1.	*Ability to Continue as a Going Concern*

The Company entered the production phase and began generating revenues from operations during the three months ended June 30, 2016. The Company had an accumulated deficit of $90,940,578 and a working capital deficit of $29,001,254 at June 30,2016. Cash used in operations for the six months ended June 30, 2016 was $7,056,662.

Golden Queen, on a non-consolidated basis, currently does not have sufficient funds to repay the $37,500,000 loan (Note 7(ii)), plus the accrued interest, at the issuance date of the condensed consolidated interim financial statements. However, in order to secure the necessary funds to meet this upcoming obligation and mitigate the going concern issue, management is evaluating its options, including debt and equity, and to re-finance the June 2015 Loan which matures on December 8, 2016. The Company raised gross proceeds of C$16 million in July, and the proceeds will be used to repay a portion of the loan.

While Golden Queen has been successful at certain of these efforts in the past, there can be no assurance that future efforts will be successful. This raises substantial doubt about this entity’s ability to continue as a going concern.

At the Project level, GQM LLC has sufficient funds to meet its contractual obligations for the next twelve months.

The Company’s access to the net assets of GQM LLC is determined by the Board of Managers of GQM LLC. The Board of Managers is not controlled by the Company and therefore there is no guarantee that any access to the net assets of GQM LLC would be provided to the Company in order to continue as a going concern. The Board of Managers of GQM LLC determine when and if distributions from GQM LLC are made to the holders of its membership units at their sole discretion.

These condensed consolidated interim financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.