SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

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[X]x Definitive Proxy Statement
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[  ]¨ Soliciting Material Pursuant to Rule 14a-12


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)

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NOTICE OF ANNUAL GENERAL

MEETING

OF SHAREHOLDERS

NOTICE OF ANNUAL GENERAL MEETING
OF SHAREHOLDERS
TO BE HELD ON JUNE 3, 2015
- and -
PROXY STATEMENT AND MANAGEMENT INFORMATION
CIRCULAR
GOLDEN QUEEN MINING CO. LTD.
CORPORATE OFFICE
2300–1066 West Hastings Street
Vancouver, BC V6E 3X2
Website:www.goldenqueen.com

&

MANAGEMENT INFORMATION CIRCULAR

GOLDEN QUEEN MINING CO. LTD.

MEETING TO BE HELD ON JUNE 2, 2016

CORPORATE OFFICE

2300 – 1066 West Hastings Street

Vancouver, BC V6E 3X2

Website:www.goldenqueen.com

Chairman’s Letter to Shareholders

Dear Fellow Shareholder,

I am

On behalf of the Board of Directors and management of Golden Queen Mining Co. Ltd., we are pleased to invite you to Golden Queen’s 2015attend the Company’s Annual Meeting of Shareholders. The meeting will be held on Thursday, June 2, 2016 at the Pan Pacific Hotel, Oceanview Suite 7, 999 Pan Pacific Way, Vancouver, BC.

Please read this

The attached Management Information 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 ourthe Company’s executives and directors.

2014

2015 was a momentous year for Golden Queen. AfterAs a result of almost three decades of effort, the Soledad Mountain gold and silver mining project is under constructionnow in production. We will provide a corporate presentation at the meeting, and on trackyou will have the opportunity to start commissioning in late 2015. By far, the greatest achievement of 2014 was the completion of a joint venture financingmeet and ask questions of the Soledad Mountain Project, which injected a gross $110 millionBoard 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 CorporationDirectors and 32.5% by my family.members of senior management.

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.

20152016 and beyond

Without question, Golden Queen’s

Last year, we stated our 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 pleased to report that construction has been completed essentially on budget, without recourse to the funds set aside as a contingency for cost overruns, and only a few months behind schedule. On March 1st, the team on site celebrated as the first bar of gold-silver doré was poured.

By the end of 2016, we expect to have developed road access to the top of the East Pit area, being the area which should provide the bulk of the material to be mined over the next several years. At the processing plant, our hourly production levels have started out strong, and we are proceeding well.

Near term milestones will includefocused on increasing our daily runtimes and adding staff and shifts to ramp up utilization. So far agglomerate quality and leaching kinetics on the start of pre-production mining, the deliveryheap appear to be very good. This year, our primary goal at Soledad Mountain is to achieve positive operating cash flow, 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

We believe that a successful new long-lived open pit gold-silver operation located in the course ofUnited States has the year, we willpotential to be going through a major transformation as we staff up from around a dozen to nearly 170 employees.rare and valuable asset in the years ahead. We are thrilled to be joined by our new colleagues, and they seem equally excited.focused on making that a reality.

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

The Board of the BoardDirectors and management team I thank you for your continued confidence in Golden Queen.Queen and look forward to seeing you at the meeting.

Respectfully,

Sincerely,

““Thomas M. Clay”Clay”

Thomas M. Clay

Chairman of the Board & Interim Chief Executive Officer

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 theSecurities Act of 1933, as amended, Section 21E of theSecurities 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.

Cautionary Note to U.S. Investors

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 43-101Standards 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, 20152, 2016

NOTICE IS HEREBY GIVEN thatthe 20152016 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,Thursday, June 3, 20152, 2016 at the Pan Pacific Hotel, Gazebo 1,Oceanview Suite 7, 999 Pan Pacific Way, Vancouver, BC, V6C 3B5, for the following purposes:

1.

To receive the financial statements of the Company for its financial year ended December 31, 20142015 together with the report of the independent auditors thereon;

2.

To elect directors to serve until the next Annual General Meeting of Shareholders or until their respective successors are elected or appointed;

3.

To ratify the appointment of BDO CanadaPricewaterhouseCoopers LLP as independent auditors of the Company for the financial year ending December 31, 2015;

2016;

4.

To consider and, if deemed appropriate, to pass, with or without variation, an ordinary resolution to approve all unallocated entitlements issuable underadvisory vote on the Company’s Stock Option Plan;executive compensation; and

5.

To transact any other business which may properly come before the Meeting, or any adjournment or postponement thereof.

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, 201518, 2016 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., 8thFloor, Toronto, ON, M5J 2Y1. Shareholders of record attending the Meeting may vote in person even if they have previously voted by proxy.

Dated at Vancouver, British Columbia, this 28th22ndday of April 2015.2016.

BY ORDER OF THE BOARD OF DIRECTORS

“H. Lutz Klingmann”
H. Lutz Klingmann, President

“Thomas M. Clay”

Thomas M. Clay, Chairman & Interim Chief Executive Officer

Important Notice Regarding the Availability of Proxy Materials for
the Company’s Annual General Meeting of Shareholders on June 3, 2015.
The Golden Queen Mining Co. Ltd. Proxy Statement and 2014 Annual Report to Shareholders
are available online atwww.goldenqueen.com

Important Notice Regarding the Availability of Proxy Materials for

the Company’s Annual General Meeting of Shareholders on June 2, 2016.

The Golden Queen Mining Co. Ltd. Proxy Statement and 2015 Annual Report to Shareholders

are available online atwww.goldenqueen.com

GOLDEN QUEEN MINING CO. LTD.


GOLDEN QUEEN MINING CO. LTD.
2300 – 1066 West Hastings Street
Vancouver, BC V6E 3X2

PROXY STATEMENT
ANNUAL GENERAL MEETING OF SHAREHOLDERS
JUNE 3, 2015
2300 – 1066 West Hastings Street

Vancouver, BC V6E 3X2

PROXY STATEMENT

ANNUAL GENERAL MEETING OF SHAREHOLDERS

JUNE 2, 2016

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, 2015,18th, 2016, one Canadian dollar

was equal to approximately $0.8319$0.78 in United States dollars.

INFORMATION REGARDING ORGANIZATION AND CONDUCT OF MEETING

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,Thursday, June 3, 2015,2, 2016, at the Pan Pacific Hotel, Gazebo 1,Oceanview Suite 7, 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, 2015.4, 2016. 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.

Appointment of Proxyholder

The persons named as proxyholder in the accompanying Proxy (“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.

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Exercise of Discretion by Proxyholder

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 theProxyholder with respect to amendments or variations tomatters identified in the attached Notice of Meeting and other matters which may properlycome before the Meeting.At present, management of the Company knows of no such amendments, variations or other matters.

PROXY VOTING

Registered Shareholders

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 Trust Company of Canada (“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.

Beneficial Shareholders

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'sshareholder’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 intermediaryIntermediary 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,VIFs, 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'sCompany’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.

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2

If you receive a VIF from the Company or Broadridge, you cannot use it to vote shares directly at the Meeting – theMeeting. 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.

Revocation of Proxies

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

(a)

Executing a Proxy bearing a later date or by executing a valid notice of revocation, either of the foregoing to be executed by the Registered Shareholder or the Registered Shareholder’s authorized attorney in writing, or, if the shareholder is a corporation, under its corporate seal by an officer or attorney duly authorized, and by delivering the Proxy bearing a later date to Computershare at any time up to and including the last business day that precedes the day of the Meeting or, if the Meeting is adjourned, the last business day that precedes any reconvening thereof, or to the chairman of the Meeting on the day of the Meeting or any reconvening thereof, or in any other manner provided by law, or

(b)

Personally attending the meeting and voting the Registered Shareholders’ shares.

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.

VOTING PROCEDURE

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"“FOR” fixing of the number of directors at five (5)four (4), “FOR”“FOR” the election of each of the nominees to the Board of Directors named on the following page, "FOR"and “FOR” the resolution to ratify the appointment of BDO CanadaPricewaterhouseCoopers LLP as independent auditors of the Company for the fiscal year ending December 31, 2015,2016, and “FOR”“FOR” the approval of the Company’s stock option plan.compensation awarded by the Company to the named executive officers. 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 election of directors and 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.

VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES

On April 28, 201518, 2016 (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.

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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 SharesStock as of April 28, 2015,18, 2016, except as described below:

 Number of Approximate %
Name and AddressShares(1)Nature of Ownershipof Total Issued(6)
    
Landon T. Clay18,759,736Sole voting and investment control17.0%
Providence, RI, USA8,868,132(2)(3)(4)(5)Shared voting and investment control8.0%
    
Thomas M. Clay1,805,680Sole voting and investment control1.6%
Providence, RI, USA6,416,863(2)(4)(5)Shared voting and investment control5.8%
    
Jonathan Clay8,422,016Sole voting and investment control7.6%
New York, NYC, USA807,250(4)Shared voting and investment control0.7%
    
Sprott Asset Management LP7,130,800Sole voting and investment control6.5%
Toronto, ON, Canada   

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Name and Address Number of Voting
Securities(1)		 Nature of Ownership Percentage of
Outstanding Voting
Securities		 
Landon T. Clay 30,777 Sole voting and investment control  0.03%
Peterborough, NH, USA 26,699,258(2) (3) (4)Shared voting and investment control  24.1%
Thomas M. Clay 1,913,650 Sole voting and investment control  1.7%
Peterborough, NH, USA 25,354,989(2) (3)Shared voting and investment control  22..8%
Brian James
Peterborough, NH, USA		 9,651,519(2) (4)Shared voting and investment control  8.7%
Jonathan Clay 8,340,016 Sole voting and investment control  7.5%
Palm Beach, FL, USA 889,250(5) (6) (7)Shared voting and investment control  0.8%

Sprott Asset Management L.P.

Toronto, ON, Canada

 7,130,800 Sole voting and investment control  6.4%

[1]

The information relating to the above share ownership was obtained by the Company from insider reports and beneficial ownership reports on Schedule 13D filed with the SEC or available at www.sedi.ca, or from the shareholder, and includes direct and indirect holdings.

[2]

Includes 5,599,613 shares reserved for immediate issuance on exercise of convertible debentures of which Landon T. Clay, and Thomas M. Clay have shared voting and investment control.

[3]

Landon T. Clay and Harris ClayBrian James have shared voting and investment control of 2,451,269 shares.

8,307,250 shares, including 7,500,000 shares issuable upon exercise of warrants;
[4]

Landon T. Clay, Thomas M. Clay, Harris Clay and Jonathan Clay have shared voting and investment control of 807,250 shares.

[5]3]

Landon T. Clay and Thomas M. Clay have shared voting and investment control of 10,000 shares.

17,047,739 shares;
[4]Landon T. Clay and Brian James have shared voting and investment control of 1,344, 269 shares;
[5]Jonathan Clay and Arctic Coast have shared voting and investment control of 807,250 shares;
[6]

Total dilutedJonathan Clay and Milledge LLC have shared voting and investment control of 50,000 shares; and

[7]Jonathan Clay has shared voting and investment control of 32,000 shares, issued includes 700,000 options outstanding at the Record Date and 9,708,736 shares reservedheld in custody for immediate issuance on exercise of convertible debentures

James Clay.

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

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).

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MATTERS TO BE ACTED UPON AT MEETING

PROPOSAL

Proposal 1: ELECTION OF DIRECTORSElection of Directors

The Board proposes to fix the number of directors of the Company at four (4) and that the following five (5)four (4) 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)four (4) 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

The board of directors recommends a vote “FOR” THE ELECTION OF EACH NOMINEE.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.

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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:

Name, Present Office,
Province/State & Country of
Residence		Present Principal Occupation or Employment[1]Security Holdings[2]
H. LUTZ KLINGMANN

Director, President and CEO

West Vancouver, British
Columbia, Canada

Mr. Klingmannwas appointed President of the Company on November 29, 2002. Mr. Klingmann is a registered professional engineer in British Columbia. The Board believes that Mr. Klingmann’s expertise and experience as a professional engineer, in mine development, and specifically his experience with the Soledad Mountain Project, is valuable as a member of the Board.

Date first appointed as a Director:March 1, 2001

Common Shares: 979,100
IndependentBoard/Committee
Memberships		Attendance at Meetings
During 2014		Other Public Board
Directorships
NoBoard of Directors
Technical Committee		5/5 (100%)
2/2 (100%)		None

THOMAS M. CLAY

Director, and Chairman of the Board

and Interim Chief Executive Officer

Providence, Rhode Island, USA

Mr. Clay’sprincipal occupation is Vice President of East Hill Management Company, LLC.  He also serves as a director of
The Clay Mathematics Institute, Inc. and of ThromboGenics NV. Mr. Clay represents the interests of certain significant shareholders of the Company, and as such, the Board believes that Mr. Clay is valuable as a member of the Board.

Date first appointed as a Director:January 13, 2009

Common Shares:
8,222,543

19,768,639[3][4][5](3)

Stock Options:

107,250

Warrants:

7,500,000(4)

IndependentBoard/Committee
Memberships		Attendance at Meetings
During 20142015		Other Public Board
Directorships
No

Board of Directors

5/5 (100%)

ThromboGenics NV

5

5


Name, Present Office,
Province/State & Country of
Residence		Present Principal Occupation or Employment[1]Security Holdings[2]

BRYAN A. COATES

Director

Saint-Lambert, Quebec,
Canada

Mr. Coatescurrently 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. Before joining Osisko, he was Chief Financial Officer of Iamgold (2006- 2007)(2006-2007), Cambior Inc. (2001-2006), and Cia Minera Antamina (1998-2001). He also acts as a Member of the Board of Directors of the Fédération des Chambres de Commerce du Quebec's,Quebec’s, the Chairman of Timmins Gold Corp., a director of NioGold Mining Corporation, as well as the chair of the Chamber's Mining Industry Committee. He is a member of the Chartered Professional Accountants of Ontario. It is the determination of the Board that Mr. CoatesCoates’ financial acumen in conjunction with his public company expertise is an asset to the Company.

Date first appointed as a Director:January 28, 2013

Stock Options: 50,000157,500

IndependentBoard/Committee
Memberships		Attendance at Meetings
During 2014215		Other Public Board
Directorships
Yes

Board of Directors

Audit Committee

Compensation Committee

Nominating Committee

5/5 (100%)

4/4 (100%)
1/1

2/2 (100%)

nil

Timmins Gold Corp.
NioGold Mining Corporation


BERNARD GUARNERA

Director

Las Vegas, Nevada, USA

Mr. Guarnerahas over 40 years of experience in the global mining industry and is President of Broadlands Mineral Advisory Services Ltd.Ltd.. Mr. Guarnera was the former Chairman of the Board of Behre Dolbear Group Inc., a mining consulting firm founded in 1991. Mr. Guarnera is a registered professional engineer and a registered professional geologist. He serves as a director of the Colorado Mining Association and Northern Zinc, and is the president of Mining and Metallurgical Society of America. The Board believes that Mr. Guarnera’s technical expertise and his capital market experience make him a valuable member of the Board.

Date first appointed as a Director:May 30, 2013

Common Shares: 25,000

Stock Options: 50,000157,500

IndependentBoard/Committee
Memberships		Attendance at Meetings
During 20142015		Other Public Board
Directorships
Yes

Board of Directors

Audit Committee

Compensation Committee

Nominating Committee
Technical Committee

5/5 (100%)

4/4 (100%)
1/1 (100%)
nil

2/2 (100%)

nil

None

6


6

Name, Present Office,
Province/State & Country of
Residence		Present Principal Occupation or Employment[1]Security Holdings[2]

GUY LE BEL

Director

Repentigny, Quebec, Canada

Mr. Le Belis 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 servespreviously served as Vice President Evaluations for Capstone Mining Corp. and is a Director of RedQuest Capital Corp. Previously, Mr. Le Bel was Vice
President, Business Development at Quadra Mining Ltd., and prior to that held business advisory, strategy and planning,
business valuation, and financial planning management roles at BHP Billiton Base Metals Ltd., Rio Algom Ltd. and Cambior
Inc. The Inc.The Board believes that Mr. Le Bel’s Canadian and international experience in strategic and financial planning make him a valuable member of the Board.

Date first appointed as a Director:May 30, 2013

Stock Options: 50,000157,500

IndependentBoard/Committee
Memberships		Attendance at Meetings
During 20142015		Other Public Board
Directorships
Yes

Board of Directors

Audit Committee

Compensation Committee

Nominating Committee
Technical Committee

5/5 (100%)

4/4 (100%)
1/1 (100%)
nil

2/2 (100%)

nil

RedQuest Capital Corp.


[1]

The information as to principal occupation and business or employment has been furnished by the respective nominees.

[2]

Based upon information furnished to Golden Queen either by the directors and executive officers or from the insider reports and beneficial ownership reports filed with the SEC or available atwww.sedi.ca.These amounts include beneficial ownership of securities not currently outstanding but which are reserved for immediate issuance on exercise of options.

[3]

Includes 5,599,6131,913,650 shares reserved for immediate issuance on exercise of convertible debentures of which Landon T. Clay and Thomas M. Clay have sharedhas sole voting and investment control.

[4]

Thomas M. Clay, Landon T. Clay Harrisand Brian James have shared voting and investment control of 807,250 shares. Thomas M. Clay and JonathanLandon T. Clay have shared voting and investment control of 807,250 shares.

17,047,739 shares;
[5]

[4]

Thomas M. Clay, Landon T. Clay and Thomas M. ClayBrian James have shared voting and investment control of 10,000 shares.

7,500,000 shares issuable upon exercise of warrants.

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)four (4) directors on the Board, H. Lutz Klingmann, Thomas M. Clay, Bryan A. Coates, Bernard Guarnera, and Guy Le Bel. Of the fivefour 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 areand Interim Chief Executive Officer, is 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.

7

7

The Board does not have a policy regarding a Board members’ attendance at annual meetings of shareholders. Four (4)Two (2) directors attended the Company’s 20142015 annual meeting of shareholders.

Biographical Information Regarding Executive Officers

H. Lutz KlingmannThomas M. Clay - PresidentChairman and Interim Chief Executive Officer.Lutz KlingmannMr. Clay is the Vice President of East Hill Management Co., LLC and Director of the Clay Mathematics Institute and of Thrombogenics N.V. His business education was completed at Harvard College, Oxford University and Harvard Business School. Mr. Clay has been involved withserved on the Board of Directors since 2009.

Robert C. Walish, Jr. – Chief Operating Officer.Mr. Walish is the President & Chief Executive Officer of Golden Queen Mining Co. Ltd. since 2001LLC and has been instrumental inwas most recently the development and permitting processGeneral Manager of the Soledad Mountain Project. He is a former DirectorSCM Franke Operation of KGHM International, formerly QuadraFNX, located in northern Chile, where he was responsible for mining, processing and President of Minto Explorations Ltd. as well as a former director and presidentadministration of a numberfour million pound per month open-pit copper mining, heap-leach and SX-EW operation. Prior to that and over the course of mid-tiermore than 30 years, Mr. Walish worked at mines in Guyana, Arizona, Alaska, South Carolina, Montana and junior miningNevada. He received his Bachelor of Arts degree from the University of Colorado and exploration companies. He has developed six mines, fourhis Master of which were inScience degree from the southwestern United States, since mid-1981. His development and operating experience spans the globe, including Africa, Venezuela, Canada and the United States.University of Wisconsin.

AndréAndrée St-Germain - Chief Financial OfficerOfficer.Andrée St-Germain joined Golden Queen in 2013 and Corporate Secretary.Ms. St-Germain was previously anhas been involved with the financings and construction of the Project. She is a former investment banker with Dundee Capital Markets Inc. where she worked exclusively with mining companies on a variety of financings and merger and acquisitionM&A advisory assignments. She holds an Internationala Master of Business Administration degree (Honours) from Schulich School of Business (York University).

PROPOSAL

Brenda Dayton – Corporate Secretary. Ms. Dayton has served as Corporate Secretary for several mining companies on the NYSE, TSX and TSX Venture and her expertise includes governance, communications and investor relations. Prior to working in public companies, she worked in banking and insurance. She holds a Bachelor of Arts degree from the University of Calgary.

Proposal 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORSRatification of Appointment of Independent Auditors

BDO Canada

PricewaterhouseCoopers LLP (“PWC”) was appointed as Golden Queen’s independent auditors on November 13, 1996.March 31, 2016. BDO Canada LLP (“BDO”) served as Golden Queen’s independent auditors for the fiscal year ended December 31, 2014. The shareholders2015. Shareholders of the Company (the “Shareholders”) will be asked at the Meeting to vote for the appointment of BDO Canada LLPPWC 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

On March 31, 2016, Golden Queen appointed PWC as its independent registered public accountant, subject to completion of its standard client acceptance procedures. The appointment of PWC was recommended by Golden Queen’s audit committee after considering proposals from several international public accounting firms, including BDO. As a result of PWC’s appointment, Golden Queen’s engagement of BDO, Canada LLP are expected to be present atas its independent registered public accounting firm, was terminated. Attached as Appendix “B” is a copy of the Meeting, will haveForm 8-K filed with the opportunity to make a statement if they desire to do so, and are expected to be available to respond to questions from Shareholders.SEC in connection with the change of Golden Queen’s independent auditor.

See External Auditor Service Fees section for more information.

Although the appointment of BDO Canada LLPPWC 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, 2015.2016. 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, 2016.2017.

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 certainde minimis standards.

8

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 20142015 audit related fees, and tax fees were pre-approved by the Audit Committee.

See External Auditor Service Fees section for more information.

Representatives of the former auditors, 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.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF BDO CANADAPRICE WATERHOUSE COOPERS LLP AS GOLDEN QUEEN'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2015.2016.

8

PROPOSAL 3: APPROVAL OF THE COMPANY’S STOCK OPTION PLANADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION

Matters to be Approved

In accordance with the requirementsSection 951 of the Toronto Stock ExchangeDodd-Frank Wall Street Reform and Consumer Protection Act (the “Exchange”“Dodd-Frank Act”), every three (3) years after institution, all unallocated options, rights requires that Golden Queen seek a non-binding advisory vote from its shareholders to approve the compensation of our Named Executive Officers as disclosed in this proxy statement.

Golden Queen seeks to provide our executives with appropriate incentives to drive the success of our business. We strive to design programs that are performance-based and other entitlements under a security based compensation arrangement which does not have a fixed maximum number of securities issuable thereunder (commonly referredthat encourage executives to as “rolling plans” or “evergreen plans”) must be approved by a majorityfurther the overall business strategy of the an issuer’s security holders. Since the Stock Option Plan providescompany. We provide compensation that is competitive to retain high-quality executives to produce successful results 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.shareholders.

The Board adopted a 2013 stock option plan (the “Stock Option Plan” orvote on this resolution is not intended to address any specific element of compensation; rather, 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 amendmentvote relates to the Plan on April 27, 2015 to clarify the procedure for fixing the earlier termination datecompensation of stock options. A copy of the amendment is annexed toour Named Executive Officers, as described in 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 99,928,683Common 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 700,000options 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 madeproxy statement 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 majoritycompensation disclosure rules of the votes cast by the holders of Common Shares presentSEC. We believe that Golden Queen’s Named Executive Officer compensation programs have been effective at appropriately aligning pay and performance and in person or represented by proxy at the Meeting. Abstentionsenabling Golden Queen to attract and broker non-votes will not be counted either in favor of or againstretain very talented executives within our industry.

The vote on this proposalresolution is advisory and therefore not binding on Golden Queen, the Compensation Committee or the Board. Although the vote is non-binding, the Compensation Committee will have no effect onreview the outcomesvoting results in connection with the on-going evaluation of such proposal.Golden Queen’s compensation programs.

“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 voteTHE BOARD RECOMMENDS SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE COMPENSATION AWARDED BY GOLDE QUEEN TO THE NAMED EXECUTIVE OFFICERS AS DESCRIBED 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.THE DISCLOSURES IN THIS PROXY STATEMENT AS REQUIRED BY THE RULES OF THE SECURITIES AND EXCHANGE COMMISSION.

Summary of the Stock Option Plan

Set out below is a summary of the material terms of the Stock Option Plan.

i)

the eligible participants under the Plan are directors, officers, employees and consultants of the Company;

9


ii)

the number of common shares reserved for issuance from time to time under the Plan is 7,200,000, which represents approximately 7.2% of the number of the current issued and outstanding shares of the Company;

iii)

if any stock option is exercised or expires or otherwise terminates for any reason, the number of common shares in respect of which the stock option is exercised or expired or terminated shall again be available for the purposes of the Plan;

iv)

the aggregate number of options awarded within any one (1) year period to insiders under the Plan or any previously established and outstanding stock option plans or grants, cannot exceed 10% of the issued shares of the Company (calculated at the time of award); or the aggregate number of shares reserved at any time for issuance to insiders upon the exercise of options awarded under the Plan or any previously established and outstanding stock option plans or grants, cannot exceed 10% of the issued shares of the Company (calculated at the time of award);

v)

the exercise price for securities under the Plan will be determined by the Board of Directors in its sole discretion as of the date of grant, and shall not be less than:


(a)

if the Company’s shares are not listed for trading on an exchange at the date of grant, the last price at which the Company’s shares were issued prior to the date of grant; or

(b)

if the Company’s shares are listed for trading on an exchange at the date of grant, the volume- weighted average price for the five trading days immediately prior to the date of grant;


vi)

the value of a share for stock appreciation rights shall be determined, unless otherwise specified or permitted by applicable regulatory policies, based on the weighted average trading price per share for the five (5) trading days immediately preceding the date the notice is received by the Company on the Exchange;

vii)

a stock appreciation right granted pursuant to the Plan shall entitle the option holder to elect to surrender to the Company, unexercised, the option with which it is included, or any portion thereof, and to receive from the Company in exchange therefore that number of shares, disregarding fractions, having an aggregate value equal to the excess of the value of one share over the purchase price per share specified in such option, times the number of shares called for by the option, or portion thereof, which is so surrendered;

viii)

the Board of Directors may grant stock options to any director, officer or employee, together with a bonus consisting of a corresponding right to be paid, in cash, an amount equal to the exercise price of such stock options, subject to such provisos and restrictions as the Board may determine, and subject to any applicable approvals, if required. The options granted as part of the bonus shall be included in, and not in addition to, the maximum number of options which may be granted under the Plan from time to time;

ix)

all options granted pursuant to the Plan will be subject to such vesting requirements as may be prescribed by the Exchange, if applicable, or as may be imposed by the Board of Directors;

x)

the expiry date of an option shall be the date so fixed by the Board of Directors at the time the particular option is awarded, provided that such date shall not be later than the fifth anniversary of the date of grant of the option. If the expiry date of an option falls within a blackout period, then the expiry date of the option will be the date which is ten (10) business days after the expiry date of the blackout period. The ten (10) business day period may not be extended by the Board;

xi)

any options granted pursuant to the Plan will terminate on the date determined by the Board, such date not to exceed one (1) year of the date the option holder ceases to act as a director, officer, or employee of the Company or any of its affiliates, and one year of the date the option holder ceases to act as an employee engaged in investor relations activities, unless such cessation is on account of death. If such cessation is on account of death, the options terminate on the first anniversary of such cessation. If such cessation is on account of cause, or terminated by regulatory sanction or by reason of judicial order, the options terminate immediately. Options that have been cancelled or that have expired without having been exercised shall continue to be issuable under the Plan. The Plan also provides for adjustments to outstanding options in the event of any consolidation, subdivision, conversion or exchange of Company’s shares;

10


xii)

options may not be assigned or transferred;

xiii)

subject to subsection xv) below, the Board may amend the Plan and the terms and conditions of any option thereafter to be granted without shareholder approval, unless shareholder approval is expressly required under any relevant law, rule or regulation, or the policies of the Exchange;

xiv)

any substantive amendments to the Plan shall be subject to the Company first obtaining the approvals, if required, of:


(a)

the shareholders or disinterested shareholders, as the case may be, of the Company at general meetings where required by the rules and policies of the Exchange, or any stock exchange on which the Shares may then be listed for trading; and

(b)

the Exchange, or any stock exchange on which the shares may then be listed for trading;


xv)

there are no provisions in the Plan for direct financial assistance to be provided by the Company to participants under the Plan to facilitate the purchase of securities under the Plan, although the Plan does permit stock appreciation rights and bonuses to be issued together with options as described above; and

xvi)

there are no entitlements under the Plan previously granted and subject to ratification by security holders.

A copy of the Stock Option Plan was filed on SEDAR atwww.sedar.com on May 2, 2013 as a schedule to the Company’s Management Information Circular and on EDGAR atwww.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.

DIRECTORS AND EXECUTIVE OFFICERS

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:

NameAgePositionPosition Held Since
H. Lutz Klingmann75DirectorMarch 1, 2001
PresidentMay 21, 2009
CEOMay 21, 2009
Thomas M. Clay3031DirectorJanuary 13, 2009
  ChairmanMay 30, 2013
Interim CEOAugust 10, 2015  
Bryan A. Coates57DirectorJanuary 28, 2013
Bernard Guarnera7072DirectorMay 30, 2013
Guy Le Bel5657DirectorMay 30, 2013
Robert C. Walish, Jr.63COOAugust 10, 2015
Andrée St-Germain3536CFOSeptember 18, 2013
Brenda Dayton48 Corporate SecretarySeptember 18, 2013October 1, 2015

9

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.

RELATIONSHIPS AMONG DIRECTORS OR EXECUTIVE OFFICERS

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

11

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth certain information regarding the beneficial ownership of the Company’s Common Stock as of April 28, 201518, 2016 by:

(i)

each director of Golden Queen;

(ii)

each of the Named Executive Officers of Golden Queen; and

(iii)

all directors and executive officers as a group.

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.

  Percentage of
 SharesShares
Name and Address ofBeneficiallyBeneficially
Beneficial OwnerOwnedOwned[5]
   
H. LUTZ KLINGMANN,Director, President, Chief Executive Officer,979,1000.9%
West Vancouver, BC  
THOMAS M. CLAY,Director8,222,543[2][3][4]7.5%
Providence, RI  
BRYAN A. COATES,Director50,000[1]0.05%
Saint-Lambert, QC  
BERNARD GUARNERA,Director75,000[1]0.07%
Las Vegas, NV  
GUY LE BEL,Director50,000[1]0.05%
Repentigny, QC,  
ANDRÉE ST-GERMAIN,Chief Financial Officer and Corporate Secretary300,000[1]0.3%
Vancouver, BC  
All officers and directors (6) persons9,676,6438.8%

Name and Address of
Beneficial Owner		 Shares
Beneficially
Owned		  Percentage of
Shares
Beneficially
Owned		 
       

THOMAS M. CLAY,Director, Chairman & Interim Chief Executive Officer
Providence, RI

  27,268,639[1][2]  24.6%
         

BRYAN A. COATES,Director

Saint-Lambert, QC

  157,500[1]  0.14%
         

BERNARD GUARNERA,Director

Las Vegas, NV

  182,500[1]  0.16%
         

GUY LE BEL,Director

Repentigny, QC

  157,500[1]  0.14%
         

ROBERT C. WALISH, JR.,Chief Operating Officer

Mojave, CA

  nil   0.0%
         

ANDRÉE ST-GERMAIN,Chief Financial Officer

Vancouver, BC

  440,000[1]  0.4%
         

BRENDA DAYTON,Corporate Secretary

Vancouver, BC

  nil   0.0%
         
All officers and directors (7) persons  28,206,139   25.4%

[1]

These amounts include beneficial ownership of securities not currently outstanding but which are reserved for immediate issuance on exercise of options. In particular, these amounts include shares issuable upon exercise of options as follows: 50,000107,250 shares issuable to Thomas M. Clay, 157,500 shares issuable to Bryan A. Coates, 50,000157,500 shares issuable to Guy Le Bel, 50,000157,500 shares issuable to Bernard Guarnera and 300,000440,000 shares issuable to Andrée St-Germain.

[2]

Includes 5,599,6131,913,650 shares reserved for immediate issuance on exercise of convertible debentures of which Landon T. Clay and Thomas M. Clay have sharedhas sole voting and investment control.

[3]

Thomas M. Clay, Landon T. Clay Harrisand Brian James have shared voting and investment control of 807,250 shares. Thomas M. Clay and JonathanLandon T. Clay have shared voting and investment control of 807,250 shares.

[4]

17,047,739 shares; Thomas M. Clay, Landon T. Clay and Thomas M. ClayBrian James have shared voting and investment control of 10,000 shares.

[5]

Total diluted7,500,000 shares issued includes 700,000 options outstanding as at the Record Date and 9,708,736 shares reserved for immediate issuance onissuable upon exercise of convertible debentures.

warrants.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) requires Golden Queen'sQueen’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.

10

To the Company’s knowledge, the Form 4 filed by each of Landon T. Clay and Thomas Clay on August 14, 2015 reporting the issuance of a warrant to issue 5,967,000 shares to the Landon T. Clay 2009 Irrevocable Trust and a warrant to issue 1,533,000 shares to the Clay Family 2009 Irrevocable Trust on August 6, 2015 were filed after the required filing date.

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, other than as disclosed in this Proxy Statement, the Company believes that during the year ended December 31, 2014,2015, its directors, executive officers and greater than 10% shareholders complied with all Section 16(a) filing requirements of the Securities Exchange Act of 1934.

12

DIRECTORS COMPENSATION

The following table sets out the compensation provided to the members of the Board during the Company’s year ended December 31, 2014:2015:

     Change in  
     Pension Value  
  Fees   and Non-  
 Earned  Non-EquityQualified  
 or PaidStockOptionIncentive PlanDeferredAll Other 
 in CashAwardsAwardsCompensationCompensationCompensationTotal
Name($)($)($)($)Earnings($)($)
H. Lutz KlingmannNilNilNilNilN/ANilNil
Thomas M. Clay$20,000NilNilNilN/ANil$20,000
Bryan A. Coates(1)$37,971NilNilNilN/ANil$37,971
Bernard Guarnera(1)(2)$48,750NilNilNilN/ANil$48,750
Guy Le Bel(1)(2)$43,478NilNilNilN/ANil$43,478

Name Fees
Earned
or Paid
in Cash
($)		  Stock
Awards
($)		  Option
Awards
($)		  Non-Equity
Incentive Plan
Compensation
($)		  Change in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings		  All Other
Compensation
($)		  Total
($)		 
H. Lutz
Klingmann(1)		  Nil   Nil   Nil   Nil   N/A   Nil   Nil 
Thomas M. Clay  18,750   Nil   35,002   Nil   N/A   Nil   53,752 
Bryan A. Coates  26,995   Nil   35,002   Nil   N/A   Nil   61,997 
Bernard Guarnera  31,876   Nil   35,002   Nil   N/A   Nil   66,878 
Guy Le Bel  29,706   Nil   35,002   Nil   N/A   Nil   64,708 

[1]

Fees earned for Bryan A. Coates, Bernard GuarneraH. Lutz Klingmann resigned from his position of Director, President and Guy Le Bel include $20,000 each for their contribution to the special committee. The special committee was formed to oversee the joint venture transaction with Gauss, LLC.

[2]

Bernard Guarnera and Guy Le Bel received a fee of $10,000 each for their contribution to the technical committee.

Chief Executive Officer on August 10, 2015.

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, 20142015 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.

EXECUTIVE COMPENSATION

Summary Compensation Table

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.

       Nonqualified  
      Non-EquityDeferred  
Name and   StockOptionIncentive PlanCompensationAll Other 
Principal Salary BonusAwardsAwardsCompensationEarningsCompensation 
PositionYear($)($)[5]($)($)[1]($)($)($)Total ($)
          
Lutz2014$163,465$40,743NilNilNilNilNil$204,208
Klingmann2013$159,524$32,907NilNilNilNil$1,905$194,336
President,2012$138,885NilNilNilNilNil$2,017$140,902
CEO         
G. Ross2014NilNilNilNilNilNilNilNil
McDonald[2]2013$21,987NilNilNilNilNilNil$21,987
Former CFO2012$29,930NilNilNilNilNilNil$29,930
Andrée St-         
Germain[3]2014$135,817$167,783Nil$141,181NilNilNil$444,781
CFO2013$47,010$9,402Nil$161,353NilNilNil$217,765

13


       Nonqualified  
      Non-EquityDeferred  
Name and   StockOptionIncentive PlanCompensationAll Other 
Principal SalaryBonusAwardsAwardsCompensationEarningsCompensation 
PositionYear($)($)($) ($)[1]($)($)($)Total ($)
          
Laurence Morris[4]2014$129,041NilNil$92,490NilNil$33,566$255,097
COO2013 $87,500NilNil$93,935NilNilNil $181,435

11

Name and
Principal
Position		 Year Salary
($)		  Bonus[7]
($)		  Stock
Awards
($)		  Option
Awards
($)[1]		  Non-Equity
Incentive Plan
Compensation
($)		  Nonqualified
Deferred
Compensation
Earnings
($)		  All Other
Compensation
($)		  Total ($) 
Lutz 2015  96,284   41,542   151,428   Nil   Nil   Nil   62,619   351,873 
Klingmann[2] 2014  163,465   40,743   Nil   Nil   Nil   Nil   Nil   204,208 
Former President, CEO 2013  159,524   32,907   Nil   Nil   Nil   Nil   1,905   194,336 
Thomas M. 2015  33,333   Nil   Nil   Nil   Nil   Nil   Nil   33,333 
Clay[3] 2014  Nil   Nil   Nil   Nil   Nil   Nil   Nil   Nil 
Chairman & Interim CEO 2013  Nil   Nil   Nil   Nil   Nil   Nil   Nil   Nil 
Robert C. 2015  115,984   75,000   Nil   Nil   Nil   Nil   Nil   190,984 
Walish, Jr.[4] 2014  Nil   Nil   Nil   Nil   Nil   Nil   Nil   Nil 
COO 2013  Nil   Nil   Nil   Nil   Nil   Nil   Nil   Nil 
Andrée St- 2015  133,572   30,583   Nil   15,195   Nil   Nil   Nil   179,350 
Germain[5] 2014  135,817   167,783   Nil   141,181   Nil   Nil   Nil   444,781 
CFO 2013  47,010   9,402   Nil   161,353   Nil   Nil   Nil   217,765 
Laurence 2015  Nil   Nil   Nil   Nil   Nil   Nil   Nil   Nil 
Morris[6] 2014  129,041   Nil   Nil   92,490   Nil   Nil   33,566   255,097 
Former COO 2013  87,500   Nil   Nil   93,935   Nil   Nil   Nil   181,435 

[1]

The determination of the value of option awards is based upon the Black-Scholes Option pricing model, details and assumptions of which are set out in the Company’s consolidated financial statements for the fiscal years ended December 31, 2013, December 31, 2014 and December 31, 2014.2015. The value of the 2013 option awards is based on the options that had vested as of December 31, 2013: 100,000 vested options for the CFO and 100,000 vested options for the former COO. The 2014 option awards reflect the value of the options issued in 2013 to the CFO and former COO but vested during fiscal 2014: 200,000 vested options for the CFO and 100,000 vested options for the former COO. The former COO resigned in November 2014 and as a result 100,000 unvested options were cancelled.

The value of the 2015 options awards is based on the options vested as of December 31, 2015; 46,667 vested options for the CFO.
[2]

G. Ross McDonaldLutz Klingmann was the Chief FinancialExecutive Officer of the Company until September 18, 2013.

August 10, 2015. During fiscal 2015, he received $62,619 in severance income.
[3]

Thomas M. Clay was appointed the Interim Chief Executive Officer on August 10, 2015.

[4]Robert C. Walish was appointed the Chief Operating Officer on August 10, 2015 and receives compensation directly from Golden Queen Mining Company LLC, which the Company contributes 50%.
[5]Andrée St-Germain was appointed the Chief Financial Officer on September 18, 2013. The bonus granted to Ms. St-Germain in 2014 includes a bonus target of C$150,000 as set out in her employment contract. See note 1 for details on the option award.

[4]

[6]

Laurence Morris was appointed the Chief Operating Officer on May 22, 2013 and resigned onof the Company until November 11, 2014. See note 1 for details on the option award.

[5]7]

Bonus amounts received in 2015 for the former President & CEO and the CFO were awarded for 2014 performance. The 2014 bonus granted to Mr. Lutz Klingmannamount received by the COO was approveda signing bonus as set out in his employment contract. The CFO was awarded a performance bonus of C$80,894 and granted subsequent tothe COO was awarded a bonus in the amount of $51,065 for their performance in 2015. These amounts were paid in the 2016 fiscal year 2014. A portion of the 2014 bonus granted to Ms. St-Germain was approved and granted subsequent to fiscal year 2014.year.

OPTION GRANTS DURING THE MOST RECENTLY COMPLETED FISCAL YEAR

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, 2014,2015, there were no247,500 options granted to the Named Executive Officers.

12

OUTSTANDING EQUITY AWARDS AT THE MOST RECENTLY COMPLETED FISCAL YEAR

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:

 Number ofNumber of   
 SecuritiesSecuritiesEquity Incentive Plan  
 UnderlyingUnderlyingAwards; Number of  
 UnexercisedUnexercisedSecurities UnderlyingOption 
 OptionsOptionsUnexercisedExercise 
Name and(#)(#)Unearned OptionsPriceOption Expiration
Principal PositionExercisableUnexercisable(#)($)Date
      
Lutz KlingmannNilNilNilN/AN/A
President, CEO     
Andrée St-Germain300,000NilNil$1.26September 18, 2018
CFO     
Laurence Morris200,000NilNil$1.16November 11, 2015
COO[1]     

[1] Laurence Morris was appointed the Chief Operating Officer on May 22, 2013 and resigned on November 11, 2014.2015:

14

Name and
Principal Position		 Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable		  Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable		  Equity Incentive Plan
Awards; Number of
Securities Underlying
Unexercised
Unearned Options
(#)		  Option
Exercise
Price
($)		  Option Expiration
Date

Thomas M. Clay

Chairman, Interim CEO(1)

  107,500   Nil   Nil  $0.58  September 8, 2020
Andrée St-Germain  300,000   Nil   Nil  $1.26  September 18, 2018
CFO  46,666   93,333   93,333  $0.58  September 8, 2020

[1]Thomas M. Clay was appointed as Interim Chief Executive Officer on August 10, 2015.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table sets out information as of the end of the fiscal year ended December 31, 20142015 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:issuance:

   Number of Securities Remaining
 Number of Securities toWeighted-AverageAvailable for Future Issuances
 be Issued Upon ExerciseExercise Price ofUnder Equity Compensation Plan
 of Outstanding Options,Outstanding Options.[Excluding Securities Reflected in
 Warrants and RightsWarrants and RightsColumn (a)]
Plan Category(a)(b)(c)
    
Equity Compensation750,000$1.296,450,000
Plans Approved by   
Security Holders   
    
Equity CompensationNilNilNil
Plans Not Approved   
by Security Holders   
    
Total:750,000$1.296,450,000

Plan Category 

Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights
(a)

  

Weighted-Average
Exercise Price of
Outstanding Options.
Warrants and Rights
(b)

  

Number of Securities Remaining
Available for Future Issuances
Under Equity Compensation Plan
[Excluding Securities Reflected in
Column (a)]

(c)

 
Equity Compensation  50,000  $1.16     
Plans Approved by  150,000  $1.59   5,880,000 
Security Holders  300,000  $1.26     
   570,000  $0.58     
Equity Compensation Plans Not Approved by Security Holders  Nil   Nil   Nil 
Total:  1,070,000  $0.94   5,880,000 

13

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, 2014.2015.

PENSION BENEFITS

The Company does not have a pension plan.

NON-QUALIFIED DEFERRED COMPENSATION

The Company does not have a deferred compensation plan.

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.

15

The Company entered into a letter agreement dated April 28, 2013an employment contract on October 1, 2015 with Laurence MorrisBrenda Dayton pursuant to which Ms. Dayton was employed as the Chief Operating OfficerCorporate Secretary of the Company. UnderCompany effectively October 1, 2015. Her employment with the letter agreement, Mr. MorrisCompany will continue without fixed term. Her position as officer of the Company will be renewed annually subject to the approval of the Board. Ms. Dayton is entitled to an annual salary of $150,000 and a bonus of upC$110,000, subject to 200% of the base salary as determined onperiodic review at twelve (12) months and eighteen (18) months, and at the discretion of the Board.in accordance with Company practice. Pursuant to the agreement, in the event Mr. Morris’ employmentcontract, if Ms. Dayton is terminated in connection withby the Company without cause or terminated by Ms. Dayton for good reason, within six (6)6 months following an acquisitiona change of the Company by another unrelated company, then Mr. Morriscontrol, she will be entitled to receive a one-timelump-sum severance payment equal to her gross salary received from the Company in the twelve month period immediately preceding the date of written notice of termination payment of 100% of his base salary, being $150,000, and all of hisprovided by Ms. Dayton or the Company. Ms. Dayton is also entitled to participate in the Company’s stock options will vest immediately. Mr. Morris’ contract continues indefinitely, unless and until terminated. Mr. Morris submitted his resignation effective November 11, 2014.option plan.

REPORT OF CORPORATE GOVERNANCE

The Canadian Securities Administrators have adopted National Instrument 58-101Disclosure of Corporate Governance Practices (“NI 58-101”) and National Policy 58-201Corporate 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.

Board of Directors

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)four (4) current directors considered independent, the Board is currently composed of a majority of independent directors. Messrs. Klingmann andMr. Clay, in their roleshis role as President andInterim CEO and the Chairman of the Board respectively, areis 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.

14

Chairman of the Board

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)four (4) 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.

16

Director Meetings

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, 2014,2015, 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.

Board Mandate

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 atwww.goldenqueen.com.

Position Descriptions

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 atwww.goldenqueen.com.

Orientation and Continuing Education

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 2014,2015, all of the directors visited the Soledad Mountain Project and had the opportunity to meet with local stakeholders.stakeholders and tour the project facilities.

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.

15

Code of Business Conduct

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 atwww.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.

17

Assessments

Based upon the Company'sCompany’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.

Board Leadership Structure

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 2013.2013 and assumed the role of Interim Chief Executive Officer on August 10, 2015. 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 bringbrings 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)four (4) 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.

Board’s Role in Risk Oversight

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.

16

Board Term Limits

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.

Gender Diversity

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.

18

As at the date hereof, there are no female directors on the Board and one (1) female executive officer (50%(33% of the total executive officers) of the Company.

Board’s Skills Matrix

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

Director Name

 Business
Development		Corporate
Governance

Finance

 Risk
Management		Capital
Markets		Mining &
Director NameDevelopmentGovernanceFinanceManagementMarkets
Processing
    
H. Lutz KlingmannXXXX X
Thomas M. ClayXXXXXXX 
Bryan A. CoatesXXXXXXX 
Bernard GuarneraXXXXX X
Guy Le BelXX XXXX

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has established an Audit Committee, a Compensation Committee, a Nominating Committee, and a TechnicalNominating Committee. Each of the Audit Committee, Compensation Committee, Nominating Committee, and TechnicalNominating 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.and Bernard Guarnera, each of whom is considered independent. 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 atwww.goldenqueen.com. During the fiscal year ended December 31, 2014,2015, 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;2015; (2) received a report from BDO Canada LLP our independent auditors, on the communications pursuantmatters required to the applicable standards andbe discussed the sameby Statement on Auditing Standards No. 61, “Communications with BDO Canada LLP;Audit Committees”; (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.

17

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, 2014,2015, filed with the SEC on March 16, 2015.30, 2016.

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

19

Submitted by the Audit Committee.

Bryan A. Coates, Chair

Bernard Guarnera, Member

Guy Le Bel, Member

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 atwww.goldenqueen.com. During the fiscal year ended December 31, 2014,2015, the Compensation Committee held one (1) meeting.two (2) meetings.

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 atwww.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, 2014,2015, 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 theThe Technical Committee are Guy Le Bel, Bernard Guarnera, and Lutz Klingmann.has been disbanded given the Company’s transition to production.

AUDIT COMMITTEE

Pursuant to National Instrument 52-110Audit 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 Audit Committee’s Charter

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

Composition of the Audit Committee

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.

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Relevant Education and Experience

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 hasCoateshas an understanding of the accounting principles used by the Company to prepare its financial statements.

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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 Chairmanis a Director of the Board of Behre Dolbear Group Inc., a mining consulting firm founded in 1991. Mr. Guarnera hasGuarnerahas 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 servesmost recently served 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.

Reliance on Certain Exemptions

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.

Audit Committee Oversight

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.

Pre-Approval Policies and Procedures

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.

External Auditor Service Fees

The fees for services provided by BDO Canada LLP to us in each of the fiscal years ended 20132014 and 20142015 were as follows:

Fees 2015[5]  2014 
Audit Fees[1] C$301,309  C$356,169 
Audit-Related Fees[2] C$18,960  C$26,371 
Tax Fees[3] C$64,670  C$94,299   
All Other Fees[4] $Nil  $Nil 
Total C$384,939  C$476,839 

[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 2015 audit fees include C$51,895 in fees related to quarterly reviews of the Company's consolidated financial statements and C$162,528 in fees related to the audit of the Company's 50%-owned subsidiary, GQM LLC. The 2014 audit fees include C$76,916 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.

Fees20142013
Audit Fees[1]C$356,169C$184,308
Audit-Related Fees[2]C$26,371C$6,955
Tax Fees[3]C$94,299C$13,071
All Other Fees[4]$Nil$Nil
TotalC$476,839C$204,334
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[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.

[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.

[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.

[4] “All Other Fees” include all other non-audit services.

[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.

[5] The final invoice for the Audit fees for the fiscal year 2015 has not yet been received and as such, those fees are not included within the table set out above.

[4] “All Other Fees” include all other non-audit services.

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COMPENSATION COMMITTEE

Composition of the Compensation Committee

The members of the Compensation Committee during the year ended December 31, 20142015 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.

Report on Executive Compensation and Compensation Discussion and Analysis

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 PresidentInterim Chief Executive Officer and its Chief Financial Officer. The base salary to the PresidentInterim Chief Executive Officer was based on a proposal from the President,Chief Financial Officer, 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.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee served as an officer or employee of the Company during the fiscal year ended December 31, 20142015 (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.

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Compensation Committee Report

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, 2014,2015, and this Proxy Statement, we have:

reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of SEC Regulation S-K; and

·reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of SEC Regulation S-K; and
·based on such review and discussion, we recommend to the Board that the Compensation Discussion and Analysis be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and this Proxy Statement on Schedule 14A.

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based on such review and discussion, we recommend to the Board that the Compensation Discussion and Analysis be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and this Proxy Statement on Schedule 14A.

Submitted by the Compensation Committee.

Bernard Guarnera, Chair

Bryan A. Coates, Member

Guy Le Bel, Member

PERFORMANCE GRAPH

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.

 December 31,December 31,December 31December 31December 31,
 20102011201220132014
      
Value Based on $100 Invested in GQM on December 31, 2010$100$101$80$30$37
      
Value Based on $100 Invested in S&P/TSX Global Gold Index on December 31, 2010$100$86$72$37$35

 

  December 31,
2011		  December 31,
2012		  December 31,
2013		  December 31,
2014		  December 31,
2015		 
Company $100  $79  $29  $36  $25 
S&P/TSX Global Gold Index (TITTGD) $100  $84  $42  $40  $36 

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Policy regarding transactions with management and others

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

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Transactions with management and others

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 arewere unsecured and bearbore interest at 2% per annum, calculated on the outstanding principal balance, payable annually. The principal amounts of the notes arewere convertible into shares of the Company at a price of C$1.03 per share for a period of two years. IfThe Company agreed to pay the notes are not convertedlegal fees incurred by the holder priorlenders relating to the maturity date, thenthis instrument which amounted to $10,049. On July 24, 2015, the Company may convert them at the lowerrepaid its C$10.0 million ($7.7 million) convertible debenture and accrued interest 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. 200,000 ($153,500).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.

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On January 1, 2014, the Company entered into an agreement to secure a $10,000,000 loan (the “January Loan”“January 2014 Loan”). The January 2014 Loan iswas provided by members of the Clay family, who are shareholders of the Company, 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 2014 Loan hashad a twelve-month term and bears an annual interest rate of 5%, payable on the maturity date. If the

The January 2014 Loan iswas repaid on a date that is less than 183 days before the maturity date,date. As a result, the Company will paypaid the Lenders an additional charge in the amount of 105%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 2014 Loan iswas repaid. The January Loan wasCompany repaid in full$7,500,000 loan plus the $375,000 accrued interest and $375,000 additional charge on the maturity date from the proceeds of new loan agreements with the lenders. For more detail, see the descriptionDecember 31, 2014. The remaining balance 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 developloan, $2,500,000, the accrued interest of $125,000 and operate the Project. Atadditional charge of $125,000, were paid on January 5, 2015. In total, the Company’s special meeting of shareholders held on September 9, 2014, the Company’s shareholders voted overwhelminglyCompany incurred $500,000 in support of the resolution approving the Joint Venture Transaction. The Joint Venture Transaction subsequently closed on September 15, 2014. Pursuantinterest expense and $500,000 in additional charge related 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).January 2014 Loan.

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 also entered into an agreement with members of the Clay family to secure a $12,500,000new loan (the ““December 2014 Loan”) with the same parties for an amount of $12,500,000. The December 2014 Loan”) including approximately $9,375,000 provided by an investment vehicle managed by Thomas M. Clay. Golden Queen issued two (2) promissory notes, each was due on demand on July 1, 2015 withand bore an annual interest rate of 10.0%,10% payable quarterly onat the first business dayend of each quarter. A portionThe loan was guaranteed by GQM Holdings, and secured by a pledge of the proceedsCompany'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 financing fee to secure the 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 also agreed to provide the lenders with the option for certain registration rights whereby the Company would bear the costs and responsibility of registering the lenders common shares for the purposes of disposition subsequent to July 1, 2015. The Company has determined it is unlikely the registration option would be exercised and therefore has not accrued any potential costs related to the registration of the common shares. The Company has presented these transaction costs as a contra liability as substantially all of these costs were paid to the lenders.

On June 8, 2015, the Company amended the December 2014 Loan to extend the maturity to December 8, 2016 and increased the principal amount from $12,500,000 to $37,500,000 (the “June 2015 Loan”). The Company also issued 10,000,000 common share purchase warrants exercisable for a period of five years expiring June 8, 2020. The common share purchase warrants have an exercise price of $0.95. All other terms remained the same as the December 2014 Loan. The Company also incurred a financing fee to secure the loan in the amount of $1,500,000, all of which was usedpaid on June 8, 2015. The Company agreed to retirepay the January Loan, including principal, accrued interest and an additional charge, for an aggregate payment of approximately $11,000,000. Golden Queen paidlegal fees incurred by the lenders relating to this instrument which amounted to $46,408. The legal fees were expensed as the transaction met the definition of a closing fee of $1,000,000, and the balancedebt extinguishment. The terms of the proceedsregistration rights remains unchanged as does the Company’s assessment of the likelihood of the registration rights being exercised. As such, as of December Loan will be used31, 2015, no accrual has been made for expenses and general corporate purposes.the potential costs related to the registration rights.

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INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

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.

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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 Mohave Shoulderband Snail as an Endangered Species

On January 31, 2014, the Center for Biological Diversity (the “(“CenterCBD”) filed an emergency petition (the “Petition”) with the United States Fish and Wildlife Service (“USFWS”) asking the USFWS to list the MojaveMohave 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 theEndangered 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.www.goldenqueen.com.

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 reviewed the petition filed by the CBD and concluded that there was no imminent threat to the snail that would cause them to believe an emergency listing was required.

Even though an emergency listing was not warranted, the USFWS is required by the Endangered Species Act to continue processing the listing petition.  A public comment period on the petition commenced on April 10, 2015 for a period of 60 days. On September 9, 2015, the USFWS and the CBD entered into a Stipulated Settlement Agreement that established a 12 Month Finding date of April 11, 2016.

In November 2015, the Company, the USFWS, and the CBD entered into a Memorandum of Understanding under which the USFWS and the CBD agreed to defer the 12 Month Finding date to June 30, 2017, and the Company agreed not to disturb until June 30, 2017 certain points on Soledad Mountain where snails or snail shells had been identified. The Company, the USFWS, and the CBD have jointly selected a third party environmental consultant that will conduct a survey to better understand the snail’s range and distribution on Soledad Mountain before the USFWS prepares its 12 Month Finding. Surveying is anticipated to take place between the fall of 2016 and the spring of 2017.

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The Project has received all necessary regulatory approvals.  The decisionongoing review by the USFWS to engage in a study does not affect the Project’s regulatory approvals or preventinterfere with the Project from moving forward.Project’s operation. The November 2015 Memorandum of Understanding caused no material adjustments to the Project’s mine plan. The Company believes that conservation of the snail can be accomplished without material adjustments to the Project’s mine plan, but if the USFWS ultimately finds that the snail is ‘endangered’ or ‘threatened’ and no agreed conservation plan is established, material adjustments to the Project’s mine plan may be required.

During the second quarter of 2014, the

National Labor Relations Board

The Company filed a complaintcharge 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 complaintcharge was in response to the 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 withand the matter was heard by Administrative Law Judge (“ALJ”) John McCarrick in June 2015. In December 2015 ALJ McCarrick issued his Decision finding that the PLA violates Section 8(e) of the National Labor Relations Act and is therefore unenforceable. The Union is in the process of appealing that Decision to 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.Washington, D.C.

A Field Attorney for the NLRB reported that he had his first substantive conversation with legal counsel for the Union

Complaint 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.Alleged Short-swing Trading Profits

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 Securities and Exchange Act of 1934, as amended (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, anddefendants. The plaintiff alleges that Mr. Clay realized short-swing profits in connection with transactions in Company securities within a period of six month periods. There can be no assurance thatmonths. The Company and the Plaintiff have entered into an agreement to settle the claims. Under the agreement, the Company will receive any funds as a resultagree to adopt certain changes to its existing Section 16 policies and procedures and pay legal fees of this suit. Although$185,000 to Plaintiff’s counsel. A Motion to Dismiss with prejudice 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.has been filed. Clay and the Company believeshave, and continue to, expressly deny that either or both have committed any act or omission giving rise to any liability and/or violation of law.

In conjunction with the allegations are without meritJune 2015 Loan, as defined elsewhere herein, the Company agreed to indemnify the Clay Group and intendtheir affiliates for up to vigorously defend$350,000 in legal expenses (not damages) incurred in defense of complaints brought against the claims.lenders and their affiliates by shareholders of the Company under Section 16 of the Exchange Act. The legal fees reimbursed by the Company currently amount to $345,572, including the $185,000 in legal fees paid to the plaintiff’s counsel.

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SHAREHOLDER COMMUNICATIONS

Shareholders can send communicationswho are interested in communicating directly with members of the Board, or the Board as a group, may do so by writing directly to the individual Board member or the Board generally care of Directors by email at info@goldenqueen.comthe Corporate Secretary, GOLDEN QUEEN MINING CO. LTD., Suite 2300 – 1066 West Hastings Street, Vancouver, British Columbia, Canada, V6E 3X2. The Company’s Secretary will forward communications directly to the appropriate Board member. If the correspondence is not addressed to a particular Board member, the communication will be forwarded to a Board member to bring to the attention of the Board. The Company’s Secretary will review all communications prior to forwarding them to the appropriate Board member. The Board has requested that items unrelated to the duties and responsibilities of the Board, such as junk mail and mass mailings, business solicitations, advertisements and other commercial communications, surveys and questionnaires and resumes or throughother job inquiries, not be forwarded.

SHAREHOLDER PROPOSALS

Pursuant to the Company’s website atwww.goldenqueen.com.

PROPOSALS OF SHAREHOLDERS

Nominations andrules of the Securities Exchange Act, shareholder proposals which shareholders wishintended to be considered for inclusion in the Proxy Statement and proxy card for the 20162017 Meeting of Shareholders of the Company, and to be included in the Company’s proxy materials for the proxy materials for the 2017 annual meeting of the Shareholders of the Company, must be received by the Corporate Secretary of Golden Queen by December 1, 2015,2016, 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.

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OTHER BUSINESS

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.

ANNUAL REPORT ON FORM 10-K

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

Additional information relating to the Company is available on the Company’s website atwww.goldenqueen.com, on SEDAR atwww.sedar.comand on EDGAR atwww.sec.gov. The Company will furnish to Shareholders, mayfree of charge, a hard copy of the Company’s financial statements and management’s discussion and analysis and/or a hard copy of the Company’s Annual Report on Form 10K for the fiscal year ended December 31, 2015 upon request additional copies by (i) mail to: 2300 – 1066 West Hastings Street, Vancouver, BC V6E 3X2 or (ii) telephone to: (778) 373-1557.

373-1557 or (iii) email to:info@goldenqueen.com. Financial information is provided in the Company’s comparativeannual financial statements and management’s discussion and analysis for its most recently completed financialfiscal year.

Dated at Vancouver, British Columbia,

OTHER MATERIAL FACTS

There are no other material facts to the knowledge of the Board relating to the matters for which this 28thdayCircular is issued which are not disclosed herein.

CERTIFICATE

The foregoing contains no untrue statement of April, 2015.a material fact and does not omit to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. The contents and the sending of this Circular have been approved by the Board.

BY ORDER OF THE BOARD OF DIRECTORS THIS22ND DAY OF APRIL 2016.

“Thomas M. Clay“
 
“H. Lutz Klingmann“
H. Lutz Klingmann, PresidentThomas M. Clay, Chairman & Interim CEO

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APPENDIX “A”

FORM 10-K

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X]

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

For the fiscal year ended December 31, 20142015

[    ]

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

For the transition period from _______________ to _______________

0-21777

(Commission File Number)

 

GOLDEN QUEEN MINING CO. LTD.

(Name of registrant in its charter)

British Columbia, CanadaNot Applicable
(State or other jurisdiction(IRS Employer
of incorporation or organization)Identification No.)
  
6411 Imperial Avenue, West2300 – 1066 Vancouver, British Columbia, CanadaV7W 2J5V6E 3X2
(Address of principal executive offices)(Zip Code)

Issuer’s telephone number:(604) 921-7570(778) 373-1557

Securities registered under Section 12(b) of the Exchange Act:None

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]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]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]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]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 [   ]x 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]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 $49,157,488 as atJune 30, 2014.2015.

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 99,928,683 common shares as at March 16, 2015.30, 2016.

DOCUMENTS INCORPORATED BY REFERENCE

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, 2014.2015. 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.

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Form 10-K

Table of Contents

PartCAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTSItem No.2
  
ICAUTIONARY NOTE REGARDING U.S. INVESTORS1Business3
  
GLOSSARY OF MINING TERMS1ARisk Factors4
  
PART I1BUnresolved Staff Comments7
  
Item 1.  Business2Properties7
  
Item 1A.  Risk Factors3Legal Proceedings10
  
Item 1B.  Unresolved Staff Comments4Mine Safety Disclosures20
  
Item 2.  Properties20
 
IIItem 3.  Legal Proceedings526
Item 4.  Mine Safety Disclosures28
PART II29
Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities29
  
6Item 6.  Selected Financial Data31
  
7Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operation32
  
7AItem 7A.  Quantitative and Qualitative Disclosures About Market Risk57
  
8Item 8.  Financial Statements and Supplementary Data58
  
9Item 9.  Changes in and Disagreements Withwith Accountants on Accounting and Financial Disclosure58
  
9AItem 9A. Controls and Procedures58
  
9BItem 9B.  Other Information59
  
PART III10Directors, Executive Officers and Corporate Governance59
  
PART IV11Executive Compensation59
  
Item 15.  Exhibits, Financial Statement Schedules12Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters59
  
Signatures13Certain Relationships and Related Transactions and Director Independence
14Principal Accounting Fees and Services
IV15Exhibits, Financial Statement Schedules
Signatures62

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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.

PART I

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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, 2014,2015, 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:

•·business strategy, strength and focus;
•·geological estimates in respect of mineral resources and reserves on the Project;
•·projections of market prices and costs and the related sensitivity of distributions;
•·supply and demand for precious metals;
•development and construction activities planned for the Project;
•·expectations regarding the ability to raise capital or generate income through operations;
•·expectations with respect to the Company’s future working capital position;
•·treatment under government regulatory regimes and tax laws;
•·anticipated gold and silver revenues;
·estimated costs of anticipated production, sales and costs of sales;
·anticipated mining operations proceeding as planned; and
·the Company’s and GQM LLC’s capital expenditure programs.

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:

•·recovery rates from gold and silver production;
·the impact of environmental regulations on our operations;
·future gold and silver prices;
•·the Company’s and GQM LLC’s ability to obtainretain qualified staff and equipment in a timely and cost-efficient manner;staff;
•the impact of increasing competition on the Company;
•·the impact of any changes in the laws of the United States;States or the State of California;
•·the ability of GQM LLC to maintain its existing and future permits in good standing;
•·the ability of GQM LLC to retain all of the interestsits mining rights under agreements with landholders, whether currently in place or may in the Project through negotiations with landholders at a cost that is acceptable to GQM LLC;future be in place;
•·the regulatory framework governing royalties, taxes and environmental matters in the United States;
•the ability of GQM LLC to obtain any required permits, access rights in respect of land and resources, and environmental consents;
•geological estimates in respect of the GQM LLC’s mineral resources and reserves;
•future development plans for the Project unfolding as currently envisioned;
•·future capital expenditures, if any, required to be made by the Company and GQM LLC and the Company’s ability to fund its pro rata capital commitments to the GQM LLC joint venture;
•future sources of funding for the Company’s and GQM LLC’s capital program;
•the Company’s future debt levels; and
•·the Company’s ability to obtain financingrepay or refinance current debt; and
·the ability of the Company to maintain its current ownership level in the future on acceptable terms, or at all.GQM LLC.

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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:

•speculative nature of exploration, appraisal and development of mineral properties;
•·uncertainties in access to future funding for exploration and developmentrepayment of debt or any future capital requirements of the Project or future acquisitions;
•

·

unexpected liabilities or changes in the cost of operations, including costs of extracting and delivering gold and silver dore to a refinery, that affect potential profitability of the Project;

•·operating hazards and risks inherent in mineral exploration and mining;
•·volatility in global equities, commodities, foreign exchange, market price of gold and silver and a lack of market liquidity;
•

·

changes to the political environment, laws or regulations, or more stringent enforcement of current laws or regulations in the United States or California;

•·ability of GQM LLC to obtain and maintain required exploration licenses, access rights or permits;permits, required for current and future planned operations;
•·unexpected and uninsurable risks that may arise;
•·risks associated with any future hedging activities; and,
·the other factors discussed underItem 1A. Risk Factors.

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.

CAUTIONARY NOTE TOREGARDING U.S. INVESTORS

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 43-101Standards 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. SeeItem 1A. Risk Factors.

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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.

Item 1.Business.

Glossary

Advance minimum royalty - Payment made beforeGLOSSARY OF MINING TERMS

We estimate and report our resources and we will estimate and report our reserves according to the start of commercial production under a mining lease agreement with landholders.

Ag–The chemical symboldefinitions set forth in NI 43-101. We will modify and reconcile the reserves as appropriate to conform to SEC Industry Guide 7 for silver.

Au–The chemical symbol for gold.

Exploration Stage Company–A company engagedreporting in the searchU.S. The definitions for or explorationeach reporting standard are presented below with supplementary explanation and descriptions of mineral deposits, which is not in either the development or production stage.parallels and differences.

NI 43-101 Definitions

Development Stage Companyindicated mineral resource–A company engaged in the preparation an indicated mineral resource is that part of a mineral depositresource for which quantity, grade or quality, densities, shape and physical characteristics can be established with reserves for productiona level of confidence sufficient to allow the appropriate application of technical and whicheconomic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is not in the production stage.

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

Fault orfaulting - 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 resourcesbased on detailed and reserves,reliable exploration and testing information gathered through appropriate techniques from locations such as gram per tonne (g/t) or troy ounces per ton (oz/ton). Grades are reported both in Imperialoutcrops, trenches, pits, workings 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 workingsthat are spaced closely enough for geological and grade continuity to givebe reasonably assumed.

inferred mineral resource– 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 -Ainferred 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 andmineral resource for which quantity and of such a grade or quality that it has reasonable prospects for economic exploitation. The location, quantity, grade, geological characteristics and continuitycan be estimated on the basis of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral resources are sub-divided, in order of increasinglimited sampling and reasonably assumed, but not verified, geological confidence, into inferred, indicated and measured categories.grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.

Mineral Reserve -mineral reserve –Aa 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 -mineral resourceA – a mineral resource is a concentration or occurrence of natural, aggregatesolid, inorganic or fossilized organic material in or on the earth’s crust in such form and quantity and of onesuch a grade or more minerals which, atquality that it has reasonable prospects for economic exploitation. The location, quantity, grade, geological characteristics and continuity of a specified timemineral resource are known, estimated or interpreted from specific geological evidence and place, may be minedknowledge. Mineral resources are sub-divided, in order of increasing geological confidence, into inferred, indicated and processed and the product(s) sold at a profit or from which some part may be profitably separated.measured categories.

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Qualified Person or QP -–Ana qualified person is 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;mining.

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SEC Industry Guide 7 Definitions:

Volcanics -exploration stageRock composed – an exploration stage prospect is one which is not in either the development or production stage.

development stage – a development stage project is one which is undergoing preparation of clastsan established commercially mineable deposit for its extraction but which is not yet in production. This stage occurs after completion of a feasibility study.

mineralized material – mineralized material is material that is not included in the reserve as it does not meet all of the criteria for adequate demonstration for economic or pieceslegal extraction.

production stage – a production stage project is actively engaged in the process of extraction and beneficiation of mineral reserves to produce a marketable metal or mineral product.

reserve – a reserve is that arepart of volcanic composition.

Referencesa mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. Reserves must be supported by a feasibility study done to bankable standards that demonstrates the economic extraction. (“Bankable standards” implies that the confidence attached to the “Company”, “Golden Queen”, “we”, “us”, “our”costs and words of similar meaning referachievements developed in the study is sufficient for the project to Goldenbe eligible for external debt financing.) A reserve includes adjustments to the in-situ tonnes and grade to include diluting materials and allowances for losses that might occur when the material is mined.

Queen Mining Co. Ltd. The U.S. dollar (“$") is

Additional definitions for terms currently or previously used in thisthe Company’s Annual Reports filed on Form 10-K10-K:

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

Ag –The chemical symbol for silver.

Au –The chemical symbol for gold.

Block model – The representation of geologic units using three-dimensional blocks of pre-determined sizes.

CIM – Canadian Institute of Mining, Metallurgy and quantitiesPetroleum.

Cut-off grade – When determining economically viable mineral reserves, the lowest grade of mineralized material that qualifies as ore, i.e. that can be mined at a profit.

Diamond drill – A type of rotary drill in which the cutting is done by abrasion rather than by percussion. The drill cuts a core of rock which is recovered in long cylindrical sections.

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

Feasibility study – A study or group of studies that determine the economic viability of a given mineral occurrence.

g/t or gpt – Grams per metric tonne.

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 units withand 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.

Gravity– A methodology using instrumentation allowing the accurate measuring of the difference between densities of various geological units in situ.

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.

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Mineral–Anaturallyformed chemical element or compound having a definite chemical composition and, usually, a characteristic crystal form.

Mineralization – A natural occurrence in rocks or soil of one or more metal yielding minerals.

Mineral deposit –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.

Mining – The process of extraction and beneficiation of mineral reserves to produce a marketable metal or mineral product. Exploration continues during the mining process and, in many cases, mineral reserves are expanded during the life of the mine operations as the exploration potential of the deposit is realized.

National Instrument 43-101 orNI 43-101 – Canadian standards of disclosure for mineral projects.

NSR – A net smelter returns royalty, which is customarily calculated by subtracting from gross revenues a deduction for calculated mill recoveries, transport costs of any concentrates to a smelter, treatment and refining charges, and other deductions at the smelter and multiplying that result by the prescribed rate.

Open pit – Surface mining in which the ore is extracted from a pit or quarry, the geometry of the pit may vary with the characteristics of the ore body.

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.

Preliminary feasibility study and pre-feasibility study – As defined in NI 43-101, each mean a comprehensive study of the viability of a mineral project that has advanced to a stage where the mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, has been established and an effective method of mineral processing has been determined, and includes a financial analysis based on reasonable assumptions of technical, engineering, legal, operating, economic, social, and environmental factors and the evaluation of other relevant factors which are sufficient for a qualified person, acting reasonably, to determine if all or part of a mineral resource may be classified as a mineral reserve.

Porphyry or porphyritic– An igneous rock characterized by visible crystals in a fine–grained matrix.

Quartz – a mineral composed of silicon dioxide, SiO2 (silica).

Reclamation – The process by which lands disturbed as a result of mining activity are modified to support beneficial land use.Reclamation activity may include the removal of buildings, equipment, machinery and other physical remnants of mining, closure of tailings storage facilities, leach pads and other mine features, and contouring, covering and re-vegetation of waste rock and other disturbed areas.

SEC Industry Guide 7 – U.S. reporting guidelines that apply to registrants engaged or to be engaged in significant mining operations.

Strike – The direction, or bearing from true north, of a vein or rock formation measured on a horizontal surface.

Vein – a thin, sheet like crosscutting body of hydrothermal mineralization, principally quartz.

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PART I

Item 1. Business

General Development of Business

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

The Company acquired its initial interest in the PropertyProject in 1985 and has since added to its holdingslandholdings and interests in the area. WorkExploration and evaluation work on the Property and on the Soledad Mountain project (the “Project”)Project was done, until September 10, 2014, by Golden Queen Mining Co., Inc. (“GQM Inc.”), a California corporation and the wholly-owned subsidiary ofby 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 thea 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 formGauss is an investment entity formed for the Joint Venture (the “Joint Venture Transaction”) was completed on September 15, 2014. Upon formationpurpose of the Joint Venture, both GQM Holdings and Gauss eachis 70.51% owned by Leucadia National Corporation and continue to own, 50%29.49% owned by members of GQM LLC.the Clay family, a controlling shareholder group of the Company. SeeProject Financing - Joint Venture Transactionbelow 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, 201530, 2016 are as follows:

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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.,2300 – 1066 West Hastings Street, Vancouver, BC, Canada, V7W 2J5.V6E 3X2. The California office of GQM LLC is located at 15772 K Street, Mojave, California, 93501.

Significant Developments in 20142015

Project Update

The Company engaged Mine Development Associates (“MDA”) in late 2014 to update the Project's geological model from first principles and to provide an updated mineral resource estimates. Theestimate. In late 2014, 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. TheIn support of the updated mineral resource and reserve estimates, the Company filed a technical report pursuant to National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) titled “Soledad“Soledad Mountain Technical Report and Updated Feasibility Study”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. SeeItem 2. Properties below for detailed information regarding the Technical Report and the Project.

The Project is fully permitted.

Major construction projects completed in 2015, include the Phase 1, stage 1 heap leach pad, the crushing-screening plant and Merrill-Crowe plant, Assay lab, workshop & warehouse, roads and access ramps, power and water supply, conveying and stacking system. 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 pitacquired mobile mining and heap leaching as presently planned is approximately twelve yearssupport equipment required for the commencement of mining operations and leaching forhas been stock-piling ore from pre-production mining. In addition the Company conducted an infill drilling program in 2015 as part of its pre-production mine planning.

Commissioning of the crushing-screening plant started in the fourth quarter of 2015 and the first gold pour occurred on March 1, 2016. Commercial 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 expectedanticipated to commence earlylater 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.2016.

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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 (seeItem 1A. Risk Factors below).

Construction of InfrastructureJoint Venture with Gauss LLC

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 expectsowns a 50% interest in GQM LLC to drill an additional production well (PW-4) in the second quarter of 2015 and complete the connectionpursuant to the site water distribution system in August 2015.

A numberterms 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.

Other activities in 2014:

•

Independent consulting engineers completed a number of burrowing owl surveys required to be done 30 days before the start of any new disturbances on site;

•Engineering work continued during the year for projects and detailed designs were used to refine cost estimates for construction;
•Security on site is being provided by an independent contractor based in California City;
•There is a focus on safety on site and no serious safety infractions were reported in 2014;
•GQM LLC identified suitable candidates for a number of key management positions and added to the management team in 2014; and
•

GQM LLC maintains an active community outreach program. We donated four lots located nearby the Mojave office to the Mojave Chamber of Commerce. The Mojave Chamber of Commerce intend to use the land for its Tourist Information Center.

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Project Financing - Joint Venture Transaction

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, dated September 15, 2014, entered into between GQM Holdings and Gauss (the “JV Agreement”) that. The JV Agreement 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 initialcurrent representatives of GQM Holdings on the board of managers are Guy Le Bel, Bryan A. Coates and Thomas Clay. The current officers of GQM LLC are Lutz KlingmannRobert C. Walish, Jr. as Chief Executive Officer and Andrée St-Germain as Chief Financial Officer. In addition, GQM LLC made

The JV Agreement also provides for future funding requirements, if needed, and dilution of member interests on a distribution of $5 million each tostraight line basis in the event any member does not equally fund a capital contribution. During 2015, Gauss LLC and GQM Holdings and paid $2.275 million to Leucadia and Auvergne aseach made 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 headingTransactions 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 (seeTransactions 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’sthe amount of $12.5 million, for a total contribution of $25 million. Following the capital contribution, each of Gauss and GQM Holdings retained a 50% ownership interest in GQM LLC. The funds contributed are expected to be sufficient for GQM LLC willto commence commercial production and maintain operations until the Project is cash flow positive. However, should additional capital funds 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 millionrequired in the aggregate. In consideration for entering intofuture, the Backstop Agreement, Golden Queen paid Gauss a standby guarantee fee of $2.25 million (seeTransactions 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.

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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 thatJV partners may be registered under the agreements ceasecalled upon 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).contribute additional capital.

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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.

Financing– Loans

On January 1, 2014,June 8, 2015, the Company entered into an agreementamended the December Loan to secure a $10 million loanextend the maturity to December 8, 2016 and increased the principal amount from $12,500,000 to $37,500,000 (the “January“June 2015 Loan”). The January Loan was provided by membersCompany also issued 10,000,000 common share purchase warrants exercisable for a period of five years expiring June 8, 2020. The common share purchase warrants have an exercise price of $0.95. All other terms remained the Clay family, who are shareholders ofsame as the December Loan. The Company including $7.5 million provided by an investment vehicle managed by Thomas M. Clay,also incurred 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 familyfinancing fee to secure $12.5 millionthe loan (the “December Loan”) including approximately $9.4 million providedin the amount of $1,500,000, all of which was paid on June 8, 2015. The Company agreed to pay the legal fees incurred 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, andrelating to this instrument, which amounted to $46,408. The legal fees were expensed as the balance oftransaction met 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 termsdefinition 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 thedebt extinguishment. The terms of the December Loan, Golden Queen entered into a registration rights agreement withremains unchanged as does the lenders, under which Golden Queen granted certainCompany’s assessment of the likelihood of the registration rights being exercised. As such, as of December 31, 2015, no accrual has been made for the potential costs related to allow the lendersregistration rights.

On October 1, 2015 and January 1, 2016, the Company chose to registerexercise its right to pay quarterly interest on the common shares of Golden Queen heldJune 2015 Loan in kind by adding interest owed to the Clay family under the Securities Act of 1933, as amended.principal balance.

Financial Information by Segment and Geographic Area

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

Competitive Conditions

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 and operate the Project or obtain financing on terms we consider acceptable.

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Environmental Regulation

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.

SeeEnvironmental 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 asItem 1A.1A. Risk Factors for a discussion of the related risks.

Employees

As of March 16, 2015,30, 2016, the Company and GQM LLC share two executive managers. In addition, GQM LLC has currently sixteenhad 130 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.

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Available Information

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 atwww.goldenqueen.com. www.goldenqueen.com. Our current reports on Form 8-K are available at the SEC’s website atwww.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 atwww.sec.gov andwww.sedar.com. www.sedar.com.

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Item 1A.Risk Factors.

Item 1A. Risk Factors

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.

Operational Risks

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

We have had no revenues from operationsMineral resource and negative operating cash flow since inception,reserve estimates are based on interpretation and as at December 31, 2014 had a deficitassumptions, and the Project may yield lower production 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 under actual operating conditions than is currently estimated. A material decrease in the quantity or grade of mineral resource or reserves from those estimates, will affect the economic viability of the Project or the Project’s return on capital

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.   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. Our working capital obligations willProject can be mined or processed profitably.

Assumptions about silver and gold market prices are subject to great uncertainty as those prices have fluctuated widely in the past. Declines in the market prices of silver and gold may render reserves containing relatively lower grades of ore uneconomic to exploit, and the Company may be required to reduce reserve estimates, discontinue development or mining at one or more of its properties or write down assets as impaired. Should GQM LLC encounter mineralization or geologic formations at the Project different from those predicted, it may adjust its reserve estimates and alter its mining plans. Either of these alternatives may adversely affect the Company’s actual production and financial condition, results of operations and cash flow.

As production at the Project proceeds, mineral resources and reserves may require us to raise additional funds through equityadjustments or debt financing, failing which we willdownward 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 ableduplicated 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 continue operations. Thebe different than actual prices, grades and costs. Extended declines in prices for gold or silver may render such estimates uneconomic and result in reduced reported mineralization or adversely affect current determinations of commercial viability. Any material reductions in estimates of mineralization, or of the ability of GQM LLC to profitably extract gold and silver, could have a material adverse effect on our share price and the value of the Project.

The estimates of production rates, costs and financial results contained in the 2015 feasibility study and any future guidance of production rates offered by the Company to obtain financing for its debt obligations, or to fund its attributable portiondepend on subjective factors and may not be realized in actual production and such estimates speak only as of capital requirements undertheir respective dates.

The 2015 feasibility study provides estimates and projections of future production, costs and financial results of the Joint Venture,Project. In addition, the Company may in the future provide guidance on projected production rates of the Project. Any such information is dependentforward-looking and depend on equity market conditions,numerous assumptions, including assumptions about the availability, accessibility, sufficiency and quality of ore, the costs of production, the market for precious metals,prices of silver and gold, the ability to sustain and increase production levels, the sufficiency of its infrastructure, the performance of its personnel and equipment, its ability to maintain and obtain mining interests and permits and its compliance with existing and future laws and regulations. Actual results and experience may differ materially from these assumptions. Any such production cost, or financial results estimates speak only as of the date on which they are made, and the willingnessCompany disclaims any intent or obligation to update such estimates, whether as a result 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.new information, future events or otherwise.

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There are significant financial and operational risks associated with developing and establishing aan operating mining operation, and since we do not have a history of producing gold and silver fromproject such as the Project, we have no proof that we will be able to develop a profitable mining operation on the Propertyproject operated by GQM LLC

Through

The financial results of 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 areis subject to risks associated with developingoperating and establishing amaintaining mining operationoperations on the Property, including:

•The availability of funds to finance our funding obligations under the Joint Venture on terms acceptable to us;
•·

the considerable time and cost involved in obtaining construction-related permits and completing construction of the facilities required for a mining operation on the Property;

•the availability and costs of mining and processing equipment and other supplies, as well as the availability of contractors required for construction;
•the availability and cost of hiring management and administrative personnel and skilled labour required to run a mining operation on the Property;
•

increases in our projected costs due to differences in grade of mineralized material, metallurgical performance or revisions to mine plans in response to the physical shape and location of mineralized materials as compared to our 2015 updated feasibility study estimates;

•

·

increases in the costs of commodities such as fuel rubber and electricity, and other materials and supplies which would increase Project development and operating costs;

•·the ability to extract sufficient gold and silver from resources and reserves to support a profitable mining operation on the Property;
•·decreases in gold and silver prices;
·compliance with approvals and permits for the Project; and
•

·

potential opposition from environmental groups, other non-governmental organizations or local residents which may delay or prevent development of the Project or affect our future operations.

operations;

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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.

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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:

•fluctuations in costs that make project development prohibitive, or that make mining uneconomical;
•insufficient mineralized material to support a profitable mining operation;
•unanticipated variations in grade of mineralized material or other geologic problems, or metallurgical or processing problems;
•·difficult surface conditions, unusual or unexpected geologic formations or failure of open pit slopes;
•·mechanical or equipment problems;problems, industrial accidents or personal injury resulting in unanticipated cost and delays;
•·environmental hazards or pollution;
•industrial accidents or personal injury;
•·fire, flooding, earthquakes, cave-ins or periodic interruptions due to inclement weather; and
•·labor disputes; and
•decreases in gold and silver prices, thus decreasing the value of mineralized material.dispute.

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. The value of our interest in GQM LLC may decrease as a result, which would be expected to reduce the value of our common shares.

There are operational risks for which insurance coverage is not available at affordable rates or at all, and the occurrence of any material adverse event for which there is no insurance coverage may decrease financial performance of GQM LLC, or may impede or prevent ongoing operations

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. Any such events would be expected to have a significant detrimental impact on the value of our interest in GQM LLC and our common stock.

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Mineral resource

Silver and reserve estimatesgold mining involves significant production and operational risks

Silver and gold mining involves significant production and operational risks, including those related to uncertain mineral exploration success, unexpected geological or mining conditions, the difficulty of development of new deposits, unfavorable climate conditions, equipment or service failures, unavailability of or delays in installing and commissioning plants and equipment, import or customs delays and other general operating risks.

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Commencement of mining can reveal mineralization or geologic formations, including higher than expected content of other minerals that can be difficult to separate from silver, which can result in unexpectedly low recovery rates. Problems may also arise due to the quality or failure of locally obtained equipment or interruptions to services (such as power, water, fuel or transport or processing capacity) or technical capital expenditure to achieve expected recoveries. Many of these production and operational risks are basedbeyond the Company’s control. Delays in commencing successful mining activities at new or expanded mines, disruptions in production and low recovery rates could have adverse effects on interpretationthe Company’s financial condition, results of operations and assumptions,cash flows.

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.

Sale of Aggregate

We have not included contributions from the sale of aggregate in the 2015 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 is expected to be reduced.

The mining industry is intensely competitive

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 production of minerals from the Project may yield lower production of gold and silver under actual operating conditions than is currently estimatedbe 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. 

Unless otherwise indicated, mineral resourceLegal 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.Regulatory Risks

Any material changes in mineral resource or reserve estimates and grades of resources and reserves will affect theeconomic 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:

•·mineral property acquisition, developmentproduction and production;reclamation;
•·taxes and fees;
•·labor standards, and occupational health and safety; and
·environmental standards for waste disposal, treatment and use of toxic substances, land use and environmental protection.

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environmental standards for waste disposal, treatment and use of toxic substances, land use and environmental protection.

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.

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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.Project, all of which would be expected to reduce the value of our interest in the GQM LLC.

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

13

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 developmentproduction of minerals from 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.

17

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 (seeItem 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.

14

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.

Agreements with landholders need ongoing monitoring and negotiations

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.

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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).assignments.

15

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.

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. Refer to Item 3. Legal Proceedingsfor complete details.

Financial Risks

Our financial statements contain a qualification as to our ability to continue as a going concern due primarily to the need to repay or refinance our current indebtedness due in December of 2016, which is not assured

Until such time as GQM LLC can economically produce and sell gold and silver from the Project and distribute cash to its members, we will continue to have no cash flow from our ownership interest in GQM LLC and will continue to incur an operating deficit. As at December 31, 2015, excluding any cash held by GQM LLC and inclusive of GQM Holdings, we had cash of approximately $6.1 million and current liabilities of approximately $37.1 million, including secured debt with a related party lender which is due in December of 2016. The ability of the Company to continue as a going concern requires that we obtain new financing to replace our current debt obligations or are able to refinance with the existing lenders. Our ability to obtain new financing is dependent on a number of factors including cash flow from operations that are distributed from GQM LLC to the Company, equity market conditions, the market for precious metals, and the willingness of other parties to lend the Company money.

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The Company must meet any future cash contribution requirements if required under the terms of the JV Agreement with Gauss LLC, or face dilution of its ownership interest in the Project, which could impact our stock value and our ability to meet stock exchange listing requirements

We hold a 50% interest in the Project pursuant to the terms of the JV Agreement. If in the future there are unexpected costs that require additional capital contributions from us under the terms of the JV Agreement, we will need to raise additional funds in order to maintain our 50% interest in the Project, otherwise we will have our interest diluted to below 50% which will likely have an adverse impact on the price of our common shares. In addition, to the extent our ownership interest of GQM LLC remains our sole business and asset, if we are diluted below 50% ownership we could fail to meet the listing requirements of the TSX and be delisted from the TSX and unable to list on a suitable alternate stock exchange. In such an event the market for our securities would be limited to the US over-the-counter market and related quotation services, being currently the OTCQX in the case of the Company. The anticipated impact of such a delisting will be to reduce venues for trading in our securities, a reduction in available market information, a reduction in liquidity, a decrease in analyst coverage of our securities, and a decrease in our ability for us to obtain additional financing to fund our operations.

GQM LLC’s results of operations, cash flows and operating costs are highly dependent upon the market prices of silver and gold and other commodities, which are volatile and beyond the Company’s control.

Silver and gold are exchange-traded commodities, and the volatility in gold and silver prices is illustrated by the following table, which sets forth, for the periods indicated (calendar year), the average annual market prices in U.S. dollars per ounce of gold and silver couldsilver, based on the daily London P.M. fix, as shown in the table below:

Mineral 2015  2014  2013  2012  2011 
Gold $1,160.06  $1,265.78  $1,411.23  $1,668.98  $1,571.52 
Silver $15.68  $19.08  $23.79  $31.15  $35.12 

Silver and gold prices are affected by many factors including U.S. dollar strength or weakness, prevailing interest rates and returns on other asset clauses, expectations regarding inflation, speculation, global currency values, governmental decisions regarding the disposal of precious metal stockpiles, global and regional demand and production, political and economic conditions and other factors. In addition, Exchange Traded Funds (“ETFs”), which have substantially facilitated the ability of large and small investors to buy and sell precious metals, have become significant holders of gold and silver. Factors that are generally understood to contribute to a decline in the prices of silver and gold include a strengthening of the U.S. dollar, net outflows from gold and silver ETFs, bullion sales by private and government holders and global economic conditions and/or fiscal policies that negatively impact large consumer markets.

Because GQM LLC is expected to derive all of its revenues from sales of silver and gold, its results of operations and cash flows will fluctuate as the prices of these metals increase or decrease. A period of significant and sustained lower gold and silver prices would materially and adversely affect GQM LLC’s futurethe results of operations and abilitycash flows. Additionally, if market prices for silver and gold decline or remain at relatively low levels for a sustained period of time, GQM LLC may have to continuerevise its operating plans, including reducing operating costs and capital expenditures, terminating or suspending mining operations at one or more of its properties and discontinuing certain exploration and development plans. GQM LLC may be unable to decrease its costs in an amount sufficient to offset reductions in revenues, and eventually operation, ofmay incur losses.

Operating costs at the Project are also affected by the price of input commodities, such as fuel, electricity, labour, chemical reagents, explosives, steel and concrete. Prices for these input commodities are volatile and can fluctuate due to conditions that are difficult to predict, including global competition for resources, currency fluctuations, consumer or industrial demand and other factors. Continued volatility in the prices of commodities and other supplies the Company purchases could lead to higher costs, which would adversely affect results of operations and cash flows.

Investment Risks

Holders of common shares may suffer dilution as a result of any equity financing by us in order to reduce or repay current indebtedness

The potential

We require additional capital to repay our current indebtedness, and we may be required to seek funding, including through the issuance of equity based securities. We cannot predict the size or price of any future financing to raise capital, and any issuance of common shares or other instruments convertible into equity. Any additional issuances of common shares or securities convertible into, or exercisable or exchangeable for, profitabilitycommon shares may ultimately result in dilution to the holders of operations on the Project, the value of the Project,common shares, dilution in any future earnings per share and a decrease in the market price of our common stockshares.

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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

Our financial statements are prepared on the basis that GQM LLC meets the requirements for accounting treatment as a variable interest entity with the Company being considered as 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 held by Gauss LLC representing a 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 ourcould have an adverse effect on the market price of Golden Queen’s common shares.

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

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.

The Company’s future growth will depend upon its ability to raise fundingdevelop new mines, either through exploration at existing properties or by acquisition from other mining companies.

Mines have limited lives based on proven and probable ore reserves. The Company’s ability to conduct continued development, are directly relatedachieve significant additional growth in revenues and cash flows will depend upon success in further developing the Project and developing or acquiring new mining properties. Any strategies to the price of gold and silver. GQM LLC’s decision tofurther 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,acquire new properties are inherently risky, and the political andCompany cannot assure that it will be able to successfully develop existing or new mining properties or acquire additional properties on favorable 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 planningterms 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.at all.

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We believe that we may bea “passive foreign investment company”for the current2015 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.2015.  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

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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.

The mining industry is intensely competitive

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.

Sale of aggregate

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.

20

ThreeTwo 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

Two of our directors namely, Bryan A. Coates and 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%29.49% 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.the interests of other investors.

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$37.5 million, including approximately $9.4$18.75 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.

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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. SeeItem 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:

•·Changes in the price for gold or silver;
•·delays, problems or increased costs in the developmentproduction of minerals from the Project;
•·decline in demand for our common stock;
•·downward revisions in securities analysts’ estimates;
•·our ability to refinance or repay our current and future debt;
·investor perception or our industry or prospects; and
•·general economic trends.

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.

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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.

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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.

Item 1B.Unresolved Staff Comments.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2.Properties.

Item 2. Properties

Land Ownership and Mining Rights

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, 189160 unpatented lode mining claims, one patentedonepatented millsite, 1718 unpatented millsites, one unpatented placer claim and owns upwards of 980holds directly or controls via agreement approximately 1,328 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.

A Project location map is shown in Figure 1 below.below:

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Figure 1

 

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 millsitesmill sites directly. The mining lease agreements were entered into from 1986 onwards. Refer to sectionProperty 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 six7 residential properties with buildings north of Silver Queen Road.

GQM LLC is continuingcontinues to purchasereview purchases of additional land that will secure its land position in the adjacent area.

Title Review

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.

Record of Survey- Section 6Survey and Royalty Map

The California Business & Professions Code includes the Professional Land Surveyors Act, “Article 5. Surveying Practices” and specifically “8762.Company obtained Records of survey.” Land surveyors must be aware ofSurvey for the requirements set out in Article 5 as theseProject on July 20, 2011 and March 31, 2014, which are essential to their surveying practice and govern their responsibilities to their clients and the State. The Company therefore decided to proceedrecorded with a Record of Survey and engaged James A. LaPuzza, PLS, MS (“Jim LaPuzza”) in July 2011 for this task.

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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, Surveyingunder Document No. 211092035 Book 0027, Page 66, 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:Document No. 3318, Book 29, Page 30, respectively.

•Recorded July 20, 2011;
•Document No. 211092035 and
•Book 0027, Page 66

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.

A copy of this report was sent to all landholders of record on August 1, 2011.

Record of Survey- Section 8

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.

The Record of Survey was recorded as follows:

 •21Recorded March 31, 2014
 •Document No. 3318
•Book 29, Page 30

Royalties

GQM LLC is required to make advance minimum royalty payments under the mining leasemininglease 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.

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Property Interests Are In Good Standing

A number of mining lease agreements expired in 20102015 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 This is not in default of any currentexpected to impact GQM LLC’s operations.

Other mining lease agreement, GQM LLC is negotiating renewal terms for mining leases that are approaching expiry. Mining leases have expiry dates ranging from 20152016 to 2045.    All mining leases havecontain an “evergreen” clause that becomes effective once the mine commences production.

Project Background

The Project is located approximately 5 miles (8 km)kilometres) 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 19th 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.

Geology

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.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.

Mineral Resource Estimates

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.

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The mineral resource estimates are summarized in the table below:

2015 Mineral Resource Estimates Provided by MDA (100% Basis)

        In-Situ Grade  Contained Metal 
        Gold  Silver  Gold  Silver 
Classification Tonnes  Ton  g/t  oz/ton  g/t  oz/ton  oz  oz 
Measured  4,298,243   4,738,000   0.960   0.028   13.37   0.39   130,000   1,865,000 
Indicated  79,237,167   87,344,000   0.549   0.016   9.26   0.27   1,415,000   23,733,000 
Measured & Indicated  83,535,409   92,082,000   0.575   0.017   9.53   0.28   1,545,000   25,598,000 
Inferred  21,392,329   23,581,000   0.343   0.010   7.20   0.21   245,000   4,965,000 

1.

Mineral resources are inclusive of mineral reserves.

2.

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

3.

Mineral resources are reported at a 0.004 oz/ton (0.137 g/t) AuEq cutoff in consideration of potential open-pit mining and heap-leach processing.

4.

Gold equivalent grades were calculated as follows: AuEq(oz/ton) = Au(oz/ton) + (Ag(oz/Ag(oz/ton)/88, which reflect a long-term Au:Ag price ratio of 55 and a Au:Ag recovery ratio of 1.6.

5.

Mineral resources are reported as partially diluted.

6.

Rounding as required by reporting guidelines may result in apparent discrepancies between tons, grade and contained metal content.

7.

Tonnage and grade measurements are in imperial and metric units. Grades are reported in troy ounces per short ton and in grams per tonne.

8.

The effective date of the mineral resource estimate is December 31, 2014.

See“Cautionary note toregarding U.S. investors concerning measured, indicated or inferred resourcesinvestors”: 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 allon Page 3 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.this Report.

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 allowallows 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.

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Mineral Reserve Estimates

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:

2015 Mineral Reserve Estimates Provided By Norwest (100% Basis)

        In-Situ Grade  Contained Metal 
        Gold  Silver  Gold  Silver 
Classification Tonnes  Ton  g/t  oz/ton  g/t  oz/ton  oz  oz 
Proven  3,357,000   3,701,000   0.948   0.028   14.056   0.410   102,300   1,517,100 
Probable  42,957,000   47,352,000   0.638   0.019   10.860   0.317   881,300   14,999,100 
Total & Average  46,314,000   51,053,000   0.661   0.019   11.092   0.324   983,600   16,516,200 

1.

The Qualified Person for the mineral reserve estimates is Sean Ennis, Vice President, Mining, P.Eng., APEGBC Registered Member who is employed by Norwest Corporation.

2.

A gold equivalent cut-off grade of 0.005 oz/ton was used for Quartz Latite and a cut-off grade of 0.006 oz/ton was used for all other rock types. The cut-off grade was varied to reflect differences in estimated metal recoveries for the different rock types mined.

3.

Gold equivalent grades were calculated as follows: AuEq(oz/ton) = Au(oz/ton) + (Ag(oz/Ag(oz/ton)/88, which reflects a long-term Au:Ag price ratio of 55 and a Au:Ag recovery ratio of 1.6. Gold-equivalent grades were used for open pit optimizations.

4.

Tonnage and grade measurements are in imperial and metric units. Grades are reported in troy ounces per short ton and in grams per tonne.

See“Cautionary note toregarding U.S. investors concerning proven or probable mineral reserve estimates:investors”This Form 10K uses the terms “proven reserves” and “probable reserves” in accordance with NI 43-101. We advise U.S. investors that the requirementson Page 3 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.this Report.

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

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

2015 Drilling Program and Exploration Potential

GQM LLC completed an infill drill program in 2015. The main objective of the infill drill program was to enhance GQM LLC's understanding of the Northwest Pit and Main Pit Phase 1 mineralization.

Additional geological targets have been identified on the Property. These targets are generally peripheral (east, south(northwest, east, and west)southwest) to the currently defined mineral resource estimates. In the east, twonorthwest, additional zones of quartz stringer veins have been mappedvein mineralization was identified in the hanging wallhanging-wall of the Soledad vein system and the potential for deeper gold-silver mineralization has been postulated based on hydrothermal alteration patterns. To the east, vein mineralization was identified in the hanging-wall of the Karma/Ajax vein system. Toward the south, an extension ofsouthwest, extensions along the Silver Queen vein system is openKarma/Ajax and additional vein splits have been mapped on surface. Also, an extension of the Starlight/Golden Queen vein system appears to be offsetsystems have been identified during an extensive re-logging program by an east-west trending fault. InitialGQM LLC’s geologic team. Historic 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 volcanic host volcanic rocks associated with mineralization on the Property extend further to the south and west 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 continuity of mineralization at depth remains untested.

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2015 Independent Feasibility Study

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 arewere 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.

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Project After-Tax NPV with Changing Metal Prices

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

A report on the 2015 feasibility study entitled “Soledad Mountain Project Technical Report and Updated Feasibility Study” dated February 25, 2015 in the form required by NI 43-101 Technical Report is available on the Company’s website atwww.goldenqueen.com. www.goldenqueen.com.

Feasibility Study Capital and Operating Cost Estimates

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.

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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.

Open Pit Design

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 2014project 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 forbuilt in-line with the feasibility level mine design.study cost estimates. Construction was completed in early 2016.

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.

Dilution and Ore Loss

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.

Open Pit Slope Design

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 55o with an indication that this angle could be safely increased to 63.4o. 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 55o. Norwest used an inter-ramp slope angle of 55o 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 45o 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 40o for this area only.

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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.

Waste Rock Management

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 37o (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 27o (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.

Open Pit Operation

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

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The 2015 Feasibility Study estimated 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.

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The initial mine life is projected to be 12 years. Note that aggregateAggregate sales over a period of thirty years areis important for the Project as this will ensure thatassist GQM LLC can meetin meeting 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.

Mining Equipment

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. SeeSubsequent Events below for further details.

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

EquipmentNumber of units
Wheel Loaders (15 yd3)2
Primary FleetExcavator (16 yd3)1
Trucks (100 tons)11 - 15
DevelopmentExcavator (5 yd3)1
FleetTrucks (40 tons)3
Track-type Dozer (452 hp)1
Track-type Dozer (610 hp)1
Support EquipmentWheeled Dozer (552 hp)1
Primary Blasthole Drill (9.75 in)2
Percussion Drill (3-4 in)1
Grader1
Water Wagon1

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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.

Blasting and Explosives

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.

Site Drainage

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.

Closure and Closing Reclamation

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.

Mineralogy, Process Development and Flow Sheet

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.

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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.

Confirmation HPGR tests were required to provide the following:

•The design parameters to both size the equipment and determine the motor sizes for the HPGR;
•The target particle size distributions for the commercial operation; and
•Information to finalize the flow sheet, e.g. the need to recycle edge material.

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:

•Recoveries are higher with longer leach times and this confirms the historical findings;
•Recoveries increase with a finer crushed product and this effect is especially pronounced for silver; and
•

Recoveries for the HPGR products are consistently higher and extraction rates faster than those obtained from conventional crusher products – the evidence is that this is due to penetration of leach solution into micro-cracks that are created by the high specific press force applied to the ore particles in the HPGR.

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:

•Higher recoveries in the heap leach operation due to micro-cracks in the ore particles;
•Faster gold and silver extraction rates;
•

Stronger agglomerates due to a more favourable overall particle size distribution and this will also impact the percolation rates of solution through the heap;

•Substantially lower capital costs than a conventional crushing - screening plant;
•Manageable dust control with fewer transfer points;
•Lower energy consumption and thus lower operating costs; and
•Exceptional circuit flexibility that will readily permit future upgrades such as a finer HPGR feed size or the recycle of edge product.

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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.

Merrill-Crowe Plant

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.

Construction of the Merrill-Crowe plant is under way.

Assay Laboratory

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 has been designed to meet all State and Federal codes.

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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.

The Heap Leach Pad and the Heap

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 following are the design criteria for the Phase 1 heap leach pad:

•The pad has been designed as a permanent, single-use pad;
•Average density of a density of 100 lb/ft3(1.6 t/m3) is used for determining the capacity of the pad;
•Maximum heap height is 230 ft (70 m);
•Lift height is 33 ft (10 m);
•The angle of repose of the agglomerated ore is 2.0H:1.0V;
•Slopes are 2.5H:1.0V on the north and west sides and 2.0H:1.0V on the south and east side of the heap;
•Nominal capacity of the Phase 1 pad is 51 million tons (46 million tonnes) and
•The Phase 1 heap leach pad will be constructed in four stages.

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.

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Services

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.

Water Supply

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.

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Power Supply

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.

Workshop-Warehouse and Fuel Storage

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.

Project Management and Operating Manpower

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.

Aggregate

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.

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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.

Environmental Issues, Approvals and Permits

Introduction

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

These are:

a.

Conditional Use Permits issued by Kern County (seeCEQA/NEPAheading below);

b.

Authorities to Construct permits issued by the Eastern Kern Air Pollution Control District (seeAuthority to Construct & Permit to Operateheading below; and

c.

Waste Discharge Requirements issued by the Lahontan Regional Water Quality Control Board (seeWater Qualityheading below.

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

General

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.

CEQA/NEPA

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.

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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 Companyannounced 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.

Air Quality

Background Information

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.

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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.

Authority to Construct and Permit to Operate

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.

Meteorological Monitoring Station

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.

Water Quality

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.

Revised Report of Waste Discharge

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.

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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. TheWater Quality Monitoring and Data Management Procedures Manual was updated to reflect the changes.

Closure, Reclamation and Financial Assurance

Closure and reclamation will be donecompleted 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.

The following general principles apply:

•Considerable experience gained in reclamation of other heap leach operations in the California deserts since the mid-1990s shows that reclamation can be completed successfully.
•The Surface Mining and Reclamation Plan will be an active plan with concurrent reclamation on one hand and alternative reclamation concepts to be sought and evaluated during the mine life on the other hand.
•Reclamation will proceed concurrently where feasible, but is nonetheless expected to require two years following ending of all mining and the processing and sale of aggregate and construction materials.
•The site drainage plan will be re-assessed to direct and thus control runoff to minimize erosion.
•Public safety will be a concern to be addressed both while mining is underway and as part of closure.
•Post-closure monitoring will continue until revegetation targets are met with the ultimate goal of establishing a productive and self-staining eco-system.

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The following points will have an impact on closure and reclamation costs:

•The footprint required for Project facilities has been significantly reduced from the earlier concepts.
•A road to the top of Soledad Mountain will remain for access to public facilities and will not be reclaimed.
•Waste rock will be disposed of in mined-out phases of the open pit as part of a comprehensive waste rock management plan.
•GQM LLC is committed to neutralizing, rinsing and then selling the leached residues.
•The size and complexity of the crushing and screening plant has been significantly reduced with fewer structures that have to be dismantled and fewer concrete footings that have to be broken up or buried.

The following two items will require future consideration:

•The workshop, warehouse building, wash slab, security and bulk fuel storage tanks, septic tank, leach field and the parking lot will find an approved, alternative industrial use and may not be dismantled. The sites where these facilities are constructed may not have to be reclaimed.
•Two (or three) groundwater production wells may remain for future industrial or municipal use. The water supply infrastructure may be turned over to the Mojave Public Utility District to become part of the permanent facilities in the area.

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.

Revegetation

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 perdescribed in the detailed revegetation plan that has been prepared by independent consulting engineers.

A summary of the proposed revegetation procedures is given below:

•Two revegetation test plots were prepared and seeded north and south of Soledad Mountain in 2006 and 2007 respectively to demonstrate that seed collected locally can be an effective source of seed;
•Seed is being collected locally and a seed library has been established;
•Seed collected locally will be supplemented by seed contained in growth media that has been stockpiled;
•Surfaces will be prepared to provide textures suitable for desert plants and micro-basins will be created to trap seed and moisture;
•Hand seeding has been found to be effective and aerial (crop duster or helicopter) seeding can be used in areas that are inaccessible by vehicle or foot;
•Seeded areas will not require fertilizer and watering;
•Reclamation of disturbed areas will occur as soon as possible throughout the mine life;
•Control of runoff to minimize erosion will be a key to successful revegetation; and
•Quantifiable goals for density and diversity of perennial species have been proposed.

Financial Assurances

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

•·To the Bureau of Land Management, State of California and Kern County for general reclamation on site;
•·To the State Water Resources Control Board for rinsing and closing reclamation of the leached residues on the heap and
•·“Unforeseen events financial assurance” required by the State Water Resources Control Board to provide for an unforeseen event that could contaminate surface or groundwater.

43


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.

Cleanup on Site

The Company has done extensive cleanup on site since 2006 at a cost of approximately $550,000 and GQM LLC is continuing the cleanupthis 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.

Environmental, Safety and Health Policy

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.

Item 3.Legal Proceedings.

Item 3. Legal Proceedings

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.

26

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

The

On January 31, 2014, the Center for Biological Diversity (“CBD”) filed an Emergency Petitionemergency petition (the “Petition”"Petition") with the United States Fish and Wildlife Service (“USFWS”("USFWS") asking the USFWS to list the MojaveMohave Shoulderband snail as a threatened or endangered underspecies. Citing a report published more than 80 years ago, the Endangered SpeciesActPetition claims that the snail exists in only three places, and that most of the snail habitat occurs on January 31, 2014.Soledad Mountain, where the Company is developing the Project.

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

In reviewing the Petition,

On April 22, 2014, 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 wasis no emergency to justify listing the MojaveMohave Shoulderband snail as threatened or endangered under the Endangered Species Act of 1973, as amended. The USFWS has reviewed the Petitionpetition filed by the CBD and concluded that there was no imminent threat to the snail that would cause them to believe an emergency listing was 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 Project has received all necessary regulatory approvals. The decision by the USFWS indicated that it wouldto proceed with a study does not be able to addressaffect the Petition at this time but might do so in future, subject to funding.Project’s regulatory approvals or prevent the Project from moving forward.

44

Other Legal Matters

During the second quarter of 2014, the

National Labor Relations Board

The Company filed a complaintcharge with the National Labor Relations Board (the

“NLRB” “NLRB”) against the Building and Construction Trades Council of Kern, Inyo, and Mono Counties (the “Union”). on May 23, 2014. The complaintcharge was in response to the action taken by the Union related to a 1997 project labor agreement (the “PLA”)(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. law.

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 withand the matter was heard by Administrative Law Judge (ALJ) John McCarrick in June 2015. In December 2015 ALJ McCarrick issued his Decision finding that the PLA violates Section 8(e) of the National Labor Relations Act and is therefore unenforceable. The Union is in the process of appealing that Decision to the NLRB in the roleWashington, D.C.

Complaint on Alleged Short-swing Trading Profits

We received notice that a complaint was filed on April 22, 2015 in United States District Court, District of prosecutor. In this case the NLRB, Region 31, will be acting as a representativeMassachusetts seeking recovery pursuant Section 16(b) of the NLRB General CounselSecurities and will be prosecuting this unfair labor practice charge againstExchange Act of 1934, as amended (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 Union.

A Field Attorney forCompany (“Clay”), and the NLRB reportedCompany as defendants. The plaintiff alleges that he had his first substantive conversationMr. Clay realized short-swing profits in connection with legal counsel for Building Trades Council on December 4, 2014.transactions in Company securities within a period of six months. 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.

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 attemptsPlaintiff have entered into an agreement to settle this issuethe claims. Under the agreement, the Company will agree to adopt certain changes to its existing Section 16 policies and a likelihoodprocedures and pay legal fees of a settlement at this point was low.$185,000 to Plaintiff’s counsel. A Motion to Dismiss with prejudice the action is expected to be filed on or before March 31, 2016. Clay and the Company have, and continue to, expressly deny that either or both have committed any act or omission giving rise to any liability and/or violation of law.

A hearing

In conjunction with the NLRB originally scheduledJune 2015 Loan, as defined elsewhere herein, the Company agreed to indemnify the Clay Group and their affiliates for February 2,up to $350,000 in legal expenses (not damages) incurred in defense of complaints brought against the lenders and their affiliates by shareholders of the Company under Section 16 of the Exchange Act. The legal fees reimbursed by the Company currently amount to $64,532. Please refer to theTransaction with Related Parties section for further details on the June 2015 has now been set for April 6, 2015.Loan.

27

Item 4.Mine Safety Disclosures.

Item 4. Mine Safety Disclosures

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.

45

28

PART II

Item 5.Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases ofEquity Securities.

Item 5.   Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities

Market and Trading Price

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.

Year ended December 31HighLow
2014Fourth Quarter $1.59 $0.92
 Third Quarter $1.72 $1.15
 Second Quarter $1.98 $1.19
 First Quarter $1.99 $0.80
2013Fourth Quarter $1.20 $0.62
 Third Quarter $1.99 $0.91
 Second Quarter $2.04 $0.75
 First Quarter $2.41 $1.44

Year ended December 31 High  Low 
2015 Fourth Quarter $1.07  $0.67 
  Third Quarter $1.12  $0.65 
  Second Quarter $1.18  $0.75 
  First Quarter $1.68  $1.03 
2014 Fourth Quarter $1.59  $0.92 
  Third Quarter $1.72  $1.15 
  Second Quarter $1.98  $1.19 
  First Quarter $1.99  $0.80 

Exchange Rates

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:

 HighLow
February 2015$1.2641$1.2374
January 2015$1.2711$1.1749
December 2014$1.1656$1.1328
November 2014$1.1440$1.1236
October 2014$1.1306$1.1104
September 2014$1.1200$1.0874

  High  Low 
February 2016 $1.4083  $1.3481 
January 2016 $1.4589  $1.3969 
December 2015 $1.3990  $1.3360 
November 2015 $1.3360  $1.3095 
October 2015 $1.3242  $1.2904 
September 2015 $1.3413  $1.3147 

Exchange rate information (from U.S.$ to Canadian $), based on the closing rates, as at each of the years ended December 31, 20132014 and 20142015 is set out in the table below:

Year Ended December 31
 20132014
Rate at end of Period
Low
High		$1.0636
$0.9838
$1.0704		$1.1601
$1.0639
$1.1656

  Year Ended December 31 
  2014  2015 
Rate at end of Period $1.1601  $1.3840 
Low $1.0639  $1.1728 
High $1.1656  $1.3990 

As of March 16, 2015,30, 2016, there were 225222 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.

46


Year ended December 31HighLow
2014Fourth Quarter$1.42$0.79
 Third Quarter$1.61$1.03
 Second Quarter$1.79$1.07
 First Quarter$1.81$0.75
2013Fourth Quarter$1.17$0.59
 Third Quarter$1.90$0.87
 Second Quarter$2.00$0.74
 First Quarter$2.43$1.42
29

Year ended December 31 High  Low 
2015 Fourth Quarter $0.85  $0.51 
  Third Quarter $0.88  $0.49 
  Second Quarter $0.99  $0.61 
  First Quarter $1.38  $0.85 
2014 Fourth Quarter $1.42  $0.79 
  Third Quarter $1.61  $1.03 
  Second Quarter $1.79  $1.07 
  First Quarter $1.81  $0.75 

Dividends

The Company has not declared dividends on its common shares since inception.

Securities Authorized for Issuance Under Compensation Plans

The following table sets forth information as at December 31, 20142015 respecting the compensation plans under which shares of the Company’s common stock are authorized to be issued.

Plan Category Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(a)		  Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)		  Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
(c)		 
Equity compensation plans approved by security holders  1,070,000  $0.94   6,130,000 
Equity compensation plans not approved by security holders  Nil   Nil   Nil 
Total  1,070,000  $0.94   6,130,000 

Plan Category

Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights

(a)


Weighted-average
exercise price of
outstanding options,
warrants and rights

(b)
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))

(c)
Equity compensation
plans approved by
security holders
750,000

$1.29

6,450,000
Equity compensation
plans not approved by
security holders
Nil

Nil

Nil
Total750,000--6,450,000
30

47

Performance Graph

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.



December
31, 2010		December
31, 2011		December
31, 2012		December
31, 2013		December
31, 2014
Company100101803037
S&P/TSX Global Gold Index
(TITTGD)		100
86
72
37
35

 

  December 31,
2011		  December 31,
2012		  December 31,
2013		  December 31,
2014		  December 31,
2015		 
Company  100     79     29     36     25   
S&P/TSX Global Gold Index (TITTGD)  100     84     42     40     36   

Purchases of Equity Securities by the Company and Affiliated Purchasers

Neither the Company nor an affiliated purchaser of the Company purchased common shares of the Company in the year ended December 31, 2014.2015.

Item 6.Selected Financial Data.

Item 6. Selected Financial Data

The following table summarizes certain selected consolidated financial data of the Company and should be read in conjunction withItem 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.

31

Results for the five most recent years are set out in the table below.

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 equivalents91,407,6445,030,5224,031,4037,922,2556,967,465
Total assets129,615,45015,791,7436,567,0698,692,8667,655,343
Total long term liabilities1,314,4358,028,8573,998,0094,779,71410,583,313
Redeemable portion of NCI22,833,645----
Stockholders' equity (deficiency),
attributable to common
shareholders		44,654,7096,240,9322,413,7803,631,916(3,327,592)
Non-controlling interest34,250,468----

48


Results for the year ended on: 

December 31,

2015

  

December 31,

2014

(Restated)

  

December 31,

2013

  December 31, 2012  December 31, 2011 
Item $  $  $  $  $ 
Revenues -  -  -  -  - 
Net income (loss) and comprehensive income (loss)  (5,461,205)*  (8,469,204)*  1,978,014   (1,270,988)  (3,230,641)
Basic income (loss) per share  (0.05)  (0.09)  0.02   (0.01)  (0.03)
Diluted income (loss) per share  (0.05)  (0.09)  (0.01)  (0.01)  (0.03)
Cash  37,587,311   91,407,644   5,030,522   4,031,403   7,922,255 
Total assets  169,444,179   129,517,335   15,791,743   6,567,069   8,692,866 
Total long term liabilities  27,330,560   14,236,435   8,028,857   3,998,009   4,779,714 
Redeemable portion of NCI  27,123,741   22,833,645   -   -   - 
Stockholders' equity (deficiency), attributable to common shareholders  26,581,933   31,732,709   6,240,932   2,413,780   3,631,916 
Non-controlling interest  40,685,611   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)(vii) of the audited consolidated financial statements.

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operation.

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, 20142015 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, 2014.2015.

The Company had no revenue from operations.operations for the year ended December 31, 2015.

The Company incurred general and administrative expenses of $4,984,750$4,615,532 during the year ended December 31, 2014 (20132015 (2014 - $2,532,279; 2012$4,984,750; 2013 - $466,996)$2,532,279). General and administrative costs were significantly higherslightly lower when compared with 2013.2014.

The following significant general and administrative expenses were incurred during the year with a comparison to expenses in 20132014 and 2012:2013:

•·$570,078 (20131,566,224 (2014 - $274,935; 2012$1,148,626; 2013 - $182,153)$202,848) for accounting, taxation and auditing fees during the year.corporate salary. 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 asdue to an increase in administrative staff in Mojave in 2015.

·$851,731 (2014 - $1,278,374; 2013 - $421,616) in legal fees. The legal fees for the Company’s overall accounting and Sarbanes Oxley (“SOX”) costs. Withfiscal year ended 2014 were significantly higher than in fiscal year 2015 due to 2014 specific matters such as 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 toProject Financing - Joint VentureTransactionabove).
•$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 toThe Center for Biodiversity Petition to List the MojaveShoulderband Snail as an Endangered Speciesabove). In addition, there

·$461,879 (2014 - $122,004; 2013 - $58,507) for insurance expenses. The insurance expenses increase is related to the general increase in corporate, site activities and the acquisition of more mining equipment and vehicles as the Company moves towards production. Enhanced insurance coverage is required for its mining equipment, vehicles and infrastructure.

·$414,327 (2014 - $570,078; 2013 - $274,935) for accounting, taxation and auditing fees during the year. The accounting fees for the fiscal year ended December 31, 2014 were significant legalhigher than in fiscal year 2015 due to the fees related to the Joint Venture Transaction that were incurred mostlycompleted in the third quarter of 2014 (refer toProjectFinancing - Joint Venture Transactionabove).2014.

49


•$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.
 32 

•·$743,216 (2013256,171 (2014 - $285,177; 2012$743,216; 2013 - $Nil)$285,177 for corporate expenses. The increase iscorporate expenses for the fiscal year 2014 were higher than in fiscal year 2015 due to the costs associated with the Company’s financing activities and a general increase in overall corporate activity. Additional fees hadrelated to be paid in connection with the Joint Venture Transaction (refer toProject Financingcompleted in 2014.

·$208,121 (2014 - Joint VentureTransactionabove).$Nil; 2013 - $Nil) for site support costs. 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 asincurred outside services 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 thatconstruction which were not previously. The significant increaseincurred in the office expenses as compared toprior years.

·$159,001 (2014 - $233,672; 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)$475,263) for stock based compensation. The Company granted 570,000 stock options in 2015 as compared with no stock options granted in 2014. The Company granted 800,000 stock options in 2013 as compared with no stock options grantedand a significant portion was expensed 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.vesting terms.

•·$128,402 (2013149,925 (2014 - $Nil; 2012$29,878; 2013 - $Nil) for repairsoperating supplies. The Company purchased operating supplies, such as first aid and maintenance. The repairs and maintenance expenses are related to work done on the Company-owned houses locatedsafety supplies, which were not incurred in Mojave, as well as work done on the Mojave office. There were no repairs and maintenance items that should have been capitalized.prior years.

The Company incurred explorationexperienced a net foreign exchange gain of $774,471 for the year ended December 31, 2015, as compared to a net foreign exchange gain of $497,155 for the year ending 2014. The net foreign exchange gain is made up by realized and unrealized gains and losses related to the Company’s convertible debentures, Canadian expenditures and the Canadian balances of $Nil duringcash and accounts payable. The net foreign exchange gain was mainly the year-endedresult of the gain realized on the convertible debentures, which were denominated in Canadian dollars while the Company’s functional currency is the US dollar. The exchange rate, stated in Canadian dollars per one US dollar, moved from $1.16 as of December 31, 2014 (2013 - $Nil; 2012 - $1,567,894). Theto $1.38 on December 31, 2015.

For the year ended December 31, 2015, the Company was developingincurred a total interest expense of $4,507,268 related to its various loans and its convertible debentures as compared to a total interest expense of $1,493,034 for the Project in preparation for production during the fiscal 2014 year and as such had no exploration expenditures inending 2014. The Company has been capitalizing all cost directlyincrease was mainly due to the amortization of the discounts and the interest payable related to the Project since it moved outconvertible debentures, the December 2014 Loan and the June 2015 Loan. Please refer to theTransaction with Related Parties section for a complete breakdown of the exploration stageinterest expenses as there was a portion of the interest capitalized to mineral property interests.

The amount of the Company’s derivative liability includes the convertible debentures issued in 2013 and the third quarter of 2012.

warrants issued in conjunction with the June 2015 Loan. The Company recorded a changedecrease in fair value of athe derivative liability including foreign exchange of $3,334,224 as a result of a decrease in the Company’s share price during the year ended 2015 as compared to a decrease of $1,004,217 (2013 - $5,385,660; 2012 - $1,030,431).for fiscal 2014. The convertible debenture was repaid in July 2015 and therefore there is no related derivative liability for the fiscal year 2014 is the resultas 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, theDecember 31, 2015. These 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 ischanges are a non-cash item and waswere recorded in accordance with accounting pronouncement ASC 850-40-15. Refer to NotesNote 8 Convertible Debenture and 10 Derivative Liability - Options and Warrants of the Consolidated Financial Statementsaudited consolidated annual 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 toProject Financing - Joint Venture Transactionabove).

50

Interest income of $126,884 (2013$204,149 (2014 - $15,181; 2012 - $51,174)$126,884) was significantly higher thanduring the year ended December 31, 2015 as compared with the same period in 2013 and in 20122014 due to the fact that the Company’shigher cash balance was significantly higher. The majority of the interest income camebalances held 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. Interest rates remained low during 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$5,461,205* ($0.05 loss per basic share) during 2012. The Company incurred higher generalthe year ended December 31, 2015 as compared to net and administrative costs incomprehensive loss of $8,469,204* ($0.09 loss per basic share) during the year ended December 31, 2014. As explained below the difference between 2015 and 2014 is mainly due to increased activity both on site and at the corporate level. The Company also incurreda 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 borrowingdecrease in 2014 as explained inLiquidity and Capital Resources section below. Finally, the Company’s gain on the change in fair value of the derivative liability was much lower in 20142015 and reduced transaction and financing fees in 2015 when 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 than2014. These were partially offset by greater interest expenses in 2015.

* Net income (loss) for the decrease inperiod attributable to the value of the Canadian dollar, C$1.16 at December 31, 2014 (2013 - C$1.06) as compared with U.S. dollar.Company.

33

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, 2014Sept. 30, 2014June 30, 2014March 31, 2014
Item$$$$
RevenueNilNilNilNil
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)

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Results for the quarter
ended on:		Dec. 31, 2013Sept. 30, 2013June 30, 2013March 31, 2013
Item$$$$
RevenueNilNilNilNil
Net income (loss) for the
quarter		1,221,564(637,744)1,226,780167,304
Basic net income (loss) per
share		0.02(0.01)0.010.00
Diluted net income (loss) per
share		(0.01)(0.01)(0.00)(0.00)
Results for the quarter ended on: December 31,
2015		  September 30,
2015		  June 30, 2015  March 31, 2015 
Item $  $  $  $ 
Revenue  Nil   Nil   Nil   Nil 
Net income (loss) for the quarter  (721,587)*  (1,924,167)*  (1,379,265)*  (1,436,186)*
Basic net income (loss) per share  (0.01)  (0.02)  (0.01)  (0.01)
Diluted net income (loss) per share  (0.01)  (0.02)  (0.01)  (0.01)

Results for the quarter ended on: December 31,
2014		  September 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)

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

For the quarters illustrated in the above table, the main reasonreasons for the significant fluctuations in the net income (loss) has been the result ofbetween periods are the fluctuations in the Company’s derivative liabilities, interest expenses and the costs related to the Joint Venture Transaction. The Company’s derivative liabilities are a function of the Company’s stock price against the instruments strike price and the exchange rate between the Canadian dollar and the US dollar. As the stock price rises, the derivative liabilities increase resulting in the Company recognizing losses. When the stock price decreases, the Company recognizes gains. 

For fiscal 2015, the Company experienced a loss related to its derivative liabilities in the amount of $101,749 (2014 – Loss of $5,747,376) in the first quarter whereas it recorded a gain of $2,568,849 (2014 – Gain of $1,634,681) during the second quarter. The second quarter gain was however off-set by higher interest expenses and a one-time financing fee of $1,500,000 paid in connection with the June 2015 Loan. In the third quarter of 2015, the Company experienced a loss of $598,770 (2014 – Gain of $2,861,314) related to the derivative liabilities. Adding to the losses for the three months ended September 30, 2015 was the interest expense and amortization of the discount on the June 2015 loan and the convertible debenture and the interest expense related to the Komatsu loans. In the fourth quarter of 2015, the Company experienced a gain of $1,465,895 (2014 – Gain of $2,255,598) related to the derivative liabilities. This gain was partially off-set by interest expense and amortization of the discount on the June 2015 loan and the interest expense related to the Komatsu loans.

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)–$1,672,861), $2,861,314 (2013 – Gain of $475,862)–$475,862) and $2,255,598 (2013 – Gain of $2,624,988)–$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 in 2014 a commitment fee of $2,250,000 (2013 - $Nil) and a joint venture transactionJoint Venture Transaction fee of $2,750,000$2,275,000 (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 priorearlier quarters or to be incurred in future quarters.

34

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

Reclamation Financial Assurance

The Company has provided reclamation financial assuranceis required to provide the Bureau of Land Management, the State Office of Mine Reclamation and Kern County totaling $553,329 (2013 - $478,742). This deposit earns interest at 0.1% per annum andwith a revised reclamation cost estimate annually. The financial assurance is not availableadjusted once the cost estimate is approved. The Company’s provision for working capital purposes. The increase in the deposit was to ensure the amountreclamation 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 of reclamation financial assurance. The reclamation assurance coversprovided as at December 31, 2015 was $624,142 (December 31, 2014 - $553,329).

In addition to the above, the Company is required to obtain and maintain financial assurance for initiating and completing corrective action and remediation of a reasonably foreseeable release from the Project’s waste management units as required by the Lahontan Regional Water Quality Control Board (the “Regional Board”). The reclamation financial assurance estimate for 2015 is $278,240 (December 31, 2014 - $Nil).

Subsequent to year-end, the Company received approval to have the financial assurance amounts released and have the assurance replaced with surety bond agreements to cover the financial assurance. The Company pays a yearly premium.

Asset Retirement Obligation

The total asset retirement obligation from the previous year.as of December 31, 2015 is $978,453 (December 31, 2014 - $624,142).

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. AsDuring the Company is moving towards productionyear ended December 31, 2015, there was an increase of $354,311 to the retirement obligations as compared with the year ended December 31, 2014, where $71,892 was capitalized to property, plant, equipment and capitalizing its development costs, $71,892 (2013 - $76,312) was capitalizedmineral interests as the asset portion of the retirement obligation for the year endedobligation. As at December 31, 2014. The total asset retirement obligation2015, as the mine nears production, the Company estimates the cash outflow related to these reclamation activities will be incurred in 2028. Reclamation provisions are measured at the expected value of December 31, 2014 is $624,142 (2013 - $552,250). Priorfuture cash flows discounted to 2013, the asset retirement obligation was expensed.their present value using a credit adjusted risk-free interest rate.

Property Rent Payments

The Company has acquired a number of mineral properties outright. It has acquired exclusive rights to explore, develop and mine other portions of the Project under various mining lease agreements with landowners.

The Company is required to make property rent payments related to its mining lease agreements with landholders, in the form of advance minimum royalties. The total property rent payments for the year ended December 31, 20142015 were $183,950 of which $24,480 was related to common shares issued (2013$134,417 (2014 - $161,190 of which $22,568 related to common shares issued; 2012 - $204,792)$67,513), and the Company expects GQM LLCis expected to pay approximately $150,000make approximate payments of $2,500 in 2015. Beginning in July of 2012,2016 to various landowners under the Company moved from the exploration stageexisting lease agreements. The significant reduction is due to the development stageexpected commencement of production. At that point, production royalties will commence.

There are multiple third party landholders and as a result, began capitalizing the costs relatedroyalty amount due to each landholder over the rental payments which are required in order to move aheadlife of the Project varies with the Project. As of December 31, 2014, $486,766 paid in property rental payments was capitalized to mineral properties.each property.

52

Mine Development Commitments and Contractual Obligations

As of December 31, 2015, GQM LLC has entered into contracts for construction totaling approximately $36.9$47.6 million as of December 31, 2014, of which $5.8$4.4 million had been paid as of December 31, 2014.remains to be paid. The major commitments relate to the construction of the heap leach pad for $8.3 million,crushing-screening plant, the construction of the conveying &and stacking system for $8.2 million and work related to the Merrill-Crowe plant equipment for $7.1 million.equipment. The commitments are expected to be paid out in 2015. In addition,early 2016. 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 weredid 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 inmake material additional construction commitments subsequent to December 31, 2014, including $18.1 million2015.

35

See Note 12 of audited consolidated annual financial statements for further details on the crushing-screening plant construction.mining equipment loans. Please refer toSubsequent Events below for additional commitments entered into by the Company subsequent to December 31, 2015.

GQM LLC’s contractual obligations as of December 31, 20142015 are shown in the table below:

 Payments Due
Contractual Obligations*TotalLess than 1
year		1-3 years3-5 yearsMore 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

GQM LLC Payments Due by Period 
Contractual Obligations Total  Less than 1
year		  1-3 years  3-5 years  More than
5 years		 
Debt obligations (mostly mobile mining equipment financing) $18,372,823  $4,942,716  $10,374,912  $3,055,195   - 
Capital lease obligations  -   -   -   -   - 
Operating lease obligations  -   -   -   -   - 
Purchase obligations (see above) $4,428,583  $4,428,583   -   -   - 
Asset retirement obligations
(Face value)		 $2,297,332   -   -   -  $2,297,332 
Other long-term liabilities  -   -   -   -   - 
Total $25,098,738  $9,371,299  $10,374,912  $3,055,195  $2,297,332 

*Obligations

GQM LTD’s contractual obligations as of December 31, 2015 are shown in the 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 thebelow:

GQM LTD Payments Due by Period 
Contractual Obligations Total  Less than 1
year		  1-3 years  3-5 years  More than
5 years		 
Interest payable - June 2015 Clay loan $969,645  $969,645         -         -           - 
2015 June Clay Loan (Face value) $38,681,507  $38,681,507   -   -   - 
Other long-term liabilities  -   -   -   -   - 
Total $39,651,152  $39,651,152   -   -   - 

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 Company 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. 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 the expiry date of the vested portion of a stock optionsoption will terminate onbe the earlier of the expiry ofdate so fixed by the termBoard at the time the stock option is awarded and (i) 12 months from the early termination date an option holder dies, (ii) 12 months from the date from(the “Early Termination Date”). The Early Termination Date will be the date the vested portion of a stock option expires following the option holder ceasesceasing to act asbe a director, employee or officerconsultant, as determined by the Board at the time of grant, or in the Company, or (iii) 12 months fromabsence thereof at any time prior to the datetime the option holder ceases to be employed,a director, employee or engaged as a consultant, byin accordance with and subject to the Company.provisions of the Plan. 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.

36

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 arewere exercisable at a price of $1.22 per share for a period of 5 years from the date of grant. The options expired unexercised on April 19, 2015.

53

During the quarter endedOn June 30,3, 2013, the Company granted 300,000 options to an officer of the Company, on June 3, 2013.Company. 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 ofoptions expired unexercised on 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

On September 30,18, 2013 the Company granted 300,000 options to Ms. Andrée St-Germain, the Company’s new Chief Financial Officer, on September 18, 2013.Officer. 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.

The Company granted the aggregate amount of 430,000 options on September 8, 2015 to the Company’s directors. The options are exercisable at a price of $0.58 for a period of five years from the date of grant and vest immediately. At the same time, the Company granted 140,000 options to Ms. Andrée St-Germain at an exercise price of $0.58. The amount of 46,666 options vest immediately, 46,667 options vest 12 months from the grant date, and a further 46,667 options vest 24 months from the grant date. The Company recorded stock-based compensation of $159,001 during the year ended December 31, 2015 related to the issuance of the stock options.

A total of 1,070,000 (976,667 exercisable) (December 31, 2014 – 750,000 (2013 – 1,380,000)outstanding and exercisable) common shares were issuable pursuant to such stock options as at December 31, 2014.2015.

Transactions with Related Parties

Consulting Fees

For the year ended December 31, 2014,2015, the Company paid $163,465 (2013$201,312 (2014 – 163,465; 2013 - $192,431; 2012 - $138,885)$192,431) to Mr. H. L.Lutz Klingmann for services as President of the Company of which $Nil (2013(2014 - $47,967; 2012 - $26,977 )$Nil; 2013 – 47,467) is payable as at December 31, 2014; paid $Nil (20132015. Included in the consulting fees for the year ended December 31, 2015 was $151,428 (2014 - $17,622; 2012$Nil; 2013 - $26,977$Nil) related to 150,000 bonus shares issued in accordance with Mr. Chester Shynkaryk, a former director, for his consulting servicesKlingmann’s management agreement (Refer to the Company; paid $Nil (2013 - $21,987; 2012 - $29,930), to Mr. Ross McDonald for his services as the former CFONote 7 – Commitments and Contingencies of the Company; paid $Nil (2013 - $11,759; 2012 - $Nil) to a company controlled by oneaudited consolidated financial statements). On May 1, 2015 Mr. Klingmann became an employee of the directors for consulting services duringCompany and his salary, since that date, is included under corporate salary expenses. Included in salaries expense is the year.severance payments received upon resignation.

During the year ended December 31, 2014,2015, the Company paid a total of $150,199 (2013$107,327 (2014 - $35,484; 2012$150,199; 2013 – $10,068)$35,484) 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 totalconsisting 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.

37

Convertible Debentures

On July 26, 2013, the Company entered into agreements to issue convertible debentures for aggregate proceeds of C$10,000,000 ($9,710,603)., from a significant shareholder group. The convertible notes aredebentures were unsecured and bearbore interest at 2% per annum, calculated on the outstanding principal balance, payable annually. The principal amounts of the notes arewere 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. The Company agreed to pay the legal fees incurred by the lenders relating to this instrument which amounted to $10,049. In July 2014, Mr. Clay transferred a portion of his convertible debenture such that C$5,767,602 is now held by the investment vehicle managed by Mr. Clay and C$1,732,398 is held by Landon Clay.

54

The conversion feature of the convertible debentures meetsmet the definition of a derivative liability instrument because the conversion feature is denominated in a currency other than the Company’s functional currency and thereforeas well as the fact the exercise price is not a fixed price as described above. Therefore, the conversion feature does not meet the “fixed-for-fixed” criteria outlined in ASC 815-40-15.

As a result, the conversion feature of the notes iswas 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 inceptionJuly 24, 2015, the Company repaid its C$10.0 million ($7.7 million) convertible debenture and accrued interest of the debentures, theC$200,000 ($153,500).

The fair value of the derivative liability related to the conversion feature was $5,741,520 and as at December 31, 2014, was $1,829,7702015 is $Nil (December 31, 20132014 - $2,833,987)$1,829,770). TheDuring 2015 and 2014 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% 

  2015 2014
Risk-free interest rate 0.49% - 0.50% 1.00% - 1.09%
Expected life of derivative liability 0.07 - 0.32 years 0.57 - 1.32 years
Expected volatility 49.36% - 77.00% 73.03% - 98.21%
Dividend rate 0.00% 0.00%

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

  December 31, 2015  December 31, 2014 
       
Balance, beginning of the period $1,829,770  $2,833,987 
Change in fair value of derivative liability including foreign exchange  (1,829,770)  (1,004,217)
Balance, end of the period $-  $1,829,770 

  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 
38

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 

  December 31, 2015  December 31, 2014 
Balance, beginning of the period $6,649,967  $4,642,620 
Amortization of discount  1,852,754   2,510,611 
Foreign exchange  (827,721)  (503,264)
Repayment of convertible debenture  (7,675,000)  - 
Balance, end of the period $-  $6,649,967 

During the year ended December 31, 2014,2015, 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$94,907 (2014 - $76,699)$181,479) based on the 2% per annum stated interest rate for a total amortization of discount and interest expense of $2,692,090$1,947,661 for the year ended December 31, 2014 (2013- $888,026)2015 (2014- $2,692,090). Interest payable relating to the convertible debenture as at December 31, 2015 was $Nil (December 31, 2014 was $70,721 (2013 - $76,699)$70,721).

Notes Payable

On January 1, 2014, the Company entered into an agreement to secure a $10,000,000 loan (the “January 2014 Loan”). The January 2014 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 2014 Loan had a twelve-month term and an annual interest rate of 5%, payable on the maturity date.

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The January 2014 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 2014 Loan iswas 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,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 in interest expense and $500,000 in additional charge duringrelated to the year.January 2014 Loan.

On December 31, 2014 the Company also entered into a new loan (the “December 2014 Loan”) with the same parties for an amount of $12,500,000. ThenThe December 2014 Loan iswas due on demand on July 1, 2015 and bearsbore an annual interest rate of 10% payable at the end of each quarter. The loan iswas 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 closingfinancing fee to secure the December Loanloan 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 also agreed to provide the lenders with the option for certain registration rights whereby the Company would bear the costs and responsibility of registering the lenders common shares for the purposes of disposition subsequent to July 1, 2015. The Company has determined it is unlikely the registration option would be exercised and therefore has not accrued any potential costs related to the registration of the common shares. The Company has presented these transaction costs as a contra liability as substantially all of these costs were paid to the lenders.

On June 8, 2015, the Company amended the December 2014 Loan to extend the maturity to December 8, 2016 and increased the principal amount from $12,500,000 to $37,500,000 (the “June 2015 Loan”). The Company also issued 10,000,000 common share purchase warrants exercisable for a period of five years expiring June 8, 2020. The common share purchase warrants have an exercise price of $0.95. All other terms remained the same as the December 2014 Loan. The Company also incurred a financing fee to secure the loan in the amount of $1,500,000, all of which was paid on June 8, 2015. The Company agreed to pay the legal fees incurred by the lenders relating to this instrument which amounted to $46,408. The legal fees were expensed as the transaction met the definition of a debt extinguishment. The terms of the registration rights remains unchanged as does the Company’s assessment of the likelihood of the registration rights being exercised. As such, as of December 31, 2015, no accrual has been made for the potential costs related to the registration rights.

 December 31, 2014
Balance, beginning of the year$ -
Proceeds from loans22,500,000
Repayment of loans(7,500,000)
Capitalized closing fee and legal fees(1,118,695)
Balance, end of the year$ 13,881,30539 

  December 31, 2015  December 31, 2014 
Balance, beginning of the period $13,881,305  $- 
Fair value at inception, notes payable  33,497,277   22,500,000 
Repayment of loans  (2,500,000)  (7,500,000)
Accretion of financing and legal fees  967,156   - 
Accretion of discount on the June 2015 Loan  1,374,228   - 
Extinguishment of the December 2014 Loan  (12,500,000)  - 
Loss on extinguishment of debt  151,539   - 
Interest payable transferred to principal balance of the June 2015 Loan  1,181,507   - 
Capitalized financing fee and legal fees  -   (1,118,695)
Balance, end of the period  36,053,012  $13,881,305 

Interest payable relating to the June 2015 Loan as at December 31, 2015 was $969,645 (December 31, 2014 - $250,000 – of which $125,000 was interest expense and $125,000 related to the additional charge for the January 2014 Loan).

Share Purchase Warrants

On June 8, 2015 the Company issued 10,000,000 share purchase warrants to the Clay family in connection with the June 2015 Loan. The share purchase warrants are exercisable until June 8, 2020 at an exercise price of $0.95. Included in the June 2015 Loan agreement was an anti-dilution provision. If the Company were to complete a financing at a share price lower than the exercise price of the share purchase warrants, the exercise price of the share purchase warrants would be adjusted to match the price at which the financing was completed.

The share purchase warrants meet the definition of a derivative liability instrument as the exercise price is not a fixed price as described above. Therefore, the settlement feature does not meet the “fixed-for-fixed” criteria outlined in ASC 815-40-15.

The fair value of the derivative liability related to the share purchase warrants as at December 31, 2015 is $2,498,269 (December 31, 2014 - $Nil). The derivative liability was calculated using an acceptable option pricing valuation model with the following assumptions:

  2015 2014
Risk-free interest rate 0.73% - 1.02% -
Expected life of derivative liability 4.44 - 5 years -
Expected volatility 72.29% - 76.11% -
Dividend rate 0.00% -

The change in the derivative share purchase warrants is as follows:

  December 31, 2015  December 31, 2014 
Balance, beginning of the period $-  $- 
Fair value at inception  4,002,723   - 
Change in fair value  (1,504,454)  - 
Balance, end of the period $2,498,269  $- 

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Advance

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

(theadvance agreement (the “Advance”) with Leucadia and Auvergne (together(collectively, the “Lenders”), with the Company as guarantor. Leucadia provided $6,500,000 of the loan and Auvergne provided $3,500,000 of the Advance respectively.$3,500,000. 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 transactionJoint 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.$10,000,000 bridge loan advanced by the Lenders in July 2014. GQM LLC paid $209,607 in interest payment, including $73,362$73,632 paid to Auvergne on the July 2014 Advance, of which $45,264 was capitalized to mineral property interests.

Amortization of Discounts and Interest Expense

The following table summarizes the amortization of discounts and interest on loans and convertible debentures:

.

  Year Ended 
December 31,
2015		  Year Ended
December 31,
2014		  Year Ended
December 31,
2013		 
Interest expense related to the convertible debentures $94,907  $181,479  $- 
Interest expense related to the January 2014 Loan  -   1,000,000   - 
Interest expense related to the December 2014 Loan  547,945   -   - 
Interest expense related to the June 2015 Loan  2,151,152   -   - 
Interest expense related to Komatsu Financial loans  281,958   3,352   - 
Accretion of debt discount on the convertible debentures  1,852,754   2,510,611   888,026 
Interest in Gauss advance  -   209,607     
Accretion of the December 2014 Loan financing fees  967,155   -     
Accretion of the June 2015 Loan discount  1,374,228   -     
Accretion of discount and interest on loan and convertible debentures $7,270,099  $3,905,049  $888,026 

The Company’s loans were contracted to fund significant development costs. The Company capitalizes a portion of the interest expense as it related to funds borrowed to complete development activities at the Project site.

  Year Ended
December 31, 2015		  Year Ended 
December 31, 2014		  Year Ended
December 31, 2013		 
Accretion of discounts and interest on loan, advance and convertible debenture $7,270,099  $3,905,049  $888,026 
Less: Interest costs capitalized  (2,762,831)  (2,412,015)  - 
Accretion of discounts and interest expensed $4,507,268  $1,493,034  $888,026 

Joint Venture Transaction

The

On September 15, 2014, the Company closed the Joint Venture Transaction with Leucadia and Auvergne on September 15 (seeProject Financing -Gauss resulting in both parties owning a 50% interest in the Project. Pursuant to the Joint Venture Transaction, Golden Queen converted its wholly-owned subsidiary GQM Inc., the entity developing the Project, into a California limited liability company named GQM LLC. On closing of the transaction, Gauss acquired 50% of GQM LLC by investing $110 million cash in exchange for newly issued membership units of GQM LLC. GQ Holdings, a newly incorporated subsidiary of the Company, holds the other 50% of GQM LLC.

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Gauss is a funding vehicle owned by entities controlled by Leucadia National Corporation (NYSE: LUK) (“Leucadia”) and certain members of the Clay family, a shareholder group which collectively owned approximately 27% of the issued and outstanding shares of Golden Queen (the “Clay Group”) at the time of the transaction. Gauss is owned 70.51% by Gauss Holdings LLC (“Gauss Holdings”, Leucadia’s investment entity) and 29.49% by Auvergne LLC (“Auvergne”, the Clay Group’s investment entity). Pursuant to the transaction, Leucadia was paid a transaction fee of $2,000,000 and $275,000 was paid to Auvergne through GQM LLC in 2014. The Company has adopted an accounting policy of expensing these transaction costs.

Variable Interest Entity

In accordance with ASC 810-10-30, the Company has determined that GQM LLC meets the definition of a VIE and that the Company is part of a related party group that, in its entirety, would meet the definition of a primary beneficiary.   Although no individual variable interest holder individually meets the definition of a primary beneficiary in the absence of the related party group, Golden Queen has determined it is considered the member of the related party group most closely associated with GQM LLC.  As a result, the Company has consolidated 100% of the accounts of GQM LLC in these consolidated financial statements, while presenting a non-controlling interest portion representing the 50% interest of Gauss in GQM LLC on its balance sheet.  A portion of the non-controlling interest has been presented as temporary equity on the Company’s balance sheet representing the initial value of the non-controlling interest that could potentially be redeemable by Gauss in the future. The net assets of GQM LLC as of December 31, 2015 and December 31, 2014 are as follows:

  December 31, 2015  December 31, 2014 
Assets, GQM LLC $158,209,916  $118,937,371 
Liabilities, GQM LLC  (22,591,211)  (4,769,144)
Net assets, GQM LLC $135,618,705  $114,168,227 

Included in the assets above, is $31,531,853 (December 31, 2014 - $83,282,403) in cash held as at December 31, 2015. The cash in GQM LLC is directed specifically to fund capital expenditures required to take the Project to production and settle GQM LLC’s obligations. The liabilities of GQM LLC do not have recourse to the general credit of the primary beneficiary except in one situation. Please refer to Note 8(vi)12 of the audited consolidated annual financial statements for more details)details on the exception.

Non-Controlling Interest

In accordance with ASC 810, the Company has presented Gauss’ ownership in GQM LLC as a non-controlling interest amount on the balance sheet within the equity section. However, the Amended and Restated Limited Liability Company Agreement (“LLC Agreement”) contains terms within Section 12.5 that provides for the exit from the investment in GQM LLC for an initial member whose interest in GQM LLC becomes less than 20%. AuvergneThe following is a summary of the terms of the clause:

Pursuant to Section 12.5, if a member becomes less than a 20% interest holder, its remaining unit interest will (ultimately) be terminated through one of three events at the non-diluted member’s option within 60 days of the diluted member’s interest dropping below 20% (the “triggering event”):

a.Through conversion to a net smelter royalty (“NSR”) (in which case the conversion ratio is based on a pro rata percentage, determined on a linear basis, based on the following: 0-20% membership interest translates to 0-5% NSR) obligation of GQM LLC;

b.Through a buy-out (at fair value) by the non-diluted member; or

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c.Through a sale process by which the diluted member’s interest is sold

·If such sale process does not result in a binding offer acceptable to the non-diluted member within six months after the election by the non-diluted member, the sale process terminates and the non-diluted member has 15 days to choose between (a) and (b).

If the non-diluted member does not make an election pursuant to the above within 60 days, the diluted member may choose (a) or (b) above. If no election is made by the diluted member, option (a) is deemed to have been elected.

This clause in the Joint Venture Transaction constitutes contingent redeemable equity as outlined in Accounting Series Release No. 268 (“ASR 268”) and has been classified as temporary equity.

On initial recognition the amount of the temporary equity is calculated using the guidance that specifies that the initial measurement of redeemable instruments should be the carrying value. The amount allocated to temporary equity and the permanent equity on initial recognition is shown below. Temporary equity represents the amount of redeemable equity within Gauss’ ownership interest in the net assets of GQM LLC. The remaining 60% of their interest is considered permanent equity as it is not redeemable.

  September 15, 2014 
Net assets, GQM LLC before Joint Venture Transaction $16,973,184 
Investment by Gauss  110,000,000 
Net assets, GQM LLC after Joint Venture Transaction  126,973,184 
Gauss’ ownership percentage  50%
Net assets of GQM LLC attributable to Gauss $63,486,592 
     
Allocation of non-controlling interest between permanent equity and temporary equity:    
Permanent non-controlling interest (60% of total non-controlling interest) $38,091,955 
Temporary non-controlling interest (40% of total non-controlling interest) $25,394,637 

Subsequent to the initial transaction, the carrying value of the non-controlling interest will be adjusted for net income and loss, distributions and contributions pursuant to ASC 810-10 based on the same percentage allocation used to calculate the initial book value of temporary equity.

  December 31, 2015  December 31, 2014 
Net and comprehensive loss in GQM LLC $(3,549,522) $(2,804,957)
Non-controlling interest percentage  50%  50%
Net and comprehensive loss attributable to non-controlling interest  (1,774,761)  (1,402,479)
Net and comprehensive loss attributable to permanent non-controlling interest $(1,064,857) $(841,487)
Net and comprehensive loss attributable to temporary non-controlling  interest $(709,904) $(560,992)

  Permanent Non-
Controlling Interest		  Temporary Non-
Controlling Interest		 
Carrying value of non-controlling interest, September 15, 2014 $38,091,955  $25,394,637 
Distributions to non-controlling interest  (3,000,000)  (2,000,000)
Net and comprehensive loss for the period  (841,487)  (560,992)
Carrying value of non-controlling interest , December 31, 2014 $34,250,468  $22,833,645 

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  Permanent Non-
Controlling Interest		  Temporary Non-
Controlling Interest		 
Carrying value of non-controlling interest, December 31, 2014 $34,250,468  $22,833,645 
Capital contribution  7,500,000   5,000,000 
Net and comprehensive loss for the period  (1,064,857)  (709,904)
Carrying value of non-controlling interest , December 31 2015 $40,685,611  $27,123,741 

Dilution of Interest in Subsidiary

As a result of the Joint Venture Transaction, the Company’s interest in GQM LLC was diluted from 100% to 50% and ordinarily, the Company would recognize a gain on dilution with the book value of the investment in GQM LLC increasing. However, since the transaction was with a related party and the Company retained control, the excess has not been recognized in net income but rather has been recorded in equity as an increase to APIC based on guidance provided in ASC 810-10-55-4D and -4E.

  September 15, 2014 
Investment by Gauss $110,000,000 
Less:    
Initial carrying value of permanent equity  (38,091,955)
Initial carrying value of temporary equity  (25,394,637)

Deferred tax liability resulting from dilution gain

  

(12,922,000

)
Effect of dilution of subsidiary recorded to APIC $33,591,408 

The deferred tax liability resulted from the increase in the book value over tax value of the investment in GQM LLC. Please refer to Notes 4 and 15 of the audited consolidated annual financial statements

Management Agreement

GQM LLC is managed by Thomas M. Clay, a Directorboard of managers comprising an equal number of representatives of each of Gauss and insiderGQM Holdings. The initial officers of GQM LLC were H. Lutz Klingmann as Chief Executive Officer, and Andrée St-Germain as Chief Financial Officer. During fiscal 2015, Robert C. Walish Jr. was appointed to replace Mr. Klingmann as Chief Executive Officer of GQM LLC. Bryan A. Coates was appointed to the GQM LLC Board of Managers as a nominee of the Company.Company, replacing Mr. Klingmann. As long as members of the Clay family beneficially hold in the aggregate greater than 25% of the Company, the Clay Group is entitled to appoint one of the Company’s representatives to the GQM LLC board of managers.

Capital Contribution Agreement

Pursuant to the transaction,Joint Venture Transaction, GQM Holdings’ made a single capital contribution to GQM LLC of $12.5 million on June 15, 2015. Gauss funded an amount equal to GQM Holdings’ capital contribution to GQM LLC. Both partners maintain their 50% ownership of the Project.

Standby Commitment

In 2014, Golden Queen also entered into a backstop guarantee agreement with Gauss (the “Backstop Agreement”) whereby, if the Company conducts a rights offering, Gauss has agreed to purchase, upon the terms set forth in the Backstop Agreement, any common shares which have not been acquired pursuant to the exercise of rights under the Rights Offering at a purchase price to be determined but not to exceed $1.10 per common share, up to a maximum amount of $45 million in the aggregate. In consideration for entering into the Backstop Agreement, on closing of the Joint Venture, the Company paid transaction fees to Leucadia and Auvergne a standby guarantee fee of $2,000,000 and $275,000, respectively. The Company$2,250,000, of which $731,250 was paid commitment fees to Leucadia and Auvergne of $1,518,750 and $731,250, respectively.Auvergne.

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.

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

Level 1Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
 
Level 2Quoted 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.
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Level 3Prices or valuation techniques

The Transaction Agreement and Backstop Agreement contemplated 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 liabilitieswould file a registration statement in connection with the Convertible Debenturerights offering by October 15, 2014. The Company has decided not to proceed with a rights offering, and as of December 31, 2013,a result the Company had embedded derivatives liabilities in connection with the Convertible Debenture and Options and Warrants prior to modification of the exercise price currency.standby commitment has expired.

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

Private Placement

The Company completed a private placement of Convertible Debentures in July 2013 (refer toConvertible Debentures above). Other than the foregoing, there were no private placements completed during the 2015, 2014, 2013, or 20122013 fiscal years.

Fair Value of Financial Instruments

The carrying amounts reported in the balance sheets for cash, receivables, accounts payable and accrued liabilities, and interest payable approximate fair values because of the immediate or short-term maturity of these non-level 3 financial instruments. The fair value of the short-term and long-term loans payable approximate their carrying values as the interest rates are based on the market. The market rates have remained steady for the loans payable during the past four quarters. The fair value of the notes payable approximates their carrying value and have been estimated based on discounted cash flows using interest rates being offered for similar debt instruments. The carrying amount of the notes payable are being recorded at amortized cost using the effective interest rate method.

All financial assets and financial liabilities are recorded at fair value on initial recognition. Transaction costs are expensed when they are incurred, unless they are directly attributable to the acquisition of qualifying assets, in which case they are added to the costs of those assets until such time as the assets are substantially ready for their intended use or sale.

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

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

Level 2Quoted 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;

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

  December 31, 2015 
  Total  Level 1  Level 2  Level 3 
Liabilities:                
Share purchase warrants $2,498,269  $-  $2,498,269  $- 
  $2,498,269  $-  $2,498,269  $- 

  December 31. 2014 
  Total  Level 1  Level 2  Level 3 
Liabilities:                
Derivative liability $1,829,770  $-  $1,829,770  $- 
  $1,829,770  $-  $1,829,770  $- 

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. The fair value measurement of the financial instruments above use observable inputs in option price models such as the binomial and the Black-Scholes valuation models.

Please refer also to the note on fair value of derivative liability underResults of Operations above for more information.

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Liquidity and Capital Resources

The Company and GQM Holdings (100%-owned by the Company) held $8,125,242$6,055,458 in cash on December 31, 20142015 as compared to $5,030,522$8,125,242 on December 31, 2013.2014. The slight increasedecrease in cash is due to general corporate expenditures, repayment of the convertible debentures and the $12.5 million capital contribution paid to GQM LLC, partly off-set by the proceeds from the $10 million January Loan, the $12.5 million December Loan and the $5 million early distribution from GQM LLC (seeCash 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 (seeTransactions with Related Partiesabove).June 2015 Loan. It is expected that the cash held by the Company will fund the Company’s corporate expenses until production start in late2017. The convertible debenture was repaid on July 24, 2015 or early 2016. The only near term commitmentfor a total of $7.7 million (C$10 million), including, $153,500 (C$200,000) of accrued interest. 

On October 1, 2015, the Company was to make the quarterly interest payment on the June 2015 loan. In accordance with the terms of the June 2015 loan agreement, the Company other thanchose to exercise its right to pay in kind by adding the remaining $2.5 million repaymentinterest owed on October 1st, 2015 to the principal balance of the January Loan and $175,720 in accounts payableJune 2015 loan. The principal balance of the loan was increased by $1,181,507. The principal balance of the loan as of December 31, 2014,2015 was $38,681,507. SeeSubsequent Events section for details on the January 1, 2016 interest expense.

The Company is evaluating its options, including debt and equity, to re-finance the $12.5 million December 2014June 2015 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.matures on December 8, 2016.

The Company’s 50%-owned subsidiary, GQM LLC, held $83,282,403$31,531,853 in cash as of December 31, 2014. The cash will be used2015 as compared 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$83,282,403 on December 31, 2014. The major commitments relate todecrease in cash is the constructionresult 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. Theincreased capital expenditures are expected to significantly increase in the first quarter of 2015 as the Company starts fullprogressed 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 estimatedand working capital needs until the Project reaches positive cash flows in 2016.

As of December 31, 2015, GQM LLC has entered into contracts for construction totaling approximately $47.6 million of which $4.4 million remains to be between $30 millionpaid. The major commitments relate to the construction of the crushing-screening plant, the construction of the conveying and $40 million will be shared by the joint venture partners. The portionstacking system and work related to mobile mining equipment will be financed through loans with Komatsu.the Merrill-Crowe plant equipment. The Company is evaluating various financing optionsremaining commitments were paid out in early 2016. GQM LLC did not make material additional construction commitments subsequent to fund its attributable remainingDecember 31, 2015.

Remaining capital expenditures including debtof approximately $2 million, as of December 31, 2015, mostly relate to spare parts and equity.commissioning related expenses.

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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, insurance expenses, corporate expenses, office expenses and corporate salary was $11,153,251. This also included$8,182,110 (2014 - $11,153,251) for 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.year ended December 31, 2015. The increasedecrease in cash used in operating activities in 2015 is mostly due to the result of a significant increasecosts incurred 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 fees2014 related to the Joint Venture Transaction that were incurred mostlyTransaction. The decrease is partially off-set by an increase in the third quarter of 2014 (referinterest expenses in 2015, as compared toProject Financing - Joint Venture Transaction above). 2014.

In July 2012, the

Cash used in Investing Activities:

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 beginbegan capitalizing all development expenditures directly related to the Project (seeCash used inInvesting Activities below for further details on 2013 project expenditures). July 2012. Prior to July 2012, all Project-related expenditures were written off due to uncertainties around obtaining the necessary permits. In 2012 cash wasapprovals for proceeding with the Project.

Cash used mainlyin investing activities totaled $69,305,674 during the year ended December 31, 2015 (2014 - $21,698,945). The increase is due to the increased level of activity on site.

The development costs incurred/capitalized, by the Company totalled $68,956,621 (2014 - $21,624,355) for the ongoingyear ended December 31, 2015, which was an increase of $47,606,729 as compared to the same period in 2014. See Note 9 – Supplementary Disclosures of Cash Flow Information in the audited consolidated annual financial statements for non-cash adjustments to property, plant, equipment and mineral interests investing activities. There was a significant increase in activity on site during 2015 due to the initiation of full construction in the fourth quarter of 2014. The following is a breakdown of significant development costs incurred during the year ended December 31, 2015 as compared with the same period in 2014:

46

·$18.0 million (2014 - $6.8 million) in costs related to the construction of the crushing-screening plant.

·$9.1 million (2014 - $0.9 million) in costs related to the construction of the Merrill-Crowe plant.

·$7.6 million (2014 - $0.4 million) in costs related to the construction of the Phase 1, Stage 1 heap leach pad.

·$4.2 million (2014 - $Nil) in pre-production operating costs related to mining, processing and maintenance.

·$3.9 million (2014 - $1.6 million) related to costs to prepare the power supply for the site.

·$3.8 million (2014 - $3.4 million) in costs related to the construction of the conveying and stacking system.

·$3.7 million (2014 - $2.8 million) in engineering and consulting costs.

·$3.6 million (2014 - $0.2 million) paid in cash for the purchase of Komatsu mobile mining equipment. GQM LLC paid the sales tax and 10% deposit upon delivery. The remaining of the purchase costs was financed through loans with Komatsu Financial.

·$3.3 million (2014 - $0.8 million) in costs related to the water supply and water storage infrastructure.

·$1.6 million (2014 - $0.4 million) in costs related to the construction of the assay laboratory.

·$1.6 million (2014 - $0.3 million) in support equipment.

·$1.4 million (2014 - $Nil) paid in cash in sustaining capital. The Company purchased two production drills, one of which was financed with the distributor. GQM LLC paid the sales tax and 10% deposit upon delivery.

The Company, through GQM LLC, continued construction in 2015 and commenced commissioning in late 2015. Construction was completed in early 2016 and the first gold and silver dore was poured on March 1, 2016. Construction was completed in-line with the budget.

Workshop-Warehouse: This project was completed in 2014. The workshop-warehouse was fully equipped with the necessary lubrication equipment, compressor, work-benches and a waste oil storage tank in February 2015. Construction of four offices on the floor above the warehouse was completed in March. We received approval for early occupancy of the Project. Major expenditures included consulting engineering fees, costs incurred for ongoing samplingworkshop-warehouse in April. The workshop-warehouse is fully functional and analysis of groundwater, legal fees and consulting fees incurred to prepare a NI 43-101 Technical Report.

These expenditures areis now being treated as investing activities since 2013 asused.

Assay Laboratory: The construction started in the Companyfourth quarter of 2014 and was completed during the first quarter of 2015. We received approval for early occupancy of the assay laboratory in April. The laboratory was equipped during the second quarter of 2015 and ventilation balancing, mechanical equipment installation and electrical hookups were completed in June. The laboratory was commissioned in July and is preparingnow fully operational.

Water Supply & Water Storage: The electrical installations at water well PW-1 were completed in March 2015 and water supply from the well is now fully automated. Five water storage tanks were delivered during the second quarter and the construction was completed in early 2016. The construction of the water supply infrastructure for the Project has been completed. The backup production water well (PW-4) was drilled, equipped and tested in June 2015 and the connection to the mine water supply infrastructure was completed in early 2016.

Power Supply: Construction of the site-wide power distribution system was completed during the fourth quarter of 2015. The primary sub-station was completed in November and we received full power in early December.

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Crushing-Screening Plant: The Hilfiker wall was completed in February. Construction of the footings and construction of a retaining wall in the primary crusher area was completed in April. Structural steel and equipment for production.the crushing-screening plant was delivered during the second and third quarters and assembly started shortly thereafter. The order for the high pressure grinding roll or HPGR was placed with ThyssenKrupp Industrial Solutions (USA), Inc. in the third quarter of 2014 and the HPGR was delivered to site in early August. Construction of a second Hilfiker wall in the HPGR was completed mid-July. The Primary section of the crushing-screening plant was commissioned in November. The Secondary and Tertiary (HPGR) sections of the crushing-screening were commissioned in December.

Stacking and Conveying System: Equipment and structural steel components of the conveying and stacking system were delivered during the second quarter and the assembly started shortly thereafter. This turn-key project was completed in November and commissioning commenced in December.

Heap Leach Pad Phase 1/Stage 1: The earthmoving phase of the Phase 1, Stage 1 heap-leach pad, the events pond and the solution conveying channel were completed during the first quarter. Mixing of the historical tailings and natural clay from a deposit along Mojave Tropico Road was completed in May and the mix has been used to construct the lower, impervious liner for the events pond, the solution conveying channel and for the heap leach pad. The synthetic upper liner was placed in the events pond and solution collection ditch in May and the upper synthetic liner was placed on the heap leach pad in May and June. A sub-contractor mobilized a portable crushing-screening plant to site and over-liner material was crushed and placed on the heap leach pad. The Phase 1, Stage 1 heap-leach pad turn-key project was completed in September. Pad loading of agglomerated ore was initiated in mid-December.

Merrill-Crowe Plant: Basic construction of the pump box was completed in March. Construction of the footings was completed in August and the erection of the building started shortly thereafter. The equipment was received during the third quarter of 2015 and the installation continued until early February 2016. The Merrill-Crowe plant was commissioned in late February 2016 and the first gold and silver dore was poured on March 1, 2016.

Mobile Mining equipment: GQM LLC purchased the Komatsu mobile equipment fleet through Komatsu’s local distributor, Road Machinery. GQM LLC purchased a total of 21 piece of equipment, including seven 100-ton haul truck, two articulated trucks, two water trucks, three loaders and two excavators.

Cash from Financing Activities:

Cash from financing activities totalled $23,667,451 during the year ended December 31, 2015 (2014 - proceeds of $119,229,318). The cash from financing activities was significantly higher during the year ended December 31, 2014 as compared to the same period in 2015 due to the Joint Venture Transaction.

Financing activities during the year ended December 31, 2015 include the June 2015 Loan incremental proceeds of $25,000,000 and Gauss LLC’s $12,500,000 capital contribution to GQM LLC. As described below, the $2,500,000 remaining balance of the January 2014 Loan and financing fees of $250,000 on the December 2014 Loan were paid during the first quarter of 2015. The Company also paid financing fees of $1,500,000 in conjunction with the June 2015 Loan and retired its convertible debentures on July 26, 2015 for $7,675,000.

The Company issued two convertible debentures for net proceeds of C$10,000,000 ($9,710,603) on July 26, 2013.

On January 1, 2014, the Company entered into the $10,000,000 January 2014 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 (seeTransactions with Related Parties above).

In July 2014, GQM Inc. (the predecessor2015. Financing fees 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 (seeTransactions with Related Parties above).

The Company formed a joint venture with Gauss in September 2014 (refer toProject 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$250,000 on the $10,000,000 JulyDecember 2014 Advance provided by Leucadia and Auvergne (seeTransactions with Related Parties above). GQM LLCLoan were also made a $5,000,000 early distribution to each Gauss and GQ Holdco, for a total early distribution of $10,000,000.paid.

On December 31, 2014 the Company also entered into the December 2014 Loan for an amount of $12,500,000. The December Loan is due on demandmatured on July 1, 2015 and bearsbore an annual interest rate of 10% payable at the end of each quarter (seeQuarter.

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On June 8, 2015, the Company amended the December 2014 Loan to extend the maturity to December 8, 2016 and increasing the principal amount from $12,500,000 to $37,500,000. The Company also issued 10,000,000 common share purchase warrants exercisable for a period of five years expiring June 8, 2020. The common share purchase warrants have an exercise price of $0.95. All other terms remained the same as the December 2014 Loan. The Company also incurred a financing fee to secure the loan in the amount of $1,500,000, all of which was paid on June 8, 2015. The Company agreed to pay the legal fees incurred by the lenders relating to this debt instrument which amounted to $46,408. The total legal fees were expensed as the transaction met the definition of a debt extinguishment. 

During the year-ended December 31, 2015 the Company made principal payments of $1,907,549 (2014 - $13,408) related to the loans payable on the mining equipment and machinery.

Please seeTransactions with Related Parties above).above for more information of the Company’s 2013, 2014 and 2015 loans.

During the 2015 fiscal year, no stock options were exercised.

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.

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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)

·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.

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•$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 inConstruction of Infrastructureabove. 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.

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Working Capital:

As at December 31, 2014,2015, the Company, had, on a consolidated basis, had current assets of $91,672,520$39,979,225 (December 31, 20132014 - $5,107,259)$91,574,405) and current liabilities of $26,562,193$47,722,334 (December 31, 20132014 - $1,521,954)$26,464,078) or working capital deficit of $65,110,327$7,743,109 (December 31, 20132014 – working capital surplus of $3,585,305)$65,110,327). The decrease in current assets from December 31, 2014 is the result of project-related expenditures, partially off-set by the proceeds from the June 2015 loan and the $12.500,000 capital contribution from Gauss LLC. The increase in working capitalcurrent liabilities is the result of the June 2015 Loan which is now included in current liabilities and an increase in mobile equipment loans at the Joint Venture Transaction (refer toLiquidity and Capital Resources above), partiallylevel. These were partly off-set by project-related expenditures.the repayment of the convertible debenture.

The Company

GQM LLC will use its cash on hand for ongoing work by GQM LLC on site (refer toConstruction of Infrastructure above),remaining capital expenditures and for detailed engineering of facilities forworking capital needs until the Project reaches positive cash flows in 2016.

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Golden Queen Mining Co. Ltd will use its cash for buying back royalty interests, for additional land purchases,general corporate expenditures such as accounting fees, legal fees, interest expense and for legal, accountingcorporate salary expenses. The Company is evaluating its options, including debt and regulatory fees.equity, to re-finance the June 2015 Loan which matures on December 8, 2016.

Refer also toOutlookbelow.

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:

ItemNo. of Shares
Shares issued and outstanding on December
31, 2013		99,233,383
Shares issued for mineral properties15,300
Shares issued pursuant to the exercise of stock
options		530,000
Shares issued and outstanding on
December 31, 2014		99,778,683Exercise
orConversion Price		Expiry Date
Director and consultants stock options750,000$1.16 - $1.59From 04/18/15
to 09/18/18
Shares to be issued as a finder’s fee100,000Not ApplicableNot Applicable
Bonus shares to H.L. Klingmann600,000Not ApplicableNot Applicable
Fully diluted on Dec 31, 2014101,228,683
Shares to be issued on conversion of
convertible debentures*		9,708,737Lower of C$1.03 or
market price on
maturity date*		25/07/15
Fully diluted on March 16, 2015110,937,420

*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.

Item No. of Shares      
Shares issued and outstanding on December 31, 2014  99,778,683     
Shares issued as part of management agreement  150,000       
Shares issued for mineral properties  Nil       
Shares issued pursuant to the exercise of stock options  Nil       
Shares issued and outstanding on December 31, 2015  99,928,683   Exercise Price  Expiry Date
Shares to be issued on exercise of directors and employees stock options  1,070,000  $0.58 to $1.59  From 11/11/15 to 09/08/20
Shares to be issued on exercise of warrants  10,000,000  $0.95  06/08/20
Shares to be issued as a finder’s fee
(due upon commercial production)		  100,000   Not Applicable  Not Applicable
Fully diluted on December 31, 2015  111,098,683       
Fully diluted March 30, 2016  111,098,683       
The company has an unlimited authorized share capital

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Outlook

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

The net proceeds fromGQM LLC started commissioning 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 matureprocessing facilities in Julylate 2015 and the Company will need to raise the capital required to retire the loan and accrued interest. The Company also has outstanding convertible debenturescommenced production 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 byMarch 2016. GQM LLC anticipates reaching commercial production later in late 2015.2016.

Recent developments include:

•The Hilfiker wall, a critical first step in the construction of the crushing-screening plant,·Construction was completed in January;February 2016. Capital expenditures were in-line with the budget;
•·Leaching of stacked ore has been ongoing since early February. Initial flow rates and ore porosity have been very good;
·The constructionMerrill-Crowe plant was commissioned in late February and the first gold and silver dore was poured on March 1, 2016;
·Pad-loading continues to ramp-up toward full production;
·Mining of the Phase 1, Stage 1 heap-leach padNorth-West pit and Main pit is advancing and our earthmoving contractor expectsongoing. We expect to complete this turn-key project in August;
•Constructioncommence mining of the site-wide power distributionEast pit by the end of 2016; 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 sixteen130 full-time employees in Mojave with an expected increase to approximately 50 full- time145 full-time employees forby April as the start of pre-production mining.production ramps-up.

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

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

The Company is evaluating its options, including debt and equity, to re-finance the June 2015 Loan which matures on December 8, 2016.

Mineral PropertiesInterests

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 Property, Plant, Equipment and Mineral PropertiesInterests of the Consolidated Financial Statementsaudited consolidated financial statements for a more detailed discussion.

Subsequent Events

No subsequent events have been identified up to the date of March 16, 2015,30, 2016, 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.

On January 1st, 2016, the Company was to make the quarterly interest payment on the June 2015 loan. In accordance with the terms of the June 2015 loan agreement, the Company chose to exercise its right to pay in kind by adding the interest owed on January 1st, 2016 to the principal balance of the June 2015 loan. The principal balance of the loan was increased by $974,986. The principal balance of the loan moving forward will be $39,656,493 and interest will be calculated on this balance.

Subsequent to December 31, 2015, GQM LLC took possession of a used crane, valued at $0.4 million. The Company made total payments, tax and a 10% down payment, of $0.06 million. The remaining $0.3 million will be financed over 48 months at an interest rate of 3.90%.

In January 2016 the company entered into $2.1 million in surety bond agreements in order to release its reclamation deposits and post a portion of the financial assurance due in 2016.

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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:

Inventory

Inventories include stock piles, in-process inventory, doré, and operating materials and supplies. The classification of inventory is determined by the stage at which the ore is in the production process. As at December 31, 2015, the Company had stock-piles, operating materials, supplies and spare parts. All inventories are stated at the lower of cost or market, with cost being determined using a weighted average cost method. Dore inventory includes product at the mine site. Dore inventory costs include direct labor, materials, depreciation, depletion and amortization as well as overhead costs relating to mining activities.

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Ore on Heap Leach Pad

The heap leach process extracts silver and gold by placing ore on an impermeable pad and applying a diluted cyanide solution that dissolves a portion of the contained silver and gold, which are then recovered in metallurgical processes. As at December 31, 2015, the Company had placed a small amount of ore on the heap leach pad but had not started placing leaching solution on the ore. The procedures and policies discussed below that pertain to more advanced stages will be applied once that specific process has been reached.

The Company uses several integrated steps to scientifically measure the metal content of ore placed on the leach pads. As the ore body is drilled in preparation for the blasting process, samples are taken of the drill residue which are assayed to determine estimated quantities of contained metal. The Company then processes the ore through crushing facilities where the output is weighed and sampled for assaying. The Company weighs the ore using a belt mounted weightometer to accurately measure the quantity of ore placed on the leach pad. The crushed ore is then transported to the leach pad for application of the leaching solution. As the leach solution is collected from the leach pads, it is continuously sampled for assaying. The quantity of leach solution is measured by flow meters throughout the leaching and precipitation process. After precipitation, the product is converted to doré, which is the final product produced by the mine. The inventory is stated at lower of cost or market, with cost being determined using a weighted average cost method.

The historical cost of the metal that is expected to be extracted within twelve months is classified as current and the historical cost of metals contained within the broken ore that is expected to be extracted beyond twelve months is classified as non-current. Ore on leach pad is valued based on actual production costs incurred to produce and place ore on the leach pad, less costs allocated to minerals recovered through the leach process.

The estimate of both the ultimate recovery expected over time and the quantity of metal that may be extracted relative to the time the leach process occurs requires the use of estimates, which are inherently inaccurate due to the nature of the leaching process. The quantities of metal contained in the ore are based upon actual weights and assay analysis. The rate at which the leach process extracts gold and silver from the crushed ore is based upon metallurgical test column estimates. The assumptions that will be used by the Company to measure metal content during each stage of the inventory conversion process includes estimated recovery rates based on laboratory testing and assaying. The Company will periodically review its estimates compared to actual experience and revise its estimates when appropriate. As operations begin, the Company will not have any actual experience as a basis to compare estimates to and therefore will begin comparing estimates to actual results once the Company’s actual experiences have a sufficiently predictive quality. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis.

Property, Plant, Equipment and Mineral Property and Exploration CostsInterests

Costs related to the development of our mineral reserves are capitalized whenit 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 The Company also capitalizes additional 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 productionexpenditures that are expensed duedirectly related to the lackdevelopment 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.mine.

Drilling and related costs are either classified as exploration or secondaryadditional development as defined above, andexpenditures, are 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.

•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;
•52Whether 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.

Property, plant, equipment and mineral interests are stated at the lower of cost or net realizable value less accumulated depreciation. Depreciation is provided by the straight-line method over the estimated service lives of the respective assets, which range from 0 to 30 years, and using the units-of-production method as follows:

•LandAuthorization of development of the ore body by management and/or the Board of Directors; andNot depreciated
•Mineral property interests and claimsAll 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.Units-of-production
Mine developmentUnits-of-production
Mine equipment5 – 10 years
Buildings12 – 30 years
Leasehold improvements30 years
Vehicles5 – 10 years
Computer equipment and software3 years
Asset retirements costsUnits-of-production
Capitalized interestUnits-of-production

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The Company has instituted a policy that all property, plant, and equipment, not related to the actual mine development, acquired for an amount over $3,000 will be capitalized and all property, plant and equipment purchased for under this threshold will be expensed as incurred. All property, plant, and equipment related to the mine development was capitalized.

Once production has commenced, capitalizedthe capitalization of certain mine construction costs will be depleted using the units-of-production method over the estimated lifeceases and expenditures are either variable production costs as a component of the proveninventory or expensed as incurred. Exceptions include costs incurred for additions or improvements to property, plant, equipment and probable reserves.mineral interests. If mineral propertiesinterests are subsequently abandoned or impaired, any capitalized costs will be charged to the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for that period.

We assess

A mine construction project is considered to have entered the production stage when the mine construction assets are available for use. At this point the Company will begin depletion of its assets as outlined in the above breakdown. In determining whether mine construction assets are considered available for use, the criteria considered include, but are not limited to, the following:

• Completion of a reasonable period of testing mine plant and equipment;

• Ability to produce minerals in saleable form (within specifications); and

• Ability to sustain ongoing production of minerals.

As at December 31, 2015, the Project was not considered to be in commercial production

Capitalized Interest

For significant exploration and development projects, interest is capitalized as part of the historical cost of developing and constructing assets in accordance with ASC 835-20 ("capitalization of interest"). 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. See Note 8(vi) of the audited consolidated annual financial statements.

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Asset Retirement Obligations

Asset retirement obligations (‘‘AROs’’) arise from the acquisition, development and construction of mining properties and plant and equipment due to government controls and regulations that protect the environment on the closure and reclamation of mining properties. The major parts of the carrying amount of AROs relate to tailings and heap leach pad closure and rehabilitation, demolition of buildings and mine facilities, ongoing water treatment and ongoing care and maintenance of closed mines. The Company recognizes an ARO at the time the environmental disturbance occurs. When the ARO provision is recognized, the corresponding cost is capitalized to property, plant, equipment and mineral interests and depreciated over the life of the related assets.

The timing of the actual environmental remediation expenditures is dependent on a number of factors such as the life and nature of the asset, the operating license conditions and the environment in which the mine operates. Reclamation provisions are measured at the expected value of future cash flows discounted to their present value using a credit adjusted risk-free interest rate. AROs are adjusted each period to reflect the passage of time (accretion). Accretion expense is recorded in cost of oursales each period. Upon settlement of an ARO, the Company records a gain or loss if the actual cost differs from the carrying amount of the ARO. Settlement gains/losses are recorded in the consolidated statements of income (loss).

Expected ARO is updated to reflect changes in facts and circumstances. The principal factors that can cause the ARO to change are the construction of new processing facilities, changes in the quantities of material in proven and probable mineral propertiesreserves and a corresponding change in the life-of-mine plan, changing ore characteristics that impact required environmental protection measures and related costs, changes in water quality that impact the extent of water treatment required and changes in laws and regulations governing the protection of the environment.

Each reporting period, provisions for impairment whenever information or circumstances indicateAROs are re-measured to reflect any changes to significant assumptions, including the potential for impairment. Such evaluations compare estimated future netamount and timing of expected cash flows with our carrying costs and future obligations on an undiscounted basis. If it is determined thatcredit adjusted risk-free interest rates. Changes to the future undiscounted cash flowsreclamation provision resulting from changes in estimate are less thanadded to or deducted from the cost of the related asset, except where the reduction of the reclamation provision exceeds the carrying value of the property, a write down torelated assets in which case 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 valueasset is reduced to zero. Any proceeds received in excess ofnil and the carrying value of the project are recorded as a realized gainremaining adjustment is recognized in the Consolidated Statementconsolidated statements of Comprehensive Income (Loss)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)8(vii) of the Audited Consolidated Financial Statementsaudited consolidated annual 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

Derivative liabilities consist of the derivative liabilities related to the convertible debentures and derivative liabilities related to the share purchase warrants related to the June 2015 Loan.

If the Company’s convertible debentures havehad 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.

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The share purchase warrants issued by the Company are exercisable at $0.95 per share purchase warrant for a period of five years. They are required to be accounted for as a separate derivative liability due to an anti-dilution clause that could potentially result in the exercise price being reduced.

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.

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New Accounting Policies

(i)

(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 issubstantial doubt about the entity’s ability to continue as agoing concernwithin 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(ii)In February, 2015, the statementsFASB issued ASU 2015-02,Consolidation (Topic 810) – Amendments to the Consolidation Analysis whichfocuses 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 income, cash flows,consolidation models from four to two, the new standard simplifies the standards 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.improves current GAAP by:

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.

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(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 whichfocuses 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.

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·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 will adopt the ASU effective January 1, 2016.

(iii)In April, 2015, FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30) which focuses on simplifying the presentation of debt issuance costs, the amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update.

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 has adopted the ASU for the December 31, 2015 year end.

(iv)In July 2015, FASB issued ASU 2015-11, Inventory – Simplifying the Measurement of Inventory (Topic 330) which focuses on simplifying the guidance on subsequent measurement of inventory. Currently, the guidance requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. The ASU now updated the measurement to lower of cost and net realizable value.Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.

The ASU will be effective for periods beginning after December 15, 2016, for public companies. Early adoption is permitted, including adoption in an interim period. The Company assessed the impact of this new standard and adopted the new standard effective October 1, 2015. As the Company had a small inventory balance, the impact of the adoption of the new standard was immaterial.

(v)In November 2015, FASB issued ASU 2015-17, Income taxes – Balance sheet classification of deferred taxes (Topic 740), which simplifies the requirement to classify deferred tax assets and liabilities as non-current and current on the statement of financial position to only having to classify the deferred tax assets and liabilities as non-current.

This update will come into effect for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company has assessed the impact of the new standard and has adopted it for the year ending December 31, 2015.

(vi)In January 2016, FASB issued ASU 2016-01, Financial Instruments – Recognition and measurement of financial assets and financial liabilities (Subtopic 825-10) which updates several aspects of recognition, measurement, presentation and disclosure of financial instruments. The amendments are as follows:

1.Require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

2.Simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value

3.Eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities.

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4.Eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet.

5.Require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.

6.Require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments.

7.Require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements.

8.Clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets.

The ASU will be effective for periods beginning after December 15, 2017, for public companies. The Company is assessing the impact of this standard.

Item 7A.Quantitative and Qualitative Disclosures About Market Risk

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Credit Risk

Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Company by failing to discharge its obligations. To mitigate exposure to credit risk on financial assets the Company has established policies to ensure liquidity of funds and ensure counterparties demonstrate minimum acceptable credit worthiness.

The Company maintains its US Dollar and Canadian Dollar cash in bank accounts with major financial institutions with high credit standings. Cash deposits held in the United States are insured by the FDIC for up to $250,000 and Canadian Dollar cash deposits held in Canada are insured by the Canada Deposit Insurance Corporation (“CDIC”) for up to C$100,000.

Certain United States and Canadian bank accounts held by the Company exceed these federally insured limits or are uninsured as they relate to US Dollar deposits held in Canadian financial institutions. As of December 31, 2015 and 2014, the Company’s cash balances held in United States and Canadian financial institutions include $37,587,311 and $91,407,644 respectively, which are not fully insured by the FDIC or CDIC. The Company has not experienced any losses on such accounts and management believes that using major financial institutions with high credit ratings mitigates the credit risk in cash.

Interest Rate Risk

The Company holds 97%63% 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, 2014,2015, a 1% decrease in interest rates would have reduced the interest income for 20142015 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, 2014,2015, 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 thefuture viability of 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.Project. .

Refer also toItem 1A. Risk Factorsabove.

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Item 8.Financial Statements and Supplementary Data.

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.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Subsequent to year-end, the Company went through a bidding process for its auditor. The audit committee recommended a change to PricewaterhouseCoopers Inc. located in Vancouver, BC. The Board is reviewing this recommendation.

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, 2014,2015, 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, 2014,2015, 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

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 has been audited2015, using criteria established in Internal Control-Integrated Framework (2013) issued by BDO Canada, LLP,the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and concluded that we have effective internal control over financial reporting as of December 31, 2015, based on these criteria.

This annual report does not include an attestation report of the Company’s independent registered public accounting firm as statedregarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the rules of the SEC that permit the Company to provide only management’s report in the attestation report which is included in the consolidated financial statements for the year ended December 31, 2014.this annual report.

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Changes in Internal Control.

There have been nowere changes made in our internal controlscontrol over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) during the quarterfiscal year ended December 31, 2015. The Company hired a US tax expert to prepare the Company’s deferred tax calculations and review the Company’s tax returns. The Company hired the expert in response to a material weakness identified as at December 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.in the area of deferred taxes.

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Item 9B.Other Information

Item 9B. Other Information

None.

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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, 20152016 and is incorporated herein by reference. If the definitive Proxy Statement cannot be filed on or before April 30, 2015,2016, 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
3.1Notice of ArticlesIncorporated by reference to Exhibit 3.03 to the Form S-3 of the Company, filed with the SEC on August 21, 2014Filed herewith
3.2ArticlesIncorporated by reference to Exhibit 3.2 to the Form 8-K of the Company, filed with the SEC on September 2, 2010
10.1ManagementAmendment to Pledge Agreement dated March 11, 2004 between the Company, Golden Queen Mining Holdings Inc., Golden Queen Mining Canada Ltd., The Landon T. Clay 2009 Irrevocable Trust Dated March 6, 2009 and H. Lutz Klingmann, and amendmentJonathan C. Clay dated May 31, 2010.February 27, 2015Incorporated by reference to Exhibit 10.1 to the Form 10-K/A10-Q of the Company, filed with the SEC on January 14, 2011May 11, 2015
10.2Amended and Restated Term Loan Agreement dated June 8, 2015 among the Company, The Landon T. Clay 2009 Irrevocable Trust Dated March 6, 2009, EHT, LLC, Harris Clay, and The Clay Family 2009 Irrevocable Trust Dated April 14, 2009Incorporated by reference to Exhibit 10.1 to the Form 8-K of the Company, filed with the SEC on June 9, 2015
10.3Amended and Restated Guaranty dated June 8, 2015 among Golden Queen Mining Holdings Inc., Golden Queen Mining Canada Ltd., The Landon T. Clay 2009 Irrevocable Trust Dated March 6, 2009, EHT, LLC, Harris Clay and The Clay Family 2009 Irrevocable Trust Dated April 14, 2009Incorporated by reference to Exhibit 10.2 to the Form 8-K of the Company, filed with the SEC on June 9, 2015
10.4Amended and Restated Pledge Agreement dated June 8, 2015 among the Company, Golden Queen Mining Holdings Inc., Golden Queen Mining Canada Ltd., The Landon T. Clay 2009 Irrevocable Trust Dated March 6, 2009, EHT, LLC, Harris Clay and The Clay Family 2009 Irrevocable Trust Dated April 14, 2009Incorporated by reference to Exhibit 10.3 to the Form 8-K of the Company, filed with the SEC on June 9, 2015
10.5Amended and Restated Registration Rights Agreement dated June 8, 2015 among the Company, The Landon T. Clay 2009 Irrevocable Trust Dated March 6, 2009, EHT, LLC, Harris Clay and The Clay Family 2009 Irrevocable Trust Dated April 14, 2009Incorporated by reference to Exhibit 10.4 to the Form 8-K of the Company, filed with the SEC on June 9, 2015

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10.6Amended and Restated Option Agreement dated June 8, 2015 among Gauss LLC, Gauss Holdings LLC, Auvergne, LLC, The Landon T. Clay 2009 Irrevocable Trust Dated March 6, 2009, EHT, LLC, Harris Clay, The Clay Family 2009 Irrevocable Trust Dated April 14, 2009, Golden Queen Mining Canada Ltd. and Golden Queen Mining Holdings Inc.Incorporated by reference to Exhibit 10.5 to the Form 8-K of the Company, filed with the SEC on June 9, 2015
10.7Indemnity Agreement between the Company and the Clay Family Holders dated June 8, 2015Incorporated by reference to Exhibit 10.6 to the Form 8-K of the Company, filed with the SEC on June 9, 2015
10.8Form of Share Purchase Warrants of the Company dated June 8, 2015Incorporated by reference to Exhibit 10.7 to the Form 8-K of the Company, filed with the SEC on June 9, 2015
10.9Mining 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
10.10Convertible Debenture dated July 26, 2013 issued by the Company to Jonathan C. Clay.Filed herewithIncorporated by reference to Exhibit 10.3 to the Form 10-K of the Company, filed with the SEC on March 16, 2015
10.4
10.11Convertible Debenture dated July 25, 2014 issued by the Company toLandon T. Clay 2013-14 Annuity TrustTrust.Filed herewithIncorporated by reference to Exhibit 10.3 to the Form 10-K of the Company, filed with the SEC on March 16, 2015
10.5
10.12Convertible Debenture dated July 25, 2014 issued by the Company to Landon T. Clay.Filed herewithIncorporated by reference to Exhibit 10.3 to the Form 10-K of the Company, filed with the SEC on March 16, 2015
10.6
10.132013 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
10.14Employment 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
10.15Transaction 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
10.16Standby 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

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10.10
10.17Registration 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

10.1160

10.18Registration 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
10.19Amended 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
10.20Term 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
10.21Guaranty 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
10.22Pledge 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
10.23Registration 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
10.24Option 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
21.1Subsidiaries of the Company.Filed herewith
23.1Consent of BDO Canada LLPFiled herewith
23.2Consent of Kappes, Cassiday & AssociatesFiled herewith
23.3Consent of Norwest CorporationFiled herewith
23.4Consent of Mine Development AssociatesFiled herewith
23.5Consent of Peter RonningFiled herewith
23.5Consent of Peter A. RonningFiled herewith
23.6Consent of Carl E. DefilippiFiled herewith
23.7Consent of Sean EnnisFiled herewith
23.8Consent of Michael M. GustinFiled herewith
31.1Rule 13a-14(a)/15(d)-14(a) Certification (CEO)Filed herewith
31.2Rule 13a-14(a)/15(d)-14(a) Certification (CFO)Filed herewith

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32.1Section 1350 Certification (CEO)Filed herewith
32.2Section 1350 Certification (CFO)Filed herewith
95Mine Safety DisclosureFiled herewith
101Financial Statements from the Annual Report on Form 10-K of the Company for the year ended December 31, 2015, formatted in XBRLFiled herewith

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SIGNATURES

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.

GOLDEN QUEEN MINING CO. LTD.By:
/s/ Thomas M. Clay 
 
By:       /s/ H. Lutz Klingmann
H. Lutz Klingmann
President and Principal Executive Officer
Thomas M. Clay 
 
Chairman and Principal Executive Officer 
Date:March 16, 2015  

Date: March 30, 2016

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.

SignatureTitleTitleDate
 /s/ Thomas ClayChairman, Principal Executive Officer and DirectorMarch 30, 2016
Thomas Clay   
   
/s/ H. Lutz KlingmannPresident, Principal Executive Officer, and DirectorMarch 16, 2015
H. Lutz Klingmann  
 
/s/ Thomas ClayChairmanMarch 16, 2015
Thomas Clay
/s//s/ Bryan A. CoatesDirectorMarch 16, 201530, 2016
Bryan A. Coates 
/s/ Guy Le BelDirectorMarch 16, 2015
Guy Le Bel
/s/ Bernard GuarneraDirectorMarch 16, 2015
Bernard Guarnera
/s/ Andree St-GermainPrincipal Financial OfficerMarch 16, 2015
Andree St-Germain

72

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. (VancouverTime) 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 theBankruptcy 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 theBankruptcy 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

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: CD4065133.004

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.

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 25, 2014.

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. (VancouverTime) 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:

“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.”

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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;

/s/ Guy Le Bel 
(ii)

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

Director March 30, 2016
(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 theBankruptcy 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 theBankruptcy 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:
Guy Le Bel 
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:
Landon T Clay 2013-4 Annuity Trust  
10 Memorial Blvd, Suite 902
Providence, Rhode Island, 02903
Facsimile: (401) 490-0749
Attention: Thomas M. Clay, trustee  

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.

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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.

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


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(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.


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. 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___.

) 
 )/s/ Bernard Guarnera 
Director )Signature of Registered HolderMarch 30, 2016
)Bernard Guarnera 
)
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 10.5

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: CD4065133.003

PRINCIPAL AMOUNT $1,732,398

CONVERTIBLE DEBENTURE

For value received,Golden Queen Mining Co. Ltd. (the "Company") hereby acknowledges itself indebted to Landon T. Clay of 188 Old Street Road, Peterborough, New Hampshire, 03458 (the "Holder"), and promises to pay to the Holder the amount of CAD$1,732,398 (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 25, 2014.

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. (VancouverTime) 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.

/s/ Andrée St-Germain 
(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;

Principal Financial Officer March 30, 2016
(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;

Andrée St-Germain 
(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:

“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.”

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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 theBankruptcy 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 theBankruptcy 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:
Landon T. Clay
188 Old Street Road
Peterborough, New Hampshire, 03458  
Facsimile: (401) 490-0749

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.

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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.

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



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(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.


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. 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
)62 

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 21.1

Subsidiaries of the Registrant

The names and ownership structure of Golden Queen’s subsidiaries are set out in the table below.

Name

Jurisdiction of Incorporation or
Organization
Ownership Percentage

Golden Queen Mining Canada Ltd.
(“GQM Canada”)
British Columbia, Canada

100% by Golden Queen

Golden Queen Holdings, Inc.
(“GQM Holdings”)
California, United States

100% by GQM Canada

Golden Queen Mining Company, LLCCalifornia, United States50% by GQM Holdings

Exhibit 21.1 Subsidiaries 4065106.10ks015. docx


Exhibit 23.1

Tel: 604 688 5421BDO Canada LLP
Fax: 604 688 5132600 Cathedral Place
www.bdo.ca925 West Georgia Street
Vancouver BC V6C 3L2 Canada

Consent of Independent Registered Public Accounting Firm

Golden Queen Mining Co. Ltd.
Vancouver, Canada

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-102112, No. 333-164950 and No. 333-191478) and Form S-3 (No. 333-198285) of Golden Queen Mining Co. Ltd., of our reports dated March 16, 2015, relating to the consolidated financial statements and the effectiveness of Golden Queen Mining Co. Ltd.’s internal control over financial reporting which appear in this Form 10-K. Our report contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.

(signed) BDO CANADA LLP

Chartered Accountants

Vancouver, Canada
March 16, 2015

BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

Exhibit 23.2

Kappes, Cassiday & Associates
7950 Security Circle Reno, Nevada 89506
Telephone: (775) 972-7575 FAX: (775) 972-4567

March 16, 2015

Golden Queen Mining Co. Ltd.
6411 Imperial Avenue
West Vancouver, BC V7W 2J5

Re:Golden Queen Mining Co. Ltd. (the “Company”)
Annual Report on Form 10K

Reference is made to the Annual Report on Form 10-K of the Company for the year ended December 31, 2014 (the “Annual Report”).

We hereby consent to the references to our firm and to the summary of the technical report entitled “Soledad Mountain Project Technical Report and Updated Feasibility Study”, dated February 25, 2015 issued by Kappes, Cassiday & Associates, Mine Development Associates and Norwest Corporation, which appear in the Annual Report, and the incorporation therein of such references to the Company’s registration statements on Form S-3 (No. 333-198285) and on Form S-8 (No. 333-191478).

Yours truly,

Kappes, Cassiday & Associates
“Carl E. Defilippi”
Per:
Carl E. Defilippi
[Authorized Signatory]

Exhibit 23.2 Consent KCA - signed.docx

Exhibit 23.3

March 16, 2015

Golden Queen Mining Co. Ltd.
6411 Imperial Avenue
West Vancouver, BC V7W 2J5

Re:Golden Queen Mining Co. Ltd. (the “Company”)
Annual Report on Form 10K

Reference is made to the Annual Report on Form 10-K of the Company for the year ended December 31, 2014 (the “Annual Report”).

We hereby consent to the references to our firm and to the summary of the technical report entitled “Soledad Mountain Project Technical Report and Updated Feasibility Study”, dated February 25, 2015 issued by Kappes, Cassiday & Associates, Mine Development Associates and Norwest Corporation, which appear in the Annual Report, and the incorporation therein of such references to the Company’s registration statements on Form S-3 (No. 333-198285) and on Form S-8 (No. 333-191478).

Yours truly,

Norwest Corporation
“Sean Ennis”
Per:
Sean Ennis - Vice President, Mining

Exhibit 23.3 Consent Norwest.docx

Exhibit 23.4

MINE DEVELOPMENT ASSOCIATES
MINE ENGINEERING SERVICES

March 16, 2015

Golden Queen Mining Co. Ltd.
6411 Imperial Avenue
West Vancouver, BC V7W 2J5

Re:Golden Queen Mining Co. Ltd. (the “Company”)
Annual Report on Form 10K

Reference is made to the Annual Report on Form 10-K of the Company for the year ended December 31, 2014 (the “Annual Report”).

We hereby consent to the references to our firm and to the summary of the technical report entitled “Soledad Mountain Project Technical Report and Updated Feasibility Study”, dated February 25, 2015 issued by Kappes, Cassiday & Associates, Mine Development Associates and Norwest Corporation, which appear in the Annual Report, and the incorporation therein of such references to the Company’s registration statements on Form S-3 (No. 333-198285) and on Form S-8 (No. 333-191478).

Yours truly,

Mine Development Associates

Per:“Michael M. Gustin”
Michael M. Gustin, President

775-856-5700

210 South Rock Blvd.
Reno, Nevada 89502
FAX: 775-856-6053

Exhibit 23.5

New Caledonian Geological Consulting
RR 6, 1450 Davidson Road
NCGGibsons, B.C., Canada V0N 1V6
Vancouver phone (604) 684-6864
e-mail peter@ronning.ca
consulting to the mineral exploration industry since 1989

Peter A. Ronning, P. Eng.
16 March 2015

Golden Queen Mining Co. Ltd.
6411 Imperial Avenue
West Vancouver, BC V7W 2J5

R.e:Golden Queen Mining Co. Ltd. (the “Company”)  
Annual Report on Form 10K  

Reference is made to the Annual Report on Form 10-K of the Company for the year ended December 31, 2014 (the “Annual Report”).

I hereby consent to the references to my name and to the summary of the technical report entitled “Soledad Mountain Project Technical Report and Updated Feasibility Study”, dated February 25, 2015 issued by Kappes, Cassiday & Associates, Mine Development Associates and Norwest Corporation, which appear in the Annual Report, and the incorporation therein of such references to the Company’s registration statements on Form S-3 (No. 333-198285) and on Form S-8 (No. 333-191478).

Yours truly,

“P. Ronning”

Peter A. Ronning, P.Eng.
dba “New Caledonian Geological Consulting”

Exhibit 23.6

Kappes, Cassiday & Associates
7950 Security Circle Reno, Nevada 89506
Telephone: (775) 972-7575 FAX: (775) 972-4567
Website: www.kcareno.com E-Mail: cdefilippi@kcareno.com

March 16, 2015

Golden Queen Mining Co. Ltd.
6411 Imperial Avenue
West Vancouver, BC V7W 2J5

Re:Golden Queen Mining Co. Ltd. (the “Company”)
Annual Report on Form 10K

Reference is made to the Annual Report on Form 10-K of the Company for the year ended December 31, 2014 (the “Annual Report”).

I hereby consent to the references to my name and to the summary of the technical report entitled “Soledad Mountain Project Technical Report and Updated Feasibility Study”, dated February 25, 2015 issued by Kappes, Cassiday & Associates, Mine Development Associates and Norwest Corporation, which appear in the Annual Report, and the incorporation therein of such references to the Company’s registration statements on Form S-3 (No. 333-198285) and on Form S-8 (No. 333-191478).

Yours truly,

“Carl E. Defilippi”
Carl E. Defilippi
[Project Manager]
Kappes, Cassiday & Associates

Exhibit 23.6 Consent Defilippi - signed.docx

Exhibit 23.7

March 16, 2015

Golden Queen Mining Co.
Ltd. 6411 Imperial Avenue
West Vancouver, BC V7W 2J5

Re:Golden Queen Mining Co. Ltd. (the “Company”)
Annual Report on Form 10K

Reference is made to the Annual Report on Form 10-K of the Company for the year ended December 31, 2014 (the “Annual Report”).

I hereby consent to the references to my name and to the summary of the technical report entitled “Soledad Mountain Project Technical Report and Updated Feasibility Study”, dated February 25, 2015 issued by Kappes, Cassiday & Associates, Mine Development Associates and Norwest Corporation, which appear in the Annual Report, and the incorporation therein of such references to the Company’s registration statements on Form S-3 (No. 333-198285) and on Form S-8 (No. 333-191478).

Yours truly,

“Sean Ennis”
Sean Ennis
Vice President, Mining
Norwest Corporation

Exhibit 23.7 Consent Ennis.docx

Exhibit 23.8

MINE DEVELOPMENT ASSOCIATES
MINE ENGINEERING SERVICES

March 16, 2015

Golden Queen Mining Co. Ltd.
6411 Imperial Avenue
West Vancouver, BC V7W 2J5

Re:Golden Queen Mining Co.Ltd. (the “Company”)
Annual Report on Form 10K

Reference is made to the Annual Report on Form 10-K of the Company for the year ended December 31, 2014 (the “Annual Report”).

I hereby consent to the references to my name and to the summary of the technical report entitled “Soledad Mountain Project Technical Report and Updated Feasibility Study”, dated February 25, 2015 issued by Kappes, Cassiday & Associates, Mine Development Associates and Norwest Corporation, which appear in the Annual Report, and the incorporation therein of such references to the Company’s registration statements on Form S-3 (No. 333-198285) and on Form S-8 (No. 333-191478).

Yours truly,

“Michael M. Gustin”
Michael M. Gustin, Senior Geologist
Mine Development Associates

775-856-5700

210 South Rock Blvd.
Reno, Nevada 89502
FAX: 775-856-6053

Exhibit 31.1

CERTIFICATION
PURSUANT TO RULE 13a-14(a) OR 15d-14(a)
OF THE U.S. SECURITIES EXCHANGE ACT OF 1934

I, H. Lutz Klingmann, certify that:

1.

I have reviewed this annual report on Form 10-K for the year ended December 31, 2014 of Golden Queen Mining Co. Ltd.

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the annual report is being prepared;

b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting;


5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):


a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s control over financial reporting.


Date:March 16, 2015By:/s/ H. Lutz Klingmann
H. Lutz Klingmann
Principal Executive Officer

Exhibit 31.1 CEO.docx

Exhibit 31.2

CERTIFICATION
PURSUANT TO RULE 13a-14(a) OR 15d-14(a)
OF THE U.S. SECURITIES EXCHANGE ACT OF 1934

I, Andree St-Germain, certify that:

1.

I have reviewed this annual report on Form 10-K for the year ended December 31, 2014 of Golden Queen Mining Co. Ltd.

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the annual report is being prepared;

b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting;


5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):


a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s control over financial reporting.


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

Exhibit 31.2 CFO.docx

EXHIBIT 32.1

CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350
AND RULE 13a-14(b) OR RULE 15d-14(b)
OF THE U.S. SECURITIES EXCHANGE ACT OF 1934

In connection with the Annual Report of Golden Queen Mining Co. Ltd. (the "Company") on Form 10-K for the year ended December 31, 2014 (the "Report"), the undersigned, in the capacities and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  March 16, 2015/s/ H. Lutz Klingman
H. Lutz Klingmann
Principal Executive Officer

Exhibit 32.1 CEO.docx

EXHIBIT 32.2

CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350
AND RULE 13a-14(b) OR RULE 15d-14(b)
OF THE U.S. SECURITIES EXCHANGE ACT OF 1934

In connection with the Annual Report of Golden Queen Mining Co. Ltd. (the "Company") on Form 10-K for the year ended December 31, 2014 (the "Report"), the undersigned, in the capacities and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

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

Exhibit 32.2 CFO.docx

Golden Queen Mining Co. Ltd.
Consolidated Financial Statements

December 31, 20142015

(US Dollars)


Tel: 604 688 5421

BDO Canada LLP

Fax: 604 688 5132

www.bdo.ca

BDO Canada LLP

600 Cathedral Place

www.bdo.ca

925 West Georgia Street

Vancouver BC V6C 3L2 Canada

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Golden Queen Mining Co. Ltd.

We have audited Golden Queen Mining Co. Ltd.’s internal control over financial reporting as of December 31, 2014, based on criteria established inInternal Control– Integrated Framework (2013) issuedby the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Golden Queen Mining Co. Ltd’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, “Management’s Report on Internal Control Over Financial Reporting”. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Golden Queen Mining Co. Ltd. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on the COSO criteria.

We have also audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), the accompanying consolidated balance sheets of Golden Queen Mining Co. Ltd. as of December 31, 20142015 and 20132014 and the related consolidated statements of income/(loss) and comprehensive income / (loss), shareholders’ equity, non-controlling interest and redeemable portion of non-controlling interest, and cash flows for each of the three years in the period ended December 31, 2014 and our report dated March 16, 2015, expressed an unqualified opinion with an explanatory paragraph disclosing substantial doubt about the Company's ability to continue as a going concern.

(signed) BDO CANADA LLP

Chartered Accountants

Vancouver, Canada
March 16, 2015

BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.


Tel: 604 688 5421BDO Canada LLP
Fax: 604 688 5132600 Cathedral Place
www.bdo.ca925 West Georgia Street
Vancouver BC V6C 3L2 Canada

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors
Golden Queen Mining Co. Ltd.

We have audited the accompanying consolidated balance sheets of Golden Queen Mining Co. Ltd. as of December 31, 2014 and 2013 and the related consolidated statements of income/(loss) and comprehensive income / (loss), shareholders’ equity, non-controlling interest and redeemable portion of non-controlling interest, and cash flows for each of the three years in the period ended December 31, 2014.2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Golden Queen Mining Co. Ltd. at December 31, 20142015 and 2013,2014, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2014,2015, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company as of December 31, 20142015 on a non-consolidated basis currently does not have sufficient funds to repay a $12,500,000$37,500,000 loan that will come due in July 2015.December 2016. This condition raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plansplan in regard to these matters arethis matter is also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We also have audited,

As discussed in accordance withNote 15 to the standards offinancial statements, the Public Company Accounting Oversight Board (United States), Golden Queen Mining Co. Ltd.’s internal control overconsolidated financial reportingstatements as of December 31, 2014 based on criteria establishedand for the year then ended have been restated to correct a misstatement inInternal Control– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 16, 2015 expressed an unqualified opinion thereon.accounting for deferred income taxes.

(signed) BDO CANADA LLP

Chartered Professional Accountants

Vancouver, Canada

March 16, 201530, 2016

BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UKaUK company limited by guarantee, and forms part of the international BDO network of independentofindependent member firms.

GOLDEN QUEEN MINING CO. LTD.

Consolidated Balance Sheets

(US dollars)

  December 31,  December 31, 
  2014  2013 
Assets      
     Current assets:      
         Cash$ 91,407,644 $ 5,030,522 
         Receivables 52,136  13,786 
         Prepaid expenses and other current assets 114,625  62,951 
       
     Total current assets 91,574,405  5,107,259 
       
     Property (Note 2) 251,467  286,256 
     Mineral property interests (Note 3) 37,138,134  9,919,486 
     Reclamation financial assurance (Note 6) 553,329  478,742 
Total Assets$ 129,517,335 $ 15,791,743 
       
Liabilities and Shareholders’ Equity      
     Current liabilities:      
         Accounts payable and accrued liabilities (Note 8(i))$ 3,309,476 $ 1,438,904 
         Interest payable (Note 8(ii) and (iii)) 320,721  76,699 
         Closing fee payable (Note 8(iii)) 250,000    
         Note payable (Note 8(iii)) 13,881,305  - 
         Current portion of loan payable (Note 13) 222,839  - 
         Derivative liability–convertible debenture (Note 8(ii)) 1,829,770  - 
         Convertible debenture (Note 8(ii)) 6,649,967  - 
         Property rent payments -  6,351 
       
     Total current liabilities 26,464,078  1,521,954 
     Asset retirement obligations (Note 6) 624,142  552,250 
     Loan payable (Note 13) 690,293  - 
     Derivative liability–convertible debenture (Note 8(ii)) -  2,833,987 
     Convertible debenture (Note 8(ii)) -  4,642,620 
       
Total liabilities 27,778,513  9,550,811 
       
Temporary Equity      
Redeemable portion of non-controlling interest (Note 8(vi)) 22,833,645  - 
Shareholders’ Equity      
         Common shares, no par value, unlimited shares authorized (2013- unlimited); 99,778,683 (2013 – 99,233,383) shares issued and outstanding (Note 5) 62,709,015  62,289,402 
         Additional paid-in capital (Note 8(vi)) 56,390,510  9,927,142 
         Deficit accumulated (74,444,816) (65,975,612)
       
     Total shareholders’ equity attributable to GQM Ltd. 44,654,709  6,240,932 
     Non-controlling interest (Note 8(vi)) 34,250,468  - 
       
Total Shareholders’ Equity 78,905,177  6,240,932 
       
Total Liabilities, Temporary Equity and Shareholders’ Equity$ 129,517,335 $ 15,791,743 

  December 31,  December 31, 
  2015  2014 
Assets      (Restated – Note 15) 
Current assets:        
  Cash ($31,531,853 and $83,282,403 attributable to VIE) $37,587,311  $91,407,644 
  Receivables ($18,238 and $20,286 attributable to VIE)  23,962   52,136 
  Inventory (Note 2) ($1,852,359 and $Nil attributable to VIE)  1,852,359   - 
  Ore on leach pad (Note 2) ($83,240 and $Nil attributable to VIE)  83,240   - 
Prepaid expenses and other current assets ($388,854 and $58,503 attributable to VIE)  432,353   114,625 
Total current assets  39,979,225   91,574,405 
         
Property, plant, equipment and mineral interests (Note 3) ($123,432,990 and $35,022,850 attributable to VIE)  128,562,572   37,389,601 
Reclamation financial assurance (Note 6) ($902,382 and $ 553,329 attributable to VIE)  902,382   553,329 
Total Assets $169,444,179  $129,517,335 
Liabilities and Shareholders’ Equity        
Current liabilities:        
Accounts payable and accrued liabilities (Note 8(i)) ($3,239,935 and $3,231,870 attributable to VIE) $3,258,692  $3,309,476 
Interest payable (Note 8(ii) and (iii))  969,645   320,721 
Financing fee payable (Note 8(iii))  -   250,000 
Notes payable (Note 8(iii))  36,053,012   13,881,305 

Current portion of loan payable (Note 12) ($4,942,716 and $222,839 attributable to VIE)

  4,942,716   222,839 
Derivative liability – Warrants (Note 8(iv))  2,498,269   - 
Derivative liability–Convertible debentures (Note 8(ii))  -   1,829,770 
Convertible debenture (Note 8(ii))  -   6,649,967 
Total current liabilities  47,722,334   26,464,078 
Asset retirement obligations (Note 6) ($978,453 and $624,142 attributable to VIE)  978,453   624,142 
Loan payable (Note 12) ($13,430,107 and $690,293 attributable to VIE)  13,430,107   690,293 

Deferred tax liability (Notes 4 and 15)

  12,922,000   12,922,000 
         
Total liabilities  75,052,894   40,700,513 
         
Temporary Equity        
Redeemable portion of non-controlling interest (Note 8(vii))  27,123,741   22,833,645 
Shareholders’ Equity        
  Common shares, no par value, unlimited shares authorized (2014 -unlimited); 99,928,683 (2014 –  99,778,683) shares issued and outstanding (Note 5)  62,860,443   62,709,015 
Additional paid-in capital  43,627,511   43,468,510 
Deficit accumulated  (79,906,021)  (74,444,816)
         
Total shareholders’ equity attributable to GQM Ltd.  26,581,933   31,732,709 
Non-controlling interest (Note 8(vii))  40,685,611   34,250,468 
         
Total Shareholders’ Equity  67,267,544   65,983,177 
Total Liabilities, Temporary Equity and Shareholders’ Equity $169,444,179  $129,517,335 

Basis of Presentation and Ability to Continue as a Going Concern (Note 1)

Commitments and Contingencies (Note 7)

Subsequent Events (Note 14)

Approved by the Directors:

“H. Lutz Klingmann” 
“Thomas M.  Clay”“Bryan A. Coates”
H. Lutz Klingmann, DirectorThomas M. Clay, DirectorBryan A. Coates, Director

See Accompanying Summary of Accounting Policies and Notes to Consolidated Financial Statements

GOLDEN QUEEN MINING CO. LTD.
Consolidated Statements of Income/(Loss) and Comprehensive Income/(Loss)
(US dollars)

  Year Ended  Year Ended  Year Ended 
  December 31,  December 31,  December 31, 
  2014  2013  2012 
          
General and administrative expenses (Note 8)$ (4,984,750)$ (2,532,279)$ (466,996)
Exploration expenditures -  -  (1,567,894)
Asset impairment loss -  (2,522) (193,340)
Adjustment to asset retirement obligation from changes in cash flow estimates -  -  (124,363)
Change in fair value of derivative liability including change in foreign exchange (Notes 8(ii) and 10) 1,004,217  5,385,660  1,030,431 
          
  (3,980,533) 2,850,859  (1,322,162)
          
Interest expense (Note 8(v)) (1,493,034) (888,026) - 
Joint venture transaction fee (Note 8(vi)) (2,275,000) -  - 
Commitment fee (Note 8(vi)) (2,250,000) -  - 
Interest income 126,884  15,181  51,174 
          
Net and comprehensive income (loss) for the year (9,871,683) 1,978,014  (1,270,988)
Add: Net and comprehensive loss attributable to the non- controlling interest for the year (Note 8(iv)) 1,402,479  -  - 
Net and comprehensive income (loss) attributable to Golden Queen Mining Co Ltd. for the year$ (8,469,204)$ 1,978,014 $ (1,270,988)
          
Income (loss) per share - basic (Note 12)$ (0.09)$ 0.02 $ (0.01)
          
Income (loss) per share - diluted (Note 12)$ (0.09)$ (0.01)$ (0.01)
          
Weighted average number of common shares outstanding - basic 99,611,278  98,390,561  97,981,197 
Weighted average number of common shares outstanding - diluted 99,611,278  102,737,593  97,981,197 

See Accompanying Summary of Accounting Policies and Notes to Consolidated Financial Statements

GOLDEN QUEEN MINING CO. LTD.
Consolidated Statements of Shareholders’ Equity, Non-controlling Interest and Redeemable Portion of Non-controlling Interest
(US dollars)

                       Redeemable 
             Total Shareholders’     Total  Portion of Non- 
       Additional    Equity attributable  Non-controlling  Shareholders’  controlling 
  Common Shares  Amount  Paid-in Capital  Deficit Accumulated  to GQM Ltd  Interest  Equity  Interest 
Balance, December 31, 2011 97,978,383 $ 61,906,619 $ 8,407,935 $ (66,682,638)$ 3,631,916 $ -  3,631,916 $ - 
Issuance of common shares for mineral property 20,000  52,852  -  -  52,852  -  52,852  - 
Net loss for the year -  -  -  (1,270,988) (1,270,988) -  (1,270,988) - 
Balance, December 31, 2012 97,998,383 $ 61,959,471 $ 8,407,935 $ (67,953,626)$ 2,413,780 $ - $ 2,413,780 $ - 
Issuance of common shares for mineral property 15,000  22,568  -  -  22,568  -  22,568  - 
Stockinterestsoptions exercised 1,220,000  307,363  -  -  307,363  -  307,363  - 
Stock-based compensation -  -  271,137  -  271,137  -  271,137  - 
Reclassification of derivative liability on the exercise of stock options (Note 10) -  -  910,054  -  910,054  -  910,054  - 
Reclassification of derivative liability upon conversion of exercise price of stock -  -  338,016  -  338,016  -  338,016  - 
Net income for the year -  -  -  1,978,014  1,978,014  -  1,978,014  - 
                         
Balance,December 31, 2013 99,233,383 $ 62,289,402 $ 9,927,142 $ (65,975,612)$ 6,240,932 $ - $ 6,240,932 $ - 
Issuance of common shares for mineral property interests 15,300  24,480  -  -  24,480  -  24,480  - 
Stock options exercised 530,000  395,133  (283,712) -  111,421  -  111,421  - 
Stock-based compensation -  -  233,672  -  233,672  -  233,672  - 
Dilution of ownership interest in subsidiary to non-controlling interest (Note 8(vi)) -  -  46,513,408  -  46,513,408  38,091,955  84,605,363  25,394,637 
Distributions to non- controlling interest -  -  -  -  -  (3,000,000) (3,000,000) (2,000,000)
Net loss for the year -  -  -  (8,469,204) (8,469,204) (841,487) (9,310,691) (560,992)
                         
Balance, December 31, 2014 99,778,683 $ 62,709,015 $ 56,390,510 $ (74,444,816)$ 44,654,709 $ 34,250,468 $78,905,177  22,833,645 

See Accompanying Summary of Accounting Policies and Notes to Consolidated Financial Statements

GOLDEN QUEEN MINING CO. LTD.
Consolidated Statements of Cash Flows
(US dollars)

  Year Ended  Year Ended  Year Ended 
  December 31,  December 31,  December 31, 
  2014  2013  2012 
Operating activities:         
Net income (loss) for the year$ (9,871,683)$ 1,978,014 $ (1,270,988)
Adjustments to reconcile net income (loss) to cash used in operating activities:      
   Donated land 34,378  -  - 
   Amortization and depreciation 34,789  9,688  9,984 
   Asset impairment loss -  2,522  193,340 
   Amortization of debt discount and interest accrual 1,489,682  888,026  - 
   Change in fair value of derivative liabilities including change in foreign exchange (1,004,217) (5,385,660) (1,030,431)
   Adjustments to asset retirement obligation based on change in cash flow estimates -  -  124,363 
   Stock-based compensation 233,672  475,263  - 
   Unrealized foreign exchange (504,539) (137,790) - 
Changes in assets and liabilities:         
   Receivables (38,350) 3,186  4,544 
   Prepaid expenses and other current assets (51,674) 18,897  62,617 
   Accounts payable and accrued liabilities (329,523) 386,666  (238,494)
   Interest payable (1,145,786) -  - 
   Property rent payments payable -  -  (7,372)
          
Cash used in operating activities (11,153,251) (1,761,188) (2,152,437)
          
Investment activities:         
   Additions to mineral property interests (21,637,763) (7,117,996) (1,695,516)
   Purchase of financial assurance (74,590) (139,663) (42,899)
          
Cash used in investing activities (21,712,353) (7,257,659) (1,738,415)
Financing activities:         
   Investment in Golden Queen Mining Company LLC by non-controlling interest 110,000,000  -  - 
   Distribution to non-controlling interest (5,000,000) -  - 
   Proceeds from convertible debt -  9,710,603  - 
   Borrowing under short-term debt 32,500,000  -  - 
   Repayment of short-term debt (17,500,000) -  - 
          
   Closing fees related to short-term debt (868,695) -  - 
   Issuance of common shares upon exercise of stock options 111,421  307,363  - 
          
Cash provided by financing activities 119,242,726  10,017,966  - 
          
Net change in cash 86,377,122  999,119  (3,890,852)
          
Cash, Beginning balance 5,030,522  4,031,403  7,922,255 
          
Cash, Ending balance$ 91,407,644 $ 5,030,522 $ 4,031,403 

Supplementary Disclosures of Cash Flow Information (Note 9)

See Accompanying Summary of Accounting Policies and Notes to Consolidated Financial Statements

GOLDEN QUEEN MINING CO. LTD.

Consolidated Statements of Income/(Loss) and Comprehensive Income/(Loss)

(US dollars)

  Year Ended
December 31,
2015		  Year Ended
December 31,
2014		  Year Ended
December 31,
2013		 
          
General and administrative expenses  (4,615,532)  (4,984,750)  (2,532,279)
Asset impairment loss  -   -   (2,522)
Change in fair value of derivative liability including change in foreign exchange (Notes 8(ii) and 8(iv))  3,334,224   1,004,217   5,385,660 
   (1,281,308)  (3,980,533)  2,850,859 
             
Interest expense (Note 8(vi))  (4,507,268)  (1,493,034)  (888,026)
Loss on extinguishment of debt (Note 8(iii))  (151,539)  -   - 
Financing fee (Note 8(iii))  (1,500,000)        
Joint-venture transaction fee (Note 8(vii))  -   (2,275,000)  - 
Commitment fee (Note 8(vii))  -   (2,250,000)  - 
Interest income  204,149   126,884   15,181 
Net and comprehensive income (loss) for the year  (7,235,966)  (9,871,683)  1,978,014 
Deduct: Net and comprehensive loss attributable to the non-controlling interest for the year (Note 8(vii))  1,774,761   1,402,479   - 
Net and comprehensive income (loss) attributable to Golden Queen Mining Co Ltd. for the year $(5,461,205) $(8,469,204) $1,978,014 
Income (loss) per share - basic (Note 11)   $(0.05) $(0.09) $0.02 
Income (loss) per share - diluted (Note 11) $(0.05) $(0.09) $(0.01)
             
Weighted average number of common shares outstanding - basic  99,893,341   99,611,278   98,390,561 
Weighted average number of common shares outstanding - diluted  99,893,341   99,611,278   102,737,593 

See Accompanying Summary of Accounting Policies and Notes to Consolidated Financial Statements

GOLDEN QUEEN MINING CO. LTD.

Consolidated Statements of Shareholders’ Equity, Non-controlling Interest and Redeemable Portion of Non-controlling Interest

(US dollars)

  Common
Shares		  Amount  Additional
Paid-in Capital
(Restated –
Note 15)		  Deficit
Accumulated		  Total
Shareholders’
Equity attributable
to GQM Ltd
(Restated –
Note 15)		  Non-controlling
Interest		  Total
Shareholders’
Equity
(Restated)		  Redeemable
Portion of Non-
controlling
Interest		 
Balance, December 31, 2012  97,998,383  $61,959,471  $8,407,935  $(67,953,626) $2,413,780  $-  $2,413,780  $- 
Issuance of common shares for mineral property interests  15,000   22,568   -   -   22,568   -   22,568   - 
Stock options exercised  1,220,000   307,363   -   -   307,363   -   307,363   - 
Stock-based compensation  -   -   271,137   -   271,137   -   271,137   - 
Reclassification of derivative liability on the exercise of  stock options  -   -   910,054   -   910,054   -   910,054   - 
Reclassification of derivative liability upon conversion of exercise price of stock (Note 10)options from Canadian dollars to US dollars  -   -   338,016   -   338,016   -   338,016   - 
Net income for the year  -   -   -   1,978,014   1,978,014   -   1,978,014   - 
Balance, December 31, 2013  99,233,383  $62,289,402  $9,927,142  $(65,975,612) $6,240,932  $-  $6,240,932  $- 
Issuance of common shares  for mineral property interests  15,300   24,480   -   -   24,480   -   24,480   - 
Stock options exercised  530,000   395,133   (283,712)  -   111,421   -   111,421   - 
Stock-based compensation  -   -   233,672   -   233,672   -   233,672   - 
Dilution of ownership interest in subsidiary to non-controlling interest (Note 8(vii))  -   -   46,513,408   -   46,513,408   38,091,955   84,605,363   25,394,637 

Deferred tax liability related to the dilution gain (Note 8(vii)

  -   -   (12,922,000)  -   (12,922,000)  -   (12,922,000)  - 
Distributions to non-controlling interest  -   -   -   -   -   (3,000,000)  (3,000,000)  (2,000,000)
Net loss for the year  -   -   -   (8,469,204)  (8,469,204)  (841,487)  (9,310,691)  (560,992)
Balance, December 31, 2014 (Restated – Note 15)  99,778,683  $62,709,015  $43,468,510  $(74,444,816) $31,732,709  $34,250,468  $65,983,177  $22,833,645 

See Accompanying Summary of Accounting Policies and Notes to Consolidated Financial Statements

GOLDEN QUEEN MINING CO. LTD.

Consolidated Statements of Shareholders’ Equity, Non-controlling Interest and Redeemable Portion of Non-controlling Interest – Continued

(US dollars)

  Common
Shares		  Amount  Additional
Paid-in Capital
(Restated –
Note 15)		  Deficit
Accumulated		  Total Shareholders’
Equity attributable
to GQM Ltd
(Restated –
Note 15)		  Non-controlling
Interest		  Total
Shareholders’
Equity
(Restated –
Note 15)		  Redeemable
Portion of Non-
controlling
Interest		 
Balance, December 31, 2014 (Restated – Note 15)  99,778,683  $62,709,015  $43,468,510  $(74,444,816) $31,732,709  $34,250,468  $65,983,177  $22,833,645 
Issuance of common shares as part of management agreement (Note 5)  150,000   151,428   -   -   151,428   -   151,428   - 
Stock-based compensation  -   -   159,001   -   159,001   -   159,001   - 
Capital contribution from non-controlling interest  (Note 8(vii))  -   -   -   -   -   7,500,000   7,500,000   5,000,000 
Net loss for the year  -   -   -   (5,461,205)  (5,461,205)  (1,064,857)  (6,526,062)  (709,904)
Balance, December 31, 2015  99,928,683  $62,860,443  $43,627,511  $(79,906,021) $26,581,933  $40,685,611  $67,267,544  $27,123,741 

See Accompanying Summary of Accounting Policies and Notes to Consolidated Financial Statements

GOLDEN QUEEN MINING CO. LTD.

Consolidated Statements of Cash Flows

(US dollars)

  Year Ended
December 31, 2015		  Year Ended
December 31, 2014		  Year Ended
December 31, 2013		 
Operating activities:            
Net income (loss) for the year $(7,235,966) $(9,871,683) $1,978,014 
Adjustments to reconcile net income (loss) to cash used in operating activities:            
Donated land  -   34,378   - 
Amortization and depreciation  28,625   34,789   9,688 
Asset impairment loss  -   -   2,522 
Amortization of debt discount and interest accrual  4,225,311   1,489,682   888,026 
Change in fair value of derivative liabilities including change in foreign exchange  (3,334,224)  (1,004,217)  (5,385,660)
Stock-based compensation  159,001   233,672   475,263 
Non-cash consulting expense  151,428   -   - 
Financing fee related to long-term debt  1,500,000   -   - 
Loss on extinguishment of debt  151,539   -   - 
Foreign exchange gain  (839,849)  (504,539)  (137,790)
Changes in assets and liabilities:            
Receivables  28,174   (38,350)  3,186 
Inventory  (1,852,359)  -   - 
Ore on leach pad  (83,240)  -   - 
Prepaid expenses and other current assets  (317,728)  (51,674)  18,897 
Accounts payable and accrued liabilities  188,623   (329,523)  386,666 
Interest payable  (951,445)  (1,145,786)  - 
Cash used in operating activities  (8,182,110)  (11,153,251)  (1,761,188)
Investment activities:            
Additions to property, plant, equipment and mineral interests  (68,956,621)  (21,624,355)  (7,117,996)
Purchase of financial assurance  (349,053)  (74,590)  (139,663)
             
Cash used in investing activities  (69,305,674)  (21,698,945)  (7,257,659)
Financing activities:            
Investment in Golden Queen Mining Company LLC by non-controlling interest  12,500,000   110,000,000   - 
Distribution to non-controlling interest  -   (5,000,000)  - 
Proceeds from convertible debt  -   -   9,710,603 

Borrowing under long-term debt

  25,000,000   32,500,000   - 
Repayment of short-term debt  (2,500,000)  (17,500,000)  - 
Financing fees related to short-term debt  (1,500,000)  (868,695)  - 
Repayment of convertible debentures  (7,675,000)  -   - 
Repayment of loans payable  (1,907,549)  (13,408)    
Financing fees related to short-term debt capitalized to the loan  (250,000)  -   - 
Issuance of common shares upon exercise of stock options  -   111,421   307,363 
Cash provided by financing activities  23,667,451   119,229,318   10,017,966 
Net change in cash  (53,820,333)  86,377,122   999,119 
Cash, Beginning balance  91,407,644   5,030,522   4,031,403 
Cash, Ending balance $37,587,311 $91,407,644 $5,030,522

Supplementary Disclosures of Cash Flow Information (Note 9)

See Accompanying Summary of Accounting Policies and Notes to Consolidated Financial Statements

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 2013 and 2012
2013

(US dollars)

Nature of BusinessGolden Queen Mining Co. Ltd. (“Golden Queen”, “GQM Ltd.” or the “Company”) is engaged in the development of the Soledad Mountain Project (“the Project”), located in the Mojave Mining District, Kern County,California. The Company originally used its wholly owned subsidiary, Golden Queen Mining Company, Inc. (“GQM Inc.”), to explore and develop the Project. On September 10, 2014, GQM Inc. was converted to a limited liability company, Golden Queen Mining Company, LLC (“GQM LLC”). The Company entered into a Joint Venture (the “JV”) agreement with Gauss LLC (“Gauss”) through its newly formed, wholly owned subsidiary, Golden Queen Mining Holdings, Inc. (“GQM Holdings”). The JV was completed on September 15, 2014. Upon completion of the JV, both the Company, through GQM Holdings, and Gauss each owned, and continue to own, 50% of GQM LLC. 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.

Principles of ConsolidationThe Company consolidates all entities in which it can vote a majority of the outstanding voting stock. In addition, it consolidates entities which meet the definition of a variable interest entity for which it is the primary beneficiary. The primary beneficiary is the party who has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and who has an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity. We consider special allocations of cash flows and preferences, if any, to determine amounts allocable to non-controlling interests. All intercompany transactions and balances are eliminated in consolidation.

These consolidated financial statements include the accounts of Golden Queen, a British Columbia corporation, its wholly-owned subsidiary, GQM Holdings, a US (State of California) corporation, and GQM LLC, a limited liability company in which Golden Queen has a 50% interest, through GQM Canada’s ownership of GQM Holdings. 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.

Generally Accepted Accounting Principles (“GAAP”)The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

Cash and Cash EquivalentsFor purposes of balance sheet classification and the statements of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As at December 31, 2015 and 2014, the Company did not have any cash equivalents.

The Company places its cash and cash equivalents with high quality financial institutions. At times, such cash deposits may be in excess of Federal Deposit Insurance Corporation insurance limits. To date, the Company has not experienced a loss or lack of access to its cash and cash equivalents. However, no assurance can be provided that access to the Company’s cash and cash equivalents will not be impacted by adverse economic conditions in the financial markets.

PropertyProperty

InventoryInventories include stockpiles, in-process inventory, doré, and operating materials and supplies. The classification of inventory is determined by the stage at which the ore is in the production process. As at December 31, 2015, the Company had stockpiles, operating materials, supplies and spare parts. All inventories are stated at the lower of cost or market, with cost being determined using a weighted average cost method. Dore inventory includes product at the mine site. Dore inventory costs include direct labor, materials, depreciation, depletion and amortization as well as overhead costs relating to mining activities.

Ore on Heap Leach PadThe heap leach process extracts silver and gold by placing ore on an impermeable pad and applying a diluted cyanide solution that dissolves a portion of the contained silver and gold, which are then recovered in metallurgical processes. As at December 31, 2015, the Company had placed a small amount of ore on the heap leach pad but had not started placing leaching solution on the ore. The procedures and policies discussed below that pertain to more advanced stages will be applied once that specific process has been reached.

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

The Company uses several integrated steps to scientifically measure the metal content of ore placed on the leach pads. As the ore body is drilled in preparation for the blasting process, samples are taken of the drill residue which are assayed to determine estimated quantities of contained metal. The Company then processes the ore through crushing facilities where the output is weighed and sampled for assaying. The Company weighs the ore using a belt mounted weightometer to accurately measure the quantity of ore placed on the leach pad. The crushed ore is then transported to the leach pad for application of the leaching solution. As the leach solution is collected from the leach pads, it is continuously sampled for assaying. The quantity of leach solution is measured by flow meters throughout the leaching and precipitation process. After precipitation, the product is converted to doré, which is the final product produced by the mine. The inventory is stated at lower of cost or market, with cost being determined using a weighted average cost method.

The historical cost of the metal that is expected to be extracted within twelve months is classified as current and the historical cost of metals contained within the broken ore that is expected to be extracted beyond twelve months is classified as non-current. Ore on leach pad is valued based on actual production costs incurred to produce and place ore on the leach pad, less costs allocated to minerals recovered through the leach process.

The estimate of both the ultimate recovery expected over time and the quantity of metal that may be extracted relative to the time the leach process occurs requires the use of estimates, which are inherently inaccurate due to the nature of the leaching process. The quantities of metal contained in the ore are based upon actual weights and assay analysis. The rate at which the leach process extracts gold and silver from the crushed ore is based upon metallurgical test column estimates. The assumptions that will be used by the Company to measure metal content during each stage of the inventory conversion process includes estimated recovery rates based on laboratory testing and assaying. The Company will periodically review its estimates compared to actual experience and revise its estimates when appropriate. As operations begin, the Company will not have any actual experience as a basis to compare estimates to and therefore will begin comparing estimates to actual results once the Company’s actual experiences have a sufficiently predictive quality. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value less accumulated depreciation. Depreciation is provided by the straight-line method over the estimated service lives of the respective assets, which range from 0 to 30 years, as follows:

Rental properties30 years
LandNot depreciated

The Company has institutedare accounted for on a policy that all propertyprospective basis.

Property, Plant, Equipment and equipment acquired for an amount over $3,000 will be capitalized and all property and equipment purchased for under this threshold will be expensed as incurred.

Mineral PropertiesInterestsCosts related to the development of our mineral reserves are capitalized whenitwhenit 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 The Company also capitalizes additional 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 productionexpenditures that are expensed duedirectly related to the lackdevelopment 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.mine.

GOLDEN QUEEN MINING CO. LTD.
Notes to Consolidated Financial Statements
Years Ended December 31, 2014, 2013 and 2012
(US dollars)

Drilling and related costs are either classified as exploration or secondaryadditional development as defined above, andexpenditures, are 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.

•

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.

Property, plant, equipment and mineral interests are stated at the lower of cost or net realizable value less accumulated depreciation.

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

Depreciation is provided by the straight-line method over the estimated service lives of the respective assets, which range from 0 to 30 years, and using the units-of-production method as follows:

LandNot depreciated
•Mineral property interests and claimsAuthorization of development of the ore body by management and/or the Board of Directors; andUnits-of-production
•Mine developmentAll 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.Units-of-production
Mine equipment5 – 10 years
Buildings12 – 30 years
Leasehold improvements30 years
Vehicles5 – 10 years
Computer equipment and software3 years
Asset retirements costUnits-of-production
Capitalized interestUnits-of-production

The Company has instituted a policy that all property, plant, and equipment, not related to the actual mine development, acquired for an amount over $3,000 will be capitalized and all property, plant and equipment purchased for under this threshold will be expensed as incurred. All property, plant, and equipment related to the mine development was capitalized.

Once production has commenced, capitalizedthe capitalization of certain mine construction costs will be depleted using the units-of-production method over the estimated lifeceases and expenditures are either variable production costs as a component of the proveninventory or expensed as incurred. Exceptions include costs incurred for additions or improvements to property, plant, equipment and probable reserves.mineral interests. If mineral propertiesinterests are subsequently abandoned or impaired, any capitalized costs will be charged to the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for that period.

We assess

A mine construction project is considered to have entered the carrying costproduction stage when the mine construction assets are available for use. At this point the Company will begin depletion of our mineral propertiesits assets as outlined in the above breakdown. In determining whether mine construction assets are considered available for impairment whenever information or circumstances indicateuse, 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 flowscriteria considered include, but are less than the carrying value of the property, a write downnot limited to, the estimated fair value is chargedfollowing:

•  Completion of a reasonable period of testing mine plant and equipment;

•  Ability to produce minerals in saleable form (within specifications); and

•  Ability to sustain ongoing production of minerals.

As at December 31, 2015, the Consolidated Statements of Comprehensive Income (Loss) and Income (Loss) for the period. Where estimates of future net cash flows areProject was not available and where other conditions suggest impairment, management assesses if the carrying value canconsidered to be recovered.in commercial production

Capitalized Interest   For significant exploration and development projects, interest is capitalized as part of the historical cost of developing and constructing assets in accordance with ASC 835-20 ("capitalization of interest"). 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. SeeNote 8(v)8(vi) - Amortization of Discount and Interest Expense.

Valuation of Long-lived AssetsAccounting standards require recognition of impairment of The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the eventrelated carrying amounts may not be recoverable. Asset impairment is considered to exist if the total estimated undiscounted pre-tax future cash flows are less than the carrying amount of the asset. In estimating future cash flows, assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of future cash flows from other asset groups. An impairment loss is measured and recorded based on discounted estimated future cash flows. Future cash flows are estimated based on estimated quantities of recoverable minerals, expected silver and gold prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of mine plans.

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

Existing proven and probable reserves are included when determining the fair value of mine site asset groups at acquisition and, subsequently, in determining whether the assets are impaired. The term “recoverable minerals” refers to the estimated amount of silver and gold that will be obtained after taking into account losses during ore processing and treatment. Estimates of recoverable minerals from exploration stage mineral interests are risk adjusted based on management’s relative confidence in such materials. The ability to achieve the estimated quantities of recoverable minerals from exploration stage mineral interests involves further risks in addition to those risk factors applicable to mineral interests where proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material could ultimately be mined economically. Assets classified as exploration potential have the highest level of risk that the carrying value of such assetsthe asset can be ultimately realized, due to the still lower level of geological confidence and economic modeling.

Silver and gold prices are volatile and affected by many factors beyond the Company’s control, including prevailing interest rates and returns on other asset classes, expectations regarding inflation, speculation, currency values, governmental decisions regarding precious metals stockpiles, global and regional demand and production, political and economic conditions and other factors may not be recoverable. It requires that those long-lived assetsaffect the key assumptions used in the Company’s impairment testing. Various factors could impact our ability to be disposed of by sale are to be measured at the lower of carrying amount or fair value less cost of sale whether or not reported in continuing operations or in discontinued operations. In accordance with the provisions of the accounting standard 360-10-35, the Company reviews the carrying value of its mineral properties on a regular basis. Estimated undiscounted future cash flowsachieve forecasted production levels from proven and probable reserves. Additionally, production, capital and reclamation costs could differ from the mineral properties are compared withassumptions used in the current carrying valuecash flow models used to assess impairment. Actual results may vary from the Company’s estimates and result in order to determine ifadditional impairment exists. Reductions to the carrying value, if necessary, are recorded to the extent the net book value of the property exceeds the estimate of future discounted cash flows or liquidation value.charges.

Foreign Currency Translation The Company’s functional and reporting currency, the US dollar, is the primary economic currency. Assets and liabilities in foreign currencies are generally translated into US dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at exchange rates on the date of the transaction. Where amounts denominated in a foreign currency are converted into US dollars by remittance or repayment, the realized exchange differences are included in other income. The exchange rates prevailing at December 31, 2015, December 31, 2014 and December 31, 2013 were $1.38, $1.16, and December 31, 2012 were $1.16, $1.06 and $0.99 stated in Canadian dollars per one US dollar, respectively. The average rates of exchange during the year ended December 31, 2015, December 31, 2014 and December 31, 2013 were $1.28, $1.10 and December 31, 2012 were $1.10, $1.06, and $1.00, stated in Canadian dollars per one US dollar, respectively.

GOLDEN QUEEN MINING CO. LTD.
Notes to Consolidated Financial Statements
Years Ended December 31, 2014, 2013 and 2012
(US dollars)

Earnings (Loss) Per ShareThe Company computes and discloses earnings (loss) per share in accordance with ASC 260, “Earnings per Share”, which requires dual presentation of basic earnings (loss) per share and diluted earnings (loss) per share on the face of all income statements presented for all entities with complex capital structures. Basic earnings (loss) per share is computed as net income (loss) attributed to the Company divided by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur from common shares issuable through stock options, warrants and convertible instruments. Net income attributable to any non-controlling interest is not included in the calculation of the basic and diluted earnings (loss) per share.

Reclamation Costs (AssetAsset Retirement Obligations)Obligations Asset retirement obligations (‘‘AROs’’) arise from the acquisition, development and construction of mining properties and plant and equipment due to government controls and regulations that protect the environment on the closure and reclamation of mining properties. The major parts of the carrying amount of AROs relate to tailings and heap leach pad closure and rehabilitation, demolition of buildings and mine facilities, ongoing water treatment and ongoing care and maintenance of closed mines. The Company accruesrecognizes an ARO at the estimated costs associated with reclamation obligations intime the periodenvironmental disturbance occurs. When the ARO provision is recognized, the corresponding cost is capitalized to property, plant, equipment and mineral interests and depreciated over the life of the related assets.

The timing of the actual environmental remediation expenditures is dependent on a number of factors such as the life and nature of the asset, the operating license conditions and the environment in which the liability is incurred or becomes determinable. Until such time that a project life is established ormine operates. Reclamation provisions are measured at the Company begins capitalizing exploration expenditures when an ore body can be economically developed, the Company records the corresponding cost as an expense. The costsexpected value of future expenditures for reclamation are notcash flows discounted to their present value unless subjectusing a credit adjusted risk-free interest rate. AROs are adjusted each period to reflect the passage of time (accretion). Accretion expense is recorded in cost of sales each period. Upon settlement of an ARO, the Company records a contractually obligated fixed payment schedule.

Future reclamation expenditures are difficult to estimate due togain or loss if the early-stage natureactual cost differs from the carrying amount of the Project,ARO. Settlement gains/losses are recorded in the uncertainties associated with definingconsolidated statements of income (loss).

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

Expected ARO is updated to reflect changes in facts and circumstances. The principal factors that can cause the natureARO to change are the construction of new processing facilities, changes in the quantities of material in proven and probable mineral reserves and a corresponding change in the life-of-mine plan, changing ore characteristics that impact required environmental protection measures and related costs, changes in water quality that impact the extent of environmental disturbance, the application ofwater treatment required and changes in laws and regulations by regulatory authoritiesgoverning the protection of the environment.

Each reporting period, provisions for AROs are re-measured to reflect any changes to significant assumptions, including the amount and timing of expected cash flows and credit adjusted risk-free interest rates. Changes to the reclamation provision resulting from changes in estimate are added to or deducted from the cost of the related asset, except where the reduction of the reclamation requirements. The Company periodically reviewsprovision exceeds the provision for such reclamation costs as evidence indicating thatcarrying value of the liabilities have potentially changed. Changesrelated assets in estimates are reflectedwhich case the asset is reduced to nil and the remaining adjustment is recognized in the Consolidated Statementsconsolidated statements of Income (Loss) Comprehensive Income (Loss) in the period an estimate is revised.income (loss).

The Company is unable to determine the estimated timing of expenditures relating to reclamation accruals. It is reasonably possible that the ultimate cost of reclamation and remediation could change in the future and that changes to these estimates could have a material effect on future operating results as new information becomes known.

EstimatesThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and judgements have been made by Management in several areas including the accounting for the joint venture transaction and determination of the temporary and permanent non-controlling interest (Note 8(vi)8(vii)), the recoverability of mineral properties expenditures, reclamation reservesroyalty obligations, inventory valuations, ore on heap leach pads, asset retirement obligations (Note 3)6),convertible debentures (Note 8(ii)) and convertible debenturederivative liability – warrants (Note 8(ii)8(iv)). Actual results could differ from those estimates.

Fair Value of Financial InstrumentsThe carrying amounts reported in the balance sheets for cash, receivables, accounts payable and accrued liabilities, interest payable, closingfinancing fee payable and loans and note payablereclamation financial assurance approximate fair values because of the immediate or short-term maturity of these non-level 3 financial instruments. The fair value of the short-term and long-term loans payable approximate their carrying values as the interest rates are based on the market rates. The market rates have remained steady for the loans payable during the past four quarters. The fair value of the short and long term portions of the notes payable approximates their carrying value and have been estimated based on discounted cash flows using interest rates being offered for similar debt instruments. The carrying amount of the convertible debt instrument isnotes payable are being recorded at amortized cost using the effective interest rate method.

As at December 31, 2014,2015, the estimated fair value of the convertible debt and the notes payable was $Nil (December 31, 2014: $7,972,993) and $32,972,361 (December 31, 2014: $13,351,649), respectively. These financial instruments were estimated using a discounted cash flow analysis based on an interest rate for a similar type of instrument without a conversion feature. The notes payable does not have a conversion feature was $7,972,993. The fair value of the reclamation financial assurance approximates the carrying valuebut rather are bifurcated out due to its short term nature.the warrant liability. The embedded derivativederivatives in connection with the convertible debenture isshare purchase warrants are being recorded at itstheir fair valuevalues using an acceptable valuation model at each reporting period.

Income TaxesThe Company follows the asset and liability method of accounting for income taxes whereby the deferred tax assets and liabilities are recognized for the future tax consequences of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. If it is determined that the realization of thea future tax benefit is not more likely than not, the Company establishes a valuation allowance.

Stock Option PlanThe 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’sCompany��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 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 the expiry date of the vested portion of a stock optionsoption will terminate onbe the earlier of the expiry ofdate so fixed by the termBoard at the time the stock option is awarded and (i) 12 months from the early termination date an option holder dies, (ii) 12 months from(the “Early Termination Date”). The Early Termination Date will be the date the vested portion of a stock option expires following the option holder ceasesceasing to act asbe a director, employee or officerconsultant, as determined by the Board at the time of grant, or in the Company, or (iii) 12 months fromabsence thereof at any time prior to the datetime the option holder ceases to be employed,a director, employee or engaged as a consultant, byin accordance with and subject to the Company.provisions of the Plan. 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. A total of 750,0001,070,000 (December 31, 20132014 – 1,380,000)750,000) common shares were issuable pursuant to such stock options as at December 31, 2014.2015.

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 2013 and 2012
2013

(US dollars)

Stock-based CompensationCompensation costs are charged to the consolidated statements of income (loss) and comprehensive income (loss). Compensation costs for employees are amortized over the period from the grant date to the date the options vest. Compensation expense for non-employees is recognized immediately for past services and pro-rata for future services over the service provision period.

We account for stock-based compensation awards granted to non-employees in accordance with FASB ASC Topic 505-50,Equity-Based Payments to Non-Employees, or ASC 505-50. Under ASC 505-50, we determine the fair value of the stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

The Company uses the Black-Scholes option valuation model to calculate the fair value of stock options at the date of grant. Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value estimate.

Derivative Financial InstrumentsThe Company reviews the terms of its equity instruments and other financing arrangements to determine whether or not there are embedded derivative instruments that are required to be accounted for separately as a derivative financial instrument. Also, in connection with the issuance of financing instruments, the Company may issue freestanding options or warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. The Company may also issue options or warrants to non-employees in connection with consulting or other services.

Derivative financial instruments are measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to profit or loss. For warrant-based derivative financial instruments, the Company uses the Black-Scholes option pricing model to estimate fair value of the derivative instruments. For more complex derivative financial instruments, the Company uses acceptable pricing models to estimate fair value of the derivative instrument.

The classification of derivative instruments, including whether or not such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. If reclassification is required, the fair value of the derivative instrument, as of the determination date, is reclassified. Any previous charges or credits to income for changes in the fair value of the derivative instrument are not reversed. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Non-Controlling Interest The non-controlling interest balance 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(vii) of the audited consolidated annual financial statements for complete details of how the transaction has been accounted for.

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 2013 and 2012
2013

(US dollars)

New Accounting Policies

(i)

(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 issubstantialsubstantial doubt about the entity’s ability to continue as a going concernwithin 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(ii)In February, 2015, the statementsFASB issued ASU 2015-02,Consolidation (Topic 810) – Amendments to the Consolidation Analysiswhich 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 income, cash flows,consolidation models from four to two, the new standard simplifies the standards 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.improves current GAAP by:

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.

GOLDEN QUEEN MINING CO. LTD.
Notes to Consolidated Financial Statements
Years Ended December 31, 2014, 2013 and 2012
(US dollars)

(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, 2015, the FASB issued ASU 2015-02,Consolidation (Topic 810)– Amendments to the Consolidation Analysiswhich 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 will adopt the ASU effective January 1, 2016.

(iii)In April, 2015, FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30) which focuses on simplifying the presentation of debt issuance costs, the amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update.

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

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 has adopted the ASU for the December 31, 2015 year end.

(iv)In July 2015, FASB issued ASU 2015-11, Inventory – Simplifying the Measurement of Inventory (Topic 330) which focuses on simplifying the guidance on subsequent measurement of inventory. Currently, the guidance requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. The ASU now updated the measurement to lower of cost and net realizable value.Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.

The ASU will be effective for periods beginning after December 15, 2016, for public companies. Early adoption is permitted, including adoption in an interim period. The Company assessed the impact of this new standard and adopted the new standard effective October 1, 2015. As the Company had a small inventory balance, the impact of the adoption of the new standard was immaterial.

(v)In November 2015, FASB issued ASU 2015-17, Income taxes – Balance sheet classification of deferred taxes (Topic 740), which simplifies the requirement to classify deferred tax assets and liabilities as non-current and current on the statement of financial position to only having to classify the deferred tax assets and liabilities as non-current.

This update will come into effect for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company has assessed the impact of the new standard and has adopted the standard for the December 31, 2015 year end.

(vi)In January 2016, FASB issued ASU 2016-01, Financial Instruments – Recognition and measurement of financial assets and financial liabilities (Subtopic 825-10) which updates several aspects of recognition, measurement, presentation and disclosure of financial instruments. The amendments are as follows:

1.Require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.
2.Simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value
3.Eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities.
4.Eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet.
5.Require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.
6.Require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments.
7.Require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements.
8.Clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets.

The ASU will be effective for periods beginning after December 15, 2017, for public companies. The Company is assessing the impact of this standard.

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

1.Basis of Presentation and Ability to Continue as a Going Concern

The Company has had no revenues from operations since inception and as at December 31, 20142015 had aaccumulated deficit of $74,444,816$79,906,021 (December 31, 20132014 - $65,975,612)$74,444,816) and working capital deficit of $65,110,327$7,743,109 (December 31, 2013 –$3,585,305)2014 –working capital of $65,110,327).

On June 9, 2014, the Company announced that it had entered into an agreement (the “JV”) with Gauss LLC (“Gauss”) for a 50% interest in the Project. On September 9, 2014, the Company’s shareholders approved the JV, which then closed on September 15, 2014. Pursuant to the JV, the Company’s wholly owned subsidiary, Golden Queen Mining Co., Inc. (“GQM Inc.”) was converted into a limited liability company, GQM LLC. On closing of the JV, Gauss invested $110,000,000 into GQM LLC and received 110,000 newly created membership units of GQM LLC to give it 50% ownership, with the Company retaining 50% interest in GQM LLC through its newly formed and wholly owned subsidiary GQM Holdings. The JV and thus the Project continues to be consolidated in the financial statements of Golden Queen.See Note 8 for complete details on the JV.

The funds received from Gauss’ investment will help the Company move the Project through the development stage and into the production phase.

GOLDEN QUEEN MINING CO. LTD.
Notes to Consolidated Financial Statements
Years Ended December 31, 2014, 2013 and 2012
(US dollars)

1.Basis of Presentation and Ability to Continue as a Going Concern - Continued

At the Project level, GQM LLC is a going concern as it has sufficient funds to meet its contractual obligations for the next twelve months. However, the assets of GQM LLC are not available to be used to satisfy the obligations of Golden Queen. Therefore, onOn a non-consolidated basis, the ability of Golden Queen to obtain financing for its ongoing activities and repay its obligations, thus maintainmaintaining its solvency, 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 this entity money. Golden Queen has a related party outstanding loan in the amount of $12,500,000loans totalling $38,681,507 plus accrued interest that will come due in July 2015 and a related party convertible debenture in the amount of CDN$10,000,000 plus accrued interest that will also come due in July 2015. The Company has the option to settle the CDN$10,000,000 convertible debt by issuing common shares at maturity. The loan and the convertible debenture were provided by members of the Clay family, who are shareholders of the Company, members which include an investment vehicle managed by Thomas M. Clay, a Director and insider of the Company.December 2016.

Golden Queen, on a non-consolidated basis, currently does not have sufficient funds to repay the $12,500,000$37,500,000 loan plus accrued interest at the issuance date of the consolidated financial statements. This raises substantial doubt about this entity’s ability to continue as a going concern.

However, in order to secure the necessary funds to meet this upcoming obligation and mitigate the going concern uncertainty,issue, management is actively exploring several options including debt financing and equity offering. The Company recently filed a Form S-3 shelf prospectus in the U.S. (dated August 21, 2014) and a preliminary short form shelf prospectus in Canada (dated March 6, 2015) in preparation for a potential equity raise. The Company is also in discussions with lenders to potentially secure debt financing that would allow the Company to repay the $12,500,000 loan. Management will review and assess all options available to find the most beneficial option to the Company and its shareholders.

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

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. Please refer to Note 16 for non-consolidated balance sheets, statements of income/(loss) and comprehensive income/(loss) and statements of cash flows for GQM Ltd.

These consolidated 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.

2.PropertyInventory and Ore on Heap Leach Pad

Property consists of:

   December 31, 2014  December 31, 2013 
Land $ 109,600 $ 109,600 
Rental properties  324,566  324,566 
Property, cost  434,166  434,166 
Less accumulated depreciation  (182,699) (147,910)
Property, net $ 251,467 $ 286,256 

  December 31, 2015  December 31, 2014 
       
Stockpile inventory $1,259,669  $- 
Supplies and spare parts  592,690   - 
  $1,852,359  $- 
         
Ore on heap leach pad:        
Current $83,240   - 

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 2013 and 2012
2013

(US dollars)

3.3.Property, Plant, Equipment and Mineral PropertiesInterests

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 and began capitalizing all development expenditures directly related to the Project. Prior to July 2012, all acquisition costs were expensed due to uncertainties around obtaining the necessary permits. Components of capitalized costs related to the mineral properties as of December 31, 2014 and 2013 are as follows:

   December 31, 2014  December 31, 2013 
        
 Mineral property interest, land and claims$ 3,299,319 $ 1,907,549 
 Deferred mine development costs 31,020,717  7,804,377 
 Asset retirement costs 272,567  200,675 
 Capitalized interest 2,412,015  - 
 Capitalized depreciation 133,516  6,885 
        
 Balance, end of the year$ 37,138,134 $ 9,919,486 
  December 31, 2015  December 31, 2014 
       
Land $109,600  $109,600 
Mineral property interests and claims  4,458,744   3,299,319 
Mine development  86,038,407   29,609,116 
Mining equipment  25,425,661   1,167,872 
Buildings  5,691,335   378,260 
Leasehold improvements  51,030   46,402 
Computer equipment and software  218,822   72,509 
Vehicles  978,573   204,640 
Asset retirement costs  626,878   272,567 
Capitalized interest  5,174,846   2,412,015 
Less:        
Accumulated depreciation, depletion and Amortization expensed  (211,324)  (182,699)
  $128,562,572  $37,389,601 

As at December 31, 2014, included in deferred mine development costs are buildings and equipment with a total accumulated cost of $2,424,635 (2013 - $226,721). Total additions during the year ended December 31, 2014 were $2,197,914 (2013 - $226,721).

During the year ended December 31, 2014,2015, the Company capitalized depreciation of $126,631 (2013$2,255,056 (2014 - $6,885)$126,631) relating to these assets was capitalized within deferred mine development.used in the development of the mine.

The Company is capitalizing a portion of the interest expense related to the convertible debenture and loannotes payable in accordance with its accounting policy.See Note 8 (v)–Amortization(vi) –Amortization of DiscountDiscounts and Interest Expense.

4.Income Taxes

The tax effects of the temporary differences that give rise to the Company's deferred tax assets and liabilities are as follows:

   2014  2013 
        
 Net operating and capital losses$ 11,129,000 $ 8,180,000 
 Property and equipment -  117,000 
 Mineral properties and deferred exploration costs -  2,703,000 
 Asset retirement obligations -  188,000 
 Foreign exchange (gain) loss (161,000) (109,000)
 Financing costs (54,000) 5,000 
 Investment in GQM LLC 939,000  - 
 Valuation allowance (11,853,000) (11,084,000)
        
 Deferred tax assets (liabilities)$ - $ - 

  2015  2014
(Restated)		 
Deferred Tax Assets / (Liabilities):        
Net operating and capital losses $10,944,000  $

12,051,000

 
Un-deducted interest  823,000   - 
Other items  

124,000

   

569,000

 
Reorganization costs  47,000   - 
Foreign exchange (gain) loss  (127,000)  (186,000)
Financing costs  444,000   - 
Investment in GQM LLC  (12,922,000)  (12,922,000)
Valuation allowance  (12,255,000)  (12,434,000)
         
Deferred tax liabilities $(12,922,000) $(12,922,000)

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 2013 and 2012
2013

(US dollars)

4.Income Taxes - Continued

The provision for income taxes differsannual tax benefit (provision) is different from the amount established usingprovided by applying the statutory federal income tax rate as follows:to our pre-tax income (loss). The reason for the differences are:

   December  December  December 
   31, 2014  31, 2013  31, 2012 
 Income tax provision (benefit) at Canadian statutory rate$ (2,567,000)$ 509,000 $ (318,000)
 Foreign income taxes at other than Canadian statutory rate (638,000) (125,000) (175,000)
 Change in fair value of derivative liability (288,000) (1,271,000) (278,000)
 Non-deductible accretion and other 80,000  204,000  (15,000)
 Non-deductible stock-based compensation 67,000  119,000  - 
 Non-taxable effect on foreign exchange 175,000  (17,000) (61,000)
 Non-deductible costs 1,458,000  -  - 
 Non Controlling Interest 561,000  -  - 
 Change in statutory rate (322,000) (64,000) - 
 Adjustment due to change in estimates -  72,000  (81,000)
 Increase (decrease) in valuation allowance 1,474,000  573,000  928,000 
 Deferred tax recovery$ - $ - $ - 

  December
31, 2015		  December
31, 2014
(Restated)		  December
31, 2013		 
Income tax (benefit) provision at Canadian statutory rate $(1,733,000) $(2,567,000) $509,000 
Foreign income taxes at other than Canadian statutory rate  (841,000)  (638,000)  (125,000)
Change in fair value of derivative liability  (867,000)  (288,000)  (1,271,000)
Non-deductible accretion and other  839,000   80,000   204,000 
Non-deductible stock-based compensation  41,000   67,000   119,000 
Non-taxable effect on foreign exchange  407,000   175,000   (17,000)
Permanent differences, other  50,000   1,458,000   - 
Non-controlling Interest  838,000   561,000   - 
Change in statutory rate  -   (322,000)  (64,000)
Adjustment due to change in estimates  1,265,000   -   72,000 
Increase (decrease) in valuation allowance  1,000   1,474,000   573,000 
Tax (benefit) provision $-  $-  $- 

Included in the increase in valuation allowance is tax-affected $180,000 (2014 - $705,000, (20132013 - $2,045,000, 2012 - $nil)$2,045,000) relating to the expiry of net operating losses.

The Company evaluates its valuation allowance requirements based on projected future operations. When circumstances change and this causes a change in management’s judgment about the recoverability of deferred tax assets, the impact of the change on the valuation allowance is reflected in current income.income or loss. As management of the Company does not currently believe that the Company will receive the benefit of this asset, a valuation allowance equal to thecertain net deferred tax assets has been established at both December 31, 20142015 and 2013.2014.

As at December 31, 2014,2015, the Company had net operating loss carry-forwards available to reduce taxable income in future years as follows:

CountryAmountExpiration Dates
United States – Federal$ 21,934,0002018 – 2034
Canada (C$)$ 10,507,0002015 – 2034

Country Amount  Expiration Dates
      
United States – Federal $23,618,000  2018 - 2034
Canada (C$) $5,863,000  2026 - 2034

These consolidated financial statements do not reflect the potential effect on future income taxes of the application of these losses.

The FASB’s guidance for “Accounting for Uncertainty in Income Taxes” clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

The Company has evaluated its tax positions for the years ended December 31, 20142015 and 20132014 and determined that it has no uncertain tax positions requiring financial statement recognition.

Under current federal and state income tax laws and regulations, GQM LLC, a multi-member limited liability company (“LLC”) is treated as a partnership for income tax reporting purposes and is generally not subject to income taxes. Additionally, at the LLC level no provision has been made for federal, state, or local income taxes on the results of operations generated by partnership activities; as such taxes are the responsibility of its Members.

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 2013 and 2012
2013

(US dollars)

5.Share Capital

The Company’s common shares outstanding are no par value, voting shares with no preferences or rights attached to them.

Common shares – 2015

In March 2015, the Company issued 150,000 common shares to the former President of the Company for achieving two of the three milestones outlined in his management agreement (See Note 7 – Commitments and Contingencies). The common shares had a total fair value of $151,428 (Note 8(i)). The fair value was based on the market price on the date of issuance.

Common shares - 2014

In May 2014, 300,000 stock options were exercised and the Company issued 300,000 common shares at $0.21 per share for proceeds of $63,000. The total transferred to share capital from additional paid-in capital upon exercise of stock options was $160,592.

In April 2014, 170,000 stock options were exercised and the Company issued 170,000 common shares at $0.21 per share for proceeds of $35,700. The total transferred to share capital from additional paid-in capital upon exercise of stock options was $91,002.

In February 2014, the Company issued 15,300 common shares for mineral property interests with a total fair value of $24,480. The fair value was based on the market price on the date of issuance.

In February 2014, 60,000 stock options were exercised and the Company issued 60,000 common shares at $0.21 per share for proceeds of $12,721. The total transferred to share capital from additional paid-in capital upon exercise of stock options was $32,118.

Common shares - 2013

In March 2013, the Company issued 15,000 common shares for mineral property interests with a total fair value of $22,568 (C$23,250).

In April 2013, 200,000 stock options were exercised and the Company issued 200,000 common shares at C$0.26 per share for proceeds of $50,674 (C$52,000). The total reclassified from derivative liability to additional paid-in capital upon exercise of stock options was $132,011.

In May 2013, 100,000 stock options were exercised and the Company issued 100,000 common shares at C$0.26 per share for proceeds of $25,722 (C$26,000). The total reclassified from derivative liability to paid-in capital upon exercise of stock options was $90,496.

In September 2013, 20,000 stock options were exercised and the Company issued 20,000 common shares at C$0.26 per share for proceeds of $5,017 (C$5,200). The total reclassified from derivative liability to additional paid-in capital upon exercise of stock options was $24,724.

In October 2013, 500,000 stock options were exercised and the Company issued 500,000 common shares at C$0.26 per share for proceeds of $126,373 (C$130,000). The total reclassified from derivative liability to additional paid-in capital upon exercise of stock options was $355,351.

In October 2013, 300,000 stock options were exercised and the Company issued 300,000 common shares at C$0.26 per share for proceeds of $74,677 (C$78,000). The total reclassified from derivative liability to additional paid-in capital upon exercise of stock options was $238,623.

In November 2013, 100,000 stock options were exercised and the Company issued 100,000 common shares at C$0.26 per share for proceeds of $24,900 (C$26,000). The total reclassified from derivative liability to additional paid-in capital upon exercise of stock options was $68,849.

Common shares - 2012

In November 2012, the Company issued 20,000 common shares for mineral property interests with a total fair value of $52,852 (C$52,000).

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 2013 and 2012
2013

(US dollars)

5.Share Capital -– Continued

Stock options

The Company has elected to use the Black-Scholes option pricing model to determine the fair value of stock options granted. In accordance with the accounting standard for employees, the compensation expense is amortized on a straight-line basis over the requisite service period, which approximates the vesting period. Compensation expense for stock options granted to non-employees is amortized over the contract services period or, if none exists, from the date of grant until the options vest. Compensation associated with unvested options granted to non-employees is re-measured on each balance sheet date using the Black-Scholes option pricing model.

On December 23, 2013, the Board of the Company passed a resolution to convert the exercise prices of granted stock options to US dollars, being the functional currency of the Company. Prior to this, the Company was recognizing a derivative liability on the balance sheet for these options since they were not denominated in the functional currency.
Refer to Note 10– Derivative liability for further details.

The following is a summary of stock option activity during the yearyears ended December 31, 2014:

      Weighted 
      Average Exercise 
   Shares  Price per Share 
 Options outstanding and exercisable: December 31, 2013 1,380,000 $0.87 
 Stock options forfeited (100,000)$1.16 
 Stock options exercised (530,000)$0.21 
 Options outstanding, December 31, 2014 750,000 $1.29 
 Options exercisable, December 31, 2014 750,000 $1.29 

The following is a summary of stock option activity during the year ended December 31,2015, 2014 and 2013:

      Weighted 
      Average Exercise 
   Shares  Price per Share 
 Stock options issued 800,000 $1.28 
 Stock options exercised (1,220,000)$0.21 
 Options outstanding, December 31, 2013 1,380,000 $0.87 
 Options exercisable, December 31, 2013 880,000 $0.68 

  Shares  Weighted
Average Exercise 
Price per Share		 
Options outstanding, December 31, 2012  1,800,000  $0.24 
Options issued  800,000  $1.28 
Options exercised  (1,220,000) $0.21 
Options outstanding, December 31, 2013  1,380,000  $0.87 
Options exercisable, December 31, 2013  880,000  $0.68 
         
Options outstanding, December 31, 2013  1,380,000  $0.87 
Options exercised  (530,000) $0.21 
Options forfeited  (100,000) $1.16 
Options outstanding, December 31, 2014  750,000  $1.29 
Options exercisable, December 31, 2014  750,000  $1.29 
         
Options outstanding, December 31, 2014  750,000  $1.29 
Options issued  570,000  $0.58 
Options expired  (250,000) $1.18 
Options outstanding, December 31, 2015  1,070,000  $0.94 
Options exercisable, December 31, 2015  976,667  $0.97 

During the year ended December 31, 2014,2015, the Company recognized $233,672 (2013$159,001 (2014 - $233,672; 2013 - $475,263) in stock-based compensation relating to employee stock options that havewere issued and/or had vesting terms. This included a reversal of $46,245 (2013$Nil (2014 - $46,245; 2013 - $Nil) in stock based compensation related to forfeited stock options.

During the year ended December 31, 2013, there were 800,000 stock options issued for a total stock-based compensation expense of $475,263 of which $271,137 related to stock options issued to employees and $204,126 related to stock options issued to non-employees. Of the options issued, 50,000 were issued to a consultant and vested immediately while an additional 150,000 options were issued to directors and they also vested immediately. The remaining 600,000 stock options were issued to two employees of which 100,000 vested immediately. The remaining 500,000 stock options had vesting conditions as follows:

300,000 options - 100,000 vesting every 6 months from grant date for a total vesting period of 18 months using the straight line method; and

GOLDEN QUEEN MINING CO. LTD.
Notes to Consolidated Financial Statements
Years Ended December 31, 2014, 2013 and 2012
(US dollars)

5.Share Capital–Continued

200,000 options - 100,000 vesting every 6 months from grant date for a total vesting period of 12 months using the straight line method.

In addition, during the year ended December 31, 2013, the Company extended the expiry date of 650,000 stock options issued to non-employees from January 28, 2014 to May 30, 2014. All other stock options remain unchanged.

The fair value of stock options granted as above is calculated using the following weighted average assumptions:

 20142013
   
Expected life years-5
Interest rate-1.78%
Volatility-98.25%
Dividend yield-0%

  2015  2014  2013 
          
Expected life years  5.00   -   5.00 
Interest rate  0.75%  -   1.78%
Volatility  76.83%  -   98.25%
Dividend yield  0.00%  -   0.00%

As at December 31, 2014,2015, the aggregate intrinsic value of the outstanding exercisable options was $Nil (December 31,(2014 - $Nil; 2013 -– $325,995).

There were no stock options exercised during the year-ended December 31, 2015. The total intrinsic value of 530,000 (2013 – $1,220,000) options exercised during 2014 was approximately $754,513 (December 31, 2013(2013 - $881,816)$325,158).

The unamortized compensation expense as at

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 was $Nil (December 31,and 2013 - $325,158).

(US dollars)

5.Share Capital – Continued

The following table summarizes information about stock options outstanding and exercisable at December 31, 2014:2015:

      Weighted    
   Number  Average    
   Outstanding  Remaining    
 Expiry and  Contractual Life  Exercise 
 Date Exercisable  (Years)  Price 
           
 April 18, 2015 50,000  0.30 $1.22 
 November 11, 2015 200,000  0.86 $1.16 
 June 3, 2018 50,000  3.42 $1.16 
 September 3, 2018 150,000  3.68 $1.59 
 September 18, 2018 300,000  3.72 $1.26 
           
 Outstanding, December 31, 2014 750,000  2.70    
 Exercisable, December 31, 2014 750,000  2.70    

Expiry
Date		 Number
Outstanding		  Number
Exercisable		  Remaining
Contractual Life
(Years)		  Exercise
Price		 
                 
June 3, 2018  50,000   50,000   2.42  $1.16 
September 3, 2018  150,000   150,000   2.68  $1.59 
September 18, 2018  300,000   300,000   2.72  $1.26 
September 8, 2020  570,000   476,667   4.69  $0.58 
Balance, December 31, 2015  1,070,000   976,667   3.75     

6.Asset Retirement Obligations and Financial Reclamation Assurance

Financial Reclamation Assurance

The Company is required to provide the Bureau of Land Management, the State Office of Mine Reclamation and Kern County with a revised reclamation cost estimate annually.  The financial assurance is adjusted once the cost estimate is approved.

The Company’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 of reclamation financial assurance. The reclamation assurance provided as at December 31, 2015 was $624,142 (December 31, 2014 - $553,329).

The

In addition to the above, the Company has providedis required to obtain and maintain financial assurance for initiating and completing corrective action and remediation of a reasonably foreseeable release from the Project’s waste management units as required by the Lahontan Regional Water Quality Control Board (the “Regional Board”).  The reclamation financial assurance estimate for 2015 is $278,240 (December 31, 2014 - $Nil). 

Subsequent to year-end, the BureauCompany received approval to have the financial assurance amounts released and have the assurance replaced with surety bond agreements to cover the financial assurance.  The Company pays a yearly premium.

Asset Retirement Obligation

The total asset retirement obligation as 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.

GOLDEN QUEEN MINING CO. LTD.
Notes to Consolidated Financial Statements
Years Ended December 31, 2015 is $978,453 (December 31, 2014 2013 and 2012
(US dollars)- $624,142). 

6.Asset Retirement Obligations - Continued

The Company estimated its asset retirement obligations based on its understanding of the requirements to reclaim and clean up theclean-up its property within the Project based on its activities and planned activities to date.

Management made  During the decision to capitalize all development expenditures directly relatedyear ended December 31, 2015, there was an increase of $354,311 to the Project in July 2012,retirement obligations as a resultcompared with the year ended December 31, 2014, where $71,892 (December 31, 2013- $76,312) was capitalized to property, plant, equipment and mineral interests as the asset portion of the retirement obligation for the year endedobligation.  As at December 31, 2014. 2015, as the mine nears production, the Company estimates the cash outflow related to these reclamation activities will be incurred in 2028.   Reclamation provisions are measured at the expected value of future cash flows discounted to their present value using a credit adjusted risk-free interest rate.

The following is a summary of asset retirement obligations:

   2014  2013 
 Balance, beginning of the year$ 552,250 $ 475,938 
 Changes in cash flow estimates 71,892  76,312 
 Balance, end of the year$ 624,142 $ 552,250 

  December 31, 2015  December 31, 2014 
Balance, beginning of the year $624,142  $552,250 
Changes in cash flow estimates  354,311   71,892 
Balance, end of the year $978,453  $624,142 

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

7.Commitments and Contingencies

Property rent payments (Advance minimum royalties)

The Company has acquired a number of mineral properties outright. It has acquired exclusive rights to explore, develop and mine other portions of the Project under various mining lease agreements with landowners.

The Company is required to make property rent payments related to its mining lease agreements with landholders, in the form of advance minimum royalties. The total property rent payments for the year ended December 31, 20142015 were $183,950 of which $24,480 was related to common shares issued (2013$134,417 (2014 - $161,190 of which $22,568 related to common shares issued)$67,513), and the Company is expected to make approximate payments of $150,000$2,500 in 20152016 to various landowners under the existing lease agreements. The paymentssignificant reduction is due to the expected commencement of production. At that point, production royalties will cease if and when the Company goes into production and then begins paying royalty payments on production yields.commence.

There are multiple third party landholders and the royalty amount due to each landholder over the life of the Project varies with each property.

Finder’s fee

The Company has agreed to issue 100,000 common shares as a finder’s fee in connection with certain property acquisitions upon commencement of commercial production of the Project. As of December 31, 2014,2015, commercial production has not commenced and no shares have been issued.

Management agreement

In 2004, the Company entered into an agreement with the President of the Company to issue 300,000 bonus shares upon completion of certain milestones. Upon receipt by the Company of a bankable feasibility study and the decision to place the Property into commercial production (Achieved), a bonus of 150,000 (Issued) common shares would be issued. Upon commencement of commercial production on the Property, a further bonus of 150,000 common shares would be issued. In May 2010, the Company entered into an amendment to the agreement whereby the 300,000 bonus shares would alternatively 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. This amended agreement iswas for a term of three years and shall automatically renewrenewed for two years. AsThe first of two milestones was reached during the first quarter of 2015 and as a result 150,000 bonus shares, valued at December 31, 2014, none$151,428, were issued to H. Lutz Klingmann on March 27, 2015.

In May 2015, the Company replaced the President’s management agreement with an employment agreement.  In addition to the previously mentioned bonus shares issuable upon commencement of commercial production, included in the agreement with the President is a provision that if the President’s position is lost upon a change of control or within six months of a change of control the President would be entitled to a one-time payment equal to twice the annual salary C$438,000 total plus twice the annual bonus.  The annual bonus is determined by the Board subsequent to a review of the milestones had been reachedPresident’s performance.

On August 10, 2015, the President and Chief Executive Officer of the Company resigned. The Company and the former President and Chief Executive Officer entered into a separation agreement as of August 10, 2015, which provides for the termination of the employment agreement and an agreement for the Company to pay six month’s salary commencing from the date of termination. The separation agreement also confirms that as a result of the termination of the employment agreement, the 150,000 bonus shares that were to be issued upon reaching the commencement of production, will no commitmentlonger be issuable as that milestone was not met as at the date of termination of the employment agreement.

The Company hired current board member, Thomas M. Clay, to issuetake over the common sharesposition of Interim Chief Executive Officer with a yearly salary of $100,000. No consulting agreement or management agreement has been recorded in connection with these arrangements.signed at this time.

During the year ended December 31,

In 2013, the Company entered into an employment agreementsagreement with a newthe Chief Financial Officer (“CFO”). Included in the agreement with the CFO is a provision that if the CFO’s position is lost upon a change of control or within six months of a change of control the CFO would be entitled to a one-time payment equal to twice the annual salary, C$300,000 total, plus twice the annual bonus. The annual bonus is determined by the Board subsequent to a review of the CFO’s performance.

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 2013 and 2012
2013

(US dollars)

7.Commitments and Contingencies -– Continued

Compliance with Environmental Regulations

The Company’s exploration and development activities are subject to laws and regulations controlling not only the exploration and mining of mineral properties, but also the effect of such activities on the environment. Compliance with such laws and regulations may necessitate additional capital outlays or affect the economics of a project, and cause changes or delays in the Company’s activities.

The Company may, from time to time, be involved in legal proceedings and claims that arise in the ordinary course of business. The Company believes that any adverse outcome of existing claims, individually or in the aggregate, would not have a material effect on its financial position, results of operations or cash flows.

Mine Development Commitments

As of December 31, 2015, GQM LLC has entered into contracts for construction totaling approximately $36.9$47.6 million as of December 31, 2014, of which $5.8$4.4 million had been paid as of December 31, 2014.remains to be paid.  The major commitments relate to the construction of the heap leach pad for $8.3 million,crushing-screening plant, the construction of the conveying &and stacking system for $8.2 million and work related to the Merrill-Crowe plant equipment for $7.1 million.equipment.  The commitments are expected to bewere paid out in 2015. In addition,early 2016.  GQM LLC committed, as of December 31, 2014, to $15.2 million of Komatsu mobile mining equipment with Road Machinery LLC. The final terms of the mobile equipment financing weredid not known as of December 31, 2014.

GQM LLC made approximately $23.4 million inmake material additional construction commitments subsequent to December 31, 2014, including $18.1 million2015.

See Note 12 for further details on the crushing-screening plant constructionmining equipment loans.

8.Related Party Transactions

Except as noted elsewhere in these consolidated financial statements, related party transactions are disclosed as follows:

(i)Consulting Fees

For the year ended December 31, 2014,2015, the Company paid $163,465 (2013$201,312 (2014 – 163,465; 2013 - $192,431; 2012 - $138,885)$192,431) to Mr. H. L.Lutz Klingmann for services as President of the Company of which $Nil (2013(2014 - $47,967; 2012 - $26,977 )$Nil; 2013 – 47,467) is payable as at December 31, 2014; paid $Nil (20132015. Included in the consulting fees for the year ended December 31, 2015 was $151,428 (2014 - $17,622; 2012$Nil; 2013 - $26,977$Nil) related to 150,000 bonus shares issued in accordance with Mr. Chester Shynkaryk, a former director, for his consulting services to the Company; paid $Nil (2013 - $21,987; 2012 - $29,930), toKlingmann’s management agreement. On May 1, 2015 Mr. Ross McDonald for his services as the former CFOKlingmann became an employee of the Company; paid $Nil (2013 - $11,759; 2012 - $Nil) to a company controlled by one ofCompany and his salary, since that date, is included under corporate salary expenses. Included in salaries expense is the directors for consulting services during the year.severance payments received upon resignation.

During the year ended December 31, 2014,2015, the Company paid a total of $150,199 (2013$107,327 (2014 - $35,484; 2012$150,199; 2013 – $10,068)$35,484) 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.

(ii)Convertible Debentures

On July 26, 2013, the Company entered into agreements to issue convertible debentures for aggregate proceeds of C$10,000,000 ($9,710,603), from a significant shareholder group. The convertible debentures arewere unsecured and bearbore interest at 2% per annum, calculated on the outstanding principal balance, payable annually. The principal amounts of the notes arewere convertible into shares of the Company at a price of C$1.03 per share for a period of two years. If the notes have not been 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.

GOLDEN QUEEN MINING CO. LTD.
Notes to Consolidated Financial Statements
Years Ended December 31, 2014, 2013 and 2012
(US dollars)

8.Related Party Transactions–Continued

(ii)Convertible Debentures - Continued

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. The Company agreed to pay the legal fees incurred by the lenders relating to this instrument which amounted to $10,049.

The conversion feature of the convertible debentures meetsmeet the definition of a derivative liability instrument because the conversion feature is denominated in a currency other than the Company’s functional currency as well as the fact the exercise price is not a fixed price as described above. Therefore, the conversion feature does not meet the “fixed-for-fixed” criteria outlined in ASC 815-40-15.

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

8.Related Party Transactions – Continued

(ii)Convertible Debentures – Continued

As a result, the conversion feature of the notes iswas 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 inceptionJuly 24, 2015, the Company repaid its C$10.0 million ($7.7 million) convertible debenture and accrued interest of the debentures, theC$200,000 ($153,500).

The fair value of the derivative liability related to the conversion feature was $5,741,520 and as at December 31, 2014, was $1,829,7702015 is $Nil (December 31, 20132014 - $2,833,987)$1,829,770). TheDuring 2015 and 2014 the derivative liability was calculated using an acceptable option pricing valuation model with the following assumptions:

  20142013
 Risk-free interest rate1.00% - 1.09%1.13% - 1.15%
 Expected life of derivative liability0.57 - 1.32 years1.57 - 2 years
 Expected volatility73.03 - 98.21%73.43% - 89.52%
 Dividend rate0.00%0.00%

  2015  2014 
Risk-free interest rate  0.49% - 0.50%  1.00% - 1.09%
Expected life of derivative liability  0.07 - 0.32 years   0.57 - 1.32 years 
Expected volatility  49.36% - 77.00%  73.03% - 98.21%
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 debenture 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.

  December 31, 2015  December 31, 2014 
Balance, beginning of the period $1,829,770  $2,833,987 
Change in fair value of derivative liability including foreign exchange  (1,829,770)  (1,004,217)
Balance, end of the period $-  $1,829,770 

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 

GOLDEN QUEEN MINING CO. LTD.
Notes to Consolidated Financial Statements
Years Ended December 31, 2014, 2013 and 2012
(US dollars)

8.Related Party Transactions–Continued
  December 31, 2015  December 31, 2014 
Balance, beginning of the period $6,649,967  $4,642,620 
Amortization of discount  1,852,754   2,510,611 
Foreign exchange  (827,721)  (503,264)
Repayment of convertible debenture  (7,675,000)  - 
Balance, end of the period $-  $6,649,967 

During the year ended December 31, 2014,2015, in addition to the amortization of the discount on the convertible debenture, the Company incurred interest expense of $181,479 (2013$94,907 (2014 - $76,699)$181,479) based on the 2% per annum stated interest rate for a total amortization of discount and interest expense of $2,692,090$1,947,661 for the year ended December 31, 2014 (2013- $888,026)2015 (2014- $2,692,090). Interest payable relating to the convertible debenture as at December 31, 2015 was $Nil (December 31, 2014 was $70,721 (2013 - $76,699)$70,721).

(iii)Notes Payable

On January 1, 2014, the Company entered into an agreement to secure a $10,000,000 loan (the “Loan”“January 2014 Loan”). TheLoanThe January 2014 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 2014 Loan had a twelve-month term and an annual interest rate of 5%, payable on the maturity date.

The January 2014 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 2014 Loan was repaid. The Company repaid $7,500,000 loan plus the $375,000 accrued interest and $375,000 additional charge on December 31, 2014. 

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

8.Related Party Transactions – Continued

(iii)Notes Payable – Continued

The remaining balance of the 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 in interest expense and $500,000 in additional charge duringrelated to the year.January 2014 Loan.

On December 31, 2014 the Company also entered into a new loan (the “December 2014 Loan”) with the same parties for an amount of $12,500,000. The loan isDecember 2014 Loan was due on demand on July 1, 2015 and bearsbore an annual interest rate of 10% payable at the end of each quarter. The loan iswas 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 closingfinancing fee to secure the 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 also agreed to provide the lenders with the option for certain registration rights whereby the Company would bear the costs and responsibility of registering the lenders common shares for the purposes of disposition subsequent to July 1, 2015. The Company has determined it is unlikely the registration option would be exercised and therefore has not accrued any potential costs related to the registration of the common shares. The Company has presented these transaction costs as a contra liability as substantially all of these costs were paid to the lenders.

On June 8, 2015, the Company amended the December 2014 Loan to extend the maturity to December 8, 2016 and increased the principal amount from $12,500,000 to $37,500,000 (the “June 2015 Loan”). The Company also issued 10,000,000 common share purchase warrants exercisable for a period of five years expiring June 8, 2020. The common share purchase warrants have an exercise price of $0.95. All other terms remained the same as the December 2014 Loan. The Company also incurred a financing fee to secure the loan in the amount of $1,500,000, all of which was paid on June 8, 2015. The Company agreed to pay the legal fees incurred by the lenders relating to this instrument which amounted to $46,408. The legal fees were expensed as the transaction met the definition of a debt extinguishment. The terms of the registration rights remains unchanged as does the Company’s assessment of the likelihood of the registration rights being exercised. As such, as of December 31, 2015, no accrual has been made for the potential costs related to the registration rights.

  December 31, 2015  December 31, 2014 
Balance, beginning of the period $13,881,305  $- 
Fair value at inception, notes payable  33,497,277   22,500,000 
Repayment of loans  (2,500,000)  (7,500,000)
Accretion of financing and legal fees  967,156   - 
Accretion of discount on the June Loan  1,374,228   - 
Extinguishment of the December 2014 Loan  (12,500,000)  - 
Loss on extinguishment of debt  151,539   - 
Interest payable transferred to principal balance of the June 2015 Loan  1,181,507   - 
Capitalized financing fee and legal fees  -   (1,118,695)
Balance, end of the period  36,053,012  $13,881,305 

Interest payable relating to the June 2015 Loan as at December 31, 2015 was $969,645 (December 31, 2014 - $250,000 – of which $125,000 was interest expense and $125,000 related to the additional charge for the January 2014 Loan).

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

8.December 31, 2014
Balance, beginning of the year$ -
Proceeds from loans22,500,000
Repayment of loans(7,500,000)
Capitalized closing fee and legal fees(1,118,695)
Balance, end of the year$ 13,881,305Related Party Transactions – Continued

(iv)Share Purchase Warrants

On June 8, 2015 the Company issued 10,000,000 share purchase warrants to the Clay family in connection with the June 2015 Loan. The share purchase warrants are exercisable until June 8, 2020 at an exercise price of $0.95. Included in the June 2015 Loan agreement was an anti-dilution provision. If the Company were to complete a financing at a share price lower than the exercise price of the share purchase warrants, the exercise price of the share purchase warrants would be adjusted to match the price at which the financing was completed.

The share purchase warrants meet the definition of a derivative liability instrument as the exercise price is not a fixed price as described above. Therefore, the settlement feature does not meet the “fixed-for-fixed” criteria outlined in ASC 815-40-15.

The fair value of the derivative liability related to the share purchase warrants as at December 31, 2015 is $2,498,269 (December 31, 2014 - $Nil). The derivative liability was calculated using an acceptable option pricing valuation model with the following assumptions:

  2015  2014 
Risk-free interest rate  0.73% - 1.02%  - 
Expected life of derivative liability  4.44 - 5 years   - 
Expected volatility  72.29% - 76.11%  - 
Dividend rate  0.00%  - 

The change in the derivative share purchase warrants is as follows:

  December 31, 2015  December 31, 2014 
Balance, beginning of the period $-  $- 
Fair value at inception  4,002,723   - 
Change in fair value  (1,504,454)  - 
Balance, end of the period $2,498,269  $- 

(v)Advance

In July 2014, GQM Inc. entered into a $10,000,000 short-term advance agreement (the “Advance”) with Leucadia and Auvergne (the(collectively, the “Lenders”), with the Company as guarantor. Leucadia provided $6,500,000 of the loan and Auvergne provided $3,500,000. 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 transactionJoint 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 $10,000,000 bridge loan advanced by the Lenders in July 2014. GQM LLC paid $209,607 in interest payment, including $73,632 paid to Auvergne on the July 2014 Advance, of which $45,264 was capitalized to mineral property interests.

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 2013 and 2012
2013

(US dollars)

8.Related Party Transactions–Continued

(v)(vi)Amortization of DiscountDiscounts and Interest Expense

The following table summarizes the capitalized amortization of discountdiscounts and interest on loans and convertible debentures:

  Year Ended 
December 31,
2015		  Year Ended
December 31,
2014		  Year Ended
December 31,
2013		 
Interest expense related to the convertible debentures $94,907  $181,479  $- 
Interest expense related to the January 2014 Loan  -   1,000,000   - 
Interest expense related to the December 2014 Loan  547,945   -   - 
Interest expense related to the June 2015 Loan  2,151,152   -   - 
Interest expense related to Komatsu Financial loans  281,958   3,352   - 
Accretion of debt discount on the convertible debentures  1,852,754   2,510,611   888,026 
Interest on Gauss advance  -   209,607     
Accretion of the December 2014 Loan financing fees  967,155   -     
Accretion of the June 2015 Loan discount  1,374,228   -     
Accretion of discount and interest on loan and convertible debentures $7,270,099  $3,905,049  $888,026 

The Company’s loans were contracted to fund significant development costs. The Company capitalizes a portion of the interest expense as at:it related to funds borrowed to complete development activities at the Project site.

   December 31, 2014  December 31, 2013 
 Amortization of discount and interest on loan, advance and convertible debenture$ 3,905,049 $ 888,026 
 Less: Interest costs capitalized (2,412,015) - 
 Amortization of discount and interest expensed$ 1,493,034 $ 888,026 

  Year Ended
December 31, 2015		  Year Ended 
December 31, 2014		  Year Ended
December 31, 2013		 
Accretion of discounts and interest on loan, advance and convertible debenture $7,270,099  $3,905,049  $888,026 
Less: Interest costs capitalized  (2,762,831)  (2,412,015)  - 
Accretion of discounts and interest expensed $4,507,268  $1,493,034  $888,026 

(vi)(vii)Joint Venture Transaction

On September 15, 2014, the Company closed the JVJoint Venture Transaction with Gauss resulting in both parties owning a 50% interest in the Project. Pursuant to the JV,Joint Venture Transaction, Golden Queen converted its wholly-owned subsidiary GQM Inc., the entity developing the Project, into a California limited liability company named GQM LLC. On closing of the transaction, Gauss acquired 50% of GQM LLC by investing $110 million cash in exchange for newly issued membership units of GQM LLC. GQGQM Holdings, a newly incorporated subsidiary of the Company, holds the other 50% of GQM LLC.

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

8.Related Party Transactions – Continued

(vii)Joint Venture Transaction - Continued

Gauss is a funding vehicle owned by entities controlled by Leucadia National Corporation (NYSE: LUK) (“Leucadia”) and certain members of the Clay family, a shareholder group which collectively owned approximately 27% of the issued and outstanding shares of Golden Queen (the “Clay Group”) at the time of the transaction. Gauss is owned 67.5%70.51% by Gauss Holdings LLC (“Gauss Holdings”, Leucadia’s investment entity) and 32.5%29.49% by Auvergne LLC (“Auvergne”, the Clay Group’s investment entity). Pursuant to the transaction, Leucadia was paid a transaction fee of $2,000,000 and $275,000 was paid to Auvergne through GQM LLC.LLC in 2014. The Company has adopted an accounting policy of expensing these transaction costs.

Variable Interest Entity

In accordance with ASC 810-10-30, the Company has determined that GQM LLC meets the definition of a VIE and that the Company is part of a related party group that, in its entirety, would meet the definition of a primary beneficiary.   Although no individual variable interest holder individually meets the definition of a primary beneficiary in the absence of the related party group, Golden Queen has determined it is considered the member of the related party group most closely associated with GQM LLC.  As a result, the Company has consolidated 100% of the accounts of GQM LLC in these consolidated financial statements, while presenting a non-controlling interest portion representing the 50% interest of Gauss in GQM LLC on its balance sheet.  A portion of the non-controlling interest has been presented as temporary equity on the Company’s balance sheet representing the initial value of the non-controlling interest that could potentially be redeemable by Gauss in the future. The net assets of GQM LLC as of December 31, 2015 and December 31, 2014 are as follows:

December 31, 2014
Assets, GQM LLC$ 118,937,371
Liabilities, GQM LLC(4,769,144)
Net assets, GQM LLC$ 114,168,227

  December 31, 2015  December 31, 2014 
Assets, GQM LLC $158,209,916  $118,937,371 
Liabilities, GQM LLC  (22,591,211)  (4,769,144)
Net assets, GQM LLC $135,618,705  $114,168,227 

Included in the assets above, is $83,282,403$31,531,853 (December 31, 2014 - $83,282,403) in cash held as ofat December 31, 2014.2015. The cash in GQM LLC is directed specifically to fund capital expenditures required to take the Project to production and settle GQM LLC’s obligations. The liabilities of GQM LLC do not have recourse to the general credit of the primary beneficiary.

GOLDEN QUEEN MINING CO. LTD.
Notesbeneficiary except in one situation. Please refer to Consolidated Financial Statements
Years Ended December 31, 2014, 2013 and 2012
(US dollars)note 12 for details on the exception.

8.Related Party Transactions–Continued

(vii)Joint Venture Transaction - Continued

Non-Controlling Interest

In accordance with ASC 810, the Company has presented Gauss’ ownership in GQM LLC as a non-controlling interest amount on the balance sheet within the equity section. However, the Amended and Restated Limited Liability Company Agreement (“LLC Agreement”) contains terms within Section 12.5 that provides for the exit from the investment in GQM LLC for an initial member whose interest in GQM LLC becomes less than 20%. The following is a summary of the terms of the clause:

Pursuant to Section 12.5, if a member becomes less than a 20% interest holder, its remaining unit interest will (ultimately) be terminated through one of three events at the non-diluted member’s option within 60 days of the diluted member’s interest dropping below 20% (the “triggering event”):

a.Through conversion to a net smelter royalty (“NSR”) (in which case the conversion ratio is based on a pro rata percentage, determined on a linear basis, based on the following: 0- 20%0-20% membership interest translates to 0-5% NSR) obligation of GQM LLC;

b.Through a buy-out (at fair value) by the non-diluted member; or

c.Through a sale process by which the diluted member’s interest is sold

·If such sale process does not result in a binding offer acceptable to the non-diluted member within six months after the election by the non-diluted member, the sale process terminates and the non-diluted member has 15 days to choose between (a) and (b).

If such sale process does not result in a binding offer acceptable

GOLDEN QUEEN MINING CO. LTD.

Notes to the non-diluted member within six months after the election by the non-diluted member, the sale process terminatesConsolidated Financial Statements

Years Ended December 31, 2015, 2014 and the non-diluted member has 15 days to choose between (a) and (b).2013

(US dollars)

8.Related Party Transactions – Continued

(vii)Joint Venture Transaction - Continued

Non-Controlling Interest - Continued

If the non-diluted member does not make an election pursuant to the above within 60 days, the diluted member may choose (a) or (b) above. If no election is made by the diluted member, option (a) is deemed to have been elected.

This clause in the JVJoint Venture Transaction constitutes contingent redeemable equity as outlined in Accounting Series Release No. 268 (“ASR 268”) and has been classified as temporary equity.

On initial recognition the amount of the temporary equity is calculated using the guidance that specifies that the initial measurement of redeemable instruments should be the carrying value. The amount allocated to temporary equity and the permanent equity on initial recognition is shown below. Temporary equity represents the amount of redeemable equity within Gauss’ ownership interest in the net assets of GQM LLC. The remaining 60% of their interest is considered permanent equity as it is not redeemable.

September 15, 2014
Net assets, GQM LLC before JV$ 16,973,184
Investment by Gauss110,000,000
Net assets, GQM LLC after JV126,973,184
Gauss’ ownership percentage50%
Net assets of GQM LLC attributable to Gauss$ 63,486,592
Allocation of non-controlling interest between permanent equity and temporary equity:
Permanent non-controlling interest (60% of total non- controlling interest)$ 38,091,955
Temporary non-controlling interest (40% of total non- controlling interest)$ 25,394,637

GOLDEN QUEEN MINING CO. LTD.
Notes to Consolidated Financial Statements
Years Ended December 31, 2014, 2013 and 2012
(US dollars)

8.Related Party Transactions–Continued

(vi)Joint Venture Transaction - Continued
  September 15, 2014 
Net assets, GQM LLC before Joint Venture Transaction $16,973,184 
Investment by Gauss  110,000,000 
Net assets, GQM LLC after Joint Venture Transaction  126,973,184 
Gauss’ ownership percentage  50%
Net assets of GQM LLC attributable to Gauss $63,486,592 
     
Allocation of non-controlling interest between permanent equity and temporary equity:    
Permanent non-controlling interest (60% of total non-controlling interest) $38,091,955 
Temporary non-controlling interest (40% of total non-controlling interest) $25,394,637 

Non-Controlling Interest - Continued

Subsequent to the initial transaction, the carrying value of the non-controlling interest will be adjusted for net income and loss, distributions and distributionscontributions pursuant to ASC 810-10 based on the same percentage allocation used to calculate the initial book value of temporary equity.

  December 31, 2015  December 31, 2014 
Net and comprehensive loss in GQM LLC $(3,549,522) $(2,804,957)
Non-controlling interest percentage  50%  50%
Net and comprehensive loss attributable to non-controlling interest  (1,774,761)  (1,402,479)
Net and comprehensive loss attributable to permanent non-controlling interest $(1,064,857) $(841,487)
Net and comprehensive loss attributable to temporary non-controlling  interest $(709,904) $(560,992)

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

8.December 31, 2014December 31, 2013
Net and comprehensive loss in GQM LLC$ (2,804,957)$ -
Non-controlling interest percentage50%
Net and comprehensive loss attributable to non- controlling interest(1,402,479)-
Net and comprehensive loss attributable to permanent non-controlling interest$ (841,487)$ -
Net and comprehensive loss attributable to temporary non-controlling interest$ (560,992)$ -Related Party Transactions – Continued

   Permanent Non-  Temporary Non- 
   Controlling Interest  Controlling Interest 
        
 Carrying value of non-controlling interest, September 15, 2014$ 38,091,955 $ 25,394,637 
 Distributions to non-controlling interests (3,000,000) (2,000,000)
 Net and comprehensive loss for the period (841,487) (560,992)
 Carrying value of non-controlling interest , end of year$ 34,250,468 $ 22,833,645 

(vii)Joint Venture Transaction - Continued

Non-Controlling Interest – Continued

  Permanent Non-
Controlling Interest		  Temporary Non-
Controlling Interest		 
Carrying value of non-controlling interest, September 15, 2014 $38,091,955  $25,394,637 
Distributions to non-controlling interest  (3,000,000)  (2,000,000)
Net and comprehensive loss for the period  (841,487)  (560,992)
Carrying value of non-controlling interest , December 31, 2014 $34,250,468  $22,833,645 

  Permanent Non-
Controlling Interest		  Temporary Non-
Controlling Interest		 
Carrying value of non-controlling interest, December 31, 2014 $34,250,468  $22,833,645 
Capital contribution  7,500,000   5,000,000 
Net and comprehensive loss for the period  (1,064,857)  (709,904)
Carrying value of non-controlling interest , December 31 2015 $40,685,611  $27,123,741 

Dilution of Interest in Subsidiary

As a result of the JV transaction,Joint Venture Transaction, the Company’s interest in GQM LLC was diluted from 100% to 50% and ordinarily, the Company would recognize a chargegain on dilution.dilution with the book value of the investment in GQM LLC increasing. However, since the transaction was with a related party and the Company retained control, the excess has not been recognized in net income but rather has been recorded in equity as an increase to APIC based on guidance provided in ASC 810-10-55-4D and -4E.

September 15, 2014
Investment by Gauss$ 110,000,000
Less:
Initial carrying value of permanent equity(38,091,955)
Initial carrying value of temporary equity(25,394,637)
Effect of dilution of subsidiary recorded to APIC$ 46,513,408

  September 15, 2014 
Investment by Gauss $110,000,000 
Less:    
Initial carrying value of permanent equity  (38,091,955)
Initial carrying value of temporary equity  (25,394,637)

Deferred tax liability resulting from dilution gain (Notes 4 and 15)

  

(12,922,000

)
Effect of dilution of subsidiary recorded to APIC $33,591,408 

The deferred tax liability resulted from the increase in the book value over tax value of the investment in GQM LLC.

Management Agreement

GQM LLC is managed by a board of managers comprising an equal number of representatives of each of Gauss and GQGQM Holdings. The initial officers of GQM LLC arewere H. Lutz Klingmann as Chief Executive Officer, and Andrée St-Germain as Chief Financial Officer. During fiscal 2015, Robert C. Walish Jr. was appointed to replace Mr. Klingmann as Chief Executive Officer of GQM LLC. Bryan A. Coates was appointed to the GQM LLC Board of Managers as a nominee of the Company, replacing Mr. Klingmann. As long as a member of the Clay family holds greater that 25% of the Company, the Clay Group is entitled to appoint one of the Company’s representatives to the GQM LLC board of managers.

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 2013 and 2012
2013

(US dollars)

8.Related Party Transactions–Continued

(vi)(vii)Joint Venture Transaction - Continued

Capital Contribution Agreement

Pursuant to the JV, GQ Holdings will have the right to makeJoint Venture Transaction, GQM Holdings’ made a single capital contribution to GQM LLC of between $15$12.5 million and $25 million (the “Top-Up Contribution”), with each such threshold to be reduced by 50% of the amount of any proceeds received by GQM LLC from any debt financing transaction. Pursuant to the JV Agreement, if the Company (through GQ Holdings) makes the Top-Up Contribution,on June 15, 2015. Gauss is committed to fundfunded 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 the Company does not make the Top-Up Contribution, Gauss will be obligated to make up to a $40 millionHoldings’ capital contribution to GQM LLC, in which case GQ Holdings’LLC. Both partners maintain their 50% ownership interest in GQM LLC will be diluted and GQ Holdings will surrender one of its board seats in GQM LLC. If Gauss makes the $40 million capital contribution, the Company will need to reassess whether the resulting dilution of its interest in the JV affects the accounting treatment of the variable interest entity and if consolidation of GQM LLC is still appropriate.Project.

Standby Commitment

In 2014, Golden Queen also entered into a backstop guarantee agreement with Gauss (the “Backstop Agreement”) whereby, if the Company conducts a rights offering, Gauss has agreed to purchase, upon the terms set forth in the Backstop Agreement, any common shares which have not been acquired pursuant to the exercise of rights under the Rights Offering at a purchase price to be determined but not to exceed $1.10 per common share, up to a maximum amount of $45 million in the aggregate. In consideration for entering into the Backstop Agreement, on closing of the Joint Venture, the Company paid Leucadia and Auvergne a standby guarantee fee of $2,250,000, of which $731,250 was paid to Auvergne.

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, the2014. The Company is conductinghas decided not to proceed with a full review of available financing alternatives,rights offering, 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. The Company will not be subject to additional fees or expenses as a result of not filing a registration statement in connection with a rights offering.standby commitment has expired.

9.Supplementary Disclosures of Cash Flow Information

   December 31, 2014  December 31, 2013 
 Cash paid during year for:      
  Interest$ 1,145,786 $ - 
  Income taxes$ - $ - 
 Non-cash financing and investing activities:      
  Reclassification of derivative liability for exercised stock options and warrants$ - $ 338,016 
  Common shares issued for mineral property$ 24,480 $ 22,568 
  Closing fee and legal fees related to short term debt capitalized$ 1,118,695 $ - 
  Asset retirement costs charged to mineral property interests$ 71,892 $ 76,312 
  Mineral property acquired through issuance of debt$ 913,132 $ - 
  Mineral property expenditures included in accounts payable$ 3,097,053 $ 903,309 
  Non-cash interest cost capitalized to mineral property interests$ 2,412,015 $ - 
  Non-cash amortization of discount and interest expense$ 1,493,034 $ 811,327 

  December 31, 2015  December 31, 2014 
       
Cash paid during year for:        
Interest $1,214,255  $1,145,786 
Income taxes $-  $- 
Non-cash financing and investing activities:        
Common shares issued for mineral property $-  $24,480 
Financing fee and legal fees related to short term debt capitalized $-  $1,118,695 
Asset retirement costs charged to mineral property interests $354,311  $71,892 
Mobile equipment acquired through issuance of debt $19,367,240  $926,540 
Property, plant, equipment and mineral interests expenditures included in accounts payable $2,857,646  $3,097,053 
Non-cash interest cost capitalized to mineral property interests $2,762,831  $2,412,015 
Non-cash amortization of discount and interest expense $4,225,311  $1,493,034 
Interest payable converted to principal balance on notes
payable		 $1,181,507  $- 

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 2013 and 2012
2013

(US dollars)

10.Derivative Liability–Options and Warrants

As at January 1, 2009, the date on which the guidance of ASC 815-40-15 became effective for the Company, the Company’s stock options and warrants met the criteria of a derivative instrument liability because they were exercisable in a currency other than the functional currency of the Company and thus did not meet the “fixed-for-fixed” criteria of that guidance. As a result, the Company was required to separately account for the stock options and warrants as derivative instrument liabilities recorded at fair value and marked-to-market each period with the changes in the fair value each period charged or credited to income.

During the year ended December 31, 2013, the Company issued a total of 200,000 stock options that were treated as a derivative liability and in total 1,220,000 stock options were exercised during the year. Upon exercise of the options, the portion of the derivative liability that pertained to these options was re-measured and recorded at its fair value of $910,054, subsequent to which it was reclassified to additional paid-in capital. The Company measured the fair value of the derivative liability pertaining to the options exercised using the Black-Scholes pricing model with the following range of assumptions: expected volatility – 82.54% - 105.67%, expected life – 0.39 – 0.78 years, risk-free discount rate – 0.97% - 1.32%, dividend yield – 0.00%.

On December 23, 2013, the Board of the Company passed a resolution to convert the exercise prices of granted stock options to US dollars, being the functional currency of the Company. As a result of this change, the derivative liability no longer exists. In accordance with Accounting Standard 815-40-35, the Company marked the derivative liability to market and recorded the change in fair value of the derivative liability in the Consolidated Statement of Comprehensive Income (Loss). The resulting balance was reclassified to additional paid-in capital. In accordance with the Toronto Stock Exchange (the “Exchange”) guidance, the reclassification was completed at the exchange rates at the grant date of the stock options. The difference between the current foreign exchange rate and the grant date exchange rate was included in the change in fair value of the derivative liability in the profit and loss statement. The total amount reclassified to equity was $338,016.

During the year ended December 31, 2014 and the year ended December 31, 2013, there were no warrants treated as derivative liabilities.

The changes of derivative liability for options and warrants are as follows:

   December 31,  December 31, 
   2014  2013 
        
 Balance, beginning of the year$-  $ 3,522,071 
 Fair value of options granted -   204,126 
 Fair value of options exercised -   (910,054)
 Change in fair value of options and warrants including foreign exchange -  (2,478,127)
 Extinguishment of liability on conversion of exercise price of options to Company’s functional currency -  (338,016)
 Balance, end of the year$  $ - 

11.10.Financial Instruments

Fair Value Measurements

All financial assets and financial liabilities are recorded at fair value on initial recognition. Transaction costs are expensed when they are incurred, unless they are directly attributable to the acquisition of qualifying assets, in which case they are added to the costs of those assets until such time as the assets are substantially ready for their intended use or sale.

GOLDEN QUEEN MINING CO. LTD.
Notes to Consolidated Financial Statements
Years Ended December 31, 2014, 2013 and 2012
(US dollars)

11.Financial Instruments - Continued

Fair Value Measurements - Continued

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 (ii) and 10–Convertible Debentures andDerivative Liability- Options and Warrantsfor derivatives fair valued on a recurring basis and considered within level 2.The fair value measurement of these financial instruments use observable inputs in option price models such as the binomial and the black-scholes valuation models.

 

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).

  December 31, 2015 
  Total  Level 1  Level 2  Level 3 
Liabilities:                
Share purchase warrants (Note 8) $2,498,269  $-  $2,498,269  $- 
  $2,498,269  $-  $2,498,269  $- 

  December 31. 2014 
  Total  Level 1  Level 2  Level 3 
Liabilities:                
Derivative liability (Note 8) $1,829,770  $-  $1,829,770  $- 
  $1,829,770  $-  $1,829,770  $- 

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 and 2013, the Company had embedded derivative liabilities in connection with the Convertible Debenture (Note 8) and Options and Warrants prior to modificationThe fair value measurement of the exercisefinancial instruments above use observable inputs in option price currency (Note 10).models such as the binomial and the Black-Scholes valuation models.

Credit Risk

Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Company by failing to discharge its obligations. To mitigate exposure to credit risk on financial assets the Company has established policies to ensure liquidity of funds and ensure counterparties demonstrate minimum acceptable credit worthiness.

The Company maintains its US Dollar and Canadian Dollar cash in bank accounts with major financial institutions with high credit standings. Cash deposits held in the United States are insured by the FDIC for up to $250,000 and Canadian Dollar cash deposits held in Canada are insured by the Canada Deposit Insurance Corporation (“CDIC”) for up toC$to C$100,000.

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

10. Financial Instruments - Continued

Certain United States and Canadian bank accounts held by the Company exceed these federally insured limits or are uninsured as they relatedrelate to US Dollar deposits held in Canadian financial institutions. As of December 31, 20142015 and 2013,2014, the Company’s cash balances held in United States and Canadian financial institutions include $91,407,644$37,587,311 and $5,030,522$91,407,644 respectively, which are not fully insured by the FDIC or CDIC. The Company has not experienced any losses on such accounts and management believes that using major financial institutions with high credit ratings mitigates the credit risk in cash.

Interest Rate Risk

The Company holds 97%63% 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, 2014,2015, a 1% decrease in interest rates would have reduced the interest income for 20142015 to a trivial amount.

Foreign Currency Exchange Risk

Certain purchases of corporate overhead expenditureexpenditures are denominated in Canadian Dollar. As a result, currency exchange fluctuations may impact the costs of our operations. Specifically, the appreciation of the Canadian Dollar against the US Dollar may result in an increase in the Canadian operating expenses in US dollar terms. As of December 31, 2014,2015, the Company maintained the majority of its cash balance in US Dollar. The Company currently does not engage in any currency hedging activities.

GOLDEN QUEEN MINING CO. LTD.
Notes to Consolidated Financial Statements
Years Ended December 31, 2014, 2013 and 2012
(US dollars)

11.Financial Instruments - Continued

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.Project. Decreases in the price of either of these metals from current levels has the potential to negatively impact thefuture viability of 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.Project.

12.11.Earnings (Loss) Per Share

   Year Ended  Year Ended  Year Ended 
   December 31,  December 31,  December 31, 
   2014  2013  2012 
 Numerator:         
 Net income (loss) – numerator for basic EPS$ (8,469,204)$ 1,978,014 $ (1,270,988)
 Amortization of discount -  888,026  - 
 Change in derivative liability – Convertible debentures -  (2,907,533) - 
           
 Change in derivative – Stock options -  (767,419) - 
           
 Numerator for diluted EPS$ (8,469,204)$ (808,912)$ (1,270,988)

   Year Ended  Year Ended  Year Ended 
   December 31,  December 31,  December 31, 
   2014  2013  2012 
 Denominator:         
 Denominator for basic EPS 99,611,278  98,390,561  97,981,197 
 Effect of dilutive securities:         
 Employee stock options -  132,800  - 
 Convertible debenture -  4,214,232  - 
 Denominator for diluted EPS 99,611,278  102,737,593  97,981,197 
           
 Basic earnings(loss) per share$ (0.09)$ 0.02  (0.01)
 Diluted loss per share$ (0.09)$ (0.01) (0.01)

  Year Ended
December 31,
2015		  Year Ended
December 31,
2014		  Year Ended
December 31,
2013		 
Numerator:            
Net income (loss) – numerator for basic EPS $(5,461,205) $(8,469,204) $1,978,014 
Amortization of discount  -   -   888,026 
Change in derivative liability – Convertible debentures  -   -   (2,907,533)
Change in derivative – Stock options  -   -   (767,419)
Numerator for diluted EPS $(5,461,205) $(8,469,204) $(808,912)

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

11.Earnings (Loss) Per Share – Continued

  Year Ended
December 31,
2015		  Year Ended
December 31,
2014		  Year Ended
December 31,
2013		 
Denominator:            
Denominator for basic EPS  99,893,341   99,611,278   98,390,561 
Effect of dilutive securities:            
Employee stock options  -   -   132,800 
Convertible debenture  -   -   4,214,232 
Denominator for diluted EPS  99,893,341   99,611,278   102,737,593 
Basic earnings(loss) per share  (0.05) $(0.09) $0.02 
Diluted loss per share  (0.05) $(0.09) $(0.01)

For the year ended December 31, 2014, 750,000 (20132015, 1,070,000 (2014 – 750,000; 2013 – 850,000) options, and the convertible debenture and 10,000,000 (2014  & 2013 – Nil) warrants were not included above as their impact would be anti-dilutive.

GOLDEN QUEEN MINING CO. LTD.
Notes to Consolidated Financial Statements
Years Ended December 31, 2014, 2013 and 2012
(US dollars)

13.12.Loan Payable

During the year ended December 31, 2015, the Company acquired (19) nineteen (2014 – (2) two) pieces of mining equipment from Komatsu through financing agreements. The Company entered into twoalso acquired a mining drill through a financing agreementsagreement with Komatsu Financial duringAtlas Copco. As at December 31, 2015 and December 31, 2014, the year for a motor grader and a water wagon. finance agreement balances are as follows:

  December 31, 2015  December 31, 2014 
Balance, beginning of year $913,132  $- 
Additions  23,155,510   1,106,521 
Down payments, taxes and principal repayments  (5,695,819)  (193,389)
Balance, end of year $18,372,823  $913,132 

The terms of the financing agreements are as follows:

December 31, 2014

Motor Grader – Acquired on December 5, 2014 for a total purchase price of $291,146 including financing fees. The loan is payable over 4 years and carries an annual interest rate of 1.80% and a monthly payment of $5,268, principal and interest. The Company made a down payment of $47,335.

$ 243,811

Water Wagon – Acquired on November 6, 2014 for a total purchase price of $815,374 including financing fees. The loan is payable over 4 years and carries an annual interest rate of 2.99% and a monthly payment of $15,109, principal and interest. The Company made a down payment of $132,646.

669,321
Total loan balance913,132
Less: Current portion of loan(222,839)
Loan payable – Long-term portion$ 690,293

  December 31, 2015  December 31, 2014 
Total acquisition costs $24,262,031  $1,106,521 
Interest rates  0.00% - 4.40%   1.80% - 2.99% 
Monthly payments  $4,669 - $33,906   $5,268 - $15,109 
Average remaining life (Years)  3.46   3.89 
Short-term portion  4,942,716   222,839 
Long-term portion $13,430,107  $690,293 

For the year ended December 31, 2015, the Company made total down payments of $3,788,070 (2014 - $179,981). The down payments consist of the sales tax on the assets and a 10% payment of the pre-tax purchase price. All of the loan agreements are bothfor a term of four years, except one which is for three years, and are secured by the underlying asset.asset except for the mining drill loan for which GQM Ltd. has provided a corporate guarantee.

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

14.12.Loan Payable - Continued

The following table outlines the principal payments to be made for each of the remaining years:

Year Principal Payments 
2016 $4,942,716 
2017 $5,126,206 
2018 $5,248,707 
2019 $3,055,194 
Total $18,372,823 

13.Comparative Figures

Certain comparative figures have been reclassified to conform to the financial statement presentation adopted for the current year. The reclassifications had no impact on the net loss, deficit accumulated or the cash flows as previously reported.  Also see Note 15 for restatement of certain 2014 balances.

14.Subsequent Events

No subsequent events have been identified up to the date of March 16, 2015,30, 2016, the date the consolidated 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, the Company paid $0.3 million, which represented 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.


APPENDIX “B”

AMENDMENT TO 2013 STOCK OPTION PLAN

1. PursuantOn January 1st, 2016, the Company was to Section 8.1(e)make the quarterly interest payment on the June 2015 loan.  In accordance with the terms of the Plan,June 2015 loan agreement, the first paragraph of Section 3.5Company chose to exercise its right to pay in kind by adding the interest owed on January 1, 2016 to the principal balance of the PlanJune 2015 loan.  The principal balance of the loan was increased by $974,986.  The principal balance of the loan moving forward will be $39,656,493 and interest will be calculated on this balance.

Subsequent to December 31, 2015, GQM LLC took possession of a used crane, valued at $0.4 million. The Company made total payments, tax and a 10% down payment, of $0.06 million. The remaining $0.3 million will be financed over 48 months at an interest rate of 3.90%.

In January 2016 the company entered into $2.1 million in surety bond agreements in order to release its reclamation deposits and post a portion of the financial assurance due in 2016. GQM Ltd. has been amended to include the underlined wording noted below.

3.5Termination of Option

An Option Holder may, subject to any vesting provisions applicable to Options hereunder, exercise an Option in whole or in part at any time or from time to time during the Exercise Period provided that, with respect to the exercise of part of an Option, the Board may at any time and from time to time fix a minimum or maximum number of Shares in respect of which an Option Holder may exercise part of any Option held by such Option Holder. Any Option or part thereof not exercised within the Exercise Period shall terminate and become null, void and of no effect as of 5:00 p.m. local time in Vancouver, British Columbia,corporate guarantee on the Expiry Date. The Expiry Date of the vested portion of an Option shall be the earlier of the date so fixed by the Board at the time the Option is awarded and the early termination date (the “Early Termination Date”). The Early Termination Date will be the date the vested portion of an Option expires following the Option Holder ceasing to be a Director, Employee or Consultant, as determined by the Board at the time of grant, or in the absence thereof at any time prior to the time the Option Holder ceases to be a Director, Employee or Consultant, in accordance with and subject to the provisions of subsections (a)-(c) below. Any portion of an Option that has not vested at the time the Option Holder ceases to be a Director, Employee or Consultant will expire on the date such Option Holder ceases to be a Director, Employee or Consultant, except that in the case of death, any unvested options will become fully vested.surety bonds.

2. The form of Option Certificate attached as Schedule A to the Plan has been amended as provided below.

GOLDEN QUEEN MINING CO. LTD.

STOCK OPTION PLANNotes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

15.Prior Periods Financial Restatements

OPTION CERTIFICATE

This Certificate is issued pursuantDuring the preparation of the deferred tax calculations for 2015 the Company found an accounting error in the calculation of the deferred income taxes for the year ended December 31, 2014. The accounting error related to the provisionsrecognition of a deferred tax liability resulting from the dilution gain recorded in additional paid-in capital from the JV transaction (Note 8(vii)). The impact of the error on the financial statements for the year ended December 31, 2014, the first three quarters of 2015 and the third quarter of 2014 are presented below. There was no impact on the Company’s Consolidated Statements of Income/(Loss) and Comprehensive Income/(Loss) or the Consolidated Statement of Cash Flows.

Impact for the year ended December 31, 2014

  As Previously Reported  As Restated 
         
Liabilities:        
Deferred tax liability $-  $12,922,000 
Total liabilities $27,778,513  $40,700,513 
Shareholders’ Equity:        
Additional paid-in capital $56,390,510  $43,468,510 
Total shareholders’ equity attributable to GQM Ltd. $44,654,709  $31,732,709 
Total shareholders’ equity $78,905,177  $65,983,177 
         

There was no impact on the Company’s Consolidated Statements of Income/(Loss) and Comprehensive Income/(Loss) or the Consolidated Statement of Cash Flows.

Impact on the first three quarters of 2015 and third quarter of 2014(Unaudited)

  September 30, 2014  March 31, 2015  
  As Previously Reported  As Restated  As Previously Reported  As Restated 
             
Liabilities:                
Deferred tax liability $-  $12,922,000  $-  $12,922,000 
Total liabilities $23,138,376  $36,060,376  $31,358,690  $44,280,690 
Shareholders’ Equity:                
Additional paid-in capital $56,436,755  $43,514,755  $56,390,510  $43,468,510 
Total shareholders’ equity attributable to GQM Ltd. $43,157,822  $30,235,822  $43,369,950  $30,447,950 
Total shareholders’ equity $77,553,630  $64,631,630  $77,448,394  $64,526,394 

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

15.Prior Periods Financial Restatements - Continued

Impact on the first three quarters of 2015 and third quarter of 2014(Unaudited) - Continued

  June 30, 2015  September 30, 2015  
  As Previously Reported  As Restated  As Previously Reported  As Restated 
             
Liabilities:                
Deferred tax liability $-  $12,922,000  $-  $12,922,000 
Total liabilities $59,791,117  $72,713,117  $57,891,299  $70,813,299 
Shareholders’ Equity:                
Additional paid-in capital $56,390,510  $43,468,510  $56,545,713  $43,623,713 
Total shareholders’ equity attributable to GQM Ltd. $41,990,686  $29,068,686  $40,221,722  $27,299,722 
Total shareholders’ equity $83,141,709  $70,219,709  $81,205,389  $68,283,389 
                 

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

16.GQM Ltd. Non-Consolidated Information

The following condensed unconsolidated financial information represents the financial information of GQM Ltd. The information is presented in accordance with the requirements of Rule 12-04 under the SEC’s Regulation S-X. Investments in the Company’s subsidiaries are accounted for under the equity method. In addition, disclosure requirements of Rule 12-04 of Regulation S-X regarding material contingencies, long-term obligations, and guarantees are the same as those included in Note 8(ii), Note8(iii) and Note 12. The Company has no material contingencies.

(i)Non-Consolidated Balance Sheets

  December 31,  December 31, 
  2015  2014 
Assets        
         
Current assets:        
Cash $5,002,974  $4,973,955 
Receivables  54,803   129,965 
Prepaid expenses and other current assets  43,499   56,122 
         
Total current assets  5,101,276   5,160,042 
         
Mineral interests  5,129,582   2,366,751 
Investment in subsidiaries  28,162,449   32,661,592 
Due from subsidiaries  27,777,387   14,651,807 
Total Assets $66,170,694  $54,840,192 
         
Liabilities and Shareholders’ Equity        
Liabilities:        
Accounts payable and accrued liabilities $67,835  $175,720 
Interest payable  969,645   320,721 
Financing fee payable  -   250,000 
Notes payable  36,053,012   13,881,305 
Derivative liability - Warrants  2,498,269   - 
Derivative liability–Convertible debentures  -   1,829,770 
Convertible debenture  -   6,649,967 
Total Liabilities  39,588,761   23,107,483 
         
Shareholders’ Equity        
Common shares, no par value, unlimited shares authorized (2014 -unlimited); 99,928,683 (2014 –  99,778,683) shares issued and outstanding  62,860,443   62,709,015 
Additional paid-in capital  43,627,511   43,468,510 
Deficit accumulated  (79,906,021)  (74,444,816)
         
Total Shareholders’ Equity  26,581,933   31,732,709 
         
Total Liabilities and Shareholders’ Equity $66,170,694  $54,840,192 

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

16.GQM Ltd. Non-Consolidated Information - Continued

(ii)Non-Consolidated Statements of Comprehensive Income (Loss)

  Year Ended
December 31,
2015		  Year Ended
December 31,
2014		  Year Ended
December 31,
2013		 
             
General and administrative expenses $(596,583) $(2,998,824) $(2,002,240)
Change in fair value of derivative liability including change in foreign exchange  3,334,224   1,004,217   5,385,660 
   2,737,641   (1,994,607)  3,383,420 
Other income (expenses)            
Interest expense  (4,225,311)  (1,325,339)  (888,026)
Loss on extinguishment of debt  (151,539)  -   - 
Financing fee  (1,500,000)  -   - 
Commitment fee  -   (2,250,000)  - 
Interest income  2,177,147   1,458,932   448,058 
Net income (loss) before equity in earnings (losses) of subsidiaries  (962,062)  

(4,111,014

)  2,943,452 
Equity in earnings (losses) of subsidiaries  (4,499,143)  (4,358,190)  (965,438)
Net and comprehensive income (loss) for the year $(5,461,205) $(8,469,204) $1,978,014 

GOLDEN QUEEN MINING CO. LTD.

Notes to Consolidated Financial Statements

Years Ended December 31, 2015, 2014 and 2013

(US dollars)

16.GQM Ltd. Non-Consolidated Information - Continued

(iii)Non-Consolidated Statements of Cash Flows

  Year Ended
December 31,
2015		  Year Ended
December 31,
2014		  Year Ended
December
31, 2013		 
Operating activities:            
Net income (loss) for the year $(5,461,205) $(8,469,204) $1,978,014 
Adjustments to reconcile net income (loss) to cash used in operating activities:            
Equity in losses (earnings) of subsidiaries  4,499,143   

4,358,190

   965,438 
Amortization of debt discount and interest accrual  4,225,311   1,534,946   888,026 
Change in fair value of derivative liabilities including change in foreign exchange  (3,334,224)  (1,004,217)  (5,385,660)
Stock-based compensation  159,001   233,672   475,263 
Non-cash consulting expense  151,428   -   - 
Financing fee related to long-term debt  1,500,000   -   - 
Loss on extinguishment of debt  151,539   -   - 
Foreign exchange  (839,849)  (504,539)  (137,790)
Changes in assets and liabilities:            
Receivables  75,162   (116,178)  3,184 
Prepaid expenses and other current assets  12,623   (27,165)  26,311 
Accounts payable and accrued liabilities  (107,885)  (177,278)  239,341 
Interest payable  (951,445)  (1,145,786)  - 
Cash used in operating activities  79,599   (5,317,559)  (947,873)
Investment activities:            
Investment in subsidiaries  -   -   (2,418,217)
Advances to subsidiaries  (13,125,580)  (8,936,581)  (5,668,178)
Cash used in investing activities  (13,125,580)  (8,936,581)  (8,086,395)
Financing activities:            
Proceeds from convertible debt  -   -   9,710,603 
Borrowing under long-term debt  25,000,000   32,500,000   - 
Repayment of short-term debt  (2,500,000)  (17,500,000)  - 
Financing fees related to short-term debt  (1,500,000)  (868,695)  - 
Repayment of convertible debentures  (7,675,000)  -   - 
Financing fees related to short-term debt capitalized to the loan  (250,000)  -   - 
Issuance of common shares upon exercise of stock options  -   111,421   307,363 
Cash provided by financing activities  13,075,000   14,242,726   10,017,966 
Net change in cash  29,019   (11,414)  983,698 
Cash,   Beginning balance  4,973,955   4,985,369   4,001,671 
Cash,  Ending balance $5,002,974  $4,973,955  $4,985,369 

Exhibit 3.1

 

 

Exhibit 21.1

Subsidiaries of the Registrant

The names and ownership structure of Golden Queen’s subsidiaries are set out in the table below.

NameJurisdiction of Incorporation or
Organization		Ownership Percentage
Golden Queen Mining Canada Ltd.
(“GQM Canada”)		British Columbia, Canada100% by Golden Queen
Golden Queen Holdings, Inc.
(“GQM Holdings”)		California, United States100% by GQM Canada
Golden Queen Mining Company, LLCCalifornia, United States50% by GQM Holdings

Exhibit 23.1

 

Tel: 604 688 5421

Fax: 604 688 5132

www.bdo.ca

BDO Canada LLP

600 Cathedral Place

925 West Georgia Street

Vancouver BC V6C 3L2 Canada

Consent of Independent Registered Public Accounting Firm

Golden Queen Mining Co. Ltd.

Vancouver, Canada

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-102112, No. 333-164950 and No. 333-191478) and Form S-3 (No. 333-198285) of Golden Queen Mining Co. Ltd., of our reports dated March 30, 2016, relating to the consolidated financial statements and the effectiveness of Golden Queen Mining Co. Ltd.’s internal control over financial reporting which appear in this Form 10-K. Our report contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.

/s/ BDO CANADA LLP

Chartered Accountants

Vancouver, Canada

March 30, 2016

BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, aUK company limited by guarantee, and forms part of the international BDO network ofindependent member firms.

Exhibit 23.2

 Kappes, Cassiday & Associates
7950 Security Circle Reno, Nevada 89506
Telephone: (775) 972-7575 FAX: (775) 972-4567

March 30, 2016

Golden Queen Mining Co. Ltd.
2300 – 1066 West Hastings Street
Vancouver, BC V6E 3X2

Re:Golden Queen Mining Co. Ltd. (the “Company”)
Annual Report on Form 10K

Reference is made to the Annual Report on Form 10-K of the Company for the year ended December 31, 2015 (the “Annual Report”).

We hereby consent to the references to our firm and to the summary of the technical report entitled “Soledad Mountain Project Technical Report and Updated Feasibility Study”, dated February 25, 2015 issued by Kappes, Cassiday & Associates, Mine Development Associates and Norwest Corporation, which appear in the Annual Report, and the incorporation therein of such references to the Company’s registration statements on Form S-3 (No. 333-198285) and on Form S-8 (No. 333-191478).

Yours truly,

Kappes, Cassiday & Associates

Per:/s/ Carl E. Defilippi
Carl E. Defilippi
[Authorized Signatory]

Exhibit 23.3

March 30, 2016

Golden Queen Mining Co. Ltd.
2300 – 1066 West Hastings Street
Vancouver, BC V6E 3X2

Re:Golden Queen Mining Co. Ltd. (the “Company”)
Annual Report on Form 10K

Reference is made to the Annual Report on Form 10-K of the Company for the year ended December 31, 2015 (the “Annual Report”).

We hereby consent to the references to our firm and to the summary of the technical report entitled “Soledad Mountain Project Technical Report and Updated Feasibility Study”, dated February 25, 2015 issued by Kappes, Cassiday & Associates, Mine Development Associates and Norwest Corporation, which appear in the Annual Report, and the incorporation therein of such references to the Company’s registration statements on Form S-3 (No. 333-198285) and on Form S-8 (No. 333-191478).

Yours truly,

Norwest Corporation

Per:/s/ Sean Ennis
Sean Ennis - Vice President, Mining

Exhibit 23.4

March 30, 2016

Golden Queen Mining Co. Ltd.
2300 – 1066 West Hastings Street
Vancouver, BC V6E 3X2

Re:Golden Queen Mining Co. Ltd. (the “Company”)
Annual Report on Form 10K

Reference is made to the Annual Report on Form 10-K of the Company for the year ended December 31, 2015 (the “Annual Report”).

We hereby consent to the references to our firm and to those portions of the summary of the technical report entitled “Soledad Mountain Project Technical Report and Updated Feasibility Study”, dated February 25, 2015 issued by Kappes, Cassiday & Associates, Mine Development Associates and Norwest Corporation, which appear in the Annual Report, and for which personnel of Mine Development Associates are responsible for, and the incorporation therein of such references to the Company’s registration statements on Form S-3 (No. 333-198285) and on Form S-8 (No. 333-191478).

Yours truly,

Mine Development Associates

Per:/s/ Michael M. Gustin
Michael M. Gustin, President

775-856-5700

210 South Rock Blvd.

Reno, Nevada 89502

FAX: 775-856-6053

Exhibit 23.5

 

March 30, 2016

Golden Queen Mining Co. Ltd.
2300 – 1066 West Hastings Street
Vancouver, BC V6E 3X2

Re:Golden Queen Mining Co. Ltd. (the “Company”)
Annual Report on Form 10K

Reference is made to the Annual Report on Form 10-K of the Company for the year ended December 31, 2015 (the “Annual Report”).

Reference is also made to the technical report entitled “Soledad Mountain Project Technical Report and Updated Feasibility Study” dated February 25, 2015 issued by Kappes, Cassiday & Associates, Mine Development Associates and Norwest Corporation (the “Technical Report”).

I hereby consent to the references to my name in the Annual Report. Furthermore, I consent to any parts of the summary of the Technical Report, appearing in the Annual Report, that describe or reference work which I did or for which I took professional responsibility in the Technical Report.

Yours truly,

/s/ Peter Ronning
Peter Ronning, P. Eng.
dba “New Caledonian Geological Consulting”

Exhibit 23.6

 Kappes, Cassiday & Associates
7950 Security Circle Reno, Nevada 89506
Telephone: (775) 972-7575 FAX: (775) 972-4567

March 30, 2016

Golden Queen Mining Co. Ltd.
2300 – 1066 West Hastings Street
Vancouver, BC V6E 3X2

Re:Golden Queen Mining Co. Ltd. (the “Company”)
Annual Report on Form 10K

Reference is made to the Annual Report on Form 10-K of the Company for the year ended December 31, 2015 (the “Annual Report”).

I hereby consent to the references to my name and to the summary of the technical report entitled “Soledad Mountain Project Technical Report and Updated Feasibility Study”, dated February 25, 2015 issued by Kappes, Cassiday & Associates, Mine Development Associates and Norwest Corporation, which appear in the Annual Report, and the incorporation therein of such references to the Company’s registration statements on Form S-3 (No. 333-198285) and on Form S-8 (No. 333-191478).

Yours truly,

/s/ Carl E. Defilippi
Carl E. Defilippi
[Project Manager]
Kappes, Cassiday & Associates

Exhibit 23.7

March 30, 2016

Golden Queen Mining Co. Ltd.
2300 – 1066 West Hastings Street
Vancouver, BC V6E 3X2

Re:Golden Queen Mining Co. Ltd. (the “Company”)
Annual Report on Form 10K

Reference is made to the Annual Report on Form 10-K of the Company for the year ended December 31, 2015 (the “Annual Report”).

I hereby consent to the references to my name and to the summary of the technical report entitled “Soledad Mountain Project Technical Report and Updated Feasibility Study”, dated February 25, 2015 issued by Kappes, Cassiday & Associates, Mine Development Associates and Norwest Corporation, which appear in the Annual Report, and the incorporation therein of such references to the Company’s registration statements on Form S-3 (No. 333-198285) and on Form S-8 (No. 333-191478).

Yours truly,

/s/ Sean Ennis
Sean Ennis
Vice President, Mining
Norwest Corporation

Exhibit 23.8

March 30, 2016

Golden Queen Mining Co. Ltd.
2300 – 1066 West Hastings Street
Vancouver, BC V6E 3X2

Re:Golden Queen Mining Co. Ltd. (the “Company”)
Annual Report on Form 10K

Reference is made to the Annual Report on Form 10-K of the Company for the year ended December 31, 2015 (the “Annual Report”).

I hereby consent to the references to my name and to those portions of the summary of the technical report entitled “Soledad Mountain Project Technical Report and Updated Feasibility Study”, dated February 25, 2015 issued by Kappes, Cassiday & Associates, Mine Development Associates and Norwest Corporation, which appear in the Annual Report and for which I am responsible for, and the incorporation therein of such references to the Company’s registration statements on Form S-3 (No. 333-198285) and on Form S-8 (No. 333-191478).

Yours truly,

/s/ Michael M. Gustin
Michael M. Gustin, Senior Geologist
Mine Development Associates

775-856-5700

210 South Rock Blvd.

Reno, Nevada 89502

FAX: 775-856-6053

Exhibit 31.1

CERTIFICATION
PURSUANT TO RULE 13a-14(a) OR 15d-14(a)
OF THE U.S. SECURITIES EXCHANGE ACT OF 1934

I, Thomas M. Clay, certify that:

1.I have reviewed this annual report on Form 10-K for the year ended December 31, 2015 of Golden Queen Mining Co. Ltd.

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the annual report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting;

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s control over financial reporting.

Date:     March 30, 2016By:/s/ Thomas M. Clay
Thomas M. Clay
Principal Executive Officer  

Exhibit 31.2

CERTIFICATION
PURSUANT TO RULE 13a-14(a) OR 15d-14(a)
OF THE U.S. SECURITIES EXCHANGE ACT OF 1934

I, Andrée St-Germain, certify that:

1.I have reviewed this annual report on Form 10-K for the year ended December 31, 2015 of Golden Queen Mining Co. Ltd.

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the annual report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting;

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s control over financial reporting.

Date:  March 30, 2016By:/s/ Andrée St-Germain
Andrée St-Germain
Principal Financial Officer

EXHIBIT 32.1

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

AND RULE 13a-14(b) OR RULE 15d-14(b)

OF THE U.S. SECURITIES EXCHANGE ACT OF 1934

In connection with the Annual Report of Golden Queen Mining Co. Ltd. (the “Company”"Company") Stock Option Planon Form 10-K for the year ended December 31, 2015 (the “Plan”"Report"), the undersigned, in the capacities and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:     March 30, 2016/s/ Thomas M. Clay
Thomas M. Clay
Principal Executive Officer  

EXHIBIT 32.2

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

AND RULE 13a-14(b) OR RULE 15d-14(b)

OF THE U.S. SECURITIES EXCHANGE ACT OF 1934

In connection with the Annual Report of Golden Queen Mining Co. Ltd. (the "Company") on Form 10-K for the year ended December 31, 2015 (the "Report"), the undersigned, in the capacities and evidences that____________________ (the “Holder”)on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to her knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:   March 30, 2016/s/ Andrée St-Germain
Andrée St-Germain
Principal Financial Officer

Exhibit 95

Mine Safety Disclosure

GQM LLC is the holder of an option (the “Option”) to purchase up to____________________ common shares (the “Shares”) in the capital stockoperator of the Project, which is located in Mojave in Kern County, California. The Company and GQM LLC have no mine safety violations to report. There were no lost-time accidents at GQM LLC during the fiscal year 2015.

APPENDIX “B”

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report: April 6, 2016

(Date of earliest event reported)

Golden Queen Mining Co. Ltd.

(Exact name of registrant as specified in its charter)

Commission File Number: 001-21777

British Columbia, CanadaNot Applicable
(State or other jurisdiction of incorporation)(IRS Employer Identification No.)

#2300 – 1066 West Hastings Street, Vancouver, British Columbia, Canada, V6E 3X2

(Address of principal executive offices, including zip code)

(778) 373-1557

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 4.01Changes in Registrant’s Certifying Accountant.

Effective on March 31, 2016, Golden Queen Mining Co. Ltd. (the “Registrant”) appointed PricewaterhouseCoopers LLP, Vancouver, British Columbia (“PWC”) as the principal independent registered public accountant of the Registrant, subject to completion of its standard client acceptance procedures. The appointment of PWC was recommended by the Registrant’s audit committee after considering proposals from several international public accounting firms, including BDO LLP (“BDO”), the Company’s independent public accounting firm for the fiscal year ended December 31, 2015. As a purchase priceresult of $____________________ per Share. SubjectPWC’s appointment, the Registrant’s engagement of BDO, as the Company’s independent registered public accounting firm, was terminated.

BDO’s principal accountant reports on the Registrant’s consolidated financial statements for each of the past two fiscal years ended December 31, 2014 and 2015, did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.

In the two most recent fiscal years preceding the termination of BDO and through to March 31, 2016, the Registrant is not aware of any disagreements with BDO on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the provisionssatisfaction of BDO, would have caused it to make references to the subject matter of the Plan:disagreement(s) in connection with its reports on the Registrant’s consolidated financial statements for such years.

The Registrant is not aware of any reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K) that have occurred during the two most recent fiscal years preceding the termination of BDO.

BDO has been provided the disclosure in this Current Report on Form 8-K, and has provided herewith a letter commenting on the disclosure, pursuant to Item 304(a)(3) of Regulation S-K, which is attached as Exhibit 16.1.

Effective March 31, 2016, the Registrant, upon the recommendation of its audit committee and approval of its board of directors, engaged PWC as its principal independent registered public accountant.

During the Registrant’s two most recent fiscal years and through the date of this Form 8-K, neither the Registrant nor anyone on its behalf has consulted with PWC regarding either (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Registrant’s consolidated financial statements, nor did PWC provide either a written report or oral advice that PWC concluded was an important factor considered by the Registrant in reaching a decision as to accounting, auditing or financial reporting issues, or (ii) any matter that was either the subject of a disagreement within the meaning of Item 304(a)(1)(iv) of Regulation S-K, or a reportable event within the meaning of Item 304(a)(1)(v) of Regulation S-K.

Item 9.01Financial Statements and Exhibits.

(d)Exhibits

Exhibit No.Description
16.1Letter from BDO LLP to the Securities and Exchange Commission dated March 31, 2016.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 (a)GOLDEN QUEEN MINING CO. LTD.the Award Date of this Option is _______________; and
   
 (b)the Expiry Date of this Option is _______________.
Date: April 6, 2016By:

/s/ Andrée St-Germain

   
(c)the Early Termination Date of this Option is _______________.
.

Andrée St-Germain

Chief Financial Officer

The right to purchase Shares under the Option will vest in the Holder in increments over the term of the Option as follows:

DateCumulative Number of Shares which may be Purchased
 

This Option may be exercised in accordance

Exhibit 16.1

 Tel: 604 688 5421BDO Canada LLP
Fax: 604 688 5132

600 Cathedral Place

www.bdo.ca

925 West Georgia Street

Vancouver BC V6C 3L2 Canada

March 31, 2016

Securities and Exchange Commission

100 F Street N.E.

Washington, D.C. 20549

We have been furnished with its terms at any time and from time to time from and including the Award Date through to and including up to 5:00 local time in Vancouver, British Columbia on the Expiry Date, by delivery to the Administratora copy of the Plan an Exercise Notice, inresponse to Item 4.01 of Form 8-K for the form provided in the Plan, together with this Certificate and a certified cheque or bank draft payableevent that occurred on March 31, 2016, to “Goldenbe filed by our former client, Golden Queen Mining Co. Ltd.” We agree with the statements made in an amount equalresponse to the aggregate of the Exercise Price of the Shares in respect of which the Option is being exercised. If the Optionee is an employee or consultant, the Optionee confirms that it is a bona fide employee or consultant,Item insofar as the case may be.they relate to our Firm.

The foregoing Option has been awarded this_____ day of__________.

GOLDEN QUEEN MINING CO. LTD.Very truly yours,

Per: _________________________

/s/BDO Canada LLP

Chartered Professional Accountants