secure its land position in the area.

The Company’s U.S. legal counsel completed a complete title review in 2014. This title review was done as part of the due diligence required for the Joint Venture Transaction, which closed in September 2014 and no particular title problems were identified.

The California Business & Professions Code includes the Professional Land Surveyors Act, “Article 5. Surveying Practices” and specifically “8762. Records of survey.” Land surveyors must be aware of the requirements set out in Article 5 as these are essential to their surveying practice and govern their responsibilities to their clients and the State. The Company therefore decided to proceed with a Record of Survey and engaged James A. LaPuzza, PLS, MS (“Jim LaPuzza”) in July 2011 for this task.

A set of 14 maps based upon survey work done by Jim LaPuzza on Soledad Mountain between 2007 and 2010, along with supporting information on the history of staking and recording and ownership of mining claims and millsites researched by Sylvia Good, RPL, Landman and legal counsel and staff of Gresham Savage Nolan & Tilden, PC,, San Bernardino, California from the early 1990s onwards, was submitted to the Kern County Department of Engineering, Surveying and Permit Services in August 2010. The maps were checked in meticulous detail by County staff over a period of 10 months. There were also numerous exchanges of information between Jim LaPuzza and staff during this period. County staff gave the maps a “Final Check” in May 2011. The recordable mylars were submitted to County staff in July 2011, formally signed by the County Surveyor and forwarded to the Kern County Assessor – Recorder as a Record of Survey. The Record of Survey was recorded as follows:

The basis for GQM LLC’s royalty map is now the Record of Survey and this has superseded all earlier versions of the royalty map.

This newest survey in effect became an extension of the Section 6 survey work utilizing the control network already established on the ground and on paper. All equipment, methods and personnel remained the same.

Unlike Section 6 with its masses of overlapping angular lode claims, Section 8, part of Soledad Mountain historically less active with actual mining, possessed a more grid-like appearance with fewer “visible” conflicts than found in Section 6. Complications arose only later with a closer examination of the title documents. The survey proved to be exceptionally complex and time consuming and took three years to complete.

The County approved a total of 14 maps and data sheets and the survey was recorded as Record of Survey No. 3318 in March 2014.

GQM LLC is required to make advance minimum royalty payments under the mining lease agreements. In some instances, GQM LLC will receive a credit for the advance minimum royalty payments when mining ore on particular properties after the start of commercial production. Most of the royalties are of the net smelter return type and are based on a sliding scale, with the percentage amount of the royalty depending upon the grade of ore mined and processed from the particular property to which the royalty relates. Weighted average royalty rates will range from a low of 1.0% to a high of 5.0% depending upon the area being mined and gold and silver prices. The agreements also typically provide for an additional royalty if non-mineral commodities, such as aggregates, are processed and sold.

A number of mining lease agreements expired in 2010 and in January 2011. While most of these were later reinstated and extended by subsequent agreement, GQM LLC is in ongoing negotiations with some remaining landholders to extend mining lease agreements.

Further, while GQM LLC is not in default of any current mining lease agreement, GQM LLC is negotiating renewal terms for mining leases that are approaching expiry. Mining leases have expiry dates ranging from 2015 to 2045. All mining leases have an “evergreen” clause that becomes effective once the mine commences production.

The Project is located approximately 5 miles (8 km) south of Mojave in Kern County in southern California. See Figure 1, a Project location map above.

Gold mining on Soledad Mountain dates back to the late 19^th century. The largest producer in the area was Gold Fields American Development Co. (“Gold Fields”), a subsidiary of Consolidated Gold Fields of South Africa. Gold Fields operated an underground mine and mill on the property from 1935 to 1942, when the mine was forced to close by War Production Board Order L-208. Production after the war was minimal, as costs had increased while the price of gold remained fixed at $35/oz until 1973.

The Soledad Mountain mineral deposit is hosted in a volcanic sequence of porphyritic rhyolite, quartz latites and bedded pyroclastics that occur on a large dome-shaped feature, called Soledad Mountain, along the margins of a collapsed caldera. Higher-grade precious metals mineralization is associated with steeply dipping, epithermal veins, which occupy faults and fracture zones that cross cut the rock units and generally trend northwest. The veins are contained within siliceous envelopes of lower-grade mineralization that forms the bulk of the mineral resource.

The primary rock types that occur on the Property are porphyritic rhyolite, flow-banded rhyolite, quartz latite, pyroclastics and siliceous vein material. Clay occurs in variable amounts and the rocks contain upwards of 60% silica as SiO2. Porphyritic rhyolite and flow-banded rhyolite were grouped as a single rock type for the metallurgical test work.

Extensive programs of mapping, diamond drilling, reverse-circulation drilling and underground diamond drilling, and channel sampling were carried out on the Property between 1985 and 2011. Company geologists managed these programs. The geological database today includes the crosscut assay data recorded on linens by Gold Fields between 1933 and 1942, as well as crosscut sample data from Rosario Exploration and the Company. The Project database includes these crosscut samples as well as samples from drilling programs completed on the Property by Gold Fields, CoCa Mines, Rosario Exploration, Shell/Billiton, Glamis Gold, and the Company. The database contains a total of 70,863 samples, generated from 381,014 ft (116,133 m) of drilling and sampling of underground crosscuts.

The Company engaged Mine Development Associates (“MDA”) to redo the Project’s geological resource model from first principles and to provide updated mineral resource estimates in 2014.

The work done by MDA in 2014 indicates that vein widths are narrower than previously modeled but that vein continuity is well defined with excellent predictability, both along strike and down-dip.

The modeling and mineral resource estimates were completed in December 2014 under the supervision of Michael M. Gustin, a Qualified Person with respect to mineral resource estimations under NI 43-101.

To complete the mineral resource estimates, the drill data was evaluated statistically, gold and silver mineral domains were interpreted independently on cross sections spaced at 50-ft (15 m) and 100-ft (30 m) intervals that span the extents of the presently defined deposit, and the mineral domains were refined on level plans spaced at 20-ft (6 m) intervals. The final modeled mineral domains were then coded into a 20 ft x 20 ft x 20 ft (6 m x 6 m x 6 m) block model and used to constrain the gold and silver grade estimations.

Cautionary note to U.S. investors concerning measured, indicated or inferred resources: We advise U.S. investors that while the terms “measured resources”, “indicated resources” and “inferred resources” are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission (“SEC”) does not recognize these terms and these terms do not comply with SEC Guide 7 requirements. Investors are cautioned not to assume that any part or all of the material in these categories will be converted into reserves. It should not be assumed that any part of an inferred mineral resource will ever be upgraded to a higher category.

The gold-equivalent relationship is consistent with that used in the previously reported (2012) resource estimates, and is based on a long-term Au:Ag price ratio of 55 and Ag:Au recovery ratio of 0.625.

The mineral resource estimates were prepared in compliance with the disclosure and reporting requirements set forth in the Canadian Securities Administrators’ NI 43-101, Companion Policy 43-101CP, and Form 43-101F1, as well as with the Canadian Institute of Mining, Metallurgy and Petroleum’s “CIM Definition Standards - For Mineral Resources and Reserves, Definitions and Guidelines” (“CIM Standards”) adopted by the CIM Council on May 10, 2014.

The Company finds that the updated geological model and block model prepared by MDA allow for high-confidence mine planning. The 2014 mineral resource estimates report slightly higher gold grades after allowing for internal dilution, whereas the 2012 mineral resource estimates reported undiluted grades.

GQM LLC is proceeding with an infill drill program within the first two phases of mining. The goals of the infill drill program are to: (1) extend mineralization both laterally and in depth below the current open pit designs; (2) convert inferred resource estimates to measured and indicated resource estimates; and (3) provide material for bottle roll tests to assess metallurgical performance.

GQM LLC is considering additional work that could be done to increase and upgrade the mineral resource estimates for the Project. Near-term drill programs will focus on the potential to define new resources and reserves proximal to the first two open pits to be mined. In addition, there is excellent potential to add resources that could significantly impact the longer-term reserves, including the Sheeted Vein zone (West open-pit) and the area between the Main open pit and East open pit, as well as extensions of mineralized structures down-dip. This exploratory drilling will be deferred until mining approaches the relevant areas.

Note that mineral resources that are not mineral reserves do not have demonstrated economic viability.

Norwest Corporation (“Norwest) completed the feasibility level open pit designs and scheduling for the 2015 updated feasibility study and provided the proven and probable reserve estimates shown in the table below:

Cautionary note to U.S. investors concerning proven or probable mineral reserve estimates: This Form 10K uses the terms “proven reserves” and “probable reserves” in accordance with NI 43-101. We advise U.S. investors that the requirements of NI 43-101 for identification of “reserves” are not the same as those of the SEC, and reserves reported by the Company in compliance with NI 43-101 may not qualify as “reserves” under SEC Guide 7 standards. Accordingly, information concerning mineral deposits set forth herein may not be comparable with information presented by companies using only U.S. standards in their public disclosure.

The mineral reserves estimates are included in the measured and indicated mineral resource estimates set out in the table in the section Mineral Resource Estimates above.

Detailed information on the open pit design and other information is provided in the section Open Pit Design and the sections that follow on all aspects of the open pit operation.

Additional geological targets have been identified on the Property. These targets are generally peripheral (east, south and west) to the currently defined mineral resource estimates. In the east, two additional zones of quartz stringer veins have been mapped in the hanging wall of the Karma/Ajax vein system. Toward the south, an extension of the Silver Queen vein system is open and additional vein splits have been mapped on surface. Also, an extension of the Golden Queen vein system appears to be offset by an east-west trending fault. Initial drill results indicate widths of 26 ft (8 m) with good gold and silver grades.

The exploration work to date has focused on known fault/vein structures central to the deposit. The host volcanic rocks associated with mineralization on the Property extend further to the south and have not been fully evaluated. Further, anomalous gold values have also been found in the low volcanic hills that protrude from the valley floor to the northwest of the Property.

The Company engaged Kappes, Cassiday & Associates (“KCA”) and Norwest to prepare an updated feasibility study and economic analysis for the Project based upon current information in December 2014.

The base case cash flow analysis is done on a constant United States dollar, after-tax, stand-alone Project basis.

Gold and silver prices used to model the base case cash flows are $1,250.00/oz and $17.00/oz, respectively, and these are the consensus estimates used by a number of analysts. Prices are fixed for the life of the mine.

The Project has an indicated after-tax internal rate of return (“IRR”) on capital employed of 28.3%. The after-tax net present value (“NPV”) is $214 million with a discount rate of 5.0% and the undiscounted, cumulative net cash flow after tax is approximately $342 million. A 5.0% discount rate is reasonable for a project at this stage and is in-line with standard industry practices. By comparison, at an 8.0% discount rate, the after-tax NPV is $160 million. The indicated contribution of gold and silver to gross revenues is 88% and 12% respectively at current gold and silver prices with an average total cash cost per ounce of gold produced, net of silver credits, of $518/oz.

The Project generates positive cash flow in the first year of production and reaches cumulative positive cash flow in the fourth year of production. Cash flows remain positive each year through the mine life.

The 2015 updated feasibility study demonstrates robust economics and first quartile cash costs. Capital expenditures to date and the expenditures projected for the remainder of 2015 are in line with the capital cost update provided in March of 2014. Approximately 70% of these remaining capital expenditures are now locked in under fixed price contracts with experienced contractors.

Of note is that only 65% of the resource estimate has been included in the current mine design. Successful infill drill programs and expanding the Approved Project Boundary could significantly increase the mine life.

The NI 43-101 Technical Report is available on the Company’s website at www.goldenqueen.com.

The 2015 updated feasibility study capital cost estimates are based upon fixed-price contracts for construction of all the key facilities for the Project and detailed cost estimates prepared for ongoing construction based upon actual experience with costs incurred since the start of construction in July 2013. Pre-production capital costs of approximately $144 million are in-line with the capital costs update provided in March 2014 and include $99.3 million in pre-production capital costs, $15.0 million contingency, $10.5 million in working capital and financial assurance cost estimate and $19.2 million for the mobile mining equipment. These estimates also included all sales taxes. The sustaining capital was estimated to be a further $25.6 million over the life of the Project. The Company also expects GQM LLC to spend a further $10.9 million on additional mobile mining equipment starting in Year 2 of production. Most of the sustaining capital would be required for the construction of heap leach pads and for mining equipment replacement.

Detailed operating costs estimates were prepared with information provided by vendors of services and supplies such as diesel fuel and explosives, reagents such as cement and sodium-cyanide and operating supplies and spare parts for both the major mining equipment and support equipment and equipment in the various processing facilities. The operating cost estimates were reviewed by KCA and Norwest and confirmed as being reasonable.

Norwest did detailed open pit designs between 2008, 2010, 2012 and again in 2014 as part of the 2015 updated feasibility study. These detailed mine designs were adapted from the original 2007 designs to reduce waste to ore mining ratios, enhance opportunities for backfill placement and develop pit phasing and access which would lower the costs associated with backfilling.

The 3D block model prepared by MDA in 2014 was used for development and evaluation of the open pit shells for the Project. The MineSight 3D (Mintec©) software package was used for the open pit optimization and design process.

Gold and silver prices ranging from $500.00 per oz and $5.00 per oz respectively to $1,400.00 per oz and $13.00 per oz respectively were used for the open pit optimization. The base case prices for gold and silver prices of $1,200.00 per oz and $12.00 per oz respectively were used for the feasibility level mine design.

The average waste rock to ore mining ratio was reduced from 2.12:1.0 in 2008 to 1.85:1.0 in 2011 to 1.49:1.0 in 2012 and has now increased to 3.41:1.0 in 2015.

Norwest allowed for dilution and ore loss in determining the mineral reserve estimates.

The dilution quantity estimates were derived from a detailed review of the ore zones and adjacent blocks in discussion and agreement with MDA. Based on the ore zone configuration and the equipment selected for mining, an average dilution of 2 ft (0.6 m) per contact was assumed. In addition, isolated blocks of ore were assumed to be mined as waste (ore loss) and isolated blocks of waste assumed to be mined as ore (dilution).

The dilution grade was determined by evaluating the average grades in the blocks adjacent to the ore zones. An average dilution of 6.8% (approximately 3.4 million tons or 3.1 million tonnes) at a gold grade of 0.003oz/ton (0.1 g/t), and a silver grade of 0.14oz/ton (4.8 g/t) was allowed for. No additional ore loss is assumed beyond what is inherent in the model, assuming very good grade control once the mine is in production and good mining practices.

An independent consulting engineer did open pit slope stability analyses in 1995 and these included analyses with the ultimate slopes subjected to a maximum, credible earthquake acceleration of 0.297g. The consulting engineer recommended an ultimate, inter-ramp slope angle of 55^o with an indication that this angle could be safely increased to 63.4 ^o. The Company drilled five diamond drill holes in 1997 specifically to obtain rock strength parameters for further slope stability analyses under the guidance of an independent consulting engineer. The independent consulting engineer did further slope stability analyses and confirmed the ultimate slope angle of 55^o. Norwest used an inter-ramp slope angle of 55^o for slopes up to 500 ft (152 m) in height for the mine design done in 2014. Pit slopes higher than 500 ft (152 m) were designed for an overall slope of 45^o by incorporating step-outs and increased catch bench widths. Slope angles in zones of adverse structure or lower quality rock mass associated with the central portion of the West Pit were designed with a lower overall slope of 40^o for this area only.

Independent consulting engineers based in Denver did waste rock heap stability analyses in 1996 and again in 1998 and these were confirmed by Norwest in 2000, in 2010 and again for the 2015 updated feasibility study. These analyses concluded that backfilled waste rock and the down-slope portion of the East Waste Rock Storage pad would be stable under both static and seismic loading conditions, both during operations and after closure and reclamation. Some sloughing of the faces of backfilled waste rock or the waste rock pad could occur during significant seismic events in the area.

GQM LLC will confirm subsurface conditions in the area now being used for waste rock storage west of Soledad Mountain in 2015. GQM LLC will also confirm the stability of the waste rock heap in this area in 2015.

Disposal of waste rock will be largely in mined-out phases of the open pits and one external waste rock pad will be constructed to the east of Soledad Mountain, the East Waste Rock Storage pad, to provide a readily accessible source of quality waste rock and an area suitable for the aggregate operation. An area located west of Soledad Mountain, formerly reserved as the Phase 2 heap leach pad, is now also being used as a second waste rock storage area.

Waste rock will be disposed of at an angle of repose of 37^o (1.3:1.0) with a loose density of 1.50 ton/yd³ (1.96 t/m³) (that represents a 30% net swell after allowing for partial compaction). Waste rock will be re-sloped to 27^o (2.0:1.0) as part of closure and closing reclamation. The toes of the re-sloped fills will remain within the Approved Project Boundary. There is no groundwater in the areas where waste rock will be disposed of and this will therefore not have an impact on the stability of either of the waste rock heaps.

Standard, open pit mining methods will be used to mine ore and waste rock. Mining operations will include drilling, blasting, loading, hauling and support equipment and GQM LLC will do the mining. All open pit mining will occur in dry conditions above the water table.

The total quantity of ore to be mined, crushed and screened and stacked on the heap leach pads is estimated to be 51 million tons (46.4 million tonnes). Total waste rock to be mined is estimated to be 174 million tons (158 million tonnes).

The production schedule developed by Norwest for the Project is based on increasing ore output to full production levels at an achievable rate with a mining sequence that allows for effective backfilling of the mined-out phases of the open pits.

Ore production increases from approximately 2.7 million tons (2.5 million tonnes) during the first full year of production to the maximum production level of approximately 5.1 million tons (4.5 million tonnes) in Years 3 and 4. The production does not reach maximum capacity from Year 5 onwards and varies from a low of 4.1 million tons (3.7 million tonnes) to a high of 4.9 million tons (4.5 million tonnes). Although ore production does not reach maximum capacity in some years, mining of higher grade ore in these periods with an increase in contained gold and silver ounces does somewhat offset the effect of the lower ore production.

The average gold produced over years 2 to 11 is approximately 74,000 oz per year with a maximum of 99,000 oz in Year 8 of production. The average silver produced is approximately 781,000 oz per year over this same period, with a maximum of 1.27 million oz of silver in Year 4 of production.

Waste rock mining ranges from a low of approximately 8 million tons (7.3 million tonnes) in Year 1 to a high of approximately 20 million tons (18.2 million tonnes) in Years 5 and 6. The variation in waste rock mining rates is driven by a combination of factors. The current mine production schedule seeks to take advantage of the available ore processing capacity limit of approximately 5.1 million tons (4.7 million tonnes) per year especially during the initial five years of the Project. This results in periods of very high waste production as zones with high mining ratios, i.e. waste tons:ore tons, must be mined in order to expose sufficient ore. In addition, the requirement to ensure the most efficient disposal of waste rock in mined-out phases of the open pits combined with the steep topography leads to truck haulage distances that can vary significantly from quarter to quarter.

The initial mine life is projected to be 12 years. Note that aggregate sales over a period of thirty years are important for the Project as this will ensure that GQM LLC can meet its closure and closing reclamation requirements.

Ore-from-waste separation will require special attention to ensure that overall grade projections are met.

Underground mine openings will be encountered from time-to-time during open pit mining and this will be allowed for in the detailed mine planning.

Norwest reviewed and confirmed operating cost estimates for the open pit operation for the 2015 updated feasibility study.

The configuration and phasing of the open pits requires that the primary loading equipment be mobile and flexible in terms of loading conditions. In addition, the equipment needs to have the capability to mine selectively in order to limit ore loss and dilution while still meeting production targets. With these considerations in mind, Norwest judged that front-end loaders for flexibility combined with a hydraulic excavator in backhoe configuration for increased selectivity and production would best meet the Project requirements. Norwest also confirmed that haulage trucks with a capacity of 100 tons (91 tonnes) would be suitable for the Project.

A fleet study was carried out by Komatsu America Corporation and completed on December 16, 2014. This study developed equipment productivity estimates for the primary mining fleet based on anticipated local mining conditions.

A smaller development is required for the initial open pit development in 2015. Once the primary mining equipment is on site, the main role for the development fleet is the pioneering of access roads, mining smaller upper benches as each new mining phase is developed, and providing additional selective mining capacity in localized ore zones.

Support equipment such as a grader and a water wagon were purchased and received in 2014. Additional mining equipment was received subsequent to December 31, 2014. See Subsequent Events below for further details.

The mining equipment required for the Project over the life of the mine is shown in the table below:

GQM LLC has decided to purchase Komatsu equipment and the equipment is being delivered and will be supported by Road Machinery LLC, a Komatsu dealer in California.

The new security requirements that were introduced to combat the threat of terrorist activities in the United States make contract blasting the preferred option and contract blasting will be used.

There are several suppliers in the region capable of meeting Project requirements. A local supplier based in Mojave provides service to a number of mines and quarries in the area and has a bulk storage facility for ammonium nitrate prill in Mojave. The local supplier also receives prill by rail and this is a key consideration in dealing with the local supplier as prill by rail is more energy efficient than moving the same quantity of prill by truck on the highway.

Based on the available groundwater data, blastholes are expected to be dry through the life of the mine and only ANFO will be used as a blasting agent. A powder factor of 0.36 lb/ton or 0.71 lb/yd³ (0.18 kg/t or 0.42 kg/m³) was used to estimate explosives consumption for the Project.

An independent consulting engineering firm based in Denver prepared a number of site drainage plans as these apply to the open pit operation. The underlying engineering assumptions meet the requirements of the California State Water Resources Control Board and the Kern County Engineering, Surveying & Permit Services Department.

A Stage I, Surface Water, Sediment and Erosion Control Plan has been prepared for construction and early mining phases of the Project.

The site drainage plan can quickly be revised as open pit designs change and this will include detailed designs for sediment ponds and drainage channels as required.

The current mine plan assumes approximately 30 million short tons (27 million tonnes) of waste rock will be sold as aggregate and removed from site over a period of thirty years and prior to closure and closing reclamation. This mine plan also assumes that a portion of the leached and rinsed residues on the heap leach pad is either processed and sold as aggregate and removed from site, or else GQM LLC is able to obtain a variation of an approval to allow a larger portion of the leached and rinsed residues to remain in place on the Phase 1 heap leach pad. If GQM LLC cannot perform reclamation procedures according to these assumptions, GQM LLC must re-handle a significant quantity of the residues either as backfill to the open pits or spread the residues on the property to meet closure and closing reclamation requirements, or a combination of both. The necessity of handling a portion of the residues as part of a closure and reclamation plan will affect the overall ore tonnage that can be mined, as the removal of waste rock and possibly a portion of the rinsed and leached residues is a component of the current mining and backfilling plan.

Studies show that gold is present as native gold and electrum with particles ranging in size from less than 10 micron to greater than 150 micron with the silver content of the electrum as high as 25%. Silver is also present as the mineral acanthite (Ag2S) with some native silver, pyrargyrite (3Ag2S^.Sb2S3) and polybasite (9Ag2S^.Sb2S3). Pyrite (FeS2), galena (PbS) and chalcopyrite (CuFeS2) are present in minor amounts with no indicated acid-generating potential. Multi-element x-ray fluorescence analyses show only trace quantities of mercury.

Test work done on Soledad Mountain ores from 1988 to 2007 shows that these ores are readily amenable to heap leaching provided the ore is crushed and/or ground to relatively small sizes. A range of parameters required to design a heap leach operation, such as agglomerate strength, percolation rates under load and the consumption of cyanide and other reagents, were determined.

In the 1990s, it was proposed to crush and screen ore to 100% - 8mesh (2.37 mm) and a four-stage crushing and screening plant using vertical shaft impact crushers in the third and fourth crushing was designed. However, the Company did a review that provided new insights into the historical test results in 2002. An alternative flow sheet was developed for the Project in late 2002, which considered three-stage crushing and screening plant with an HPGR in the third crushing stage, and is reflected in the current design.

Samples of rhyolite ore and quartz latite ore were collected for the HPGR tests in July 2003 and in March 2004 respectively. The samples were crushed to 100% passing 1.3 inch (32 mm) and 1.4 inch (35 mm) respectively by McClelland Laboratories, Inc. (“MLI”), an independent metallurgical laboratory located in Sparks, Nevada. The samples were shipped by airfreight to the test facilities of two HPGR manufacturers in Germany where the actual HPGR tests were done. The crushed samples were returned to the MLI laboratory in Nevada for confirmation leach test work. The following conclusions were drawn based upon the results of bottle roll and column leach tests:

The detailed analysis of the leached residues or tails indicated that tests should be done on a high-grade and a low-grade sample to obtain data for the complete range of expected head grades. Two rhyolite samples were taken for this test work in April 2006. The total weight of the two samples was approximately 4,600 lb (2,100 kg). The samples were shipped by truck to MLI for first-stage crushing and then by airfreight to a HPGR manufacturers’ test facility in Germany where the HPGR tests were done. The samples were returned to MLI and bottle roll tests and column leach tests were started in July and completed in December 2006. Final test results were received and combined with the results from earlier tests for a detailed recovery analysis.

The average life of mine recoveries used in the 2015 updated feasibility study were 82.1% for gold and 50.0% for silver.

Tests were done on leached residues from two of the column leach tests to determine the percolation rates under load and the results of the tests were used to design the heap and confirm heap height for the heap leach operation.

The test work shows that the HPGR is expected to have distinct advantages over conventional crushing and screening to size and prepare particles for heap leaching in this particular application. The indicated benefits of using the HPGR will be:

The HPGR consists basically of two counter-rotating rolls – one a fixed roll and the other a ‘floating’ roll. The ‘floating’ roll is mounted on and can move freely on two slides and the grinding forces are applied to the ‘floating’ roll by hydraulic rams. Ore is choke-fed to the gap between the rolls and comminution takes place by inter-particle crushing in the bed of particles. The gap between the rolls is determined by the nip-in characteristics of the feed and the total grinding force applied, which in turn depends upon pressures in the hydraulic system. Each roll is driven by an electric motor via a planetary gear reducer. The total grinding force can range from 169k lbf to 4500k lbf (750 kN to 20,000 kN) and pressures in the gap can range from approximately 7,000 lb/in² (50 MPa) to 36,000 lb/in² (250 MPa). The unconfined compressive strengths of Soledad Mountain ores range from 320 lb/in² to 17,200 lb/in² (2.2 MPa to 118.9 MPa) by comparison.

An independent consulting engineering firm did the design of the crushing-screening plant including the HPGR in 2006. This design was revised in 2008, further updated in 2011 and updated again in 2014. The crushing-screening plant has been designed to process 5,119,000 tons (4,654,000 tonnes) of ore per year.

Capital and operating cost estimates for the crushing-screening plant were brought current by Project management and confirmed by KCA for the updated feasibility study in 2015.

Gold and silver are typically recovered in a heap leach operation by dissolution in a dilute sodium-cyanide solution and then by precipitation with zinc or adsorption on activated carbon. The zinc precipitation process, referred to as the Merrill-Crowe process after its developers, is used to recover gold and silver when the silver to gold ratio in solution is greater than 10:1. The silver to gold ratio is expected to average 15:1 for the Project and a Merrill-Crowe precipitation plant will therefore be required. In the Merrill-Crowe process, zinc dust is metered into the deaerated, pregnant solution and gold and silver are precipitated as micron-sized, metallic particles. The precipitate is dried, mixed with selected fluxes and melted in an induction furnace. The molten mix of gold and silver, i.e. the doré, is poured into moulds. The doré is cooled, cleaned and shipped to a commercial refinery where gold and silver bullion are produced for final sale.

The Merrill-Crowe process is highly efficient and recoveries in a commercial plant typically range upwards of 98%.

Independent consulting engineers did detailed designs and prepared capital cost estimates for the Merrill-Crowe plant and this includes the refinery for the 2015 updated feasibility study.

Operating cost estimates for the Merrill-Crowe plant were brought current by Project management and confirmed by independent consulting engineers for the updated 2015 feasibility study.

The assay laboratory has been designed to cope with the planned workload including the required sample preparation and solid and solution analyses for gold and silver as well as analyses required to manage the heap leach operation. Environmental control analyses will also be performed.

The laboratory has been sized to handle from 50 to 200 solid and from 10 to 50 solution samples per day depending upon requirements.

The design and capital cost estimates for the laboratory were updated over a period of four months in 2014. The laboratory includes areas for sample preparation, fire assays and related wet chemistry and metallurgical test work such as bottle roll tests and column leach tests.

Extensive provision has been made for dust control. All lead waste and dust containing heavy metals will be shipped to a designated disposal site. Rock dust and rejects from sample preparation will be returned to the process. Scrubbers will be fitted to fume hoods.

The laboratory building and building services are being constructed on a turn-key basis by an independent contractor based in Lancaster and the target for completion is March 2015.

Quotes are currently being obtained for the equipment for the laboratory and equipping the laboratory will proceed as soon as construction of the building has been completed.

A dilute, sodium-cyanide solution will be used to dissolve gold and silver in the heap leach operation. Extensive procedures will be put in place to protect workers and the environment. The cyanide will be received in dissolved form by truck directly from the manufacturer and will be pumped to a storage tank on site and then to the process.

An independent consulting engineering firm is responsible for the design of the heap leach facility, which has been designed for zero discharge. The Phase 1 heap leach pad, will be located on the northern side of Soledad Mountain. This will be a single-use, dedicated pad. An area located on the western side of Soledad Mountain, formerly reserved as the Phase 2 pad, is now being used as a waste rock storage area.

The Phase 1 heap leach pad will be lined with a composite liner consisting of a compacted soil liner and a geomembrane. The geomembrane will in turn be covered and protected by 18 inches (45 cm) of a crushed liner protection fill that will act as a drainage layer. A network of perforated pipes will be installed in the liner protection fill. Solution will drain by gravity to a pump box and will be pumped to the Merrill-Crowe plant where gold and silver will be extracted from the pregnant solution. The barren solution will be returned to the heap and drip emitters will be used on the heap to limit evaporation losses. Drip emitters will be covered. An overflow pond is located east and downstream of the pump box.

Detailed site investigations were done in the area where the Phase 1 heap leach pad will be constructed in 2004 and again in 2006. The independent consulting engineering firm completed the design of the Phase 1 pad for construction in 2014.

The design of the heap leach pad meets all applicable regulatory requirements. Note that the heap must be reclaimed to approximately 25 ft (7.6 m) above original contours to meet State of California reclamation requirements.

An earthmoving contractor with experience in constructing heap leach pads prepared the capital cost estimates for the construction of the Phase 1, Stage 1 portion of the pad for the 2015 updated feasibility study. Construction of the Phase 1, Stage 1 pad is currently under way.

An equipment manufacturer did the heap leach stacking study for the conveying and stacking system and prepared capital cost estimates for the 2015 updated feasibility study. The equipment manufacturer received a contract for the fabrication of the conveying and stacking system in fabrication of the equipment is currently under way.

The Project is located approximately 5 miles (8 km) south of Mojave in southern California. The metropolitan areas of Rosamond and Lancaster lie from 9 miles (14 km) to 20 miles (32 km) to the south. Access to site is from State Route 14 and Silver Queen Road, an existing paved County road. Mojave is a railroad hub for the Burlington Northern/Santa Fe and Union Pacific/Southern Pacific railroad lines. Services such as a hospital, ambulance, fire-protection, garbage and hazardous waste disposal, schools, motels and housing, shopping, airport and recreation are available in Mojave and its surroundings.

A water supply will be required for the operation and it is expected that both ground water and water supplied by the Antelope Valley – East Kern Water Agency will be available for the Project.

A detailed study of the site hydrogeology was completed in 2006 to confirm that groundwater would be a dependable source of water for the Project. As many as 35 wells have been drilled in the greater Project area in the past. Records for some of these wells plus step rate test data from production well PW-1 drilled by the Company indicate that, initially, two production wells can provide the maximum estimated water requirement of 650 gal/min (147.6 m³/h). Production well PW-1 is located approximately 3,000 ft (1 km) north of the Project. A second production well, PW-2, was drilled approximately 1,000 ft (300 m) north of well PW-1 and cased and tested and a third production well, PW-3, was drilled in an area west of the Project in November 2008 and development of the well has also been completed. Neither PW-2 nor PW-3 had yields high enough to add to the water required on a continuous basis for the Project.

The Company has identified an area to the west of PW-1 that has historically had a number of production wells that have yielded upwards of 600 gal/min (136.2 m³/h). GQM LLC plans to drill a production well (PW-4) in this area in 2015 to ensure that an adequate supply of groundwater is confirmed to support the Project.

Water samples taken from four characterization wells on site indicate that groundwater can be used in the heap leach process without pre-treatment.

An independent consulting engineering firm did the design for the water supply and the process water and firewater distribution systems and prepared capital and operating cost estimates for the 2012 feasibility study. The design for the system has now been redone by an independent consulting engineering firm based in Bakersfield.

The Company filed an application for a water service connection with Antelope Valley – East Kern Water Agency (“AVEK”) in February 2008 to provide a backup water supply. This was mandated as one of the conditions of approval in the Conditional Use Permits that were issued in 2010.

Project management met with AVEK in Mojave in August 2014 to discuss details of an interconnection of the two systems. AVEK is ready to provide water for the Project, and could most likely provide the full requirement. AVEK submitted a proposal for detailed engineering and for preparation of contract documents in September 2014. GQM LLC approved the cost estimate and this engineering remains to be completed.

Independent consulting engineers based in Bakersfield also designed a pipeline and pump station to pump water from four AVEK water storage tanks to site. The cost of this project has been included in the Project capital cost estimates.

Water supply and water storage – the Phase 1 project has been completed and the first production well (PW-1) is now connected to site. Phases 2, 3 and 4 are underway and completion is expected in May 2015. GQM LLC also expects to drill an additional production well (PW-4) in the second quarter of 2015 and complete the connection in August 2015.

GQM LLC is evaluating the use of recycled water or Title 22 water for the Project with the Rosamond Community Services District. A suitable route for a pipeline is available and this option will be pursued once the mine is in production. The use of Title 22 water would be an environmental plus for the Project. This supply will be of interest only once the Project is running smoothly with a positive cash flow and an assured long life.

The regional utility, Southern California Edison (“SCE”), will supply power.

A main power line with three sets of conductors runs along the eastern property boundary. The top two sets of conductors carry 66 kV while the bottom set of conductors carries 12,460 V and these are the common primary voltages in SCE territory.

SCE indicates that the power factor is an absolutely critical item in SCE territory. SCE requires a minimum operating power factor of 0.95 and a load-sensitive capacitor bank will be installed to achieve this. SCE may also limit the number of starts permitted for the major motors per day.

GQM LLC will install and own the utility tie sub-station. The incoming voltage of 12,460 V will be the mine distribution voltage. This decision was supported by a Method of Service study done by SCE and the Company in 2012. Overhead transmission lines will distribute power from the utility tie sub-station to areas where power will be required and this construction is currently under way.

A diesel-powered generator will provide standby power and this will be set beside the Merrill-Crowe plant. Power will be available to operate the Merrill-Crowe plant and solution distribution systems in case of a SCE power failure.

Project management prepared a detailed motor list and estimated the power consumption for the Project. SCE provided a rate for power of $0.135/kWh for the 2015 updated feasibility study. The rate structure is complex and a mix of consumption and demand charges applies to peak, mid-peak and off-peak periods.

An independent consulting engineering firm and contractor based in Bakersfield prepared a detailed design for the site power distribution system and provided a capital cost estimate in 2014. The firm was awarded a contract for the construction of the site power distribution system in 2014 and this project is now under way.

Construction of the service facilities required for a mining operation such as a workshop and warehouse and diesel fuel and gasoline storage was completed in 2014.

A management team has assembled in Mojave to manage the Project. Manpower is expected to average 30 salaried and the number of hourly-paid workers is expected to range from 138 to over 172 depending upon the ore and waste mining rates once the mine is in full production. GQM LLC is committed to hiring locally or from the surrounding towns.

Construction manpower is expected to peak at 200 with an estimated 142 man-years required for construction.

It is expected that a by-product aggregate and construction materials business can be developed once the heap leach operation is in full production, based on the location of the Project in southern California with close proximity to major highways and railway lines. The source of raw materials will be quality waste rock specifically stockpiled for this purpose. The waste rock can be classified into a range of products such as riprap, crushed stone and sand with little further processing. Test work done in the 1990s confirmed the suitability of waste rock as aggregate and construction material. The production and sale of aggregate is expected to commence early in the mine life and continue for up to thirty years or until the stockpile of quality waste rock has been exhausted. GQM LLC also plans to process and sell leached and rinsed residues from the heap leach operation as aggregate or for other uses to local and regional markets.

No contributions from the sale of aggregate have been included in the 2015 updated feasibility study cash flow projections. However, aggregate sales over a period of thirty years are important for the Project as it will permit GQM LLC to meet its closure and reclamation requirements.

The Project has received three key permits that allow GQM LLC to construct the facilities and begin mining and processing operations.

The environmental issues and the efforts made to secure the three key permits are described in detail under the subheadings CEQA/NEPA, Authority to Construct & Permit to Operate, and Water Quality.

The area surrounding Mojave is typical of the western Mojave Desert. The immediate vicinity of the Project is sparsely populated with considerable historical and more recent mining activity. The Standard Hill, Tropico and Cactus mines are located within a radius of 7.5 miles (12km) of the Property.

The Project and the immediate area surrounding the Project or a total of approximately 9,600 acres (3,887 hectares) are included in the Specific Plan (the “Plan”) for Soledad Mountain - Elephant Butte & Vicinity - south of Mojave. This Plan was prepared in March 1973 and adopted by the Kern County Board of Supervisors as Resolution 73-485 on June 18, 1973. Gold and silver mining operations are recognized in the Plan as important land uses and the protection of mineral deposits, potentially of commercial value, is included in the Plan through restriction of incompatible land uses. The Project as presently defined and permitted is consistent with the Plan.

An independent consulting engineering firm reviewed the major approvals and permits that were issued for the Project in the late 1990s and the current regulatory environment in California in 2005. Additional work was indicated due to the time that had passed since these permits were first issued and changes that had been made in the Project. There have also been changes in regulations imposed by two levels of government in California. No significant environmental issues were however identified in the review and furthermore, the footprint of the Project as presently defined has been reduced in both a physical and an environmental sense.

Environmental issues and the status of approvals and permits are summarized in the following sections.

The Project is subject to the California Environmental Quality Act (“CEQA”) and the National Environmental Policy Act (“NEPA”), each of which requires written analysis of proposed mining activities and their effect on the physical, biological, social and economic resources of the area. This analysis is known under CEQA as an environmental impact report (“EIR”), and under NEPA as an environmental impact statement (“EIS”).

The environmental setting of the Project was documented in a number of baseline studies prepared between 1990 and 1997. The Kern County Board of Supervisors unanimously approved two Conditional Use Permits (“CUP”) for the Project in September 1997 (i.e. CUP Case No. 41, Map No. 213 and CUP Case No. 22, Map No. 214). The Bureau of Land Management subsequently issued its Record of Decision approving the Plan of Operations under NEPA in November 1997.

The State of California introduced backfilling requirements for open pit, metal mines in December 2002. The Company contended that these regulations did not apply to the Project under a grandfathering provision included in the regulation. The Company, therefore, pursued both a favourable interpretation under the regulation and subsequently an amendment of the regulation with the State Mining and Geology Board (the “Board”) in 2006. These efforts were supported by Kern County officials. Both approaches were rejected by the Board and the decision was duly recorded by the Board in January 2007.

The Company completed an Application for a revised Surface Mining and Reclamation Plan, which was submitted to the Kern County Planning & Community Development Department (the “Planning Department”) in April 2007. ThePlanning Department completed its review of the Application and deemed the Application complete in July 2007. The Planning Department noted that changes proposed for the Project constituted new information that required evaluation of potential impacts and mitigation in a supplemental EIR (“SEIR”). The SEIR was distributed by the Planning Department, as lead agency under the provisions of CEQA, to approximately 430 recipients and notification of release to 985 recipients on January 11, 2010. The Kern County Planning Commission (the “Commission”) formally considered the Project on April 8, 2010. At the meeting, the Commission, consisting of a panel of three commissioners, unanimously approved the Project. The Commission certified the SEIR and adopted a Mitigation Measures Monitoring Program and a set of Conditions of Approval for the Project. The Mitigation Measures Monitoring Program and Conditions of Approval for the Project were amended by Commission Resolution No. 171-10 adopted on October 28, 2010.

Under Condition 107 of the Conditional Use Permits, the Company was required to submit, prior to the commencement of mining, additional information relating to closure and closing reclamation. The Company submitted the required information to the Planning Department on November 28, 2011 and on June 8, 2012. In accordance with the Surface Mining and Reclamation Act of 1975, the Planning Department consulted the OMR. The OMR confirmed in a letter to the Planning Department dated June 29 that the additional information provided by the Company adequately demonstrated compliance with Condition 107.

The Company announced that the Planning Department had approved the additional information submitted by the Company in regards to Condition 107 of the Conditional Use Permits for the Project in a news release dated July 12, 2012 and the Project is now fully permitted.

The Planning Department granted an extension of time of one year to April 21, 2015 to announce the start of mining on the Property at a meeting held in the offices of the Planning Department on November 7, 2013. GQM LLC has now requested a further extension of time of two years to April 21, 2017 as suggested by the Kern County Planning & Community Development Department.

The Project lies within the Southeast Desert Air Basin (the “Air Basin”), which falls under the jurisdiction of the Eastern Kern Air Pollution Control District (“EKAPCD”). EKAPCD is charged to regulate sources of air pollution within the basin, pursuant to authority granted under the federal Clean Air Act.

The Air Basin is designated as unclassified for PM10 emissions (that portion of the total suspended particulates less than 10 microns in size) and as a non-attainment area for ozone. The typically windy conditions and very dry nature of the area are responsible for high background PM10 levels recorded at several nearby meteorological monitoring stations.

Fugitive dust from a mining operation on the Property, combined with background dust, may result in unacceptable levels of PM10 emissions in the surrounding areas, especially downwind, and this may present the greatest potential environmental issue for the Project. A PM10 level of 44 micrograms per cubic meter was projected by computer modeling for an annual mining rate of 30 million tons (27 million tonnes) in 1996. This level is below the California attainment standard of 50 micrograms per cubic meter and the Federal standard of 150 micrograms per cubic meter. However, the Company believes that it will achieve compliance with applicable standards by a greater margin, as the modeling methodology assumes worst-case conditions, which are considered unlikely to be encountered in the actual operation based on the planned use of commonly accepted dust control techniques in all phases of the operation.

The Planning Department requested that the Air Quality Assessment and Health Risk Assessment for the Project be redone in February 2009 to provide current information for the SEIR. This study was completed and in the hands of the Planning Department and EKAPCD on July 21, 2009.

EKAPCD transferred an Emission Reduction Credit Certificate from Cactus Gold Mines Company to the Project in February 1999 and this Emission Reduction Credit Certificate remains valid.

The Company had obtained seven Authority to Construct permits dated March 16, 2002. These permits expired on March 16, 2004 and were not renewed due to changes anticipated in the Project.

Ten applications for Authority to Construct permits were submitted to the EKAPCD in February 2011. The EKAPCD confirmed that the information required to support the applications was complete. The draft Authority to Construct (“ATC”) permits were received in September 2011. The Company’s consulting engineers and legal counsel completed their review of the draft ATC permits in January 2012. The ATC permits were issued by EKAPCD on February 8, 2012 and were initially valid for two years. The ATC permits were extended by two years from February 8, 2014 to February 7, 2016. The ATC permits will be converted to a Permit to Operate after construction has been completed and subject to inspection by EKAPCD.

The Company was required to install both upwind and downwind meteorological monitoring stations before the start of production and decided to proceed with the upwind monitoring station in May 2006 to add to the background database. The station was designed by an independent consulting engineering firm and commissioned in September 2006. The EKAPCD approved the design of the station in October 2006. Data is being recorded on a continuous basis and quarterly reports are being issued to the EKAPCD.

The downwind meteorological monitoring station was constructed in 2014 and is now in operation.

The Project is located in the northern portion of the Antelope Valley Groundwater Basin. The mean recorded annual rainfall in the surrounding area is approximately 6.14 in (156 mm). Typical patterns of precipitation are winter rains and summer thunderstorms and these tend to be short-lived and of high intensity. The site is dominated by Soledad Mountain and surface drainage patterns in the area are largely influenced by local topography. This varies from steep, rugged hillsides at the upper elevations to a gently sloping desert floor around the toe of Soledad Mountain. Runoff on the northern side of Soledad Mountain is via a series of gullies or channels, which direct surface flows to the north, northeast and northwest and eventually to the east to the Gloster and Chaffee Hydrologic Areas of the Antelope Hydrologic Unit.

There are no springs or intermittent streams in the immediate area. The closest intermittent stream is approximately 3 miles (5 km) to the west. Evaporation rates are high. Groundwater is typically found at depths of 180ft to 200ft (55 m to 60 m) in the area north of the Project.

The Lahontan Regional Water Quality Control Board (“Regional Board”) is responsible for ensuring compliance with the federal Clean Water Act and California’s Porter-Cologne Water Quality Act. The Company submitted a Report of Waste Discharge (“ROWD”), prepared by a company based in Bakersfield to the Regional Board in June 1997.The Regional Board adopted Board Order No. 6-98-9 in March 1998 at a meeting held in Lancaster and this set the Waste Discharge Requirements for the Project.

The ROWD submitted in 1997 included a design for the heap leach facility done before and in 1997. The Company and its consulting engineers prepared an engineering review that set out significant differences between the layout and designs prepared for the heap leach facility in 1997 and in 2005 and made a presentation to the Regional Board in Victorville in May 2006. The Regional Board requested that the Company submit a revised ROWD to reflect these changes. The Company and its consulting engineers prepared and submitted a revised ROWD to the Regional Board in March 2007.

The Regional Board completed its assessment of the revised ROWD and prepared draft Waste Discharge Requirements (“WDRs”) for the Project. The Regional Board waited for confirmation from the Planning Department that the SEIR had been certified before adopting a revised Board Order setting WDRs for the Project.

The Regional Board unanimously approved WDRs and a Monitoring and Reporting Program for the Project at the joint, regular meeting held on July 14, 2010 in South Lake Tahoe, Nevada and Victorville, California. The Board recommended adopting an order approving the WDRs subject only to locating an additional ground water monitoring well. This well was drilled and tested in November 2010. The Board Order was signed by the Executive Officer of the Regional Board on July 23, 2010.

The order approving the WDRs was a critical authorization for the construction and operation of, and establishes the discharge and monitoring standards for the heap leach pads, waste rock stockpiles and other activities that have the potential to affect surface and ground waters.

A Stage I, Surface Water, Sediment and Erosion Control Plan was prepared for the construction and early mining phases of the Project. Storm Water discharges will be regulated by the Regional Board under the State’s NPDES General Construction Storm Water Permit during the initial construction phase of the Project and under the NPDES General Industrial Storm Water Permit during mine operations. Our independent consulting engineer, a Qualified SWPPP Developer in California, therefore prepared the designs and the Company filed Permit Registration Documents electronically through the Storm Water Multiple Application and Report Tracking System (SMARTS). The Documents included a Notice of Intent, Storm Water Pollution Prevention Plan (SWPPP), Risk Assessment, a Site Map and a signed certification statement by the Legally Responsible Person. The Company also paid the first annual fee. Note that the SWPPP alone is a 200-page document. Note further that the Documents filed through SMARTS meet applicable NPDES Storm Water Program requirements of the Kern County Engineering, Surveying & Permit Services Department. The Notice of Intent is now active.

The Company and GQM LLC has submitted quarterly and annual reports in compliance with the WDRs.

Groundwater monitoring consists of sampling groundwater in four wells once per quarter. The historical sampling method for these wells involved conventional large-volume purging with high-capacity pumps. An alternative sampling methods comparison was conducted on one well in 2011 and 2012. Based upon this evaluation an independent consulting engineering firm based in Denver recommended installing dedicated low-flow bladder pumps in four wells and this was approved by the Regional Board in May 2012. The low-flow bladder pumps and associated tubing were installed during the week of August 13, 2012. The Water Quality Monitoring and Data Management Procedures Manual was updated to reflect the changes.

Closure and reclamation will be done in accordance with the requirements set out in the CUPs and an approved Surface Mining and Reclamation Plan and as set out in the Board Order issued by the Regional Board.

Reclamation will proceed concurrently where feasible, but is nonetheless expected to require two years following ending of mining and all aggregate operations, and a further three years of post-closure monitoring. Monitoring will continue until the reclamation success criteria are met.

Sites have been revegetated successfully elsewhere in the California deserts, for example at the Castle Mountain Mine in San Bernardino County, and it is expected that revegetation can be completed successfully for the Project as per the detailed revegetation plan that has been prepared by independent consulting engineers.

GQM LLC is required to provide the following financial assurances for the Project:

GQM LLC has provided reclamation financial assurance in the form of a Letter of Credit backed by a Certificate of Deposit with Union Bank, N.A. to the Bureau of Land Management, the State and Kern County totaling $553,329 (2013 - $478,742; 2012 - $339,079).

The estimate for reclamation financial assurance is $624,142 for 2015 and this estimate has been submitted to the Engineering, Surveying & Permit Services Department for review and approval.

The Company has done extensive cleanup on site since 2006 at a cost of approximately $550,000 and GQM LLC is continuing the cleanup effort. This was a significant cost for the Company and demonstrates that the Company and GQM LLC are committed to environmental stewardship and good housekeeping in its operations.

GQM LLC has an Environmental, Safety and Health Policy and a management system to implement the Policy.

The Company prepared a Cyanide Management Plan for the Project and became a signatory to the International Cyanide Management Code in 2013. The Code was developed under the auspices of the United Nations Environment Program and the International Council on Metals and the Environment. The International Cyanide Management Institute, a non-profit organization, administers the Code. Signatories to the Code commit to follow the Principles set out in Code and to follow the Standards of Practice. Companies are expected to design, construct, operate and decommission their facilities consistent with the requirements of the Code and must have their operations audited by an independent third party. Audit results are made public.

To the best of our knowledge, there are no legal actions pending, threatened or contemplated against the Company or GQM LLC, other than what is noted below.

The Center for Biodiversity Petition to List the Mojave Shoulderband Snail as an Endangered Species

The Center for Biological Diversity filed an Emergency Petition (the “Petition”) with the United States Fish and Wildlife Service (“USFWS”) to list the Mojave Shoulderband snail as threatened or endangered under the Endangered SpeciesAct on January 31, 2014.

The Company worked with its environmental and legal advisors to prepare a detailed and complete response to the Petition, which was filed with the USFWS on March 31, 2014. The Company's response is available on the Company's website at www.goldenqueen.com, in the “Notices & Other Filings” section.

In reviewing the Petition, the Company found that the Center's assumptions, arguments, and conclusions lacked scientific support. In the terminology of the USFWS, the Petition did not present substantial scientific information sufficient to convince a reasonable person that action by the USFWS might be warranted. The Petition relied on incorrect and incomplete information with respect both to the science and to the Project. Most of the biological information presented in the Petition was generic or pertained to other snail species. To the extent the Petition discussed the Mojave Shoulderband snail in particular, the discussion relied on a 500 word, 80-year old academic journal note that did not meet modern academic standards, and unpublished data gathered by the Petitioners but withheld from the USFWS and the public.

The Company learned in April 2014 that the USFWS had determined that there was no emergency to justify listing the Mojave Shoulderband snail as threatened or endangered under the Endangered Species Act of 1973, as amended. The USFWS has reviewed the Petition and concluded that there was no imminent threat to the snail that would cause them to believe an emergency listing was required. The USFWS indicated that it would not be able to address the Petition at this time but might do so in future, subject to funding.

During the second quarter of 2014, the Company filed a complaint with the National Labor Relations Board (the

“NLRB”) against the Building and Construction Trades Council of Kern, Inyo, and Mono Counties (the “Union”). The complaint was in response to action taken by the Union related to a 1997 project labor agreement (the “PLA”) that the Company believes is not applicable to the current Project and, in any event, unenforceable under federal labor law.The NLRB informed the Company that the NLRB’s General Counsel had found in favor of the Company in the above matter in early October 2014. The NLRB next informed the Company that the Union had decided not to sign the Settlement Agreement offered by the NLRB. The NLRB has issued a Complaint against the Union with the NLRB in the role of prosecutor. In this case the NLRB, Region 31, will be acting as a representative of the NLRB General Counsel and will be prosecuting this unfair labor practice charge against the Union.

A Field Attorney for the NLRB reported that he had his first substantive conversation with legal counsel for Building Trades Council on December 4, 2014. The Field Attorney explored the possibility of a settlement whereby the Building Trades Council would agree not to enforce the 1997 PLA. Legal counsel for the Building Trades Council indicated that they were not interested in a settlement because the Unions believed that the PLA was lawful and enforceable.

A hearing with the NLRB originally scheduled for February 2, 2015 has now been set for April 6, 2015.

GQM LLC is the operator of the Project, which is located in Mojave in Kern County, California. The Company and GQM LLC have no mine safety violations to report.

The common shares of the Company are listed and traded on the Toronto Stock Exchange under the trading symbol “GQM”. The high and low sales prices of the common shares as traded on the Toronto Stock Exchange for the calendar periods indicated are set out in the table below. All prices are reported in Canadian dollars.

The following table sets forth, for the periods indicated, certain exchange rates based on the noon buying rate in Canadian dollars. Such rates are the number of Canadian dollars per one (1) U.S. dollar quoted by the Bank of Canada. The high and low exchange rates for each month during the previous six months were as follows:

Exchange rate information (from U.S.$ to Canadian $), based on the closing rates, as at each of the years ended December 31, 2013 and 2014 is set out in the table below:

As of March 16, 2015, there were 225 registered holders of record of the Company’s common shares and an undetermined number of beneficial holders.

The Company announced that it had commenced trading on the OTCQX International under the symbol “GQMNF” in a news release dated September 11, 2012. The OTCQX is the highest tier of the OTC Markets group and the Company expects that this will increase accessibility for U.S. investors.

The high and low sales prices of the common stock as traded on the OTCQX for the calendar periods indicated are set out in the table below. All prices are reported in U.S. dollars.

The following table sets forth information as at December 31, 2014 respecting the compensation plans under which shares of the Company’s common stock are authorized to be issued.

The performance graph below shows the Company’s cumulative total return based on an initial investment of $100 in GQM common stock, as compared with the S&P/TSX Global Gold Index. The chart shows performance marks as of the last trading day during each of the last five years ended December 31.

Neither the Company nor an affiliated purchaser of the Company purchased common shares of the Company in the year ended December 31, 2014.

The following table summarizes certain selected consolidated financial data of the Company and should be read in conjunction with Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation and the consolidated financial statements and notes thereto (for the applicable period) appearing elsewhere in this report.

Results for the year ended on:	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Item	$	$	$	$	$
Revenues	-	-	-	-	-
Net income (loss) and comprehensive income (loss)	(8,469,204)*	1,978,014	(1,270,988)	(3,230,641)	(9,983,926)
Basic income (loss) per share	(0.09)	0.02	(0.01)	(0.03)	(0.11)
Diluted income (loss) per share	(0.09)	(0.01)	(0.01)	(0.03)	(0.11)
Cash and cash equivalents	91,407,644	5,030,522	4,031,403	7,922,255	6,967,465
Total assets	129,615,450	15,791,743	6,567,069	8,692,866	7,655,343
Total long term liabilities	1,314,435	8,028,857	3,998,009	4,779,714	10,583,313
Redeemable portion of NCI	22,833,645	-	-	-	-
Stockholders' equity (deficiency), attributable to common shareholders	44,654,709	6,240,932	2,413,780	3,631,916	(3,327,592)
Non-controlling interest	34,250,468	-	-	-	-

* - Net income (loss) for the period attributable to the Company.

For more information of the assets and liabilities specific to GQM LLC, the variable interest entity, see Note 8 (vi) of the consolidated financial statements.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operation.

The following discussion of the operating results and financial condition of the Company should be read in conjunction with the audited, consolidated financial statements of the Company for the year ended December 31, 2014 and the notes thereto (the “Consolidated Financial Statements”). Additionally, please note that the operating results and financial conditions described below include the amounts attributable to the non-controlling interest.

The information in this Management Discussion and Analysis of Financial Condition and Results of Operation is prepared in accordance with U.S. generally accepted accounting principles and all amounts herein are in U.S. dollars unless otherwise noted.

Results of Operation

The following are the results of operation for the year ended December 31, 2014.

The Company had no revenue from operations.

The Company incurred general and administrative expenses of $4,984,750 during the year ended December 31, 2014 (2013 - $2,532,279; 2012 - $466,996). General and administrative costs were significantly higher when compared with 2013.

The following significant general and administrative expenses were incurred during the year with a comparison to expenses in 2013 and 2012:

•	$570,078 (2013 - $274,935; 2012 - $182,153) for accounting, taxation and auditing fees during the year. The current year increase is the result of higher costs associated with the 2013 year-end audit and the 2014 quarterly reviews completed by the Company’s auditors as well as an increase in the Company’s overall accounting and Sarbanes Oxley (“SOX”) costs. With the increase in overall corporate activity, changes and improvements to our control environment and processes and a move towards production, the amount of work required to complete the financial statement audit and the internal control over financial reporting audit increased as compared to the prior period. Finally, there were significant accounting fees related to the Joint Venture Transaction due to the complexity of the agreement, including the hiring of an independent accounting firm to assist with complex accounting matters (refer to *Project Financing - Joint Venture* *Transaction* above).

•	$1,278,374 (2013 - $421,616; 2012 - $234,914) in legal fees. The increase is the result of the work required for financing activities, a general increase in overall corporate activity and other corporate matters such as the Company’s response to the Petition (refer to *The Center for Biodiversity Petition to List the Mojave* *Shoulderband Snail as an Endangered Species* above). In addition, there were significant legal fees related to the Joint Venture Transaction that were incurred mostly in the third quarter of 2014 (refer to *Project* *Financing - Joint Venture Transaction* above).

•	$1,148,626 (2013 - $202,848; 2012 - $Nil) for corporate salary. The increase is due in part to the ten full- time staff and executives at the Vancouver and Mojave offices employed by GQM LLC as of December 31, 2014. Most of the staff was hired in 2014. Bonuses were also paid to one of the executives as well as the Mojave employees. These bonuses were not issued in prior periods. In addition, one-time fees were paid to the independent directors for their involvement in the special committee formed to evaluate the joint venture transaction and their work on the Company’s technical committee.

•	$743,216 (2013 - $285,177; 2012 - $Nil) for corporate expenses. The increase is due to the costs associated with the Company’s financing activities and a general increase in overall corporate activity. Additional fees had to be paid in connection with the Joint Venture Transaction (refer to *Project Financing - Joint Venture* *Transaction* above). The Company opened an administrative office in Mojave in July 2013 and has been hiring new employees, hence increasing overall corporate expenses at the project level as well as costs related to recruiting and relocating new hires.

•	$425,743 (2013 - $205,318; 2012 - $59,359) for office expense. The Company opened an office in Mojave, California, in July 2013 and has since incurred expenditures that were not previously. The significant increase in the office expenses as compared to 2013 is directly related to the increased activity at the Mojave office including items such as office supplies, computers and software, utilities, telephone, internet, vehicle expense and advertising.

•	$233,672 (2013 - $475,263; 2012 - $Nil) for stock based compensation. The Company granted 800,000 stock options in 2013 as compared with no stock options granted in 2012. In 2014, 100,000 unvested stock options were forfeited resulting in a reversal of $46,245 of stock-based compensation expense that was previously recognized in the first nine months of 2014. There were no stock options granted in 2014.

•	$195,440 (2013 - $69,617; 2012 - $33,775) for public relations and promotion. The increase is due to the increase in overall corporate activity, including participation in industry shows, the Company’s financing efforts and the costs associated with the shareholder vote on the joint venture agreement.

•	$128,402 (2013 - $Nil; 2012 - $Nil) for repairs and maintenance. The repairs and maintenance expenses are related to work done on the Company-owned houses located in Mojave, as well as work done on the Mojave office. There were no repairs and maintenance items that should have been capitalized.

The Company incurred exploration expenditures of $Nil during the year-ended December 31, 2014 (2013 - $Nil; 2012 - $1,567,894). The Company was developing the Project in preparation for production during the fiscal 2014 year and as such had no exploration expenditures in 2014. The Company has been capitalizing all cost directly related to the Project since it moved out of the exploration stage in the third quarter of 2012.

The Company recorded a change in fair value of a derivative liability including foreign exchange of $1,004,217 (2013 - $5,385,660; 2012 - $1,030,431). The derivative liability for the fiscal year 2014 is the result of the convertible debenture having a conversion price denominated in Canadian dollars as well as the fact that the final conversion price is not fixed, whereas at September 30, 2013, the derivative liability was the result of both the convertible debenture (for the reasons stated above) and the stock options having exercise prices in Canadian Dollars, which is not the Company’s functional currency. In both cases, the conversion/exercise prices were denominated in a currency that was not the functional currency of the Company, U.S. dollars. This item is a non-cash item and was recorded in accordance with accounting pronouncement ASC 850-40-15. Refer to Notes 8 Convertible Debenture and 10 Derivative Liability - Options and Warrants of the Consolidated Financial Statements for a detailed analysis of the changes in fair value of the derivative liability.

GQM LLC incurred transaction fees for $2,275,000 (2013 – $Nil; 2012 - $Nil) during the third quarter of 2014. The transaction fees were paid to Leucadia and Auvergne when the Joint Venture Transaction closed on September 15. The Company incurred commitment fees of $2,250,000 (2013 – $Nil; 2012 - $Nil) and these commitment fees were also paid to Leucadia and Auvergne when the Joint Venture Transaction closed on September 15. The commitment fees were paid as a result of the standby purchase agreement (refer to Project Financing - Joint Venture Transaction above).

Interest income of $126,884 (2013 - $15,181; 2012 - $51,174) was significantly higher than in 2013 and in 2012 due to the fact that the Company’s cash balance was significantly higher. The majority of the interest income came in the fourth quarter as GQM LLC earned interest on a significant portion of the funds received through the Joint Venture Agreement. As the Company continues to move towards production, the funds will continue to decrease in 2015 and as a result the interest income is expected to be lower in 2015.

The Company recorded interest expense of $1,493,034 (2013 - $888,026; 2012 - $Nil). The total interest expense for the year was $3,905,049 (2013 - $888,026; 2012 - $Nil) of which $2,412,015 (2013 - $Nil; 2012 - $Nil) was capitalized to mineral property interests. The total interest expense breaks down as follows:

1.	Convertible debenture interest of $181,479 (2013 - $76,699; 2012 - $Nil);
2.	Amortization of the discounted convertible debentures, which is a non-cash item - $2,510,611 (2013 - $811,327; 2012 - $Nil);
3.	January 2014 loan interest - $500,000 (2013 - $Nil; 2012 - $Nil);
4.	January 2014 loan extension fee - $500,000 (2013 - $Nil; 2012 - $Nil);
5.	Gauss advance interest - $209,607 (2013 - $Nil; 2012 - $Nil); and
6.	Komatsu financing loan interest - $3,353 (2013 - $Nil; 2012 - $Nil).

The Company recorded net and comprehensive loss of $8,469,204 (or $0.09 per share) during the year as compared to a net and comprehensive income of $1,978,014 (or $0.02 per share) during 2013 and a net and comprehensive loss of $1,270,988 (or $0.01 per share) during 2012. The Company incurred higher general and administrative costs in 2014 due to increased activity both on site and at the corporate level. The Company also incurred significant one-time fees associated with the Joint Venture Transaction, including a commitment fee of $2,250,000 (2013 - $Nil; 2012 - $Nil) and a Joint Venture transaction fee of $2,275,000 (2013 - $Nil; 2012 - $Nil) paid during 2014. In addition, the Company incurred higher interest costs due to larger amounts of borrowing in 2014 as explained in Liquidity and Capital Resources section below. Finally, the Company’s gain on the change in fair value of the derivative liability was much lower in 2014 compared to 2013, and similar to 2012, as the Company’s stock price rose to C$1.03, as at December 31, 2014, compared with C$0.83 in 2013 (2012 - C$2.26), which increased the derivative liability but was more than offset by the decrease in the value of the Canadian dollar, C$1.16 at December 31, 2014 (2013 - C$1.06) as compared with U.S. dollar.

Summary of Quarterly Results

Results for the eight most recent quarters are set out in the table below:

Results for the quarter ended on:	Dec. 31, 2014	Sept. 30, 2014	June 30, 2014	March 31, 2014
Item	$	$	$	$
Revenue	Nil	Nil	Nil	Nil
Net income (loss) for the quarter	1,543,120*	(1,811,843)*	(705,843)	(7,494,638)
Basic net income (loss) per share	0.02	(0.02)	(0.01)	(0.08)
Diluted net income (loss) per share	0.00	(0.02)	(0.01)	(0.08)

Results for the quarter ended on:	Dec. 31, 2013	Sept. 30, 2013	June 30, 2013	March 31, 2013
Item	$	$	$	$
Revenue	Nil	Nil	Nil	Nil
Net income (loss) for the quarter	1,221,564	(637,744)	1,226,780	167,304
Basic net income (loss) per share	0.02	(0.01)	0.01	0.00
Diluted net income (loss) per share	(0.01)	(0.01)	(0.00)	(0.00)

* - Net income (loss) for the period attributable to the Company.

For the quarters above, the main reason for the significant fluctuations in the net income (loss) has been the result of the fluctuations in the Company’s derivative liabilities. For fiscal 2014, the Company experienced a significant loss related to its derivative liabilities in the amount of $5,747,376 (2013 – Gain of $611,949) in the first quarter whereas the second, third and fourth quarters of 2014 resulted in gains of $1,634,681 (2013 – Gain of $1,672,861), $2,861,314 (2013 – Gain of $475,862) and $2,255,598 (2013 – Gain of $2,624,988), respectively. The Company’s derivative liabilities are a function of the Company’s stock price. As the stock price rises, the derivative liabilities increase resulting in the Company recognizing losses and when the stock price decreases, the Company recognizes gains. In addition to the derivative liabilities, the Company also incurred a commitment fee of $2,250,000 (2013 - $Nil) and a joint venture transaction fee of $2,750,000 (2013 - $Nil) in the third quarter of fiscal 2014 that were meaningful contributing factors to the significant loss recognized in that quarter. Both fees were one-time fees not previously incurred in prior quarters or to be incurred in future quarters.

In general, the results of operations can vary from quarter to quarter depending upon the nature, timing and cost of activities undertaken during the quarter, whether or not the Company incurs gains or losses on foreign exchange or grants stock options, and the movements in its derivative liability.

Reclamation Financial Assurance and Asset Retirement Obligation

The Company has provided reclamation financial assurance to the Bureau of Land Management, the State and Kern County totaling $553,329 (2013 - $478,742). This deposit earns interest at 0.1% per annum and is not available for working capital purposes. The increase in the deposit was to ensure the amount of the reclamation assurance covers the asset retirement obligation from the previous year.

The Company estimated its asset retirement obligations based on its understanding of the requirements to reclaim and clean-up its property based on its activities to date. As the Company is moving towards production and capitalizing its development costs, $71,892 (2013 - $76,312) was capitalized as the asset portion of the retirement obligation for the year ended December 31, 2014. The total asset retirement obligation as of December 31, 2014 is $624,142 (2013 - $552,250). Prior to 2013, the asset retirement obligation was expensed.

Property Rent Payments

The total property rent payments for the year ended December 31, 2014 were $183,950 of which $24,480 was related to common shares issued (2013 - $161,190 of which $22,568 related to common shares issued; 2012 - $204,792) and the Company expects GQM LLC to pay approximately $150,000 in 2015. Beginning in July of 2012, the Company moved from the exploration stage to the development stage and as a result, began capitalizing the costs related to the rental payments which are required in order to move ahead with the Project. As of December 31, 2014, $486,766 paid in property rental payments was capitalized to mineral properties.

Mine Development Commitments and Contractual Obligations

GQM LLC has entered into contracts for construction totaling approximately $36.9 million as of December 31, 2014, of which $5.8 million had been paid as of December 31, 2014. The major commitments relate to the construction of the heap leach pad for $8.3 million, the construction of the conveying & stacking system for $8.2 million and work related to the Merrill-Crowe plant equipment for $7.1 million. The commitments are expected to be paid out in 2015. In addition, GQM LLC committed, as of December 31, 2014, to $16.2 million of Komatsu mobile mining equipment with Road Machinery LLC. The final terms of the mobile equipment financing were not known as of December 31, 2014. As of December 31, 2014, GQM LLC received the water truck and a motor grader, valued at approximately $1.1 million (see note 5 of the audited consolidated annual financial statements for more details).

GQM LLC made approximately $23.4 million in additional construction commitments subsequent to December 31, 2014, including $18.1 million for the crushing-screening plant construction.

GQM LLC’s contractual obligations as of December 31, 2014 are shown in the table below:

	Payments Due
Contractual Obligations*	Total	Less than 1 year	1-3 years	3-5 years	More than 5 years
Long-term debt obligations	$913,132	$222,839	$463,948	$226,345	-
Capital lease obligations	-	-	-	-	-
Operating lease obligations	-	-	-	-	-
Purchase obligations (see above)	$31,053,168	$31,053,168	-	-	-
Asset retirement obligations	$624,142	-	-	-	$624,142
Other long-term liabilities	-	-	-	-	-
Total	$32,590,442	$31,276,007	$463,948	$226,345	$624,142

* Obligations shown in table above are for GQM LLC. The Company’s obligations as at December 31, 2014 also include a C$10 million convertible debenture, the December 2014 $12.5 million loan and the remaining $2.5 million due on the January 2014 loan. These obligations are due within 1 year. Please refer to the Transactions with Related Parties section for complete details.

Off-balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Stock Option Plan

The Company’s current stock option plan (the “Plan”) was adopted by the Company in 2013 and approved by shareholders of the Company in 2013. The Plan provides a fixed number of 7,200,000 common shares of the Company that may be issued pursuant to the grant of stock options. The exercise price of stock options granted under the Plan shall be determined by the Company’s board of directors (the “Board”), but shall not be less than the volume-weighted, average trading price of the Company’s shares on the Toronto Stock Exchange (the “TSX”) for the five trading days immediately prior to the date of the grant. The expiry date of a stock option shall be the date so fixed by the Board subject to a maximum term of five years. The Plan provides that stock options will terminate on the earlier of the expiry of the term and (i) 12 months from the date an option holder dies, (ii) 12 months from the date from the date the option holder ceases to act as a director or officer of the Company, or (iii) 12 months from the date the option holder ceases to be employed, or engaged as a consultant, by the Company. All options granted under the 2013 Plan will be subject to such vesting requirements as may be prescribed by the TSX, if applicable, or as may be imposed by the Board.

The Company granted 1,950,000 stock options to directors, officers and consultants of the Company on January 28, 2009. The options are exercisable at a price of $0.21 per share for a period of 5 years from the date of grant. The Company also granted 50,000 stock options to a consultant of the Company on April 19, 2010. The options are exercisable at a price of $1.22 per share for a period of 5 years from the date of grant.

During the quarter ended June 30, 2013, the Company granted 300,000 options to an officer of the Company, on June 3, 2013. The options are exercisable at a price of $1.16 for a period of five years from the date of grant and vest over a period of 18 months with 100,000 vesting in 6, 12 and 18 months respectively. During the fourth quarter of 2014, the officer resigned and as a result, 100,000 unvested stock options were forfeited. The remaining 200,000 remain outstanding with an accelerated expiration date of November 11, 2015. The Company also granted 50,000 stock options to a consultant of the Company on June 3, 2013. The options are exercisable at a price of $1.16 for a period of five years from the date of grant and vest immediately.

During the quarter ended September 30, 2013, the Company granted 300,000 options to Ms. Andrée St-Germain, the Company’s new Chief Financial Officer, on September 18, 2013. The options are exercisable at a price of $1.26 for a period of five years from the date of grant and vest over a period of 12 months with 100,000 vesting on the date of grant, 100,000 vesting in 6 and 12 months respectively. The Company also granted 150,000 stock options to the

Company’s independent directors on September 4, 2013. The options are exercisable at a price of $1.59 for a period of five years from the date of grant and vest immediately.

A total of 750,000 (2013 – 1,380,000) common shares were issuable pursuant to such stock options as at December 31, 2014.

Transactions with Related Parties

Consulting Fees

For the year ended December 31, 2014, the Company paid $163,465 (2013 - $192,431; 2012 - $138,885) to Mr. H. L. Klingmann for services as President of the Company of which $Nil (2013 - $47,967; 2012 - $26,977 ) is payable as at December 31, 2014; paid $Nil (2013 - $17,622; 2012 - $26,977 to Mr. Chester Shynkaryk, a former director, for his consulting services to the Company; paid $Nil (2013 - $21,987; 2012 - $29,930), to Mr. Ross McDonald for his services as the former CFO of the Company; paid $Nil (2013 - $11,759; 2012 - $Nil) to a company controlled by one of the directors for consulting services during the year.

During the year ended December 31, 2014, the Company paid a total of $150,199 (2013 - $35,484; 2012 – $10,068) to four directors. This includes $60,000 in fees paid to the three independent directors as compensation for their position on a special committee formed to assist with the JV transaction and $20,000 paid to two independent directors for their position on the Company’s technical committee. A total of $70,199 for regular director fees was paid to the three independent directors and Thomas M. Clay.

The Company amended a consulting services agreement originally entered into in 2004 with Mr. H.L. Klingmann, the President of the Company, in May of 2010. Under the original agreement, upon receipt by the Company of a feasibility study and a production decision made by the Company, a bonus of 150,000 common shares would be issued and upon commencement of commercial production on the Property, a bonus of 150,000 common shares would be issued. Pursuant to the amended agreement, an alternative 300,000 bonus shares would be issuable upon a change of control transaction or upon a sale of all or substantially all of the Company’s assets, having a value at or above C$1.00 per share of the Company, with a further 300,000 bonus shares being issuable in the event the change of control transaction or asset sale occurred at a value at or above C$1.50 per share. As at December 31, 2014, the milestones had not been reached and no commitment to issue the common shares has been recorded in connection with these arrangements.

Convertible Debentures

The conversion feature of the convertible debentures meets the definition of a derivative liability instrument because the conversion feature is denominated in a currency other than the Company’s functional currency and therefore does not meet the “fixed-for-fixed” criteria outlined in ASC 815-40-15. As a result, the conversion feature of the notes is required to be recorded as a derivative liability recorded at fair value and marked-to-market each period with the changes in fair value each period being charged or credited to income or loss.

On inception of the debentures, the fair value of the derivative liability related to the conversion feature was $5,741,520 and as at December 31, 2014, was $1,829,770 (December 31, 2013 - $2,833,987). The derivative liability was calculated using an acceptable option pricing valuation model with the following assumptions:

	2014	2013
Risk-free interest rate	1.00% - 1.09%	1.13% - 1.15%
Expected life of derivative liability	0.57 - 1.32 years	1.57 - 2 years
Expected volatility	73.03 - 98.21%	73.43% - 89.52%
Dividend rate	0.00%	0.00%

The changes in the derivative liability related to the conversion feature are as follows:

		December 31, 2014			December 31, 2013

Balance, beginning of the year	$	2,833,987		$	-
Fair value at inception		-			5,741,520
Change in fair value of derivative liability including foreign exchange		(1,004,217	)		(2,907,533	)
Balance, end of the year	$	1,829,770		$	2,833,987

With the conversion feature initially being valued at $5,741,520, the resulting residual value allocated to the host debentures was $3,975,480, being the difference between the face value of the convertible debentures and the fair value of the conversion feature derivative liability.

The change in the convertible debentures is as follows:

		December 31, 2014			December 31, 2013
Balance, beginning of the year	$	4,642,620		$	-
Discounted convertible debentures		-			3,975,480
Amortization of discount		2,510,611			811,327
Foreign exchange		(503,264	)		(144,187	)
Balance, end of the year	$	6,649,967		$	4,642,620

During the year ended December 31, 2014, in addition to the amortization of the discount on the convertible debenture shown in the above table, the Company incurred interest expense of $181,479 (2013 - $76,699) based on the 2% per annum stated interest rate for a total interest expense of $2,692,090 for the year ended December 31, 2014 (2013- $888,026). Interest payable relating to the convertible debenture as at December 31, 2014 was $70,721 (2013 - $76,699).

Notes Payable

On January 1, 2014, the Company entered into an agreement to secure a $10,000,000 loan (the “January Loan”). The January Loan was provided by members of the Clay family, who are shareholders of the Company, including $7,500,000 provided by an investment vehicle managed by Thomas M. Clay, a Director and insider of the Company. The January Loan had a twelve-month term and an annual interest rate of 5%, payable on the maturity date.

The January Loan was repaid on a date that is less than 183 days before the maturity date. As a result, the Company paid the Lenders an additional charge in the amount that is equivalent to 5% of the principal amount, plus interest on the principal amount at the rate of 5% per annum accrued to the date the January Loan is repaid. The Company repaid $7,500,000 loan plus the $375,000 accrued interest and $375,000 additional charge on December 31, 2014. The remaining balance of the January Loan, $2,500,000, the accrued interest of $125,000 and the additional charge of $125,000, were paid on January 5, 2015. In total, the Company incurred $500,000 interest expense and $500,000 in additional charge during the year.

On December 31, 2014 the Company also entered into a new loan (the “December Loan”) with the same parties for an amount of $12,500,000. Then December Loan is due on demand on July 1, 2015 and bears an annual interest rate of 10% payable at the end of each quarter. The loan is guaranteed by GQM Holdings, and secured by a pledge of the Company's interests in GQM Canada, GQM Canada’s interest in GQM Holdings and GQM Holdings' 50% interest in GQM LLC. The Company also incurred a closing fee to secure the December Loan in the amount of $1,000,000, of which, $750,000 was paid on December 31, 2014 and the remaining $250,000 was paid on January 5, 2015. The Company agreed to pay the legal fees incurred by the lenders relating to this instrument which amounted to $90,916. The total legal fees paid for the transaction were $118,695. The Company has presented these transaction costs as a contra liability as substantially all of these costs were paid to the lenders.

		December 31, 2014
Balance, beginning of the year	$	-
Proceeds from loans		22,500,000
Repayment of loans		(7,500,000	)
Capitalized closing fee and legal fees		(1,118,695	)
Balance, end of the year	$	13,881,305

Advance

In July 2014, GQM Inc. (the predecessor of GQM LLC) entered into an agreement for a $10,000,000 short-term loan

(the “Advance”) with Leucadia and Auvergne (together the “Lenders”), with the Company as guarantor. Leucadia provided $6,500,000 and Auvergne provided $3,500,000 of the Advance respectively. The Advance had an interest rate of 10.0% per annum, compounded monthly. Auvergne is an investment vehicle managed by Thomas M. Clay, a Director and insider of the Company. On closing of the joint venture transaction on September 15, 2014, GQM LLC applied part of the investment of $110,000,000 to repayment of principal and accrued interest on the Advance. GQM LLC paid $209,607 in interest payment, including $73,362 paid to Auvergne on the July 2014 Advance, of which $45,264 was capitalized to mineral property interests.

Joint Venture Transaction

The Company closed the Joint Venture Transaction with Leucadia and Auvergne on September 15 (see Project Financing - Joint Venture Transaction above and Note 8(vi) of the audited consolidated annual financial statements for more details). Auvergne is managed by Thomas M. Clay, a Director and insider of the Company.

Pursuant to the transaction, GQM LLC paid transaction fees to Leucadia and Auvergne of $2,000,000 and $275,000, respectively. The Company paid commitment fees to Leucadia and Auvergne of $1,518,750 and $731,250, respectively.

There were no other transactions with related parties during the year ended December 31, 2014.

Fair Value of Financial Instruments

All financial assets and financial liabilities are recorded at fair value on initial recognition.

The three levels of the fair value hierarchy are as follows:

Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2	Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; See Notes 8 and 10 of the audited consolidated annual financial statements – Convertible Debentures and Derivative Liability- Options and Warrants for derivatives fair valued on a recurring basis.

Level 3	Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Under fair value accounting, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. As of December 31, 2014 the Company had embedded derivatives liabilities in connection with the Convertible Debenture and as of December 31, 2013, the Company had embedded derivatives liabilities in connection with the Convertible Debenture and Options and Warrants prior to modification of the exercise price currency.

Refer also to the note on fair value of derivative liability under Results of Operations above.

Private Placement

The Company completed a private placement of Convertible Debentures in July 2013 (refer to Convertible Debentures above). Other than the foregoing, there were no private placements completed during the 2014, 2013, or 2012 fiscal years.

Liquidity and Capital Resources

The Company and GQM Holdings (100%-owned by the Company) held $8,125,242 in cash on December 31, 2014 as compared to $5,030,522 on December 31, 2013. The slight increase in cash is due to proceeds from the $10 million January Loan, the $12.5 million December Loan and the $5 million early distribution from GQM LLC (see Cash from Financing Activities below) mostly offset by corporate and project-related expenditures, payment of the commitment fees to Leucadia and Auvergne and repayment of $7.5 million of the January Loan (see Transactions with Related Parties above). It is expected that the cash held by the Company will fund the Company’s corporate expenses until production start in late 2015 or early 2016. The only near term commitment of the Company, other than the remaining $2.5 million repayment of the January Loan and $175,720 in accounts payable as of December 31, 2014, is the $12.5 million December 2014 Loan, which will mature in July 2015. The Company also has outstanding convertible debentures in the principal amount of C$10 million maturing and payable in July 2015, unless otherwise converted. The Company holds the right to decide whether to convert or pay back the debenture. It is not known at this time if the Company will decide the convert or to pay back the debentures.

The Company’s 50%-owned subsidiary, GQM LLC, held $83,282,403 in cash as of December 31, 2014. The cash will be used to fund capital expenditures required to take the Project to production. GQM LLC has entered into contracts for construction totaling approximately $36.9 million as of December 31, 2014, of which $5.8 million had been paid as of December 31, 2014. The major commitments relate to the construction of the heap leach pad for $8.3 million, the construction of the conveying & stacking system for $8.2 million and work related to the Merrill-Crowe plant equipment for $7.1 million. The commitments are expected to be paid out in 2015 with the cash on hand. The capital expenditures are expected to significantly increase in the first quarter of 2015 as the Company starts full construction. The trend will continue until the Company reaches the commissioning phase in late 2015. It is expected that the current cash on hand will fund capital expenditures until the third quarter of 2015. The remaining capital expenditures, estimated to be between $30 million and $40 million will be shared by the joint venture partners. The portion related to mobile mining equipment will be financed through loans with Komatsu. The Company is evaluating various financing options to fund its attributable remaining capital expenditures, including debt and equity.

Cash used in Operating Activities:

Cash used to fund operating activities, including general and administrative expenses such as legal fees, accounting, taxation and auditing fees, corporate expenses, office expenses and corporate salary was $11,153,251. This also included the Joint Venture transaction fee of $2,275,000 and the commitment fee of $2,250,000 that were paid as part of the Joint Venture Transaction. The increase in cash used in operating activities is the result of a significant increase in overall corporate activity. With the Company preparing the Project for production, the corporate expenses, office expenses and corporate salaries significantly increased. In addition, there were significant legal fees, corporate expenses and accounting fees related to the Joint Venture Transaction that were incurred mostly in the third quarter of 2014 (refer to Project Financing - Joint Venture Transaction above).

In July 2012, the Company received notice that it had met all the remaining major conditions of the conditional use permits for development of the Project. As a result, Management made the decision to begin capitalizing all development expenditures directly related to the Project (see Cash used in Investing Activities below for further details on 2013 project expenditures). Prior to July 2012, all Project-related expenditures were written off due to uncertainties around obtaining the necessary permits. In 2012 cash was used mainly for the ongoing development of the Project. Major expenditures included consulting engineering fees, costs incurred for ongoing sampling and analysis of groundwater, legal fees and consulting fees incurred to prepare a NI 43-101 Technical Report.

These expenditures are now being treated as investing activities since 2013 as the Company is preparing the Project for production.

Cash from Financing Activities:

On January 1, 2014, the Company entered into the $10,000,000 January Loan. The January Loan had a twelve-month term and an annual interest rate of 5%, payable on the maturity date. The Company repaid $7,500,000 of the loan on December 31, 2014. The remaining balance of the loan, $2,500,000 was repaid on January 5, 2015 (see Transactions with Related Parties above).

In July 2014, GQM Inc. (the predecessor of GQM LLC) entered into the $10,000,000 Advance with Leucadia and Auvergne, with the Company as guarantor. The Advance had an interest rate of 10% per annum, compounded monthly. The Advance and accrued interests were paid in full on September 15, 2014 with the proceeds from the JV transaction (see Transactions with Related Parties above).

The Company formed a joint venture with Gauss in September 2014 (refer to Project Financing - Joint Venture Transaction above). Gauss acquired 50% of GQM LLC in exchange for a $110,000,000 investment. On closing of the Joint Venture Transaction, GQM LLC applied part of the investment of $110,000,000 to repayment of principal and accrued interest on the $10,000,000 July 2014 Advance provided by Leucadia and Auvergne (see Transactions with Related Parties above). GQM LLC also made a $5,000,000 early distribution to each Gauss and GQ Holdco, for a total early distribution of $10,000,000.

On December 31, 2014 the Company also entered into the December Loan for an amount of $12,500,000. The December Loan is due on demand on July 1, 2015 and bears an annual interest rate of 10% payable at the end of each quarter (see Transactions with Related Parties above).

During the 2014 fiscal year, options were exercised by former directors as follows:

	•	In May 2014, 300,000 stock options were exercised by a former director and the Company issued 300,000 shares at $0.21 per share for proceeds of $63,000.

	•	In April 2014, 170,000 stock options were exercised by two former directors and the Company issued 170,000 shares at $0.21 per share for proceeds of $35,700.

	•	In February 2014, 60,000 stock options were exercised by a former director and the Company issued 60,000 shares at $0.21 per share for proceeds of $12,721.

The Company issued two convertible debentures for net proceeds of C$10,000,000 ($9,710,603) on July 26, 2013. See Note 8 of the Consolidated Financial Statements for more details. The proceeds of the convertible debentures will be used exclusively to advance the Project, including construction of infrastructure-related items that is now underway.

During the 2013 fiscal year, options were exercised by former directors, insiders and consultants as follows:

Second Quarter of 2013

•	200,000 options for proceeds of $50,674 (C$52,000)
•	100,000 options for proceeds of $25,722 (C$26,000)

Third Quarter of 2013

•	20,000 options for proceeds of $5,017 (C$5,200)

Fourth Quarter of 2013

•	500,000 options for proceeds of $126,373 (C$130,000)
•	300,000 options for proceeds of $74,677 (C$78,000)
•	100,000 options for proceeds of $24,900 (C$26,000)

During the 2012 fiscal year, there were no financing activities and as a result, there was no cash received or used in financing activities.

Cash used in Investing Activities:

The Company began capitalizing all development expenditures directly related to the Project in July 2012. Prior to July 2012, all Project-related expenditures were written off due to uncertainties around obtaining the necessary approvals for proceeding with the Project.

Cash used in investing activities totaled $21,712,353 during the 2014 fiscal year (2013 - $7,257,659).

The development costs incurred/capitalized, by the Company totalled $27,146,756 (2013 - $8,043,873), which was an increase of $19,102,883 as compared to 2013. See Note 9 –Supplementary Disclosures of Cash Flow Information in the Consolidated Financial Statements for non-cash adjustments to mineral property interest investing activities. There was a significant increase of activity on site in 2014 due to the initiation of the Project construction. The following is a breakdown of significant development costs in 2014 as compared with 2013:

•	$1,391,770 (2013 - $1,392,081) in mineral property additions. The significant expenditures on the acquisition of mineral properties in 2014 were the result of the acquisition of a substantial number of property interests nearby the Project.

•	$2,766,506 (2013 - $1,432,723) in engineering and consulting costs. Costs were significantly higher in 2014 as substantial detailed engineering work was required once the Company decided to proceed with the development of the Project. This included a substantial amount of procurement and construction management costs. The detailed engineering for construction was essentially completed in 2014.

•	$1,818,978 (2013 - $700,390) in costs incurred in the construction of a workshop-warehouse. The costs occurred in 2013 related to the site preparation. The construction of the workshop-warehouse started in early 2014 and was completed in the third quarter of 2014.

•	$1,622,033 (2013 - $Nil) in costs for the power supply and distribution, which included electrical houses for a production well (PW-1) and for the tank farm, a standby generator for the Merrill-Crowe facility and several site transformers.

•	$6,756,063 (2013 - $Nil) in costs related to the crushing-screening plant. Approximately $4.8mm was spent for the purchase of the high pressure grinding rolls. The remaining was mostly spent on site preparation of the area where the crushing-screening plant will be located.

•	$3,359,530 (2013 - $Nil) in costs related to the construction of the conveying and stacking system. GQM LLC entered into a turn-key contract for the conveying and stacking system during the fourth quarter of 2014.

•	$1,106,521 (2013 - $Nil) in costs for the purchase of mobile mining equipment from Komatsu. GQM LLC received, in the fourth quarter of 2014, a water truck and grader. Both machines were financed through a loan with Komatsu.

•	$2,412,015 (2013 - $Nil) in capitalized interest costs. Interest is capitalized until the asset is ready for service. Capitalized interest is determined by multiplying the Company’s weighted-average borrowing cost on general debt by the average amount of qualifying costs incurred. Once an asset subject to interest capitalization is completed and placed in service, the associated capitalized interest is expensed through depletion or impairment.

The Company, through GQM Inc. then GQM LLC, continued its work on the Project as described in Construction of Infrastructure above. Construction is advancing smoothly and has progressed to a 30% completion rate; all turn-key projects have been awarded to independent contractors.

Workshop-Warehouse: This project was completed on time and on budget in July 2014.

Water Supply & Water Storage: The construction of the basic water supply for the Project is under way. Considerable progress was also made with the electrical infrastructure required for this project.

Fuel Storage Facility: Construction of the fuel storage facility was completed in September.

Site Preparation: Site preparation of the area where the crushing-screening plant will be constructed was completed in the third quarter of 2014. The excavation of the overflow pond was completed and site grading was started in the area where the Merrill-Crowe plant will be constructed.

Crushing-Screening Plant: An order for a high-pressure grinding roll was placed with ThyssenKrupp Industrial Solutions (USA), Inc. in the third quarter.

Assay Laboratory: The contract was awarded during the third quarter of 2014 and contraction started in the fourth quarter.

Merrill-Crowe plant: The contract for the equipment was awarded during the fourth quarter of 2014.

Stacking and Conveying System: The contract was awarded during the fourth quarter of 2014 and payments totaling ~$3 million were made in December 2014.

Heap Leach Pad Phase 1/Stage 1: The contract was awarded during the fourth quarter of 2014.

EPCM (Engineering, Procurement and Construction Management): Detailed engineering work was essentially completed in 2014. Significant costs were incurred in detailed engineering for the crushing-screening plant, the stacking and conveying system and the Merrill-Crowe plant.

Working Capital:

As at December 31, 2014, the Company had, on a consolidated basis, current assets of $91,672,520 (December 31, 2013 - $5,107,259) and current liabilities of $26,562,193 (December 31, 2013 - $1,521,954) or working capital of $65,110,327 (December 31, 2013 – working capital of $3,585,305). The increase in working capital is the result of the Joint Venture Transaction (refer to Liquidity and Capital Resources above), partially off-set by project-related expenditures.

The Company will use its cash on hand for ongoing work by GQM LLC on site (refer to Construction of Infrastructure above), for detailed engineering of facilities for the Project, for buying back royalty interests, for additional land purchases, and for legal, accounting and regulatory fees.

Refer also to Outlook below.

The Company is evaluating various options for financing its Joint Venture obligations and repay its debt obligations, including debt, equity and other alternatives.

Outstanding Share Data

At a special meeting of the holders of common shares of the Company held on December 17, 2013, the shareholders approved a special resolution to change the authorized share capital of the Company from 150,000,000 common shares to an unlimited number of common shares, all without par value, and no preferred shares.

On December 23, 2013, the Board of Directors of the Company passed a resolution to convert the exercise prices of granted stock options to U.S. dollars, being the functional currency of the Company for the purposes of financial reporting, in order to avoid recording a derivative liability in the Company’s financial statements.

The number of shares issued and outstanding and the fully diluted share position are set out in the table below:

Item	No. of Shares
Shares issued and outstanding on December 31, 2013	99,233,383
Shares issued for mineral properties	15,300
Shares issued pursuant to the exercise of stock options	530,000
Shares issued and outstanding on December 31, 2014	99,778,683	Exercise or Conversion Price	Expiry Date
Director and consultants stock options	750,000	$1.16 - $1.59	From 04/18/15 to 09/18/18
Shares to be issued as a finder’s fee	100,000	Not Applicable	Not Applicable
Bonus shares to H.L. Klingmann	600,000	Not Applicable	Not Applicable
Fully diluted on Dec 31, 2014	101,228,683
Shares to be issued on conversion of convertible debentures*	9,708,737	Lower of C$1.03 or market price on maturity date*	25/07/15
Fully diluted on March 16, 2015	110,937,420

*The principal amounts of the convertible debentures, being an aggregate of C$10,000,000, are convertible into shares of the Company at a price of C$1.03 per share for a period of two years. If the convertible debentures have not been converted by the holder prior to the maturity date, then either the Company or the holder may convert them at the lower of C$1.03 or the market price as at the maturity date. The market price on the maturity date will be determined based on the volume weighted average price of the shares as traded on the TSX for the five trading days preceding the maturity date.

Outlook

The estimated capital costs, including contingency, working capital and mining equipment, are $144 million.

The net proceeds from the Joint Venture Transaction will be applied to the continued development of the Project. It is expected that the current cash on hand will fund capital expenditures until the third quarter of 2015. The remaining capital expenditures, estimated to be between $30 million and $40 million will be shared by the Joint Venture partners. The portion related to mobile mining equipment will be financed through loans with Komatsu.

The Company is evaluating various financing options, including debt and equity, to fund its attributable remaining capital expenditures. The $12.5 million December Loan will also mature in July 2015 and the Company will need to raise the capital required to retire the loan and accrued interest. The Company also has outstanding convertible debentures in the principal amount of C$10 million maturing and payable in July 2015, unless otherwise converted. The Company holds the right to decide whether to convert or pay back the debenture. It is not known at this time if the Company will decide the convert or to pay back the debentures.

Construction is advancing smoothly and has progressed to a 35% completion rate; all turn-key projects have been awarded to independent contractors. The Company expect the start of commissioning by GQM LLC in late 2015.

Recent developments include:

•	The Hilfiker wall, a critical first step in the construction of the crushing-screening plant, was completed in January;
•	The construction of the Phase 1, Stage 1 heap-leach pad is advancing and our earthmoving contractor expects to complete this turn-key project in August;
•	Construction of the site-wide power distribution and water supply infrastructure is advancing rapidly;
•	Two laydown areas were prepared and these areas are now ready to receive equipment;
•	An archeological survey was completed in the area where the Phase 1, Stage 1 heap-leach pad is being constructed;
•	The Company expects GQM LLC to drill an additional production well in the second quarter of 2015 and complete the connection to the water supply infrastructure in August 2015;
•	Pre-production mining is expected to start in early April 2015;
•	There are now sixteen full-time employees in Mojave with an expected increase to approximately 50 full- time employees for the start of pre-production mining.

It is not expected that GQM LLC will hedge any of its gold or silver production.

The ability of GQM LLC to develop a mine on the Property is subject to numerous risks, certain of which are disclosed under Item 1A. Risk Factors above. Readers should evaluate the Company’s prospects in light of these and other risk factors.

Mineral Properties

In July 2012, the Company received notice that it had met all remaining major conditions of the conditional use permits for the Project. As a result, Management made the decision to begin capitalizing all development expenditures related to the Project while all other expenses not related to the development of the project continue to be expensed as incurred. Refer also to Note 3 Mineral Properties of the Consolidated Financial Statements for a more detailed discussion.

Subsequent Events

No subsequent events have been identified up to the date of March 16, 2015, the date the financial statements were approved, other than denoted below.

i)	On January 5, 2015 the Company repaid the remaining portion of the January 2014 loan. Please refer to Section 8(iii) – Loans Payable for complete details.

ii)	Subsequent to December 31, 2014, mobile mining equipment was delivered to site. Shortly after receiving the equipment, GQM LLC paid $0.3 million, which represents the sales tax and a 10% deposit. The remaining $1.8 million will be financed over 48 months at an interest rate of 2.99%.

iii)	In February 2015, the Company incorporated Golden Queen Mining Canada Ltd. (“GQM Canada”), a wholly owned British Columbia subsidiary, to hold the Company’s interest in GQM Holdings.

Application of Critical Accounting Estimates

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment.

The financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below:

Mineral Property and Exploration Costs

Costs related to the development of our mineral reserves are capitalized when it has been determined an ore body can be economically developed. An ore body is determined to be economically minable based on proven and probable reserves and when appropriate permits are in place. Major mine development expenditures are capitalized, including primary development costs such as costs of building access roads, heap leach pads, processing facilities, and infrastructure development.

Costs for exploration, pre-production development, if and when applicable, and maintenance and repairs on capitalized property, plant and equipment are charged to operations as incurred. Exploration costs include those relating to activities carried out in search of previously unidentified mineral deposits. Pre-production development activities involve costs incurred in the exploration stage that may ultimately benefit production that are expensed due to the lack of evidence of economic development, which is necessary to demonstrate future recoverability of these expenses. Secondary development costs are incurred for preparation of an ore body for production in a specific ore block, stope or work area, providing a relatively short-lived benefit only to the mine area they relate to, and not to the ore body as a whole.

Drilling and related costs are either classified as exploration or secondary development, as defined above, and charged to operations as incurred, or capitalized, based on the following criteria:

•	Whether or not the costs are incurred to further define mineralization at and adjacent to existing reserve areas or intended to assist with mine planning within a reserve area;
•	Whether or not the drilling costs relate to an ore body that has been determined to be commercially mineable, and a decision has been made to put the ore body into commercial production; and
•	Whether or not at the time that the cost is incurred, the expenditure: (a) embodies a probable future benefit that involves a capacity, singly or in combination, with other assets to contribute directly or indirectly to future net cash inflows, (b) we can obtain the benefit and control others’ access to it, and (c) the transaction or event giving rise to our right to or control of the benefit has already occurred.

If all of these criteria are met, drilling and related costs are capitalized. Drilling costs not meeting all of these criteria are expensed as incurred. The following factors are considered in determining whether or not the criteria listed above have been met, and capitalization of drilling costs is appropriate:

•	Completion of a favourable economic study and mine plan for the ore body targeted;
•	Authorization of development of the ore body by management and/or the Board of Directors; and
•	All permitting and/or contractual requirements necessary for us to have the right to or control of the future benefit from the targeted ore body have been met.

Once production has commenced, capitalized costs will be depleted using the units-of-production method over the estimated life of the proven and probable reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to the Consolidated Statements of Comprehensive Income (Loss) for that period.

We assess the carrying cost of our mineral properties for impairment whenever information or circumstances indicate the potential for impairment. Such evaluations compare estimated future net cash flows with our carrying costs and future obligations on an undiscounted basis. If it is determined that the future undiscounted cash flows are less than the carrying value of the property, a write down to the estimated fair value is charged to the Consolidated Statement of Comprehensive Income (Loss) for the period. Where estimates of future net cash flows are not available and where other conditions suggest impairment, management assesses if the carrying value can be recovered.

Proceeds received under option agreements and/or earn-in agreements are recorded as a cost recovery against the carrying value of the underlying project until the carrying value is reduced to zero. Any proceeds received in excess of the carrying value of the project are recorded as a realized gain in the Consolidated Statement of Comprehensive Income (Loss).

Non-controlling Interest

Non-controlling interest consists of equity in GQM LLC not attributable, directly or indirectly, to Golden Queen. GQM LLC meets the definition of a Variable Interest Entity (“VIE”). Golden Queen has determined it is the member of the related party group that is most closely associated with GQM LLC and, as a result, is the primary beneficiary who consolidates GQM LLC. The non-controlling interest has been classified into two categories; permanent equity and temporary equity.

Non-controlling interests in temporary equity represent the estimated portion of non-controlling interest that could potentially be convertible through either a conversion of the non-controlling interest into a net smelter royalty obligation of GQM LLC or a buy-out of the non-controlling interest at fair value by the Company. The convertible portion of non-controlling interest recorded in temporary equity is initially recorded at the carrying value and then adjusted for net income or loss and distributions attributable to the temporary equity.

The non-controlling interest in permanent equity represents the portion of the non-controlling interest that is not convertible. Please refer to Note 8(vi) of the Audited Consolidated Financial Statements for complete details of how the transaction has been accounted for.

Asset Retirement Obligations

GQM LLC’s provision for reclamation of the property is estimated each year by an independent consulting engineer. This estimate, once approved by state and county authorities, forms the basis for a cash deposit to support the reclamation financial assurance mechanism. GQM LLC estimated its asset retirement obligations based on its understanding of the requirements to reclaim and clean-up its property based on its activities to date. As a result, GQM LLC has recorded an asset retirement obligation of $624,142.

GQM LLC has provided reclamation financial assurance to the Bureau of Land Management, the State of California and Kern County totaling $553,329.

Derivative Liabilities

If the Company’s convertible debentures have not been converted by the holder prior to the maturity date, then either the Company or the holder may convert them at the lower of C$1.03 or the market price as at the maturity date. The convertible debentures were required to be accounted for as separate derivative liabilities due to this possible variability in conversion price. These liabilities were required to be measured at fair value. These instruments were adjusted to reflect fair value at each period end. Any increase or decrease in the fair value was recorded in results of operations as change in fair value of derivative liabilities. In determining the appropriate fair value, we used the Binomial pricing model.

New Accounting Policies

(i) Effective August 2014, FASB issued Accounting Standards update (“ASU”) 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40 –Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The update essentially requires management of all entities, for annual and interim periods, to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued.

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, but the substantial doubt is alleviated as a result of consideration of management’s plans, the entity should disclose information that enables users of the financial statements to understand all of the following:

1.	Principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans).
2.	Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations.
3.	Management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern.

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, and substantial doubt is not alleviated after consideration of management’s plans, an entity should include a statement in the footnotes indicating that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued). Additionally, the entity should disclose information that enables users of the financial statements to understand all of the following:

1.	Principal conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.
2.	Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations.
3.	Management’s plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

This update will come into effect for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is assessing the impact of this standard.

(ii) Effective June 2014, FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation - The amendments in this Update eliminate the concept of a development state entity (DSE) from U.S. GAAP.

The amendments also eliminate an exception previously provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity at risk. The amendments in this Update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to:

•	Present inception-to-date information in the statements of income, cash flows, and shareholder equity;
•	Label the financial statements as those of a development stage entity;
•	Disclose a description of the development stage activities in which the entity is engaged; and
•	Disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.

The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations. The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. The Company early adopted the new reporting requirements of ASU No. 2014-10 in its financial reporting for its interim period beginning April 1, 2014.

(iii) In July 2013, FASB issued ASU 2013-11, "Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or Tax Credit Carryforward Exits." The FASB's objective in issuing this ASU is to eliminate diversity in practice resulting from a lack of guidance on this topic in current U.S. GAAP. This ASU became effective for the Company on January 1, 2014. The ASU did not have a significant impact on the Company’s consolidated financial statements.

iv) In February 18, 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810) – Amendments to the Consolidation Analysis which focuses on the consolidation evaluation for reporting organizations (public and private companies and not-for-profit organizations) that are required to evaluate whether they should consolidate certain legal entities. In addition to reducing the number of consolidation models from four to two, the new standard simplifies the standards and improves current GAAP by:

•	Placing more emphasis on risk of loss when determining a controlling financial interest. A reporting organization may no longer have to consolidate a legal entity in certain circumstances based solely on its fee arrangement, when certain criteria are met.
•	Reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (VIE).
•	Changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or VIEs.

The ASU will be effective for periods beginning after December 15, 2015, for public companies. Early adoption is permitted, including adoption in an interim period. The Company is assessing the impact of this standard.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

The Company holds 97% of its cash in bank deposit accounts with a single major financial institution. The interest rates received on these balances may fluctuate with changes in economic conditions. Based on the average cash balances during the year ended December 31, 2014, a 1% decrease in interest rates would have reduced the interest income for 2014 to a trivial amount.

Foreign Currency Exchange Risk

Certain purchases of labour are denominated in Canadian dollars. As a result, currency exchange fluctuations may impact the costs of our operations. Specifically, the appreciation of the Canadian dollar against the U.S. dollar may result in an increase in the Canadian operating expenses in U.S. dollar terms. As of December 31, 2014, the Company maintained the majority of its cash balance in U.S. dollars. The Company currently does not engage in any currency hedging activities.

Commodity Price Risk

The Company’s primary business activity is the development of the open pit, gold and silver, heap leach project on the Property. Decreases in the price of either of these metals from current levels has the potential to negatively impact the Company’s ability to secure significant additional financing required to develop the Project into an operating mine. We do not currently engage in hedging transactions and we have no hedged mineral resources.

Refer also to Item 1A. Risk Factors above.

Item 8.

Financial Statements and Supplementary Data.

The Consolidated Financial Statements of the Company and the notes thereto are attached to this report following the signature page and Certifications.

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A.

Controls and Procedures.

Disclosure controls and procedures.

An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2014, in assuring them in a timely manner that material information required to be disclosed in this report has been properly recorded, processed, summarized and reported.

Management’s report on internal control over financial reporting.

Management is responsible for establishing and maintaining adequate internal control over our financial reporting, which is designed 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 in the United States of America.

Because of its inherent limitations, any system of internal control over financial reporting, no matter how well designed, may not prevent or detect misstatements due to the possibility that a control can be circumvented or overridden or that misstatements due to error or fraud may occur that are not detected. Also, because of changes in conditions, internal control effectiveness may vary over time.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2014, using criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and concluded that we have maintained effective internal control over financial reporting as of December 31, 2014, based on these criteria.

An evaluation was performed under the supervision and with the participation of management, including the CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures as required by Exchange Act Rules 13a-15(e) and 15(d)-15(e) as of the end of the reporting period covered by this report. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures, including controls and procedures designed to ensure that information required to be disclosed by us is accumulated and communicated to our management (including our CEO and CFO), were effective as of December 31, 2014, in assuring them in a timely manner that material information required to be disclosed in this report has been properly recorded, processed, summarized and reported.

Our internal control over financial reporting as of December 31, 2014 has been audited by BDO Canada, LLP, an independent registered public accounting firm, as stated in the attestation report which is included in the consolidated financial statements for the year ended December 31, 2014.

Changes in Internal Control.

There have been no changes in our internal controls over financial reporting during the quarter ended December 31, 2014, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Item 9B.

Other Information

None.

PART III

Information with respect to Items 10 through 14 is set forth in the definitive Proxy Statement to be filed with the Securities and Exchange Commission on or before April 30, 2015 and is incorporated herein by reference. If the definitive Proxy Statement cannot be filed on or before April 30, 2015, the issuer will instead file an amendment to this Form 10-K disclosing the information with respect to Items 10 through 14.

PART IV

Item 15. Exhibits

Exhibit No.	Description of Exhibit	Manner of Filing
Exhibit No.	Description of Exhibit	Manner of Filing
3.1	Notice of Articles	Incorporated by reference to Exhibit 3.03 to the Form S-3 of the Company, filed with the SEC on August 21, 2014
3.2	Articles	Incorporated by reference to Exhibit 3.2 to the Form 8-K of the Company, filed with the SEC on September 2, 2010
10.1	Management Agreement dated March 11, 2004 between the Company and H. Lutz Klingmann, and amendment dated May 31, 2010.	Incorporated by reference to Exhibit 10.1 to the Form 10-K/A of the Company, filed with the SEC on January 14, 2011
10.2	Mining Lease dated April 22, 1986 between the Company, Southwestern Refining Corporation, and Claude and Mary J.Birtle, and amendment dated March 23, 2007.	Incorporated by reference to Exhibit 10.2 to the Form 10-K/A of the Company, filed with the SEC on January 14, 2011
10.3	Convertible Debenture dated July 26, 2013 issued by the Company to Jonathan C. Clay.	Filed herewith
10.4	Convertible Debenture dated July 25, 2014 issued by the Company to Landon T. Clay 2013-14 Annuity Trust	Filed herewith
10.5	Convertible Debenture dated July 25, 2014 issued by the Company to Landon T. Clay.	Filed herewith
10.6	2013 Stock option plan of the Company.	Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on September 24, 2013
10.7	Employment Agreement dated September 18, 2013 between the Company and Andree St-Germain.	Incorporated by reference to Exhibit 10.1 of the Company’s Form 10-Q filed with the SEC on May 12, 2014
10.8	Transaction Agreement among the Company, Golden Queen Mining Company, Inc., Gauss LLC, Gauss Holdings LLC, and Auvergne, LLC dated June 8, 2014.	Incorporated by reference to Exhibit 10.1 to the Form 8-K of the Company, filed with the SEC on June 12, 2014
10.9	Standby Purchase Agreement among the Company, Gauss Holdings LLC and Auvergne, LLC dated June 8, 2014.	Incorporated by reference to Exhibit 10.2 to the Form 8-K of the Company, filed with the SEC on June 12, 2014

10.10	Registration Rights Agreement between the Company and Gauss Holdings LLC dated June 8, 2014.	Incorporated by reference to Exhibit 10.3 to the Form 8-K of the Company, filed with the SEC on June 12, 2014
10.11	Registration Rights Agreement between the Company and Auvergne, LLC dated June 8, 2014.	Incorporated by reference to Exhibit 10.4 to the Form 8-K of the Company, filed with the SEC on June 12, 2014
10.12	Amended and Restated Limited Liability Company Agreement between the Company, Golden Queen Mining Company, LLC, Gauss LLC, and Golden Queen Mining Holdings, Inc. dated September 15, 2014.	Incorporated by reference to Exhibit 10.5 to the Form 8-K of the Company, filed with the SEC on September 16, 2014
10.13	Term Loan Agreement between the Company, The Landon T. Clay 2009 Irrevocable Trust Dated March 6, 2009 and Harris Clay dated December 31, 2014.	Incorporated by reference to Exhibit 10.1 to the Form 8-K of the Company filed with the SEC on December 31, 2014
10.14	Guaranty between Golden Queen Mining Holdings, Inc., The Landon T. Clay 2009 Irrevocable Trust Dated March 6, 2009 and Harris Clay dated December 31, 2014.	Incorporated by reference to Exhibit 10.2 to the Form 8-K of the Company filed with the SEC on December 31, 2014
10.15	Pledge Agreement between the Company and Golden Queen Mining Holdings, Inc. in favor of The Landon T. Clay 2009 Irrevocable Trust Dated March 6, 2009 and Harris Clay dated December 31, 2014.	Incorporated by reference to Exhibit 10.3 to the Form 8-K of the Company filed with the SEC on December 31, 2014
10.16	Registration Rights Agreement between the Company, The Landon T. Clay 2009 Irrevocable Trust Dated March 6, 2009 and Harris Clay dated December 31, 2014.	Incorporated by reference to Exhibit 10.4 to the Form 8-K of the Company filed with the SEC on December 31, 2014
10.17	Option Agreement between Golden Queen Mining Holdings Inc., Gauss LLC, Gauss Holdings LLC, Auvergne, LLC, The Landon T. Clay 2009 Irrevocable Trust Dated March 6, 2009 and Harris Clay dated December 31, 2014.	Incorporated by reference to Exhibit 10.5 to the Form 8-K of the Company filed with the SEC on December 31, 2014
21.1	Subsidiaries of the Company.	Filed herewith
23.1	Consent of BDO Canada LLP	Filed herewith
23.2	Consent of Kappes, Cassiday & Associates	Filed herewith
23.3	Consent of Norwest Corporation	Filed herewith
23.4	Consent of Mine Development Associates	Filed herewith
23.5	Consent of Peter Ronning	Filed herewith
23.6	Consent of Carl E. Defilippi	Filed herewith
23.7	Consent of Sean Ennis	Filed herewith
23.8	Consent of Michael M. Gustin	Filed herewith
31.1	Rule 13a-14(a)/15(d)-14(a) Certification (CEO)	Filed herewith
31.2	Rule 13a-14(a)/15(d)-14(a) Certification (CFO)	Filed herewith

32.1	Section 1350 Certification (CEO)	Filed herewith
32.2	Section 1350 Certification (CFO)	Filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GOLDEN QUEEN MINING CO. LTD.


By:	/s/ H. Lutz Klingmann
	H. Lutz Klingmann
	President and Principal Executive Officer



Date:	March 16, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date


/s/ H. Lutz Klingmann	President, Principal Executive Officer, and Director	March 16, 2015
H. Lutz Klingmann

/s/ Thomas Clay	Chairman	March 16, 2015
Thomas Clay

/s/ Bryan A. Coates	Director	March 16, 2015
Bryan A. Coates

/s/ Guy Le Bel	Director	March 16, 2015
Guy Le Bel

/s/ Bernard Guarnera	Director	March 16, 2015
Bernard Guarnera

/s/ Andree St-Germain	Principal Financial Officer	March 16, 2015
Andree St-Germain

Exhibit 10.3

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES SHALL NOT TRADE THE SECURITIES BEFORE NOVEMBER 27, 2013.

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.

NUMBER: CD4065133.002

PRINCIPAL AMOUNT CAD$2,500,000

CONVERTIBLE DEBENTURE

For value received, Golden Queen Mining Co. Ltd. (the "Company") hereby acknowledges itself indebted to Jonathan C. Clay of 29 Ridgecroft Road, Bronxville, New York, 10708 (the "Holder"), and promises to pay to the Holder the amount of CAD$2,500,000 (the "Principal Amount"), on July 26, 2015 (the "Maturity Date") or such earlier date as the Principal Amount may become due and payable (subject to and in accordance with the terms, conditions and provisions of this Debenture (as defined herein), in lawful money of Canada (or in lawful currency of the United States if agreed to by the Holder and the Company on the payment date) at the head office of the Company, being currently at 6411 Imperial Avenue, West Vancouver, British Columbia, V7W 2J5, or at such other place or places within British Columbia, as may be designated by the Company from time to time by notice in writing to the Holder, together with all costs and expenses that may become payable to the Holder hereunder.

The Company will pay interest annually (being each July 26while this Debenture remains outstanding) on the Principal Amount then outstanding at the rate of 2% per annum from the date of issue, or from the last interest payment date on which interest has been paid ("Interest Payment Date"), in accordance with this Debenture money.

By its acceptance of this Debenture hereof, the Holder acknowledges and agrees to the terms and conditions hereof, including the terms and conditions set out in Schedule "A" hereto, which are incorporated herein by reference and form a part of this Debenture.

IN WITNESS WHEREOF, the Company has caused this Debenture to be executed as of July 26, 2013.

GOLDEN QUEEN MINING CO. LTD.


Per:	“H. Lutz Klingmann”
	Authorized Signatory

SCHEDULE "A"

The following conditions are applicable to this Convertible Debenture due July 26, 2015.

ARTICLE 1
INTERPRETATION

1.1

Definitions

In this Debenture, unless there is something in the subject matter or context inconsistent therewith, the expressions following shall have the following meanings, namely:

"this Debenture", "the Debenture", "hereto", "herein", "hereby", "hereunder", "hereof" and similar expressions refer to the convertible debenture represented hereby and not to any particular Article, Section, subsection, clause, subdivision or other portion hereof and include any and every instrument supplemental or ancillary hereto and every debenture issued in replacement hereof;

"business day" means a day which is not a Saturday or Sunday or a civic or statutory holiday in the city of Vancouver, British Columbia;

"Soledad Mountain Project" means the Company's Soledad Mountain gold-silver project located in Kern County, California;

"Close of Business" means 5:00 p.m. (Vancouver Time) on a business day;

"Company" means Golden Queen Mining Co. Ltd. and includes any successor corporation thereto;

"Company's Auditors" or "Auditors of the Company" means an independent firm of chartered or certified managerial accountants duly appointed as auditors of the Company;

"Conversion Price" in respect of this Debenture, means the effective price at which this Debenture may be converted into Shares, being either (i) CAD$1.03 per Share at any time until the Maturity Date, or (ii) on the Maturity Date, the lower of CAD$1.03 or the VWAP for the 5 trading days immediately preceding the last business day prior to (and excluding) the Maturity Date;

"Counsel" means a barrister or solicitor or firm of barristers or solicitors or other legal counsel retained or employed by the Company;

"director" means a director of the Company for the time being and "directors" or "Board of Directors" means the board of directors of the Company and reference to action by the directors means action by the directors of the Company as a board;

“Disinterested Shareholder Approval” means the approval of shareholders of the Company by ordinary resolution passed at a properly constituted meeting of such shareholders, excluding votes attached to shares beneficially owned, or over which control and direction is exercised, by the Holder, to the issuance to the Holder of Shares on conversion of this Debenture in excess of the Insider Participation Limit;

"Holder" means the Person from time to time registered as the Holder of this Debenture;

“Insider Participation Limit” means 9,831,338 Shares;

"Market Price" has the meaning given thereto in the policies of the Toronto Stock Exchange;

"Maturity Date" has the meaning given to it on the face page hereof, provided that if such date is not a business day, then the Maturity Date will be the immediately following business day;

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"Person" means an individual, partnership, corporation or other business or legal entity or any duly constituted government of or in Canada and any minister, department, commission, board, bureau, agency, authority, instrumentality or court and the like of any such government;

"Principal Amount" has the meaning given to it on the face page hereof;

"Shares" means the common shares in the capital of the Company, as such common shares exist at the close of business on the date of execution and delivery of this Debenture and shall include any and all shares resulting from any subdivision, redivision, reduction, combination or consolidation, merger, amalgamation or reorganization and any common shares of any company to which the Company may sell, lease or transfer or otherwise dispose of all or substantially all of its property and assets;

"Trading Day", when used with respect to the Shares, shall mean a day on which the principal securities exchange on which the Shares are listed or admitted to trading is open for the transaction of business or, if the Shares are not listed or admitted to trading on any securities exchange, a business day;

“TSX” means the Toronto Stock Exchange;

“VWAP” means the volume weighted average price for the Shares as reported by the TSX; and

"written direction of the Company" means an instrument in writing signed by and two directors or officers of the Company.

1.2

Interpretation

Words importing the singular number only shall include the plural and vice versa and words importing the masculine gender shall include the neuter or the feminine gender and vice versa.

1.3

Headings, Etc.

The division of this Debenture into Articles and Sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Debenture.

1.4

Day Not a Business Day

In the event that any day on or before which any action is required to be taken hereunder is not a business day, then such action shall be required to be taken on or before the requisite time on the next succeeding day that is a business day.

1.5

Currency

All references to currency herein shall be to lawful money of Canada.

1.6

Exhibits

The following are the Exhibits annexed to and incorporated in this Debenture and which are deemed to be part hereof:

	Exhibit "A"	-	Notice of Conversion
	Exhibit "B"	-	Form of Transfer

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ARTICLE 2
CONVERSION OF DEBENTURES

2.1

Conversion Privilege and Conversion Price

(a)

Upon and subject to the provisions and conditions of this Article:

	(i)	the Holder shall have the right, at their option, at any time, and from time to time, on any business day prior to the Close of Business on the Maturity Date (or such later date as may be agreed upon by the Company and the Holder and approved by the TSX or such other stock exchange upon which the Shares may be listed from time to time) (the "Time of Expiry"), to convert; and

	(ii)	if not converted by the Holder on or prior to the business day immediately preceding the Maturity Date, the Issuer shall have the right to convert,

in either case the full, but not less than the full, Principal Amount into Shares at the Conversion Price in effect on the Date of Conversion (as defined in subsection 2.2(b)).

	(b)	The Conversion Price shall be subject to adjustment as provided in Section 2.3.

	(c)	Such right of conversion shall extend only to the maximum number of whole Shares into which the aggregate principal amount of this Debenture surrendered for conversion at any one time by the Holder may be converted in accordance with the foregoing provisions of this Section, except that where the number of Shares to be issued on conversion of this Debenture by the Holder would exceed the Insider Participation Limit without Disinterested Shareholder Approval having been obtained by the Issuer prior to such conversion, then:

	(i)	the Company shall issue the number of Shares equal to the Insider Participation Limit;

	(ii)	shall promptly call a meeting of its shareholders, to be held no later than 60 calendar days of the Date of Conversion for the purpose of obtaining the Disinterested Shareholder Approval;

	(iii)	if Disinterested Shareholder Approval is obtained at the meeting called pursuant to subsection 2(c)(ii) above, then the Company shall issue the remaining shares issuable upon conversion of the Debenture pursuant to this Section 2.1 that have not previously been issued pursuant to subsection 2(c)(i); and

	(iv)	if Disinterested Shareholder Approval is not obtained at the meeting called pursuant to subsection 2(c)(ii) above, then the Company shall pay the unconverted principal amount of this Debenture and all accrued and unpaid interest on the Maturity Date.

2.2

Manner of Exercise of Right to Convert

(a)

If the Holder desires to convert this Debenture into Shares, the Holder shall, prior to the Time of Expiry, surrender this Debenture to the Company at its offices specified in Section 6.3 hereof together with a written notice of conversion, substantially in the form of Exhibit "A" hereto, duly executed by the Holder or his executors or administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Company, exercising the right of the Holder to convert this Debenture in accordance with the provisions of this Article. Thereupon, the Holder or his nominee(s) or assignee(s) shall be entitled to be entered in the books of the Company as at the Date of Conversion as the registered holder of the number of Shares into which this Debenture is convertible in accordance with the provisions of this Article and, as soon as practicable thereafter, the Company shall deliver to the Holder or his nominee(s) or assignee(s), certificates representing such Shares.

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	(b)	For the purposes of this Article, this Debenture shall be deemed to be surrendered for conversion on the first business date (herein called the "Date of Conversion") on or immediately following the day which this Debenture is received by the Company in accordance with the provisions of this Article.

	(c)	Upon the surrender of this Debenture for conversion in accordance with this Article, the Holder shall be entitled to receive accrued and unpaid interest in respect thereof up to the Date of Conversion of the Debenture, and the Shares issued upon such conversion shall rank only in respect of dividends declared in favour of Shareholders of record on and after the Date of Conversion, from which applicable date such Shares will for all purposes be and be deemed to be issued and outstanding as fully paid and non-assessable Shares.

	(d)	The conversion of this Debenture by the Holder pursuant to this Article shall extinguish, satisfy or relieve the Company of its obligation to pay the Holder the Principal Amount of this Debenture so converted and surrendered.

2.3

Adjustments

The Conversion Price, in effect as at any date shall be subject to adjustment from time to time as follows:

	(a)	Share Subdivision, Consolidation and Stock Dividend: If and whenever at any time prior to the Time of Expiry, the Company shall (i) subdivide or redivide the outstanding Shares into a greater number of Shares, (ii) reduce, combine or consolidate the outstanding Shares into a smaller number of Shares, or (iii) issue Shares, or securities convertible into or exchangeable for Shares, to the holders of all or substantially all of the outstanding Shares by way of stock dividend other than a dividend paid in the ordinary course, the Conversion Price in effect on the effective date of such subdivision, redivision, reduction, combination or consolidation or on the record date for such issue of Shares, or securities convertible into or exchangeable for Shares, by way of a stock dividend, as the case may be, shall in the case of the events referred to in clauses (i) and (iii) above, be decreased in proportion to the number of outstanding Shares resulting from such subdivision, redivision or dividend (including, in the case where securities convertible into or exchangeable for Shares are issued, the number of Shares that would have been outstanding had such securities been converted into or exchanged for Shares on such record date) or shall, in the case of the events referred to in clause (ii) above, be increased in proportion to the number of outstanding Shares resulting from such reduction, combination or consolidation, in each such case so that upon a subsequent conversion of this Debenture in accordance with the terms hereof the Holder shall receive the same number of Shares which he would have owned immediately following such event if he had converted the Debenture immediately prior to such event. Such adjustment shall be made successively whenever any event referred to in this subsection (a) shall occur, any such issue of Shares (or securities convertible into or exchangeable for Shares) by way of a stock dividend shall be deemed to have been made on the record date for the stock dividend for the purpose of calculating the number of outstanding Shares under subsections (b) and (c) of this Section 2.3; to the extent that any such securities convertible into or exchangeable for Shares are not converted into or exchanged for Shares prior to the expiration of the conversion or exchange right, the Conversion Price shall be readjusted effective as at the date of such expiration to the Conversion Price which would then be in effect based upon the number of Shares actually issued on the exercise of such conversion or exchange right.

	(b)	Rights Offering: If and whenever at any time prior to the Time of Expiry the Company (i) shall fix a record date for the issuance of rights, options or warrants to all or substantially all the holders of its outstanding Shares entitling them, for a period expiring not more than 45 days after such record date, to subscribe for or purchase Shares (or securities convertible into or exchangeable for Shares) or (ii) the Company agrees in any manner whatsoever to issue Shares (or securities convertible into or exchangeable for Shares) at a price per share (or having a conversion or exchange price per share) less than 95% of the Market Price of a Share on such record date or the date of any such agreement, as the case may be, the Conversion Price shall be adjusted immediately after such record date or date of such agreement so that it shall equal the price determined by multiplying the Conversion Price in effect on such record date or date of such agreement by a fraction, of which the numerator shall be the total number of Shares outstanding on such record date or date of such agreement plus a number of Shares equal to the number arrived at by dividing the aggregate price of the total number of additional Shares offered for subscription or purchase (or the aggregate conversion or exchange price of the securities convertible into or exchangeable for Shares so offered) by such Market Price per Share, and of which the denominator shall be the total number of Shares outstanding on such record date or date of such agreement plus the total number of additional Shares offered for subscription or purchase (or into which the securities convertible into or exchangeable for Shares so offered are convertible or exchangeable); any Shares owned by or held for the account of the Company shall be deemed not to be outstanding for the purpose of any such computation; such adjustment shall be made successively whenever such a record date is fixed or such agreement is entered into; to the extent that any such rights, options or warrants are not so issued or any such rights, options or warrants are not exercised prior to the expiration thereof, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect if such record date had not been fixed or, effective as at the date of such expiration, to the Conversion Price which would then be in effect based upon the number of Shares (or securities convertible into or exchangeable for Shares) actually issued upon the exercise of such rights, options or warrants, as the case may be.

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(c)

Other Distributions to Shareholders: If and whenever at any time prior to the Time of Expiry the Company shall fix a record date for the making of a distribution to all or substantially all the holders of its outstanding Shares of (i) shares of any class other than Shares (or other securities convertible into or exchangeable for Shares) or (ii) rights, options or warrants (other than rights, options or warrants referred to in subsection 2.3(b) and rights, options or warrants to subscribe for or purchase Shares, or other securities convertible into or exchangeable for Shares, for a period of not more than 45 days after such record date at a price per Share, or having a conversion or exchange price per Share, not less than 95% of the Market Price of a Share on such record date), (iii) evidences of its indebtedness, or (iv) any assets, then, in each such case, the Conversion Price shall be adjusted immediately after such record date so that it shall equal the price determined by multiplying the Conversion Price in effect on such record date by a fraction, of which the numerator shall be the total number of Shares outstanding on such record date multiplied by the Market Price per Share on such record date, less the fair market value (as determined by the directors of the Company, which determination shall be conclusive, subject to TSX approval) of such shares or rights, options or warrants or evidences of indebtedness or assets so distributed, and of which the denominator shall be the total number of Shares outstanding on such record date multiplied by such Market Price per Share; any Shares owned by or held for the account of the Company shall be deemed not to be outstanding for the purpose of any such computation; such adjustment shall be made successively whenever such a record date is fixed, to the extent that such distribution is not so made, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect if such record date had not been fixed or to the Conversion Price which would then be in effect based upon such shares or rights, options or warrants or evidences of indebtedness or actually distributed, as the case may be. The Company shall not make a distribution to holders of Shares as described in this subsection 2.3(c) where the fair market value (as determined by the Auditors of the Company, which determination shall be conclusive) of the Shares or rights, options or warrants or evidences of indebtedness or assets distributed exceeds the product of the Market Price per Share on the record date for such distribution and the total number of Shares outstanding on such record date unless the Holder is permitted to participate in such distribution as though and to the same effect as if it had converted this Debenture into Shares immediately prior to the applicable record date.

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	(d)	Other Changes to Shares: In the case of any reclassification of, or other change in, the outstanding Shares of the Company other than subdivision, reduction, combination or consolidation, the Conversion Price shall be adjusted in such manner, if any, and at such time, as the directors determine to be appropriate on a basis consistent with this Section 2.3.

	(e)	Capital Reorganization, Merger: If and whenever at any time prior to the Time of Expiry there is a capital reorganization, consolidation, merger, arrangement or amalgamation of the Company with or into any other body corporate, trust, partnership or other entity or a sale or conveyance (with the consent of the Holder) whereby all or substantially all of the Company's undertaking and assets would become the property of any body corporate, trust, partnership or other entity and without limitation, the Holder, if he has not exercised his right of conversion under Section 2.1 prior to the effective date of such reorganization, consolidation, merger, arrangement, amalgamation sale, upon any such conversion at any time thereafter, shall be entitled to receive and shall accept, in lieu of the number of Shares to which he was theretofore entitled upon conversion, the aggregate number of Shares or other securities or property of the Company or of the body corporate, trust, partnership or other entity resulting from the reorganization, consolidation, merger, arrangement or amalgamation or to which such sale may be made, as the case may be, that the Holder would have been entitled to receive as a result of such reorganization, consolidation, arrangement, amalgamation or sale if, on the record date or effective date thereof, as the case may be, the Holder had been the registered holder of the number of Shares to which he was theretofore entitled upon conversion.

	(f)	Equitable Adjustment for Other Actions: If and whenever at any time prior to the Time of Expiry the Company shall take any action affecting its Shares, other than an action described in Section 2.3(a) through (d), that, in the reasonable opinion of the Board of Directors, would materially adversely affect the rights of the Holder, then the number of Shares issuable upon the conversion of the Debenture or the Conversion Price thereof shall, subject to receipt by the Corporation of all required approvals (if any) from any stock exchange on which the Shares are listed, and all applicable securities regulatory authorities, be adjusted in such manner and at such time as the Board of Directors may determine, in their sole discretion, to be equitable in the circumstances. Failure of the Board of Directors to make an adjustment in accordance with this Section 2.3 shall be conclusive evidence that the directors have determined that it is equitable to make no adjustment in the circumstances. In the event that any such adjustment is made, the Corporation shall deliver a notice to the Holder in accordance with Section 2.7.

	(g)	Effective Date and Procedure for Adjustment: In any case in which this Section 2.3 shall require that an adjustment shall become effective immediately after a record date for an event referred to herein, the Company may defer, until the occurrence of such event, issuing to the Holder, in the case of the Debenture being converted after such record date and before the occurrence of such event, the additional Shares issuable upon such conversion by reason of the adjustment required by such event before giving effect to such adjustment; provided however, that the Company shall deliver to the Holder an appropriate instrument evidencing the Holder's right to receive such additional Shares upon the occurrence of the event requiring such adjustment and the right to receive any distributions made on such additional Shares declared in favour of holders of record of Shares on and after the Date of Conversion or the date fixed for redemption or such later date as the holders would, but for the provisions of this subsection (g), have become the holder of record of such additional Shares pursuant to subsection 2.3(b).

	(h)	Adjustments Cumulative: The adjustments provided for in this Section 2.3 are cumulative and shall apply to successive subdivisions, redivisions, reductions, combinations, consolidations, distributions, issues or other events resulting in any adjustment under the provisions of this Section. No adjustment of the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Conversion Price then in effect; provided however, that any adjustments which by reason of this subsection (g) are not required to be made shall be carried forward and taken into account in any subsequent adjustment.

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	(i)	In the event of any question arising with respect to the adjustments provided in this Section 2.3, such question shall be conclusively determined by a firm of chartered accountants or certified managerial accountants appointed by the Company (who may be the Auditors of the Company); such accountants shall have access to all necessary records of the Company and such determination shall be binding upon the Company, and the Holder.

	(j)	No adjustment in the Conversion Price shall be made in respect of any event described in subsections 2.3(a)(iii), 2.3(b) and 2.3(c) if the Holder is entitled by the Company to and, subject to the consent of the TSX, participates in such event on the same terms mutatis mutandis as if he had converted his Debenture prior to the effective date or record date, as the case may be, of such event.

	(k)	Notwithstanding anything contained herein, the Conversion Price shall not be adjusted or be subject to adjustment as a result of:

	(i)	The granting by the Company of options or other rights under any stock option plan, stock purchase plan, phantom stock plan, stock appreciation rights plan, or other deferred, share or incentive compensation plan to officers, directors, employees or consultants of the Company or its affiliates;

	(ii)	The issue by the Company of any Shares or other securities of the Company for valuable consideration to any persons other than as specifically provided for in this Section 2.3 (including without limitation the issue of Shares upon the exercise or conversion of any securities of the Company outstanding as at the Issue Date that are exercisable or convertible into Shares); or

	(iii)	The declaration or payment of any dividends on the Shares in the ordinary course.

	(l)	If a state of facts shall exist to which the provisions of Section 2.3 are not strictly applicable, or if strictly applicable would not fairly adjust the rights of the Holder against dilution in accordance with the intent and purposes hereof, then the Company shall execute and deliver to the Holder an amendment hereto providing for an adjustment in the application of such provisions so as to adjust such rights as aforesaid. The Holder shall accept the certificate or opinion of a firm of independent chartered accountants (who may be the Company's Auditors) with respect to any such adjustment in the application of such provision, and as to questions of law in connection therewith shall accept an opinion of Counsel.

	(m)	At least 15 days prior to the effective date or record date, as the case may be, of any event that requires or might require an adjustment pursuant to this Section 2.3, the Company shall give notice to the Holder of the particulars of such event and, if determinable, the required adjustment.

	(n)	In the event that any adjustment for which the notice of adjustment referred to in paragraph (m) above has been given is not then determinable, the Company will give notice to the Holder of the required adjustment promptly after such adjustment is determinable.

2.4

No Requirement to Issue Fractional Shares

The Company shall not be required to issue fractional Shares upon the conversion of this Debenture pursuant to this Article and no cash amount shall be payable to the Holder in lieu of such fractional Shares.

2.5

Taxes and Charges on Conversion

The Company will from time to time promptly pay or make provision satisfactory to the Holder for the payment of any and all taxes and charges which may be imposed by the laws of Canada or any province thereof (except income tax or security transfer tax, if any) which shall be payable with respect to the issuance or delivery to the Holder, upon the exercise of his right of conversion, of Shares pursuant to the terms of this Debenture.

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2.6

Cancellation of Converted Debentures

Upon conversion of this Debenture under the provisions of this Article, the Debenture so converted shall be forthwith delivered to and cancelled by the Company and no Debenture shall be issued in substitution for the Debenture after conversion.

2.7

Notice of Adjustment

The Company shall from time to time, immediately after the occurrence of any event which requires an adjustment or readjustment as provided in Section 2.3, deliver a certificate of the Company to the Holder specifying the nature of the event requiring the adjustment or readjustment and the amount of the adjustment necessitated thereby and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. The Company shall, except in respect of any subdivision, redivision, reduction, combination or consolidation of its Shares, forthwith give notice to the Holder in the manner provided in Section 6.3 specifying the event requiring such adjustment or readjustment and the results thereof, including the resulting Conversion Price; provided that, if the Company has given notice under Section 2.8 covering all the relevant facts in respect of such event no such notice need be given under this Section 2.7.

2.8

Notice of Special Matters

The Company covenants with the Holder that, so long as this Debenture remains outstanding, it will give notice to the Holder in the manner provided in Section 6.3, of its intention to fix a record date or an effective date for any event referred to in subsections (a), (b), (c) and (e) of Section 2.3 (other than the subdivision, redivision, reduction, combination or consolidation of its Shares) which may give rise to an adjustment in the Conversion Price and, in each case, such notice shall specify the particulars of such event and the record date and the effective date for such event; and, if prepared or available as at the date that such notice is required to be given pursuant to this Section 2.8, such notice shall be accompanied by the material (ie. proxy circular, information booklets, etc.) sent to the holders of Shares in respect of the event in question; provided that the Company shall only be required to specify in such notice such particulars of such event as shall have been fixed and determined on the date on which such notice is given. In any event, such notice shall be given not less than 14 days in each case prior to such applicable record date or effective date.

2.9

Legend

The following legends shall appear on any certificate evidencing Shares issued upon conversion of this Debenture prior to the date which is four months and one day from the date hereof:

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES SHALL NOT TRADE THE SECURITIES BEFORE NOVEMBER 27, 2013.”

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.”

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES OF TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON TSX.”

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ARTICLE 3
COVENANTS OF THE COMPANY

The Company hereby covenants and agrees with the Holder as follows:

3.1

To Pay Principal and Interest

That the Company will duly and punctually pay or cause to be paid to the Holder the Principal Amount of and interest accrued on this Debenture on the dates, at the places, in the monies, and in the manner described in this Debenture.

	(a)	If no Event of Default has occurred and is continuing, interest on this Debenture may be paid at the option of the Holder by issuing and delivering fully-paid and non-assessable Shares in lieu of cash at a deemed price equal to Market Price at the time of payment, provided that the Holder shall give written notice of such election to the Company 10 business days prior to the particular Interest Payment Date, failing which the Company shall pay the interest in cash.

	(b)	If the interest is to be paid by the delivery of Shares,

	(i)	the Holder or his nominee(s) or assignee(s) shall be entitled to be entered in the books of the Company as at the applicable Interest Payment Date as the registered holder of the number of Shares issued in satisfaction of the interest payment and, on or prior to the Interest Payment Date, the Company shall deliver to the Holder or his nominee(s) or assignee(s), certificates representing such Shares;

	(ii)	certificates representing such Shares shall bear any legend required under applicable securities law; and

	(iii)	the Company shall not issue fractional Shares in satisfaction of any interest payments. The Company shall round the number of Shares down to the nearest whole Share and pay the equivalent dollar value of any fractional Shares that the Holder is otherwise entitled to satisfy interest payment on the applicable Interest Payment Date.

	(c)	The amount received by the Holder in respect of any interest payable or the entitlement thereto will not be affected by whether the Company elects to satisfy the interest payment with Shares or cash.

	(d)	The delivery of the Shares (and cash equal to the value of fractional shares, if any) shall fully satisfy the Company's interest payment obligation on the applicable Interest Payment Date.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES

4.1

Representations and Warranties of the Company

The Company hereby represents and warrants with and to the Holder that the Company is duly authorized and has the corporate and lawful power and authority to create and issue this Debenture and that this Debenture represents a valid, legal and binding obligation of the Corporation enforceable in accordance with its terms.

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ARTICLE 5
EVENTS OF DEFAULT

5.1

Events of Default

Upon the happening of any one or more of the following events (each an "Event of Default"), namely:

	(a)	if the Company does not pay the Principal Amount of this Debenture when the same becomes due and payable under the terms of this Debenture;

	(b)	if the Company does not make payment of any interest due on this Debenture when the same becomes due and any such default continues for a period of five business days after notice of such default is given to the Company by the Holder.

	(c)	if a decree or order of a court having jurisdiction in the premises is entered adjudging the Company a bankrupt or insolvent under the Bankruptcy Act (Canada) or any other bankruptcy, insolvency or analogous laws, or issuing sequestration or process of execution against, or against any substantial part of, the property of the Company or appointing a receiver of, or of any substantial part of, the property of the Company or ordering the winding-up or liquidation of its affairs;

	(d)	if a resolution is passed for the winding-up or liquidation of the Company or if the Company institutes proceedings to be adjudicated a bankrupt or insolvent or consents to the institution of bankruptcy or insolvency proceedings against it under the Bankruptcy Act (Canada) or any other bankruptcy, insolvency or analogous laws, or consents to the filing of any such petition or to the appointment of a receiver of, or of any substantial part of, the property of the Company or makes a general assignment for the benefit of creditors or admits in writing its inability to pay its debts generally as they become due or takes corporate action in furtherance of any of the aforesaid purposes; or

	(e)	if an encumbrancer or encumbrancers, whether permitted or otherwise, takes possession of any part of the property of the Company or any execution, distress or other process of any court becomes enforceable against any part of the property of the Company, or a distress or like process is levied upon any of such property;

then in each and every such event the Holder may, by notice in writing to the Company, declare the Principal Amount and interest on this Debenture then outstanding and all other monies outstanding hereunder to be due and payable and, if any such default remains unremedied for a period of three days after receipt by the Company of such notice, the same shall forthwith become immediately due and payable to the Holder, anything therein or herein to the contrary notwithstanding, and the Company shall forthwith pay to the Holder the Principal Amount and accrued and unpaid interest, together with interest at the rate stated in this Debenture on such principal, interest and such other monies from the date of the said declaration until payment is received by the Holder

ARTICLE 6
MISCELLANEOUS

6.1

Severability

If any covenant or provision herein or any portion thereof is determined to be void, unenforceable or prohibited by the law of any province or the local requirements of any provincial or federal governmental authority such shall not be deemed to affect or impair the validity of any other covenant or provision herein or portion thereof, as the case may be, nor the validity of such covenant or provision or portion thereof, as the case may be, in any other jurisdiction.

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6.2

Laws of British Columbia

This Debenture shall be deemed to have been made and shall be construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein and shall be treated in all respects as a British Columbia contract. The Holder and the Company hereby irrevocably submits to the jurisdiction of the courts of the Province of British Columbia for any action, suit or any other proceeding arising out of or relating to this Debenture and any other agreement or instrument mentioned therein or any of the transactions contemplated thereby. Each of the Holder and the Company agrees not to commence any legal proceeding related hereto except in such court. Each of the Holder and the Company irrevocably waives any objection which it may now or hereafter have to the laying of the venue of any such proceeding in any such court and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE HOLDER AND THE COMPANY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUCH ACTION, SUIT OR PROCEEDING. Each of the Holder and the Company agrees that the prevailing party in any action or proceeding arising out of or relating to this Convertible Debenture or the transactions contemplated hereby shall be entitled to recover its reasonable fees and expenses in connection therewith, including legal fees.

6.3

Notices

All notices, reports or other communication required or permitted by this Debenture must be in writing and either delivered by hand or by any form of electronic communication by means of which a written or typed copy is produced by the receiver thereof and is effective on actual receipt unless sent by electronic means in which case it is effective on the business day next following the date of transmission, addressed to the relevant party, as follows:

	(a)	if to the Company:

		Golden Queen Mining Co. Ltd.
		6411 Imperial Avenue
		West Vancouver, British Columbia, V7W 2J5
		Facsimile: (604) 921-9446
		Attention: Lutz Klingmann, President

	(b)	if to the Holder:

		Jonathan C. Clay
		29 Ridgecroft Road
		Bronxville, New York, 10708
		Facsimile: (401) 490-0749
		Attention: Jonathan C. Clay

or the last address or telecopier number of the party concerned, notice of which was given in accordance with this paragraph.

6.4

Transfer

Subject to any applicable securities laws, this Debenture is transferable by the Holder and the term "Holder" shall mean any successor, transferee or assignee of the current and any future Holder.

6.5

Enurement

This Debenture and all its provisions shall enure to the benefit of the Holder, its successors and permitted assigns and shall be binding upon the Company, its successors and assigns.

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6.6

Amendment

This Convertible Debenture may not be amended or modified in any manner nor may any of its provisions be waived except by written amendment executed by the Holder and the Company. A waiver, modification or amendment by a party shall only be effective if (a) it is in writing and signed by the Holder and the Company, (b) it specifically refers to this Convertible Debenture and (c) it specifically states that the party, as the case may be, is waiving, modifying or amending its rights hereunder. Any such amendment, modification or waiver shall be effective only in the specific instance and for the specific purpose for which it was given.

6.7

Further Assurances

The Company hereby covenants and agrees that it will do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, all and every such other act, deed and assurance as the Holder shall reasonably require for the better accomplishing and effectuating of the intentions and provisions of this Debenture. The Company shall gross up each interest payment, if any interest is subject to withholding tax, by an amount so that after deduction of applicable withholding taxes the Holder will be receiving interest hereunder as if no withholding taxes were payable.

6.8

Securities Requirements

By its acceptance of this Debenture, the Holder acknowledges and agrees that if required by applicable securities legislation, policy or order or by any securities commission, stock exchange or other regulatory authority the Holder will execute, deliver, file and otherwise assist the Company in filing such reports, undertakings and other documents with respect to the issuance of this Debenture or the Shares which may be acquired upon conversion as may be required. By its acceptance of this Debenture, the Holder further acknowledges that the Debenture will be, and any Shares acquired upon conversion of this Debenture may be, subject to a restriction on resale under applicable securities legislation until the appropriate hold period has been satisfied. Any obligation represented by this Convertible Debenture whether on account of principal, interest, costs of collection or otherwise, shall be made in full when due and, at the request of the Holder, may be set-off against obligations owed by the Holder to the Company.

ARTICLE 7
SUCCESSOR CORPORATION

7.1

Certain Requirements

The Company shall not, directly or indirectly, sell, lease, transfer or otherwise dispose of all or substantially all of its property and assets as an entirety to any other corporation, and shall not amalgamate or merge with or into any other corporation including in accordance with a plan of arrangement (any such other corporation being herein referred to as a "successor corporation") and unless:

	(a)	the successor corporation shall execute, prior to or contemporaneously with the consummation of any such transaction, an agreement supplemental hereto together with such other instruments as are reasonably satisfactory to the Holder and in the opinion of Counsel are necessary or advisable to evidence the assumption by the successor corporation of the due and punctual payment of the Principal Amount of this Debenture and the interest thereon in accordance with the terms hereof and all other monies payable hereunder and the covenant of the successor corporation to pay the same and its agreement to observe and perform all the covenants and obligations of the Company under this Debenture; and

	(b)	no condition or event shall exist as to the Company or the successor corporation either at the time of or immediately after the consummation of any such transaction and after giving full effect thereto or immediately after the successor corporation complying with the provisions of clause (a) above which constitutes or would constitute, after notice or lapse of time or both, an Event of Default.

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7.2

Vesting of Powers in Successor

Whenever the conditions of Section 7.1 have been duly observed and performed the successor corporation shall possess and from time to time may exercise each and every right and power of the Company under this Debenture in the name of the Company or otherwise and any act or proceeding by any provision of this Debenture required to be done or performed by any directors or officers of the Company may be done and performed with like force and effect by the directors or officers of such successor corporation and thereupon the Company may be released and discharged from liability under this Debenture and the Holder shall execute any document or documents which it may be advised by the Company is or are necessary or advisable for effecting or evidencing such release and discharge.

[The remainder of this page is intentionally blank.]

EXHIBIT "A"
to the Convertible Debenture of
Golden Queen Mining Co. Ltd.

NOTICE OF CONVERSION

TO:

Golden Queen Mining Co. Ltd.

The undersigned registered Holder of the within convertible debenture of Golden Queen Mining Co. Ltd. issued on July 26, 2013 and due on July 26, 2015 (the "Debenture") hereby irrevocably elects to convert $______________of the principal amount of the Debenture into common shares of Golden Queen Mining Co. Ltd. (the "Conversion Securities") in accordance with the terms of the Debenture and directs that the Conversion Securities issuable and deliverable upon the conversion be issued and delivered as set out below.

Name(s) in Full and Social Insurance Number(s) or Tax Identification Number⁽¹⁾	Address(es)	Number of Common Shares

(1) Please print the full name in which certificates representing the Conversion Securities are to be issued. If any of the said Conversion Securities are to be issued to a person or persons other than the registered holder of the Debenture, the registered holder must pay to the Company all eligible transfer taxes or other government charges, and the signature of the holder must be guaranteed by a Canadian chartered bank or a trust company or by a member of a Canadian stock exchange.

DATED this _______________ day of ________________________, 20___.

(Signature of Registered Holder)

(Name)

(Address)

(City and Province)

[ ] Please check if the certificates representing the said Conversion Securities are to be delivered at the office where the Debenture is surrendered, failing which such certificate(s) will be mailed to the address(es) set out above. Certificates will be delivered or mailed as soon as practicable after the surrender of the Debenture to the Company.

EXHIBIT "B"
to the Convertible Debenture of
Golden Queen Mining Co. Ltd.

FORM OF TRANSFER

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto ___________________________ (the "Transferee") of ___________________________: Fax number: (________________) _________________,$___________________principal amount of the convertible debenture (the "Debenture") of Golden Queen Mining Co. Ltd. registered in the name of the undersigned and registered by the Debenture and hereby irrevocably appoints ______________________________as the attorney of the undersigned to transfer the Debenture on the register of transfers, with full power of substitution, subject to compliance with the provisions of the Debenture.

DATED the ________day of ________________, 20___.

	)
	)
	)	Signature of Registered Holder
	)
	)
Signature of Guarantee	)	Name of Registered Holder
	)

Signature of Transferor must be guaranteed by a Canadian Schedule 1 chartered bank, a major trust company in Canada, a member firm of a recognized stock exchange, or a member of the Securities Transfer Association Medallion Program (Stamp) (SEMP) (MSP).

Exhibit 10.4

NUMBER: CD4065133.004

PRINCIPAL AMOUNT $5,767,602

CONVERTIBLE DEBENTURE

For value received, Golden Queen Mining Co. Ltd. (the "Company") hereby acknowledges itself indebted to Landon T. Clay 2013-4 Annuity Trust of 10 Memorial Blvd, Suite 902, Providence, Rhode Island, 02903 (the "Holder"), and promises to pay to the Holder the amount of CAD$5,767,602 (the "Principal Amount"), on July 26, 2015 (the "Maturity Date") or such earlier date as the Principal Amount may become due and payable (subject to and in accordance with the terms, conditions and provisions of this Debenture (as defined herein), in lawful money of Canada (or in lawful currency of the United States if agreed to by the Holder and the Company on the payment date) at the head office of the Company, being currently at 6411 Imperial Avenue, West Vancouver, British Columbia, V7W 2J5, or at such other place or places within British Columbia, as may be designated by the Company from time to time by notice in writing to the Holder, together with all costs and expenses that may become payable to the Holder hereunder.

IN WITNESS WHEREOF, the Company has caused this Debenture to be executed as of July 25, 2014.

GOLDEN QUEEN MINING CO. LTD.


Per:	“ H. Lutz Klingmann”
	Authorized Signatory