10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT

For the transition period from __________________ to __________________

000-21777
(Commission File Number)

GOLDEN QUEEN MINING CO. LTD.
(Exact name of registrant as specified in its charter)

British Columbia, Canada	Not Applicable
(State or other jurisdiction of incorporation)	(IRS Employer Identification) No.)

6411 Imperial Avenue
West Vancouver, British Columbia
V7W 2J5 Canada
(Address of principal executive offices)

Issuer’s telephone number, including area code: (604) 921-7570

Former name, former address and former fiscal year, if changed since last report: N/A

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

Check whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X]      No [   ]

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

Check whether the registrant is a shell company, as defined in Rule 12b-2 of the Exchange Act.
Yes [   ]      No [X]

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:
As of August 11, 2014 the registrant’s outstanding common stock consisted of 99,778,683 shares.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

2

Golden Queen Mining Co. Ltd.
Condensed Consolidated Interim Financial Statements
June 30, 2014

(Unaudited - US Dollars)

GOLDEN QUEEN MINING CO. LTD.
Condensed Consolidated Interim Balance Sheets
(Unaudited - US dollars)

		June 30,			December 31,
		2014			2013
Assets
Current assets:
Cash	$	5,076,621		$	5,030,522
Receivables		28,538			13,786
Prepaid expenses and other current assets		163,053			62,951
Total current assets		5,268,212			5,107,259
Property and equipment, net		268,033			286,256
Mineral property interests (Note 2)		18,412,963			9,919,486
Reclamation financial assurance (Note 4)		478,739			478,742
Total Assets	$	24,427,947		$	15,791,743
Liabilities and Shareholders’ Equity (Deficiency)
Current liabilities:
Accounts payable and accrued liabilities (Note 6(i))	$	1,876,601		$	1,438,904
Interest payable (Note 6(ii) and (iii))		911,639			76,699
Loan payable (Note 6(iii))		10,000,000			-
Property rent payments		-			6,351
Total current liabilities		12,788,240			1,521,954
Asset retirement obligations (Note 4)		552,250			552,250
Derivative liability–Convertible debenture (Note 6(ii))		6,946,682			2,833,987
Convertible debenture (Note 6(ii))		5,772,276			4,642,620
Total liabilities		26,059,448			9,550,811
Shareholders’ Equity (Deficiency)
Preferred shares, no par value, 3,000,000 shares              authorized; no shares outstanding           Common shares, no par value, unlimited shares              authorized (2013-unlimited); 99,778,683 (2013 – 99,233,383)              shares issued and outstanding (Note 3)		62,709,015			62,289,402
Additional paid-in capital		9,835,578			9,927,142
Deficit accumulated		(74,176,094	)		(65,975,612	)
Total shareholders’ equity (Deficiency)		(1,631,501	)		6,240,932
Total Liabilities and Shareholders’ Equity (Deficiency)	$	24,427,947		$	15,791,743

Basis of Presentation and Ability to Continue as a Going Concern (Note 1)
Commitments and Contingencies (Note 5)
Subsequent Events (Note 10)

Approved by the Directors:

“H. Lutz Klingmann”	“Thomas M. Clay”
H. Lutz Klingmann, Director	Thomas M. Clay, Director

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

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

		Three			Three			Six
		Months			Months			Months			Six Months
		Ended			Ended			Ended			Ended
		June 30,			June 30,			June 30,			June 30,
		2014			2013			2014			2013
General and administrative expenses	$	(2,081,950	)	$	(452,804	)	$	(3,147,208	)	$	(902,501	)
Change in fair value of derivative liability including    change in foreign exchange (Notes 6(ii) and 8)		1,634,681			1,672,861			(4,112,695	)		2,284,810
		(447,269	)		1,220,057			(7,259,903	)		1,382,309
Interest expense (Note 6)		(264,120	)		-			(955,417	)		-
Interest income		5,546			6,723			14,838			11,775
Net and comprehensive income (loss) for the period	$	(705,843	)	$	1,226,780		$	(8,200,482	)	$	1,394,084
Earnings (Loss) per share (Note 9):
Earnings (Loss) per share - basic	$	(0.01	)	$	0.01		$	(0.08	)	$	0.01
Earnings (Loss) per share - diluted	$	(0.02	)	$	(0.00	)	$	(0.08	)	$	(0.01	)
Weighted average number of common shares outstanding -basic		99,619,562			98,228,768			99,441,099			98,116,201
Weighted average number of common shares outstanding - diluted		109,418,434			99,376,903			99,441,099			99,334,081

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

GOLDEN QUEEN MINING CO. LTD.
Condensed Consolidated Interim Statements of Shareholders’ Equity (Deficiency)
(Unaudited - US dollars)

											Total Shareholders’
	Common				Additional			Deficit			Equity
	Shares		Amount		Paid-in Capital			Accumulated			(Deficiency)
Balance, December 31, 2012	97,998,383	$	61,959,471	$	8,407,935		$	(67,953,626	)	$	2,413,780
Issuance of common shares     for mineral property	15,000		22,568		-			-			22,568
Stock options exercised	1,220,000		307,363		-			-			307,363
Stock-based compensation	-		-		271,137			-			271,137
Reclassification of derivative     liability on the exercise of     stock options	-		-		910,054			-			910,054
Reclassification of derivative     liability upon conversion of     exercise price of stock	-		-		338,016			-			338,016
Net income for the year	-		-		-			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
Issuance of common shares     for mineral property interests	15,300		24,480		-			-			24,480
Stock options exercised	530,000		395,133		(283,712	)		-			111,421
Stock-based compensation	-		-		192,148			-			192,148
Net loss for the period	-		-		-			(8,200,482	)		(8,200,482	)
Balance, June 30, 2014	99,778,683	$	62,709,015	$	9,835,578		$	(74,176,094	)	$	(1,631,501	)

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

GOLDEN QUEEN MINING CO. LTD.
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited - US dollars)

		Six Months			Six Months
		Ended			Ended
		June 30, 2014			June 30, 2013
Operating activities:
Net income (loss) for the period	$	(8,200,482	)	$	1,394,084
Adjustments to reconcile net income (loss) to cash used in operating activities:
Amortization and depreciation		18,223			5,224
Amortization of debt discount and interest accrual		955,417			-
Change in fair value of derivative liability including change in foreign exchange		4,112,695			(2,284,810	)
Stock option compensation		192,148			66,359
Unrealized foreign exchange		18,369			-
Changes in assets and liabilities:
Receivables		(14,752	)		6,793
Prepaid expenses and other current assets		(100,102	)		23,799
Accounts payable and accrued liabilities		203,275			66,745
Cash used in operating activities		(2,815,209	)		(721,806	)
Investment activities:
Additions to mineral property interests		(7,250,113	)		(1,777,025	)
Deposits on mineral properties		-			-
Release (purchase) of financial assurance		-			(14,434	)
Cash used in investing activities		(7,250,113	)		(1,791,459	)
Financing activities:
Borrowing under short-term debt		10,000,000			-
Issuance of special warrants		-			76,396
Issuance of common shares upon exercise of stock options		111,421			-
Cash provided by financing activities		10,111,421			76,396
Net change in cash		46,099			(2,436,869	)
Cash, Beginning balance		5,030,522			4,031,403
Cash, Ending balance	$	5,076,621		$	1,594,534

Supplementary Disclosures of Cash Flow Information (Note 7)

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

GOLDEN QUEEN MINING CO. LTD.
Notes to Condensed Consolidated Interim Financial Statements
For the Six Months Ended June 30, 2014
(Unaudited - US dollars)

Nature of Business Golden Queen Mining Co. Ltd. (“Golden Queen” or the “Company”) is engaged in acquiring and maintaining gold and silver mining properties for exploration, future development and production. The Company was formed on November 21, 1985. Since its inception, the Company has been in the exploration stage but moved into the development stage in 2012. Planned activities involve bringing to production a precious metals mine, the Soledad Mountain Project (“the Project”), located in the Mojave Mining District, Kern County, California.

Principles of Consolidation These condensed consolidated financial statements include the accounts of Golden Queen, a British Columbia corporation, and its wholly-owned subsidiary, Golden Queen Mining Co., Inc. (the “Subsidiary”), a US (State of California) corporation.

Generally Accepted Accounting Principles (“GAAP”) The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

Cash and Cash Equivalents For 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.

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.

Property and Equipment Property and equipment 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 3 to 30 years, as follows:

Buildings	30 years
Furniture and Fixtures	5 years
Automobiles	3 to 5 years
Rental Properties	30 years
Land	Not depreciated

The Company has instituted a policy that all property 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 Properties Costs related to the development of our mineral reserves are capitalized when it has been determined an ore body can be economically developed. The development stage begins when an ore body is determined to be economically minable based on proven and probable reserves and appropriate permits are in place, and ends when the production stage begins. Major mine development expenditures are capitalized, including primary development costs such as costs of building access roads, heap leach pads, and infrastructure development.

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

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

• Whether or not the costs are incurred to further define mineralization at and adjacent to existing reserve areas or intended to assist with mine planning within a reserve area;

GOLDEN QUEEN MINING CO. LTD.
Notes to Condensed Consolidated Interim Financial Statements
For the Six Months Ended June 30, 2014
(Unaudited - US dollars)

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

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

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

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

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

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

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 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 6(iv)— Interest Expense.

Valuation of Long-lived Assets Accounting standards require recognition of impairment of long-lived assets in the event the carrying value of such assets may not be recoverable. It requires that those long-lived assets 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 flow from the mineral properties is compared with the current carrying value in order to determine if 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 flow or liquidation value.

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 June 30, 2014 and December 31, 2013 were $1.07 and $1.06 stated in Canadian dollars per one US dollar, respectively. The average rates of exchange during the three months ended June 30, 2014 and the year ended December 31, 2013 were $1.09 and $1.03, stated in Canadian dollars per one US dollar, respectively.

GOLDEN QUEEN MINING CO. LTD.
Notes to Condensed Consolidated Interim Financial Statements
For the Six Months Ended June 30, 2014
(Unaudited - US dollars)

Earnings (Loss) Per Share The 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) 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.

Reclamation Costs (Asset Retirement Obligations) The Company accrues the estimated costs associated with reclamation obligations in the period in which the liability is incurred or becomes determinable. Until such time that a project life is established or the Company begins capitalizing exploration expenditures when an ore body can be economically developed, the Company records the corresponding cost as an expense. The costs of future expenditures for reclamation are not discounted to their present value unless subject to a contractually obligated fixed payment schedule.

Future reclamation expenditures are difficult to estimate due to the early-stage nature of the Project, the uncertainties associated with defining the nature and extent of environmental disturbance, the application of laws and regulations by regulatory authorities and changes in reclamation requirements. The Company periodically reviews the provision for such reclamation costs as evidence indicating that the liabilities have potentially changed. Changes in estimates are reflected in the Consolidated Statement of Comprehensive Income (Loss) in the period an estimate is revised.

The Company is in the development stage and 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.

Estimates The 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 have been made by Management in several areas including the recoverability of mineral properties, reclamation reserves and valuation of stock options, convertible debenture and derivative liabilities. Actual results could differ from those estimates.

Fair Value of Financial Instruments The carrying amounts reported in the balance sheets for cash and cash equivalents, receivables, accounts payable and accrued liabilities and loans payable approximate fair values because of the immediate or short-term maturity of these financial instruments. The carrying amount of the convertible debt instrument is being recorded at amortized cost using the effective interest rate method. As at June 30, 2014, the estimated fair value of the convertible debt using a discounted cash flow analysis based on an interest rate for a similar type of instrument without a conversion feature was $12,297,540. The fair value of the reclamation financial assurance approximates the carrying value due to its short term nature. The value of the embedded derivative is being recorded at its fair value using an acceptable valuation model at each reporting period.

Income Taxes The 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 the future tax benefit is not more likely than not, the Company establishes a valuation allowance.

Stock Option Plan The Company’s current stock option plan (the “Plan”) was adopted by the Company in 2013 and approved by shareholders of the Company in 2013. The Plan provides a fixed number of 7,200,000 common shares of the Company that may be issued pursuant to the grant of stock options. The exercise price of stock options granted under the Plan shall be determined by the Company’s Board of Directors (the “Board”), but shall not be less than the volume-weighted, average trading price of the Company’s shares on the TSX for the five trading days immediately prior to the date of the grant. The expiry date of a stock option shall be the date so fixed by the Board subject to a maximum term of five years. The Plan provides that stock options will terminate on the earlier of the expiry of the term and (i) 12 months from the date an option holder dies, (ii) 12 months from the date the option holder ceases to act as a director or officer of the Company, or (iii) 12 months from the date the option holder ceases to be employed, or engaged as a consultant, by the Company. All options granted under the 2013 Plan will be subject to such vesting requirements as may be prescribed by the TSX, if applicable, or as may be imposed by the Board. A total of 850,000 (December 31, 2013 – 1,380,000; June 30, 2013 – 1,800,000) common shares were issuable pursuant to such stock options as at June 30, 2014.

GOLDEN QUEEN MINING CO. LTD.
Notes to Condensed Consolidated Interim Financial Statements
For the Six Months Ended June 30, 2014
(Unaudited - US dollars)

Stock-based Compensation Compensation costs are charged to the condensed consolidated interim statements of 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 Instruments The 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.

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

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

• Present inception-to-date information in the statements of income, cash flows, and shareholder equity;
• Label the financial statements as those of a development stage entity;

GOLDEN QUEEN MINING CO. LTD.
Notes to Condensed Consolidated Interim Financial Statements
For the Six Months Ended June 30, 2014
(Unaudited - US dollars)

• Disclose a description of the development stage activities in which the entity is engaged; and
• Disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.

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

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 financial statements.

GOLDEN QUEEN MINING CO. LTD.
Notes to Condensed Consolidated Interim Financial Statements
For the Six Months Ended June 30, 2014
(Unaudited - 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 June 30, 2014 had a deficit of $74,176,094 (December 31, 2013 - $65,975,612) and a working capital deficit of $7,520,028 (December 31, 2013 – surplus of $3,585,305). Management plans to control current costs and anticipates that the remaining funds from the $10 million loan from January 2014 (Note 6(iii) – Related Party Transactions), will fund project development and administrative activities over the next several months. The proceeds from the July 2, 2014 Loan from Leucadia and Auvergne (Note 10 – Subsequent Events) will also fund the Company’s project development activities over the next several months.

The Company announced on June 9, 2014 that it entered into an agreement (the “Transaction Agreement”) regarding a proposed joint venture with Gauss LLC. Pursuant to the Transaction Agreement, the Company’s joint venture partner will invest US$110 million in cash in exchange for a 50% interest in the Project. Closing of the joint venture is subject to approval by Golden Queen’s disinterested shareholders and certain other conditions. Please refer to the Form 10-Q dated August 11, 2014 for further details on the proposed joint venture transaction.

A production decision will be made if and when the joint venture transaction closes.

The ability of the Company to obtain financing for its ongoing activities and thus maintain solvency, or to fund construction of the Project (including funding its portion of capital requirements under the joint venture to be formed upon closing of the joint venture pursuant to the Transaction Agreement), is dependent on equity market conditions, the market for precious metals, the willingness of other parties to lend the Company money or the ability to find a merger partner. While the Company has been successful at certain of these efforts in the past, there can be no assurance that future efforts will be successful. This raises substantial doubt about the Company’s ability to continue as a going concern.

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

2. Mineral Properties

In July 2012, the Company received notice that it had met all the remaining major conditions of the conditional use permits for development of the Project. As a result, management made the decision to begin capitalizing all development expenditures directly related to the Project. Prior to July 2012, all acquisition costs were written off due to uncertainties around obtaining the necessary permits. Development expenditures for the three months ended on June 30, 2014 are as follows:

Balance, December 31, 2012	$	1,799,301
Acquisition costs:
Mineral properties		1,392,081
Deferred costs:
Property rent payments		161,190
Road construction		962,828
Site infrastructure development		1,604,929
Site development costs		2,673,869
Workshop and warehouse		700,390
Leach pad construction		548,586
		8,043,873
Asset retirement obligation (Note 4)		76,312
Balance, December 31, 2013	$	9,919,486

GOLDEN QUEEN MINING CO. LTD.
Notes to Condensed Consolidated Interim Financial Statements
For the Six Months Ended June 30, 2014
(Unaudited - US dollars)

2. Mineral Properties – Continued

Balance, December 31, 2013	$	9,919,486
Acquisition costs:
Mineral properties		1,221,743
Deferred costs:
Property rent payments		97,480
Road construction		193,428
Site infrastructure development		723,148
Site development costs		3,300,879
Workshop and warehouse		1,543,602
Crushing-Screening Plant		1,360,426
Leach pad construction		52,771
		8,493,477
Balance, June 30, 2014	$	18,412,963

As at June 30, 2014, included in site infrastructure development is capital properties and equipment with a total accumulated cost of $410,305 (2013 - $226,721). Total additions during the three and six months ended June 30, 2014 were $107,227 and $183,584 (Three and six months ended June 30, 2013 - $Nil and $Nil). During the three and six months ended June 30, 2014, amortization of $14,269 and $21,099 (Three and six months ended June 30, 2013 - $Nil and $Nil) relating to these assets was capitalized within site infrastructure development.

As at June 30, 2014, included in site development costs is interest expense of $990,813 (December 31, 2013 - $Nil). The Company is capitalizing a portion of the interest expense related to the convertible debenture and loan in accordance with its accounting policy. See Note 6 (iv) – Interest Expense.

3. Share Capital

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 transferred to share capital from additional paid-in capital upon exercise of stock options was $132,011.

GOLDEN QUEEN MINING CO. LTD.
Notes to Condensed Consolidated Interim Financial Statements
For the Six Months Ended June 30, 2014
(Unaudited - US dollars)

3. Share Capital – Continued

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 transferred to share capital from additional 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 transferred to share capital from 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 transferred to share capital from 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).

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 transferred to share capital from additional paid-in capital upon exercise of stock options was $68,849.

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 remeasured 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 8 – Derivative liability for further details.

The following is a summary of stock option activity during the six month period ended June 30, 2014:

			Weighted
			Average Exercise
	Shares		Price per Share
Options outstanding and exercisable: December 31, 2013	1,380,000		$0.87
Stock options issued	-		-
Stock options exercised	(530,000	)	$0.21
Options outstanding, June 30, 2014	850,000		$1.27
Options exercisable, June 30, 2014	650,000		$1.29

During the three and six months ended June 30, 2014, the Company recognized $96,074 and $192,148 (Three and six months ended June 30, 2013 - $Nil and $Nil) in stock-based compensation relating to employee stock options that have vesting terms.

GOLDEN QUEEN MINING CO. LTD.
Notes to Condensed Consolidated Interim Financial Statements
For the Six Months Ended June 30, 2014
(Unaudited - US dollars)

3. Share Capital – Continued

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
• 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:

	2014	2013
Expected life years	-	5
Interest rate	-	1.78%
Volatility	-	98.25%
Dividend yield	-	0%

As at June 30, 2014, the aggregate intrinsic value of the outstanding exercisable options was approximately $140,385 (December 31, 2013 - $325,995; June 30, 2013 - $1,020,208).

The total intrinsic value of 530,000 options exercised during 2014 was approximately $678,494 (December 31 2013 - $881,816).

The unamortized compensation expense as at June 30, 2014 was $134,014 (December 31, 2013 - $325,158; June 30, 2013 - $Nil).

The following table summarizes information about stock options outstanding and exercisable at June 30, 2014:

		Weighted
	Number	Average
	Outstanding	Remaining
Expiry	and	Contractual Life	Exercise
Date	Exercisable	(Years)	Price
April 18, 2015	50,000	0.80	$1.22
June 3, 2018	300,000	3.93	$1.16
June 3, 2018	50,000	3.93	$1.16
September 3, 2018	150,000	4.18	$1.59
September 18, 2018	300,000	4.22	$1.26
Outstanding, June 30, 2014	850,000	3.89
Exercisable, June 30, 2014	650,000	3.84

GOLDEN QUEEN MINING CO. LTD.
Notes to Condensed Consolidated Interim Financial Statements
For the Six Months Ended June 30, 2014
(Unaudited - US dollars)

4. Asset Retirement Obligations

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 Company has provided reclamation financial assurance to the Bureau of Land Management, the State and Kern County totaling $478,739 (2013 - $478,742). This deposit earns interest at 0.1% per annum and is not available for working capital purposes.

The Company estimated its asset retirement obligations based on its understanding of the requirements to reclaim and clean-up the property within the Project based on its activities and planned activities to date.

Management made the decision to capitalize all development expenditures directly related to the Project in July 2012, $Nil (December 31, 2013- $76,312) was capitalized as the asset portion of the retirement obligation for the period ended June 30, 2014. The following is a summary of asset retirement obligations:

		2014		2013
Balance, beginning of the period	$	552,250	$	475,938
Changes in cash flow estimates		-		76,312
Balance, end of the period	$	552,250	$	552,250

5. 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 six months ended June 30, 2014 were $99,980 of which $24,480 was related to common shares issued (Year ended December 31, 2013 - $161,190 of which $22,568 related to common shares issued), and the Company is expected to make approximate payments of $184,000 in 2014 to various landowners under the existing lease agreements. The payments are at the discretion of the Company and will cease if and when the Company goes into production and then begins paying royalty payments on production yields.

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 June 30, 2014, commercial production has not commenced and no shares have been issued.

GOLDEN QUEEN MINING CO. LTD.
Notes to Condensed Consolidated Interim Financial Statements
For the Six Months Ended June 30, 2014
(Unaudited - US dollars)

5. Commitments and Contingencies - Continued

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, a bonus of 150,000 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 is for a term of three years and shall automatically renew for two years. As at June 30, 2014, none of the milestones had been reached and no commitment to issue the common shares has been recorded in connection with these arrangements.

During the year ended December 31, 2013, the Company entered into employment agreements with a new Chief Financial Officer (“CFO”) and a Chief Operating Officer (“COO’). 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. Included in the agreement with the COO is a provision that if the COO’s position is lost upon a change of control or within six months of a change of control the COO would be entitled to a onetime payment equal to 100% of the annual base salary of $150,000.

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.

6. Related Party Transactions

Except as noted elsewhere in these consolidated financial statements, related party transactions are disclosed as follows:

(i)	Consulting Fees
	For the three and six months ended June 30, 2014, the Company paid $39,032 and $84,059 (2013 - $37,371 and $74,523) to Mr. H. L. Klingmann for services as President of the Company of which $13,797 (December 31, 2013 - $47,967; June 30, 2013 - $Nil) is payable as at June 30, 2014.
	During the three and six months ended June 30, 2014, the Company paid a total of $11,815 and $23,439 (2013 - $Nil and $Nil) to its three independent directors. The two non independent directors, Lutz Klingmann and Thomas M. Clay, were not paid directors’ fees during the three and six months ended June 30, 2014 or 2013.
(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). The convertible debentures are unsecured and bear interest at 2% per annum, calculated on the outstanding principal balance, payable annually. The principal amounts of the notes are convertible into shares of the Company at a price of C$1.03 per share for a period of two years. If the notes 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 Condensed Consolidated Interim Financial Statements
For the Six Months Ended June 30, 2014
(Unaudited - US dollars)

6. Related Party Transactions – 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 meets 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. As a result, the conversion feature of the notes is required to be recorded as a derivative liability recorded at fair value and marked-to-market each period with the changes in fair value each period being charged or credited to income or loss.

On inception of the debentures, the fair value of the derivative liability related to the conversion feature was $5,741,520 and as at June 30, 2014, was $6,946,682 (December 31, 2013 - $2,833,987). The derivative liability was calculated using an acceptable option pricing valuation model with the following assumptions:

	2014	2013
Risk-free interest rate	1.07% - 1.09%	1.13% - 1.15%
Expected life of derivative liability	1.07 - 1.32 years	1.57 - 2 years
Expected volatility	95.87 - 98.71%	73.43% - 89.52%
Dividend rate	0.00%	0.00%

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

		June 30, 2014		December 31, 2013
Balance, beginning of the period	$	2,833,987	$	-
Fair value at inception		-		5,741,520
Change in fair value of derivative liability including
foreign exchange		4,112,695		(2,907,533	)
Balance, end of the period	$	6,946,682	$	2,833,987

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

The change in the convertible debentures is as follows:

		June 30, 2014		December 31, 2013
Balance, beginning of the year	$	4,642,620	$	-
Discounted convertible debentures		-		3,975,480
Amortization of discount		1,113,618		811,327
Foreign exchange		16,038		(144,187	)
Balance, end of the period	$	5,772,276	$	4,642,620

During the three and six months ended June 30, 2014, in addition to the amortization of the discount on the convertible debenture, the Company incurred interest expense of $45,799 and $91,516 (June 30, 2013 - $Nil and $Nil) based on the 2% per annum stated interest rate for a total interest expense of $638,837 and $1,205,134 for the three and six months ended June 30, 2014 (June 30, 2013- $Nil and $Nil). As at June 30, 2014, a total of $990,813 (2013 - $Nil) has been capitalized to mineral property interest. See Note 6 (iv).

GOLDEN QUEEN MINING CO. LTD.
Notes to Condensed Consolidated Interim Financial Statements
For the Six Months Ended June 30, 2014
(Unaudited - US dollars)

6. Related Party Transactions – Continued

(iii)	Loan Payable
	On January 1, 2014, the Company entered into an agreement to secure a $10,000,000 loan (the “Loan”). The 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 Loan has a twelve-month term and bears an annual interest rate of 5%, payable on the maturity date.
	The Loan will be repaid on a date that is less than 183 days before the maturity date As a result, the Company will pay the Lenders a prepayment penalty in the amount that is equivalent to 105% of the principal amount, plus interest on the principal amount at the rate of 5% per annum accrued to the date the Loan is repaid. The estimated $500,000 finance charge, included in the $741,096 interest payable balance, represents the prepayment penalty to the Lenders.

		June 30, 2014
Balance, beginning of the period	$	-
Proceeds from the loan		10,000,000
Balance, end of the period	$	10,000,000

The interest expense and prepayment finance charge of $741,096 has been accrued on this loan since inception and is included in interest payable as at June 30, 2014.

(iv)      Amortization of discount and Interest Expense

The following summarizes the capitalized amortization of discount and interest expense as at June 30, 2014 and December 31, 2013.

		June 30, 2014			December 31, 2013
Amortization of discount and interest on loan and convertible debenture	$	1,946,230		$	888,026
Less: Interest costs capitalized		(990,813	)		-
Amortization of discount and interest expensed	$	955,417		$	-

7. Supplementary Disclosures of Cash Flow Information

		Six Months Ended			Six Months Ended
		June 30, 2014			June 30, 2013
Cash paid during year for:
Interest	$	-		$	-
Income taxes	$	-		$	-
Non-cash financing and investing activities:
Stock option compensation	$	192,148		$	-
Common shares issued for mineral property	$	24,480		$	-
Gain (loss) on change in fair value of derivative liability	$	(4,112,695	)	$	2,284,810
Mineral property expenditures included in accounts payable	$	228,071		$	313,847
Non-cash interest cost capitalized to mineral property interests	$	990,813		$	-
Non-cash amortization of discount and interest expense	$	955,417		$	-

GOLDEN QUEEN MINING CO. LTD.
Notes to Condensed Consolidated Interim Financial Statements
For the Six Months Ended June 30, 2014
(Unaudited - US dollars)

8. 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-up 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 three month period ended June 30, 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:

		June 30,		December 31,
		2014		2013
Balance, beginning of the period	$	-	$	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 period	$	-	$	-

GOLDEN QUEEN MINING CO. LTD.
Notes to Condensed Consolidated Interim Financial Statements
For the Six Months Ended June 30, 2014
(Unaudited - US dollars)

9. Earnings (Loss) Per Share

		Three Months			Three Months			Six Months			Six Months
		Ended			Ended			Ended			Ended
		June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
Numerator:
Net income (loss) – numerator for basic EPS	$	(705,843	)	$	1,226,780		$	(8,200,482	)	$	1,394,084
Amortization of discount		-			-			-			-
Change in derivative liability – Convertible debentures		(1,634,681	)		-			-			-
Change in derivative – Stock options		-			(1,672,861	)		-			(2,284,810	)
Numerator for diluted EPS	$	(2,340,524	)	$	(446,081	)	$	(8,200,482	)	$	(890,726	)

		Three Months			Three Months			Six Months			Six Months
		Ended			Ended			Ended			Ended
		June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
Denominator:
Denominator for basic EPS		99,619,562			98,228,768			99,441,099			98,116,201
Effect of dilutive securities:
Employee stock options		90,134			1,148,136			-			1,217,880
Convertible debenture		9,708,738			-			-			-
Denominator for diluted EPS		109,418,434			99,376,903			99,441,099			99,334,081
Basic earnings(loss) per share	$	(0.01	)	$	0.01		$	(0.08	)	$	0.01
Diluted loss per share	$	(0.02	)	$	(0.00	)	$	(0.08	)	$	(0.01	)

For the three and six month periods ended June 30, 2014, 150,000 (June 30, 2013 – 400,000) options were not included above as their impact would be anti-dilutive. In addition, for the six month period ended June 30, 2014, the convertible debenture was not included above as its effect would be anti-dilutive.

10. Subsequent Events

July 2, 2014 Advance with Leucadia and Auvergne

The Company announced on July 2 that the Company and its wholly owned subsidiary entered into a loan agreement with Leucadia National Corporation (“Leucadia”) and Auvergne, LLC, an entity controlled by certain members of the Clay family (“Auvergne”, and together with Leucadia, the “Lenders”), with the Company as guarantor, in respect of an advance of $10,000,000 (the “Loan”) by the Lenders (as to $6,500,000 from Leucadia and $3,500,000 from Auvergne) to the subsidiary. The Loan is collateralized against certain assets of the subsidiary and the Company, and ranks in priority to existing debt. Proceeds will be used to advance the development of the Soledad Mountain Project.

The maturity date of the Loan will be the closing of the joint venture transaction with Gauss LLC (Refer to Note 1) the “JV Closing”). In the event the JV Closing occurs later than September 30, 2014, the maturity date can be extended to December 1, 2014 by paying a $1,000,000 extension fee. The extension fee is not payable if the JV Closing occurs before the extended maturity date.

GOLDEN QUEEN MINING CO. LTD.
Notes to Condensed Consolidated Interim Financial Statements
For the Six Months Ended June 30, 2014
(Unaudited - US dollars)

10. Subsequent Events (Continued)

The Loan will bear interest at a rate of 10.0% per annum, compounded monthly. After the occurrence and during the continuation of an event of default, interest on the Loan will accrue at a rate of 12.0% per annum.

The repayment of the Loan, accrued interest and extension fee, if any, will be funded from the proceeds of the joint venture transaction upon the JV Closing.

Significant Commitments on Site in July 2014

The Company entered into the following significant commitments during July 2014:

• Confirmed an order for a high-pressure grinding roll with ThyssenKrupp Industrial Solutions (USA), Inc. (Formerly Polysius Corporation) and made a deposit of approximately $1.0 million in July;

• Committed to the construction and commissioning of the basic water supply for the Project approximately $1.2 million and;

• Committed to the construction of the assay laboratory building with plumbing and electrical items approximately $1.0 million.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation

The following discussion of the operating results and financial condition of Golden Queen Mining Co. Ltd. (“Golden Queen” or the “Company”) is as at August 11, 2014 and should be read in conjunction with the unaudited condensed consolidated interim financial statements of the Company for the quarter ended June 30, 2014 and the notes thereto.

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

The Soledad Mountain Project

Overview

The Company is developing a gold-silver, open pit, heap leach operation on its fully-permitted Soledad Mountain property, located just outside the town of Mojave in Kern County in southern California. The Soledad Mountain Project (the “Project”) will use conventional open pit mining methods and the cyanide heap leach and Merrill-Crowe processes to recover gold and silver from crushed, agglomerated ore.

Please refer to the Company’s news release of October 25, 2012 and the Form 10-K dated March 17, 2014 for information on the Project.

The Company started construction of infrastructure-related items during the second quarter of 2013.

Construction of Infrastructure and Project Facilities

Construction continued on site during the second quarter and proceeded smoothly with no incidents to report.

Phase 1 Construction

The access road from the dip crossing to site and the parking lot were paved.

The Company awarded a contract for the construction of the workshop-warehouse and wash slab to a contractor based in Lancaster in November 2013. This was the first of a number of turn-key projects. A milestone was reached when the prepared workshop-warehouse pad was formally handed over to the contractor to start construction of the footings in January 2014.

The following points apply to the construction of the workshop-warehouse:

• The outside slabs and walkways were formed and concrete poured and this completed the concrete work;
• The outside of the building was completed in June;
• A 15-ton crane and a light vehicle hoist were installed and commissioned in June;
• The inside finishing work was completed in July and all systems were tested;
• A number of smaller safety-related items were noted during an inspection and these are being corrected;
• Concrete K-rail was purchased and set in place between the workshop-warehouse building and the excavated slope as a safety measure and to meet MSHA requirements; and
• Work is now under way to equip the workshop-warehouse with shelving for the warehouse, and lubrication equipment and a completed compressed air system for the workshop.

The construction of a guard shack with a sliding gate was completed in May 2014.

Phase II Construction

The following projects are part of Phase II construction and are under way:

• The construction and commissioning of the basic water supply for the Project, scheduled for completion in the fourth quarter of 2014;
• The construction of the workshop-warehouse septic system/leach field;

3

• The procurement and construction of the fuel storage facility;
• Confirmed an order for a high-pressure grinding roll (“HPGR”) with ThyssenKrupp Industrial Solutions (USA), Inc. (formerly Polysius Corporation) and made a deposit of approximately $1.0 million in July; and
• Detailed designs and cost estimates have been completed for the construction of the assay laboratory, and the contract for the construction of the assay laboratory has been awarded in July.

The following points apply to the site grading of the area where the crushing-screening plant will be constructed:

• The required fill material was taken from the overflow pond, which is part of the heap leach facilities;
• Earthmoving is complete for this project and final grading was completed in early June;
• As-built surveys were completed and our contractor is doing the final and detailed layout and design of the crushing-screening plant with the HPGR; and
• The next step in this area is the construction of a Hilfiker retaining wall.

Phase III Construction

The Company has awarded the following contracts:

• A contract for the construction of the access road to the area where the downwind environmental monitoring station will be constructed;
• A contract for the site grading of the area where the Merrill-Crowe plant will be constructed;
• A contract to excavate the base of the Hilfiker retaining wall;
• A contract for the construction of the heap leach facilities pump box;
• A contract for a test program to determine the parameters for the clay-tailings mix that will be used to construct the lower liner of the Phase 1, Stage 1 heap leach pad; and
• A number of smaller miscellaneous projects that are also under way.

The Company has consistently been able to secure permits for construction of the facilities and have not experienced any difficulties to date.

The Company is now managing site security and there were no incidents to report in the second quarter.

The Company has an active Community Outreach Program with a number of site visits arranged for local community groups.

Key Changes in Costs from the Feasibility Study

One of the Company's priorities in the first quarter of 2014 was to do more detailed engineering for construction and update cost estimates for the major turn-key projects. The feasibility study capital cost estimates were prepared in 2012 and were therefore out of date by around 18 months by the end of 2013. The detailed designs are either well under way or have essentially been completed, and the Company has received updated cost estimates for all of the turn-key projects.

The current designs and updated cost estimates have raised the total estimated capital cost to build the Project to $114 million. This includes a contingency of 15% or approximately $15 million. The 2012 feasibility study cost estimate was $79 million with unallocated costs of $12 million for a total of $91 million.

In addition to the $114 million required to build the Project, the Company estimates that $10.5 million will be required for working capital and approximately $17 million for mobile mining equipment. These estimates have not changed from the feasibility study. The Company's new estimate for the total capital required to bring the Project to production is $141 million (from $119 million in the feasibility study), of which approximately $14 million has been spent to date.

Approximately 50% of capital expenditures are comprised of turn-key projects that will be awarded as fixed-price contracts. These contracts will therefore provide price protection during the construction. The Company has selected and is working with contractors for its turn-key projects with significant experience and excellent reputations.

4

The time that has passed between the time the feasibility study was released in October 2012 and the first quarter of 2014, when the Company updated its capital costs, has provided the Company with the opportunity to re-evaluate the designs and we have made numerous improvements which we believe will enhance the efficiency and reliability of the processing operations.

Workshop-Warehouse: The Company received a proposal for the construction of the workshop-warehouse and wash slab from a local contractor in November 2013 and the proposed cost for the project was in line with the feasibility study cost estimate.

Crushing-Screening Plant: Our contractor has completed the design for the crushing-screening plant as a turn-key project with numerous improvements to the feasibility-level design, to improve the functionality of the plant, both from an operating and a maintenance point of view. The plant now includes an agglomeration drum and provision has been made for a possible future increase in plant throughput and this has increased the cost estimate for the plant by $2.7 million.

The Company has confirmed an order for the HPGR with ThyssenKrupp Industrial Solutions (USA), Inc. (formerly Polysius Corporation) and made a deposit of approximately $1.0 million in July. The cost of the HPGR is in line with the feasibility study cost estimate.

Stacking and Conveying System: The feasibility study design for the stacking and conveying system was done in 2005. The current design has evolved substantially over the past few years to a fully-automated system with a significant increase in the reliability of the overall system. The power distribution along the system has evolved with a separate transformer and motor control package for each unit of the system. Each of the grass hopper conveyors now includes a dust control cover and all functions of the stacker are now controlled by radio remote control. As a result of the changes, the estimated costs have increased by $3.9 million.

Phase 1 Heap Leach Pad: The Phase 1 heap leach pad has been designed as a permanent, single-use pad with external solution collection and management systems. Crushed and agglomerated ore will be conveyed to the heap and stacked with a radial stacker. The Company has received an updated cost estimate for the construction of the Phase 1, Stage 1 pad and this, after allowance for the construction of the overland conveyor route and peripheral roads in 2013, is lower than the feasibility study cost estimate by $1 million.

Merrill-Crowe Plant: The current design includes an increase in solution flow rates of 50% and this was decided upon as part of an overall design review of the Project. The increase in solution flow rates has been accommodated in the original Merrill-Crowe plant footprint. Costs have however increased by $1.8 million due to the changes to the plant design.

Assay Laboratory: The assay laboratory has been changed from a laboratory assembled from three pre-fabricated modules to a laboratory constructed on site. Costs have increased by $0.8 million as a result of these changes.

Water Supply (Supply from two groundwater production wells and distribution on site): Both the design and the cost estimates for the water supply from two production wells were re-done by a consulting engineering firm based in Bakersfield. The original design commissioned for the water supply feasibility study was inadequate resulting in a higher cost estimate than was originally anticipated by approximately $2.3 million.

Project Financing - Proposed Joint Venture Transaction

The Company announced on June 9, 2014 that it entered into an agreement (the “Transaction Agreement”) regarding a proposed joint venture (the “Joint Venture”) with Gauss LLC (“Gauss”), to develop and operate the Company’s Soledad Mountain Project (the “Project”). 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 owns approximately 27% of the issued and outstanding shares of Golden Queen (the “Clay Group”). Gauss will be owned 67.5% by Gauss Holdings LLC (“Gauss Holdings”, Leucadia’s investment entity) and 32.5% by Auvergne LLC (“Auvergne”, the Clay Group’s investment entity). Pursuant to the Transaction Agreement, Gauss will invest $110 million in cash in exchange for a 50% interest in the Project. Closing of the Joint Venture is subject to approval by Golden Queen’s shareholders and certain other conditions.

Pursuant to the terms of the Transaction Agreement, Golden Queen will convert its wholly-owned subsidiary that is developing the Project, Golden Queen Mining Company, Inc., into a California limited liability company (“GQ California”). Gauss will acquire 50% of the membership interests of GQ California for $110 million payable in cash to GQ California. On closing of the Joint Venture, Golden Queen, through a wholly-owned subsidiary (“GQ Holdco”), and Gauss will each own 50% of GQ California and will enter into an amended and restated limited liability company agreement of GQ California (the “JV Agreement”) that will govern the management of the Project, the obligations of the parties in connection with further funding requirements and ownership of GQ California. GQ California will be managed by a board of managers comprising an equal number of representatives of each of Gauss and GQ Holdco.

5

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

Prior to closing of the joint venture transaction, Golden Queen will incorporate GQ Holdco and transfer the current liabilities of GQ California, consisting primarily of intercompany loans, to GQ Holdco.

On closing of the joint venture transaction, Golden Queen’s CEO, Lutz Klingmann, and CFO, Andrée St-Germain, will become the CEO and CFO, respectively, of GQ California.

The transaction is subject to customary closing conditions, including approval by the Toronto Stock Exchange (the “TSX”) and the shareholders of Golden Queen. Golden Queen will call a special meeting of its shareholders, which will be held on September 9, 2014. Pursuant to stock exchange requirements, the transaction must be approved by a majority of shareholders voting at the meeting, excluding the votes of Company insiders participating in the transaction. Members of the Clay Group who are investors in Auvergne, and represent approximately 27% of the Company’s issued and outstanding shares, will not be eligible to vote at the meeting. The record date of the meeting is July 31, 2014. Details of the joint venture transaction are disclosed in a proxy statement on Schedule 14A that was filed with the United States Securities and Exchange Commission (the “SEC”) and certain Canadian securities regulators on July 31, 2014. A copy of the proxy statement is available on the SEC website, as well as at www.sedar.com and the Company’s website at www.goldenqueen.com.

Golden Queen’s board of directors (the “Board”) has unanimously determined that the Transaction Agreement is in the best interests of Golden Queen. This conclusion reached by the Board was based upon the favorable recommendation of a special committee of independent directors of Golden Queen, which was appointed to consider the transaction, and the receipt of a valuation and an opinion from Maxit Capital LP, the special committee’s financial adviser, as to the fairness from a financial point of view of the consideration to be received by Golden Queen for the sale of a 50% interest in the Project.

A production decision will be made if and when the joint venture transaction closes.

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

Standby Commitment

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. The common shares will be purchased at a price 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 will pay Gauss a standby guarantee fee of $2.25million.

However, the Company is conducting a full review of available financing alternatives, and as a result, the size of a possible rights offering (if any) is not known at this time. The use of proceeds of any financing will include funding the Company’s additional investment in GQ California in order to maintain its 50% joint venture interest. The price per share that may be acquired upon the exercise of rights will be determined at a future date.

6

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

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

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

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

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

Other Legal Matters

During the three months ended June 30, 2014, the Company filed a complaint with the National Labor Relations Board (the “NLRB”) against the Building and Construction Trades Council of Kern, Inyo, and Mono Counties (the “Union”). The complaint was in response to the action taken by the Union related to a 1997 project labor agreement that the Company believes is not applicable to the current Project and in any event unenforceable under federal labor law. The Company will assess its options related to this matter when it receives a response from the NRLB.

Results of Operations

The following are the results of operations for the three and six months ended June 30, 2014, and the corresponding period ended June 30, 2013.

The Company had no revenue from operations.

The Company incurred general and administrative expenses of $2,081,950 and $3,147,208 during the three and six months ended June 30, 2014 as compared to $452,804 and $902,501 for the same periods in 2013. Costs were higher by $1,629,146 and $2,244,707 for the three and six months ended June 30, 2014 when compared with the same periods in 2013. The reasons for the higher costs are highlighted below.

The following significant general and administrative expenses were incurred during the six months ended June 30, 2014 with a comparison to costs incurred during the same period in 2013:

• $928,756 (2013 – $230,015) for legal expenses. The increase is the result of the work required for financing activities, a general increase in overall corporate activity and other corporate matters such as the Company’s response to the Petition (refer to The Centre for Biodiversity Petition to List the Mojave Shoulderband Snail as an Endangered Species above).

• $264,521 (2013 - $133,218) for audit, tax and accounting fees. The current period increase is the result of higher costs associated with the 2013 year-end audit completed in first quarter of 2014. With the increase in overall corporate activity, changes and improvements to our control environment and processes and a move from the exploration stage to the development stage, 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. The increase is also a result of discussions and analyses with experts in the subject matter related to our significant financing activities.
  
  

7

• $637,663 (2013 – $Nil) for corporate expenses. The increase is due to the costs associated with the Company’s financing activities and a general increase in overall corporate activity. Additional fees had to be paid in connection with the announced joint venture agreement (refer to Project Financing - Proposed Joint Venture Transaction above). The Company opened an administrative office in Mojave in July 2013 and has been hiring new employees, hence increasing overall corporate expenses at the project level.
  
  
• $113,749 (2013 - $74,746) for consulting fees. The increase was the result of increased work during the current period by the Company’s President. The increase was also due to the reallocation of $29,692 in consulting fees originally capitalized in 2013.
  
  
• $387,755 (2013 - $Nil) for corporate salary. The increase is the result of the Company having eight full- time staff at the Vancouver and Mojave offices, including a CFO and a COO. The staff was hired between the second quarter of 2013 and the second quarter of 2014.
  
  
• $96,268 (2013 - $5,056) for public relations and promotions. The increase is due to the increase in overall corporate activity, the Company’s financing efforts and a move from the exploration stage to the development stage.
  
  
• $322,132 (2013 - $49,742) for office expense. The significant increase in the office expenses is directly related to the increased activity at the Mojave office including items such as office supplies, utilities, telephone, internet, vehicle expense and staff recruitment costs.

The following significant general and administrative expenses were incurred during the three month ended June 30, 2014 with a comparison to costs incurred during the same quarter in 2013:

• $538,926 (2013 – $84,140) for legal expenses. The increase is the result of the work required for financing activities.

• $107,027 (2013 - $50,063) for audit, tax and accounting fees. The increase is the result of the work required for tax discussion and analyses with experts in the subject matter related to our significant financing activities and other general corporate matters.

• $466,079 (2013 – $Nil) for corporate expenses. The increase is due to the costs associated with the Company’s financing activities and a general increase in overall corporate activity.

• $266,677 (2013 - $Nil) for corporate salary. The increase is the result of the Company having eight full- time staff at the Vancouver and Mojave offices

• $57,672 (2013 - $3,678) for public relations and promotions. The increase is due to the increase in overall corporate activity, the Company’s financing efforts and a move from the exploration stage to the development stage.

• $208,275 (2013 - $41,289) for office expenses. The significant increase in the office expenses is directly related to the increased activity at the Mojave office including items such as office supplies, utilities, telephone, internet, vehicle expense and staff recruitment costs.

The Company incurred $264,120 and $955,417 for interest expense during the three and six months ended June 30, 2014 as compared with $Nil and $Nil for the same period in 2013. The Company received C$10,000,000 by issuing convertible debentures in July 2013 and received $10,000,000 from a loan in January 2014. This resulted in interest expenses for the period. The total interest cost includes an amortization of the discounted convertible debentures of $593,038 and $1,113,618 during the three and six months ended June 30, 2014 (2013 - $Nil and $Nil), $45,799 and $91,516 relate to the stated interest on the July 2013 convertible debentures during the three and six months ended June 30, 2014 (2013 - $Nil and $Nil) and $616,096 and $741,096 relate to the January 2014 loan during the three and six months ended June 30, 2014 (2013 - $Nil and $Nil). Included in the interest cost for the January 2014 loan is a finance charge of $500,000 (2013 - $Nil). This charge represents the premium payable to the lender. The finance charge became due once management concluded that the loan would be repaid with less than 183 days remaining before maturity. See below table for more details on the period interest expense.

8

For significant exploration and development costs, the Company capitalizes a portion of the interest expense. As such, the Company capitalized a portion of the above interest expense as it related to funds borrowed to complete development activities at the Project site. The following summarizes interest expense as at June 30, 2014 and December 31, 2013.

		June 30, 2014			December 31, 2013
Amortization of discount and interest on loan and convertible debenture	$	1,946,230		$	888,026
Less: Interest cost capitalized		(990,813	)		-
Amortization of discount and interest expense	$	955,417		$	-

The Company recorded a decrease in the derivative liability change including foreign exchange of $1,634,681 as a result of a decrease in the Company’s share price during the three months ended June 30, 2014 from the previous quarter compared to a decrease of $1,672,861 for the same quarter in 2013. For the six months ended June 30, 2014, the Company recorded a significant increase in the derivative liability change including foreign exchange of $4,112,695 (2013 – decrease of $2,284,810) as a result of the addition of a derivative liability related to the July 2013 convertible debentures and an increase in the Company’s share price from December 31, 2013 as compared to the same period in 2013. The derivative liability as of June 30, 2014 is the result of the convertible debenture having a conversion price denominated in Canadian dollars as well as the fact that the final conversion price is not fixed, whereas at June 30, 2013, the derivative liability was the result of stock options having exercise prices in Canadian Dollars. In both cases, the conversion/exercise prices were denominated in a currency that was not the functional currency of the Company, US Dollars. These derivative liability changes are a non-cash item and were recorded in accordance with accounting pronouncement ASC 850-40-15. Refer to Notes 6 and 8 of the unaudited condensed consolidated interim financial statements for a detailed analysis of the changes in fair value of the derivative liability.

Interest income of $5,546 (2013 - $6,723) was slightly lower during the three months ended June 30, 2014 as compared with the same period in 2013 due to lower cash balances in 2014. For the six month period ended June 30, 2014, interest income was $14,838 (2013 - $11,775), slightly higher than the same period in 2013 due to higher cash balances at the beginning of the six month period ended June 30, 2014. Interest rates remained low during the quarter and are projected to remain low for the remainder of 2014 at least.

The Company recorded a net and comprehensive loss of $705,843 and $8,200,482 (or $0.01 and $0.08 basic loss per share) during the three and six months ended June 30, 2014 as compared to net and comprehensive income of $1,226,780 and $1,394,084 (or $0.01 and $0.01 basic earnings share) during the same period of 2013. The difference between the three months ended June 30, 2014 and 2013 is mainly due to an increase in administration costs, an increase of $1,629,146, and interest expense of $264,120, a cost that was not present in 2013. The difference between the six month periods ended June 30, 2014 and 2013 was the result of increased administrative expense, increase of $2,244,707, interest expense of $955,417, a cost that was not present in 2013, and a difference of $6,397,505 in the change in fair value of the derivative liability.

Summary of Quarterly Results

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

Results for the quarter ended on:	June 30, 2014		March 31, 2014		Dec. 31, 2013		Sept. 30, 2013
Item	$		$		$		$
Revenue	Nil		Nil		Nil		Nil
Net income (loss) for the quarter	(705,843	)	(7,494,638	)	1,221,564		(637,634	)
Basic net income (loss) per share	(0.01	)	(0.08	)	0.02		(0.01	)
Diluted net income (loss) per share	(0.02	)	(0.08	)	(0.01	)	(0.01	)

9

Results for the quarter ended on:	June 30, 2013		March 31, 2013		Dec. 31, 2012	Sept. 30, 2012
Item	$		$		$	$
Revenue	Nil		Nil		Nil	Nil
Net income (loss) for the quarter	1,226,780		167,304		803,716	(1,825,831	)
Basic net income (loss) per share	0.01		0.00		0.01	(0.02	)
Diluted net income (loss) per share	(0.00	)	(0.00	)	0.01	(0.02	)

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

The Company provided reclamation financial assurance to the Bureau of Land Management, the State and Kern County of $478,739 for the year ended December 31, 2013 ($339,076 for the year ended December 31, 2012). This deposit earned interest at 0.1% per annum and is not available for working capital purposes. The increase in the deposit was to ensure the amount of the reclamation financial assurance covers the asset retirement obligation from the previous year.

The reclamation financial assurance increased to $552,250 in 2014 based upon the anticipated work done on site in 2014 and the Company recorded this obligation as at June 30, 2014 and December 31, 2013. The estimate was submitted to the State Office of Mine Reclamation for review and was subsequently approved by the Kern County Engineering, Surveying & Permit Services Department.

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. During the three and six months ended June 30, 2014, there were no changes to the retirement obligations as compared with the year ended December 31, 2013, where $76,312 was capitalized to mineral property interests as the asset portion of the retirement obligation. The amount was capitalized as the Company is in the development stage and is capitalizing all of its development costs pursuant to our policy. The total asset retirement obligation as of June 30, 2014 is $552,250 (December 31, 2013 - $552,250). Prior to 2013, the asset retirement obligation was expensed. The Company will be reassessing the retirement obligation if and when a production decision has been made or there is further site disturbances during the phased construction.

Property Rent Payments

The Company continues to make property rent payments to landholders and paid $75,500 in cash and $24,480 in common shares of the Company for the six month period ended June 30, 2014, as compared to $82,064 during the same period in 2013. The overall payments during the year are expected to increase from approximately $161,000 in 2013 to approximately $184,000 in 2014. The Company is in ongoing discussions with landholders and has made offers to buy back royalty interests.

Off-balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Stock Option Plan

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

10

During the quarter ended June 30, 2013, the Company granted 300,000 options to Mr. Laurence Morris, the Company’s new Chief Operating Officer. 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. The Company also granted 50,000 stock options to a consultant of the Company on June 3, 2013. The options are exercisable at a price of $1.16 for a period of five years from the date of grant and vest immediately.

During the quarter ended September 30, 2013, the Company granted 300,000 options to Ms. Andrée St-Germain, the Company’s new Chief Financial Officer. 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, and 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 did not grant options during the quarters ended December 31, 2013, March 31, 2014 and June 30, 2014.

A total of 850,000 (650,000 exercisable) (December 31, 2013 – 1,380,000 (880,000 exercisable); June 30, 2013 – 1,850,000 (1,550,000 exercisable)) common shares were issuable pursuant to such stock options as at June 30, 2014.

Transactions with Related Parties

Consulting Fees

For the three and six months ended June 30, 2014, the Company paid $39,032 and $84,059 (2013 - $37,371 and $74,523) to Mr. H. L. Klingmann for services as President of the Company of which $13,797 (December 31, 2013 - $47,967; June 30, 2013 - $Nil) is payable as at June 30, 2014.

During the three and six months ended June 30, 2014, the Company paid a total of $11,815 and $23,439 (2013 - $Nil and $Nil) to its three independent directors. The two non independent directors, Lutz Klingmann and Thomas M. Clay, were not paid directors’ fees during the three and six months ended June 30, 2014 or 2013.

Convertible Debentures

On July 26, 2013, the Company entered into agreements to issue convertible debentures for aggregate proceeds of C$10,000,000. The convertible debentures are unsecured and bear interest at 2% per annum, calculated on the outstanding principal balance, payable annually. The principal amounts of the debentures are convertible into shares of the Company at a price of C$1.03 per share for a period of two years. If the debentures 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. The market price on the maturity date will be determined based on the volume- weighted average price of the shares traded on the TSX 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 conversion feature of the convertible debentures meets the definition of a derivative liability instrument because the conversion feature is denominated in a currency other than the Company’s functional currency and therefore does not meet the “fixed-for-fixed” criteria outlined in ASC 815-40-15. As a result, the conversion feature of the debentures is required to be recorded as a derivative liability recorded at fair value and marked-to-market each period with the changes in fair value each period being charged or credited to income.

See also Note 6 of the unaudited condensed consolidated interim financial statements for more details on the convertible debentures.

11

Loan

In January 2014, the Company entered into an agreement to secure a $10,000,000 loan (the “Loan”). The Loan was provided by members of the Clay family including $7,500,000 provided by an investment vehicle managed by Thomas M. Clay, a Director and insider of the Company. The Loan has a twelve-month term and bears an annual interest rate of 5%, payable on the maturity date. If the Loan is repaid on a date that is less than 183 days before the maturity date, the Company will pay the Lenders 105% of the principal amount, plus interest on the principal amount at the rate of 5% per annum accrued to the date the Loan is repaid. In addition, the outstanding balance will be immediately due and payable on the earlier of the maturity date, the first date during the term on which a financing over $15,000,000 is completed and the occurrence of an event of default. As at June 30, 2014, the value of the prepayment option has been recognized as an interest cost as management assessed its ability to prepay the Loan and concluded that the Company would not be able to prepay the Loan within the terms outlined above.

See also Note 6 of the unaudited condensed consolidated interim financial statements for more details on this Loan.

There were no other transactions with related parties during the quarter ended June 30, 2014.

Fair Value of Financial Instruments

The carrying amounts reported in the balance sheets for cash and cash equivalents, receivables, accounts payable and accrued liabilities and loans payable approximate fair values because of the immediate or short-term maturity of these financial instruments. The carrying amount of the convertible debenture is being recorded at amortized cost using the effective interest rate method. As at June 30, 2014, the estimated fair value of the convertible debenture using a discounted cash flow analysis based on an interest rate for a similar type of instrument without a conversion feature was $12,297,540. The fair value of the reclamation financial assurance approximates the carrying value because the stated interest rates reflect recent market conditions or because the rates are variable in nature. The value of the embedded derivative is being recorded at its fair value using an acceptable valuation model at each reporting period.

It is the opinion of management that the Company is not exposed to significant interest, currency or credit risk arising from the use of these financial instruments.

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

Liquidity and Capital Resources

The Company held $5,076,621 in cash on June 30, 2014 as compared to $1,594,534 during the same period in 2013. The increase in liquidity is the result of the proceeds from the 2013 convertible debentures and 2014 Loan (see Transactions with Related Parties above), partially off-set by increased corporate activity and activity on site. The $10m raised subsequently to period end (see Note 10- Subsequent Event in the financial statements), which are key funds for the Company to continues its development of the property.

Cash used in Operating Activities:

Cash was used to fund the general and administrative work on the Project and for legal, accounting, consulting and regulatory fees.

Cash from Financing Activities:

During the six months ended on June 30, 2014, 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. 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 by two former directors and the Company issued 170,000 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 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.

12

• In February 2014, 60,000 stock options were exercised by a former director and the Company issued 60,000 shares at $0.21 per share for proceeds of $12,721. The total transferred to share capital from additional paid-in capital upon exercise of stock options was $32,118.

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 $7,250,113 during the six months ended June 30, 2014 (2013 - $1,791,459).

The Company continued its work on the Project with the main work being completed in the second quarter of 2014 as described in Construction of Infrastructure and Project Facilities above.

Workshop-Warehouse: The Company awarded a contract for the construction of the workshop-warehouse and wash slab to a contractor based in Lancaster in November 2013. This was the first of a number of turn-key projects. A milestone was reached when the prepared workshop-warehouse pad was formally handed over to the contractor to start construction of the footings in January. Construction of the building was essentially completed in June with finishing work under way.

Site Preparation: Earthmoving was completed in June for the area where the crushing-screening plant will be constructed. The required fill material was taken from the overflow pond, which is part of the heap leach facilities. Work is now progressing in the area and a number of additional contracts have been let.

Access Road to Site: The access road from the dip crossing to site and the parking lot were paved. This completed all remaining work in this area.

EPCM (Engineering, Procurement and Construction Management) : Detailed engineering work and construction management continued during the second quarter of 2014.

Working Capital:

As at June 30, 2014, the Company had current assets of $5,268,212 (December 31, 2013 - $5,107,259; June 30, 2013 - $1,662,762) and current liabilities of $12,788,240 (December 31, 2013 - $1,521,954; June 30, 2013 - $640,917) or working capital deficiency of $7,520,028 (December 31, 2013 – working capital of $3,585,305 ; June 30, 2013 – working capital of $1,021,845). The decrease in working capital to a deficiency is the result of a significant increase in our current liabilities as a result of the Loan (refer to Liquidity and Capital Resources above) and a significant increase in project related expenditures. Current assets are mainly comprised of cash. The increase in cash is described above and largely a result of the January 2014 $10 million loan.

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

Outstanding Share Data

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

Item	No. of Shares
Shares issued and outstanding on March 31, 2014	99,308,683
Shares issued for mineral properties	Nil
Shares issued pursuant to the exercise of stock options	470,000
Shares issued and outstanding on June 30, 2014	99,778,683	Exercise Price	Expiry Date
Director and consultants stock options	850,000	US$1.16 to US$1.59	From 04/19/15 to 09/18/18
Shares to be issued as a finder’s fee	100,000	Not Applicable	Not Applicable
Bonus shares to H.L. Klingmann	600,000	Not Applicable	Not Applicable
Fully diluted on June 30, 2014	101,328,683

13

Shares to be issued on conversion of convertible debentures*	9,708,737	Lower of C$1.03 or market price on maturity date*	07/25/15
Fully diluted on August 11, 2014	111,037,420
The company has an unlimited authorized share capital

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

Outlook

The Project is now fully permitted.

The revised estimated capital costs, including working capital and assuming purchase of the mining equipment, are $141 million.

The Company announced on June 9, 2014 that it entered into an agreement (the “Transaction Agreement”) regarding a proposed joint venture. Pursuant to the Transaction Agreement, the joint venture partner will invest US$110 million in cash in exchange for a 50% interest in the Project. Closing of the joint venture is subject to approval by Golden Queen’s disinterested shareholders and certain other conditions (refer to “Project Financing” above for further details of the proposed transaction).

A production decision will be made if and when the joint venture transaction closes.

The July 2, 2014 advance of $10 million (refer to Subsequent Events below) will permit the Company to commit to the following major projects:

• Confirmed an order for a HPGR with ThyssenKrupp Industrial Solutions (USA), Inc. (formerly Polysius Corporation) and made a deposit of approximately $1.0 million in July;
• Construct and commission the basic water supply for the Project costing approximately $1.2 million; and
• Construct the assay laboratory building with plumbing and electrical items costing approximately $1.0 million.

The Company is evaluating various financing options to fund its attributable remaining capital expenditures, including debt and equity.

The Company estimates that construction can be completed in approximately 15 to 18 months once Project financing has been secured.

It is not expected that the Company will hedge any of its gold or silver production.

The ability of the Company to develop a mine on the property is subject to numerous risks, certain of which are disclosed in the Company’s latest Form 10-K filing with the SEC, dated March 17, 2014. Readers should evaluate the Company’s prospects in light of these and other risk factors.

Mineral Properties

The Company received notice that it had met all remaining major conditions of the conditional use permits for the Project in July 2012. As a result, management of the Company made the decision to begin capitalizing all expenditures related to Project. Refer also to Note 2 Mineral Properties of the unaudited condensed consolidated interim financial statements for a more detailed discussion.

Subsequent Events

July 2, 2014 Advance with Leucadia and Auvergne

The Company announced on July 2 that the Company its wholly owned subsidiary entered into a loan agreement with Leucadia National Corporation (“Leucadia”) and Auvergne, LLC, an entity controlled by certain members of the Clay family (“Auvergne”, and together with Leucadia, the “Lenders”), with the Company as guarantor, in respect of an advance of US$10,000,000 (the “Loan”) by the Lenders (as to US$6,500,000 from Leucadia and US$3,500,000 from Auvergne) to the subsidiary. The Loan is collateralized against certain assets of the Subsidiary and the Company, and ranks in priority to existing debt. Proceeds will be used to advance the development of the Soledad Mountain Project.

14

The maturity date of the Loan will be the closing of the joint venture transaction with Gauss LLC (Refer to “Project Financing” section above) (the “JV Closing”). In the event the JV Closing occurs later than September 30, 2014, the maturity date can be extended to December 1, 2014 by paying a US$1,000,000 extension fee. The extension fee is not payable if the JV Closing occurs before the extended maturity date.

The Loan will bear interest at a rate of 10.0% per annum, compounded monthly. After the occurrence and during the continuation of an event of default, interest on the Loan will accrue at a rate of 12.0% per annum.

The repayment of the Loan, accrued interest and extension fee, if any, will be funded from the proceeds of the joint venture transaction upon the JV Closing.

Significant Commitments on Site

The Company entered into the following significant commitments during July 2014:

• Confirmed an order for a high-pressure grinding roll with ThyssenKrupp Industrial Solutions (USA), Inc. (formerly Polysius Corporation) and made a deposit of approximately $1.0 million in July;

• Committed to the construction and commissioning of the basic water supply for the Project costing approximately $1.2 million; and

• Committed to the construction of the assay laboratory building with plumbing and electrical items costing approximately $1.0 million.

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. Significant estimates have been made by Management in several areas including the recoverability of mineral properties, reclamation reserves and valuation of stock options, convertible debenture and derivative liabilities. Actual results could differ from those estimates.

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

Mineral Property and Exploration Costs

Costs related to the development of our mineral reserves are capitalized when it has been determined an ore body can be economically developed. The development stage begins when an ore body is determined to be economically recoverable based on proven and probable reserves and appropriate permits are in place, and ends when the production stage or exploitation of reserves begins. Major mine development expenditures are capitalized, including primary development costs such as costs of building access ways, heap leach pads, ramps and infrastructure developments.

Costs for exploration, pre-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: (a) in search of previously unidentified mineral deposits, or (b) at undeveloped concessions. Pre-development activities involve costs incurred in the exploration stage that may ultimately benefit production that are expensed due to the lack of evidence of economic development, which is necessary to demonstrate future recoverability of these expenses. Secondary development costs are incurred for preparation of an ore body for production in a specific ore block, stope or work area, providing a relatively short-lived benefit only to the mine area they relate to, and not to the ore body as a whole.

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

15

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

If all of these criteria are met, drilling and related costs are capitalized. Drilling and related 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 favorable economic study and mine plan for the ore body targeted;
• Authorization of development of the ore body by management and/or the Board of Directors; and
• All permitting and/or contractual requirements necessary for us to have the right to or control of the future benefit from the targeted ore body have been met.

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

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

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

Asset Retirement Obligations

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 to support the reclamation financial assurance mechanism. The Company estimated its asset retirement obligations based on its understanding of the requirements to reclaim and clean-up its property based on its activities to date. As a result, the Company has recorded an asset retirement obligation of $552,250.

The Company has provided reclamation financial assurance to the Bureau of Land Management, the State of California and Kern County totaling $478,739.

Derivative Liabilities

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

New Accounting Policies

Effective June 2014, FASB issued Accounting Standards update (“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.

16

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

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

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

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 financial statements.

Qualified Person and Caution With Respect to Forward-looking Statements

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 in this Form 10-Q.

This Form 10-Q contains certain forward-looking statements, which relate to the intent, belief and current expectations of the Company’s management, as well as assumptions and parameters used in the feasibility study referenced in this report. These forward-looking statements are based upon numerous assumptions that involve risks and uncertainties and other factors that may cause actual results to differ materially from those indicated by such forward-looking statements. Such factors include among other things the receipt and compliance with the terms of required approvals and permits, the costs of and availability of sufficient capital to fund the projects to be undertaken by the Company and commodity prices. In addition, projected mining results, including quantity of ore, grade, production rates, and recovery rates, are subject to numerous risks normally associated with mining activity of the nature described in this report and in the feasibility study, and as a result actual results may differ substantially from projected results. Readers are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date the statements were made.

Caution to U.S. Investors

Management advises U.S. investors that while the terms “measured resources”, “indicated resources” and “inferred resources” are recognized and required by Canadian regulations, the SEC does not recognize these terms. U.S. investors are cautioned not to assume that any part or all of the material in the mineral resource categories will be converted into mineral reserves. References to such terms are contained in the Company’s Form 10-K and other publicly available filings. We further advise U.S. investors that the mineral reserve estimates disclosed in this report have been prepared in accordance with Canadian regulations and may not qualify as “reserves” under the SEC Industry Guide 7. Accordingly, information concerning mineral resources and reserves set forth herein may not be comparable with information presented by companies using only U.S. standards in their public disclosure.

17

Additional Information

Further information on Golden Queen Mining Co. Ltd. is available on the SEDAR web site at www.sedar.com and on the Company’s web site at www.goldenqueen.com.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

We hold 89% of our 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. The interest rates received on these balances may fluctuate with changes in economic conditions. Based on the average cash balances during the quarter ended June 30, 2014, a 1% decrease in interest rates would have reduced the interest income for the quarter ended June 30, 2014 to a trivial amount.

Foreign Currency Exchange Risk

Foreign currency exchange rates can fluctuate widely due to numerous factors, such as supply and demand for foreign and U.S. currencies and U.S. and foreign country economic conditions. Currency exchange fluctuations may impact the costs of our operations and may affect our profitability and cash flows. Specifically, the appreciation of the U.S. dollar against the Canadian dollar may result in an increase in our operating costs in Canadian dollar terms. The Company now holds approximately 92% of its funds in U.S. dollar deposit accounts with a Canadian financial institution and a U.S. financial institution to eliminate currency exchange risks.

We currently do not engage in any currency hedging activities.

Commodity Price Risk

Our primary business activity is the development of a gold-silver, open pit, heap leach operation on the Soledad Mountain property. Decreases in the price of either gold or silver from current levels has the potential to negatively impact our ability to secure the significant additional financing required to develop the Project into an operating mine. Gold and silver prices may fluctuate widely from time to time and are affected by numerous factors, including expectations with respect to the rate of inflation, exchange rates, interest rates, global and regional political and economic circumstances and government policies. Additionally, hedging activities by producers, consumers, financial institutions and individuals can affect gold and silver supply and demand.

We do not currently engage in hedging transactions and we have no hedged mineral resources.

Item 4. Controls and Procedures.

Timely Disclosure

The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, or the “Exchange Act.” These rules refer to the controls and other procedures of a company that are designed to ensure that the information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the required time periods. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our Exchange Act reports is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. It is management’s responsibility to establish and maintain adequate internal control over financial reporting for the Company.

As of June 30, 2014, our Chief Executive Officer and Chief Financial Officer, and our external Sarbanes-Oxley consultants carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based upon this evaluation our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

18

Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining effective internal control over financial reporting. Under the supervision of our Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2014 using the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) issued in 1992. In 2013, COSO released an updated framework that becomes effective for year-ends beginning on December 15, 2014. Management is working to be compliant with the new framework by its annual assessment for the year ended December 31, 2014.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of June 30, 2014, the Company determined that there were no deficiencies that constituted material weaknesses.

As a result, management has concluded that the Company did maintain effective internal control over financial reporting as of June 30, 2014 based on criteria established in Internal Control—Integrated Framework issued by COSO as issued in 1992.

Changes in Internal Control

There were no material changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) during the three month period ended June 30, 2014.

Fraud Analysis

The Company is committed to preventing fraud and corruption and is developing an anti-fraud culture. To achieve this goal, the Company has committed to the following:

1.	Developing and maintaining effective controls to prevent fraud;
2.	Ensuring that if fraud occurs a vigorous and prompt investigation takes place;
3.	Taking appropriate disciplinary and legal actions;
4.	Reviewing systems and procedures to prevent similar frauds;
5.	Investigating whether there has been a failure in supervision and take appropriate disciplinary action if supervisory failures occurred; and
6.	Recording and reporting all discovered cases fraud.

The following policies have been developed to support the Company’s goals:

• Insider Trading Policy
• Managing Confidential Information Policy
• Whistleblower Policy
• Anti-corruption Policy

All policies can be viewed in full on the Company’s website at www.goldenqueen.com

For the period ended June 30, 2014 and year ended December 31, 2013, there were no reported instances of fraud.

19

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

See “The Centre for Biodiversity Petition to List the Mojave Shoulderband Snail as an Endangered Species” and “Other Legal Matters” contained in Part I - Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-Q.

Item 1A. Risk Factors

Material changes from risk factors previously disclosed in our Form 10-K for the fiscal period ended December 31, 2013 which may have a material impact on, or constitute risk factors in respect of, our future financial performance and in respect of an investment in the Company are hereby incorporated by reference to the “Risk Related to the Joint Venture” on pages 25-27 of the Proxy Statement of the Company, filed with the SEC on July 31, 2014 and attached to this Form 10-Q as Exhibit 99.1 These risk factors should be read in conjunction with disclosure on business and risks in Part I - Item 2. Management’s Discussion and Analysis of Financial Condition of this Form 10-Q.

Item 6. Exhibits

10.1	Transaction Agreement among the Company, Golden Queen Mining Company, Inc., Gauss LLC, Gauss Holdings LLC, and Auvergne, LLC dated June 8, 2014 is incorporated by reference to Exhibit 10.1 to the Form 8-K of the Company, filed with the SEC on June 12, 2014.
10.2	Standby Purchase Agreement among the Company, Gauss Holdings LLC, Auvergne, LLC dated June 8, 2014 is incorporated by reference to Exhibit 10.2 to the Form 8-K of the Company, filed with the SEC on June 12, 2014.
10.3	Registration Rights Agreement between the Company and Gauss Holdings LLC dated June 8, 2014 is incorporated by reference to Exhibit 10.3 to the Form 8-K of the Company, filed with the SEC on June 12, 2014.
10.4	Registration Rights Agreement between the Company and Auvergne, LLC dated June 8, 2014 is incorporated by reference to Exhibit 10.4 to the Form 8-K of the Company, filed with the SEC on June 12, 2014.
10.5	Debt Restructuring Agreement among the Company, Golden Queen Mining Co., Inc., the Clay Family 2009 Irrevocable Trust Dated April 14, 2009, and Harris Clay dated June 8, 2014 is incorporated by reference to Exhibit 10.5 to the Form 8-K of the Company, filed with the SEC on June 12, 2014.
10.6	Senior Secured Promissory Note among the Company, Golden Queen Mining Company, Inc., Leucadia National Corporation and Auvergne, LLC dated July 2, 2014 is incorporated by reference to Exhibit 10.6 to the Form 8-K of the Company, filed with the SEC on July 2, 2014.
10.7	Subordination Agreement among the Company, Golden Queen Mining Company, Inc., the Clay Family 2009 Irrevocable Trust Dated April 14, 2009 and Harris Clay dated July 2, 2014 is incorporated by reference to Exhibit 10.7 to the Form 8-K of the Company, filed with the SEC on July 2, 2014.
31.1	Certification of the Principal Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the U.S. Securities Exchange Act of 1934.
31.2	Certification of the Principal Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the U.S. Securities Exchange Act of 1934.
32.1	Section 1350 Certification of the Principal Executive Officer.
32.2	Section 1350 Certification of the Principal Financial Officer.
99.1	Risks Related to the Joint Venture.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Schedule
101.CAL	XBRL Taxonomy Calculation Linkbase
101.DEF	XBRL Taxonomy Definition Linkbase
101.LAB	XBRL Taxonomy Label Linkbase
101.PRE	XBRL Taxonomy Presentation Linkbase

20

SIGNATURES

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 thereunto duly authorized.

Date: August 11, 2014

GOLDEN QUEEN MINING CO. LTD.
(Registrant)

By:	/s/ H. Lutz Klingmann
	H. Lutz Klingmann
	Principal Executive Officer
By:	/s/ Andree St-Germain
	Andree St-Germain
	Principal Financial Officer

21

EX-31.1

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 quarterly report on Form 10-Q for the fiscal quarter ended June 30, 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: August 11, 2014	By:	/s/ H. Lutz Klingmann
		H. Lutz Klingmann
		Principal Executive Officer

EX-31.2

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 quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2104 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: August 11, 2014	By:	/s/ Andree St-Germain
		Andree St-Germain
		Principal Financial Officer

EX-32.1

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 Quarterly Report of Golden Queen Mining Co. Ltd. (the "Company") on Form 10-Q for the fiscal quarter ended June 30, 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: August 11, 2014	/s/ H. Lutz Klingmann
	H. Lutz Klingmann
	Principal Executive Officer

EX-32.2

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 Quarterly Report of Golden Queen Mining Co. Ltd. (the "Company") on Form 10-Q for the fiscal quarter ended June 30, 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: August 11, 2014	/s/ Andree St-Germain
	Andree St-Germain
	Principal Financial Officer

EX-99.1

Risks Related to the Joint Venture

There can be no certainty that all conditions precedent to the Joint Venture will be satisfied.

Our ability to consummate the Joint Venture is subject to a number of conditions precedent, certain of which are outside the control of the Company, including receipt of regulatory approval. The Company has made a submission to the TSX regarding the Joint Venture, and the provisions of the Proxy Statement relating to the resolution sought were reviewed and accepted by the TSX. However there is no guarantee that the Joint Venture will receive final approval from the TSX.

In addition, completion of the Joint Venture is contingent on our shareholders approving the Joint Venture. There can be no assurance or guarantee that our shareholders will approve the Joint Venture.

If for any reason the Joint Venture is not completed, the market price of the Shares may be adversely affected. If the Joint Venture is not completed and the Company cannot obtain financing for repayment of the Promissory Note and working capital requirements, the financial condition of the Company will be materially adversely affected.

The Transaction Agreement may be terminated in certain circumstances.

The parties to the Transaction Agreement have the right to terminate the Transaction Agreement and the Joint Venture in certain circumstances. Accordingly, there is no certainty, nor can the Company provide any assurance, that the Transaction Agreement will not be terminated, with the result that the Joint Venture will not proceed. In addition, in certain circumstances, the Company will be required to pay the Expenses Fee and/or the Termination Fee.

Completion of the Joint Venture will mean that the Company only has a 50% interest in the Soledad Project.

The Soledad Project is the Company’s only mineral property. If the Company were unable to fund the Joint Venture such that its interest in the Soledad Project was diluted further, the market price of the Shares may be adversely affected. In addition, the Company 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 the Company’s trading volume occurs on the OTCQX International Exchange, if the TSX delists our 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.

In addition, there is no assurance that the development of the Soledad Project will be successful even if the Joint Venture closes, or that the Joint Venture will have a positive impact on the shareholders.

There can be no assurance that the Company will be capable of raising additional funding required to continue development of the Soledad Project and meet its funding obligations under the Joint Venture.

The Company has limited financial resources. Assuming the Joint Venture closes, the Company will receive a portion of the funds required to continue its operations. However, the ability of the Company to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions, business performance of the Company, as well as the market price of metals. The recent volatility in global equities, commodities, foreign exchange, precious and base metals and a lack of market liquidity, may adversely affect the development of the Company and its ability to obtain financing. There is no assurance that sources of financing will be available to the Company on acceptable terms, if at all. Failure to obtain additional financing on a timely basis will cause the Company’s interest in the Joint Venture to be diluted.

Further financing by the Company 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. The Company has issued Shares or other instruments convertible into equity in the past and cannot predict the size or price of any future issuances of 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 the Company’s securities. Any additional issuances of Shares or securities convertible into, or exercisable or exchangeable for, Shares may ultimately result in dilution to the holders of Shares, dilution in any future earnings per share of the Company and may have a material adverse effect upon the market price of the Shares.

- 26 -

The board of managers of the Joint Venture will have discretion regarding the use and allocation of funds to the development of the Soledad Project.

The board of managers and officers of the Joint Venture will 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 will be 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 under “About the Soledad Mountain Project.” 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 Soledad Project may not develop exactly as set out in this Proxy Statement. In addition, the ability of the Company 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.

The Valuation and Fairness Opinion prepared by Maxit Capital is subject to certain assumptions, limitations and qualifications.

The Valuation and Fairness Opinion prepared by Maxit Capital, which support the consideration to be paid by Gauss for the interest in GQ California and concludes that the Joint Venture is fair, from a financial point of view, to the Company, was based on information provided to Maxit Capital by the Company, as well as certain other publicly available information. The Valuation and Fairness Opinion are subject to the assumptions, limitations and qualifications described in the summary of the Valuation and Fairness Opinion included in this Proxy Statement, and as a result, may not be a completely accurate analysis of the value of the interest in GQ Califorina to be acquired by Gauss.

The Clay Group owns a substantial interest in the Company and is represented on our board of directors and its committees, and thus may exert significant influence on our corporate affairs and actions, including those submitted to a shareholder vote.

The Clay Group currently owns approximately 27% of the Company’s Shares and will also own 32.5% of Gauss, which will own half of the Soledad Project. For so long as the Clay Group beneficially owns at least 25% of the Company, at least one of GQ Holdco’s representatives on the board of managers 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 the development and operation of the Soledad Project. The interests of the Clay Group may be different from your interests.

If Gauss Holdings and Auvergne purchase a significant number of Shares pursuant to the Standby Commitment, they will have the ability to exert a significant degree of control over the Company.

If the Company undertakes a rights offering and not all of the rights are exercised by holders, and the Company exercises the right to have Gauss Holdings and Auvergne purchase Shares pursuant to the Standby Commitment, Gauss Holdings and Auvergne may acquire a significant number of Shares, which could result in Gauss Holdings and Auvergne holding a significant ownership stake in the Company. In addition, if Gauss Holdings and Auvergne are required to take up and pay for a large number of Shares pursuant to the Standby Commitment, the liquidity of the Shares may be negatively impacted.

Gauss Holdings’ and Auvergne’s agreement to purchase Shares pursuant to the Standby Commitment may be terminated under certain circumstances.

Gauss Holdings and Auvergne’s obligation to purchase Shares pursuant to the Standby Commitment at the election of the Company is subject to the satisfaction of certain conditions prior to the closing of a rights offering. If Gauss Holdings and Auvergne do not purchase the Shares pursuant to the Standby Commitment, any rights offering may not be fully subscribed and the anticipated proceeds of a rights offering may not be fully realized. The receipt of net proceeds from a rights offering in an amount less than the aggregate amount of funds to allow the Company to repay indebtedness and fund the Joint Venture would have a material adverse effect on the Company and on the value and trading price of the Shares as the Company does not currently have sufficient cash or alternate sources of financing available to repay its indebtedness or fund the Joint Venture. Once any rights have commenced trading on the TSX, the Company will be required to proceed with such rights offering, subject to limited exceptions, even if Gauss Holdings and Auvergne do not purchase the Shares pursuant to the Standby Commitment.

- 27 -

XML

Schedule of Changes in the Derivative Liability (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Related Party Transactions Schedule Of Changes In The Derivative Liability 1	$ 2,833,987
Related Party Transactions Schedule Of Changes In The Derivative Liability 2	0
Related Party Transactions Schedule Of Changes In The Derivative Liability 3	0
Related Party Transactions Schedule Of Changes In The Derivative Liability 4	5,741,520
Related Party Transactions Schedule Of Changes In The Derivative Liability 5	4,112,695
Related Party Transactions Schedule Of Changes In The Derivative Liability 6	(2,907,533)
Related Party Transactions Schedule Of Changes In The Derivative Liability 7	6,946,682
Related Party Transactions Schedule Of Changes In The Derivative Liability 8	$ 2,833,987

XML

Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 1	$ 99,619,562
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 2	98,228,768
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 3	99,441,099
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 4	98,116,201
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 5	90,134
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 6	1,148,136
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 7	0
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 8	1,217,880
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 9	9,708,738
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 10	0
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 11	0
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 12	0
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 13	109,418,434
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 14	99,376,903
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 15	99,441,099
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 16	$ 99,334,081
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 17	(0.01)
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 18	0.01
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 19	(0.08)
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 20	0.01
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 21	(0.02)
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 22	0.00
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 23	(0.08)
Earnings (loss) Per Share Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block 24	(0.01)

XML

Schedule of Mineral Properties (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Mineral Properties Schedule Of Mineral Properties 1	$ 1,799,301
Mineral Properties Schedule Of Mineral Properties 2	1,392,081
Mineral Properties Schedule Of Mineral Properties 3	161,190
Mineral Properties Schedule Of Mineral Properties 4	962,828
Mineral Properties Schedule Of Mineral Properties 5	1,604,929
Mineral Properties Schedule Of Mineral Properties 6	2,673,869
Mineral Properties Schedule Of Mineral Properties 7	700,390
Mineral Properties Schedule Of Mineral Properties 8	548,586
Mineral Properties Schedule Of Mineral Properties 9	8,043,873
Mineral Properties Schedule Of Mineral Properties 10	76,312
Mineral Properties Schedule Of Mineral Properties 11	9,919,486
Mineral Properties Schedule Of Mineral Properties 1	9,919,486
Mineral Properties Schedule Of Mineral Properties 2	1,221,743
Mineral Properties Schedule Of Mineral Properties 3	97,480
Mineral Properties Schedule Of Mineral Properties 4	193,428
Mineral Properties Schedule Of Mineral Properties 5	723,148
Mineral Properties Schedule Of Mineral Properties 6	3,300,879
Mineral Properties Schedule Of Mineral Properties 7	1,543,602
Mineral Properties Schedule Of Mineral Properties 8	1,360,426
Mineral Properties Schedule Of Mineral Properties 9	52,771
Mineral Properties Schedule Of Mineral Properties 10	8,493,477
Mineral Properties Schedule Of Mineral Properties 11	$ 18,412,963

XML

Mineral Properties (Narrative) (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Mineral Properties 1	$ 410,305
Mineral Properties 2	226,721
Mineral Properties 3	107,227
Mineral Properties 4	183,584
Mineral Properties 5	0
Mineral Properties 6	0
Mineral Properties 7	14,269
Mineral Properties 8	21,099
Mineral Properties 9	0
Mineral Properties 10	0
Mineral Properties 11	990,813
Mineral Properties 12	$ 0

XML

Schedule of Amortization of discount and Interest Expense (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Related Party Transactions Schedule Of Amortization Of Discount And Interest Expense 1	$ 1,946,230
Related Party Transactions Schedule Of Amortization Of Discount And Interest Expense 2	888,026
Related Party Transactions Schedule Of Amortization Of Discount And Interest Expense 3	(990,813)
Related Party Transactions Schedule Of Amortization Of Discount And Interest Expense 4	0
Related Party Transactions Schedule Of Amortization Of Discount And Interest Expense 5	955,417
Related Party Transactions Schedule Of Amortization Of Discount And Interest Expense 6	$ 0

XML

Schedule of Change in Asset Retirement Obligation (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Asset Retirement Obligations Schedule Of Change In Asset Retirement Obligation 1	$ 552,250
Asset Retirement Obligations Schedule Of Change In Asset Retirement Obligation 2	475,938
Asset Retirement Obligations Schedule Of Change In Asset Retirement Obligation 3	0
Asset Retirement Obligations Schedule Of Change In Asset Retirement Obligation 4	76,312
Asset Retirement Obligations Schedule Of Change In Asset Retirement Obligation 5	552,250
Asset Retirement Obligations Schedule Of Change In Asset Retirement Obligation 6	$ 552,250

XML

Share Capital

6 Months Ended

Jun. 30, 2014

Share Capital [Text Block]

3. Share Capital

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 transferred to share capital from 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 transferred to share capital from additional 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 transferred to share capital from 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 transferred to share capital from 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).

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 transferred to share capital from additional paid-in capital upon exercise of stock options was $68,849.

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 remeasured 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 8 – Derivative liability for further details.

The following is a summary of stock option activity during the six month period ended June 30, 2014:

			Weighted
			Average Exercise
	Shares		Price per Share
Options outstanding and exercisable: December 31, 2013	1,380,000		$0.87
Stock options issued	-		-
Stock options exercised	(530,000	)	$0.21
Options outstanding, June 30, 2014	850,000		$1.27
Options exercisable, June 30, 2014	650,000		$1.29

During the three and six months ended June 30, 2014, the Company recognized $96,074 and $192,148 (Three and six months ended June 30, 2013 - $Nil and $Nil) in stock-based compensation relating to employee stock options that have vesting terms.

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
• 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:

	2014	2013
Expected life years	-	5
Interest rate	-	1.78%
Volatility	-	98.25%
Dividend yield	-	0%

As at June 30, 2014, the aggregate intrinsic value of the outstanding exercisable options was approximately $140,385 (December 31, 2013 - $325,995 ; June 30, 2013 - $1,020,208).

The total intrinsic value of 530,000 options exercised during 2014 was approximately $678,494 (December 31 2013 - $881,816).

The unamortized compensation expense as at June 30, 2014 was $134,014 (December 31, 2013 - $325,158 ; June 30, 2013 - $Nil).

The following table summarizes information about stock options outstanding and exercisable at June 30, 2014:

		Weighted
	Number	Average
	Outstanding	Remaining
Expiry	and	Contractual Life	Exercise
Date	Exercisable	(Years)	Price
April 18, 2015	50,000	0.80	$1.22
June 3, 2018	300,000	3.93	$1.16
June 3, 2018	50,000	3.93	$1.16
September 3, 2018	150,000	4.18	$1.59
September 18, 2018	300,000	4.22	$1.26
Outstanding, June 30, 2014	850,000	3.89
Exercisable, June 30, 2014	650,000	3.84

XML

Schedule of Cash Flow, Supplemental Disclosures (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Supplementary Disclosures Of Cash Flow Information Schedule Of Cash Flow, Supplemental Disclosures 1	$ 0
Supplementary Disclosures Of Cash Flow Information Schedule Of Cash Flow, Supplemental Disclosures 2	0
Supplementary Disclosures Of Cash Flow Information Schedule Of Cash Flow, Supplemental Disclosures 3	0
Supplementary Disclosures Of Cash Flow Information Schedule Of Cash Flow, Supplemental Disclosures 4	0
Supplementary Disclosures Of Cash Flow Information Schedule Of Cash Flow, Supplemental Disclosures 5	192,148
Supplementary Disclosures Of Cash Flow Information Schedule Of Cash Flow, Supplemental Disclosures 6	0
Supplementary Disclosures Of Cash Flow Information Schedule Of Cash Flow, Supplemental Disclosures 7	24,480
Supplementary Disclosures Of Cash Flow Information Schedule Of Cash Flow, Supplemental Disclosures 8	0
Supplementary Disclosures Of Cash Flow Information Schedule Of Cash Flow, Supplemental Disclosures 9	(4,112,695)
Supplementary Disclosures Of Cash Flow Information Schedule Of Cash Flow, Supplemental Disclosures 10	2,284,810
Supplementary Disclosures Of Cash Flow Information Schedule Of Cash Flow, Supplemental Disclosures 11	228,071
Supplementary Disclosures Of Cash Flow Information Schedule Of Cash Flow, Supplemental Disclosures 12	313,847
Supplementary Disclosures Of Cash Flow Information Schedule Of Cash Flow, Supplemental Disclosures 13	990,813
Supplementary Disclosures Of Cash Flow Information Schedule Of Cash Flow, Supplemental Disclosures 14	0
Supplementary Disclosures Of Cash Flow Information Schedule Of Cash Flow, Supplemental Disclosures 15	955,417
Supplementary Disclosures Of Cash Flow Information Schedule Of Cash Flow, Supplemental Disclosures 16	$ 0

XML

Related Party Transactions (Narrative) (Details)	6 Months Ended
	Jun. 30, 2014 USD ($) D	Jun. 30, 2014 CAD
Related Party Transactions 1	$ 39,032
Related Party Transactions 2	84,059
Related Party Transactions 3	37,371
Related Party Transactions 4	74,523
Related Party Transactions 5	13,797
Related Party Transactions 6	47,967
Related Party Transactions 7	0
Related Party Transactions 8	11,815
Related Party Transactions 9	23,439
Related Party Transactions 10	0
Related Party Transactions 11	0
Related Party Transactions 12		10,000,000
Related Party Transactions 13	9,710,603
Related Party Transactions 14	2.00%	2.00%
Related Party Transactions 15		1.03
Related Party Transactions 16		1.03
Related Party Transactions 17		7,500,000
Related Party Transactions 18	10,049
Related Party Transactions 19	5,741,520
Related Party Transactions 20	6,946,682
Related Party Transactions 21	2,833,987
Related Party Transactions 22	5,741,520
Related Party Transactions 23	3,975,480
Related Party Transactions 24	45,799
Related Party Transactions 25	91,516
Related Party Transactions 26	0
Related Party Transactions 27	0
Related Party Transactions 28	2.00%	2.00%
Related Party Transactions 29	638,837
Related Party Transactions 30	1,205,134
Related Party Transactions 31	0
Related Party Transactions 32	0
Related Party Transactions 33	990,813
Related Party Transactions 34	0
Related Party Transactions 35	10,000,000
Related Party Transactions 36	7,500,000
Related Party Transactions 37	5.00%	5.00%
Related Party Transactions 38	183	183
Related Party Transactions 39	105.00%	105.00%
Related Party Transactions 40	5.00%	5.00%
Related Party Transactions 41	500,000
Related Party Transactions 42	741,096
Related Party Transactions 43	$ 741,096

XML

Commitments and Contingencies (Narrative) (Details)	6 Months Ended
	Jun. 30, 2014 USD ($)	Jun. 30, 2014 CAD
Commitments And Contingencies 1	$ 99,980
Commitments And Contingencies 2	24,480
Commitments And Contingencies 3	161,190
Commitments And Contingencies 4	22,568
Commitments And Contingencies 5	184,000
Commitments And Contingencies 6	100,000	100,000
Commitments And Contingencies 7	300,000	300,000
Commitments And Contingencies 8	150,000	150,000
Commitments And Contingencies 9	150,000	150,000
Commitments And Contingencies 10	300,000	300,000
Commitments And Contingencies 11		1.00
Commitments And Contingencies 12	300,000	300,000
Commitments And Contingencies 13		1.50
Commitments And Contingencies 14		300,000
Commitments And Contingencies 15	100.00%	100.00%
Commitments And Contingencies 16	$ 150,000

XML

Schedule of Derivative Liabiity, Options and Warrants (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Derivative Liability Options And Warrants Schedule Of Derivative Liabiity, Options And Warrants 1	$ 0
Derivative Liability Options And Warrants Schedule Of Derivative Liabiity, Options And Warrants 2	3,522,071
Derivative Liability Options And Warrants Schedule Of Derivative Liabiity, Options And Warrants 3	0
Derivative Liability Options And Warrants Schedule Of Derivative Liabiity, Options And Warrants 4	204,126
Derivative Liability Options And Warrants Schedule Of Derivative Liabiity, Options And Warrants 5	0
Derivative Liability Options And Warrants Schedule Of Derivative Liabiity, Options And Warrants 6	(910,054)
Derivative Liability Options And Warrants Schedule Of Derivative Liabiity, Options And Warrants 7	0
Derivative Liability Options And Warrants Schedule Of Derivative Liabiity, Options And Warrants 8	(2,478,127)
Derivative Liability Options And Warrants Schedule Of Derivative Liabiity, Options And Warrants 9	0
Derivative Liability Options And Warrants Schedule Of Derivative Liabiity, Options And Warrants 10	(338,016)
Derivative Liability Options And Warrants Schedule Of Derivative Liabiity, Options And Warrants 11	0
Derivative Liability Options And Warrants Schedule Of Derivative Liabiity, Options And Warrants 12	$ 0

XML

Derivative Liability Options and Warrants (Narrative) (Details) (USD $)	6 Months Ended
	Jun. 30, 2014 Y
Derivative Liability Options And Warrants 1	200,000
Derivative Liability Options And Warrants 2	1,220,000
Derivative Liability Options And Warrants 3	$ 910,054
Derivative Liability Options And Warrants 4	82.54%
Derivative Liability Options And Warrants 5	105.67%
Derivative Liability Options And Warrants 6	0.39
Derivative Liability Options And Warrants 7	0.78
Derivative Liability Options And Warrants 8	0.97%
Derivative Liability Options And Warrants 9	1.32%
Derivative Liability Options And Warrants 10	0.00%
Derivative Liability Options And Warrants 11	$ 338,016

XML

Earnings (Loss) Per Share (Narrative) (Details)	6 Months Ended
	Jun. 30, 2014
Earnings (loss) Per Share 1	150,000
Earnings (loss) Per Share 2	400,000

XML

Mineral Properties

6 Months Ended

Jun. 30, 2014

Mineral Properties [Text Block]

2 . Mineral Properties

In July 2012, the Company received notice that it had met all the remaining major conditions of the conditional use permits for development of the Project. As a result, management made the decision to begin capitalizing all development expenditures directly related to the Project. Prior to July 2012, all acquisition costs were written off due to uncertainties around obtaining the necessary permits. Development expenditures for the three months ended on June 30, 2014 are as follows:

Balance, December 31, 2012	$	1,799,301
Acquisition costs:
Mineral properties		1,392,081
Deferred costs:
Property rent payments		161,190
Road construction		962,828
Site infrastructure development		1,604,929
Site development costs		2,673,869
Workshop and warehouse		700,390
Leach pad construction		548,586
		8,043,873
Asset retirement obligation (Note 4)		76,312
Balance, December 31, 2013	$	9,919,486

Balance, December 31, 2013	$	9,919,486
Acquisition costs:
Mineral properties		1,221,743
Deferred costs:
Property rent payments		97,480
Road construction		193,428
Site infrastructure development		723,148
Site development costs		3,300,879
Workshop and warehouse		1,543,602
Crushing-Screening Plant		1,360,426
Leach pad construction		52,771
		8,493,477
Balance, June 30, 2014	$	18,412,963

As at June 30, 2014, included in site infrastructure development is capital properties and equipment with a total accumulated cost of $410,305 (2013 - $226,721). Total additions during the three and six months ended June 30, 2014 were $107,227 and $183,584 (Three and six months ended June 30, 2013 - $Nil and $Nil). During the three and six months ended June 30, 2014, amortization of $14,269 and $21,099 (Three and six months ended June 30, 2013 - $Nil and $Nil) relating to these assets was capitalized within site infrastructure development.

As at June 30, 2014, included in site development costs is interest expense of $990,813 (December 31, 2013 - $Nil). The Company is capitalizing a portion of the interest expense related to the convertible debenture and loan in accordance with its accounting policy. See Note 6 (iv) – Interest Expense.

XML

Subsequent Events (Narrative) (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Subsequent Events 1	$ 10,000,000
Subsequent Events 2	6,500,000
Subsequent Events 3	3,500,000
Subsequent Events 4	1,000,000
Subsequent Events 5	10.00%
Subsequent Events 6	12.00%
Subsequent Events 7	1,000,000.0
Subsequent Events 8	1,200,000.0
Subsequent Events 9	$ 1,000,000.0

XML

Schedule of Change in the Convertible Debentures (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Related Party Transactions Schedule Of Change In The Convertible Debentures 1	$ 4,642,620
Related Party Transactions Schedule Of Change In The Convertible Debentures 2	0
Related Party Transactions Schedule Of Change In The Convertible Debentures 3	0
Related Party Transactions Schedule Of Change In The Convertible Debentures 4	3,975,480
Related Party Transactions Schedule Of Change In The Convertible Debentures 5	1,113,618
Related Party Transactions Schedule Of Change In The Convertible Debentures 6	811,327
Related Party Transactions Schedule Of Change In The Convertible Debentures 7	16,038
Related Party Transactions Schedule Of Change In The Convertible Debentures 8	(144,187)
Related Party Transactions Schedule Of Change In The Convertible Debentures 9	5,772,276
Related Party Transactions Schedule Of Change In The Convertible Debentures 10	$ 4,642,620

XML

Condensed Consolidated Interim Balance Sheets (USD $)	Jun. 30, 2014	Dec. 31, 2013
Current assets:
Cash	$ 5,076,621	$ 5,030,522
Receivables	28,538	13,786
Prepaid expenses and other current assets	163,053	62,951
Total current assets	5,268,212	5,107,259
Property and equipment, net	268,033	286,256
Mineral property interests	18,412,963	9,919,486
Reclamation financial assurance	478,739	478,742
Total Assets	24,427,947	15,791,743
Current liabilities:
Accounts payable and accrued liabilities	1,876,601	1,438,904
Interest payable	911,639	76,699
Loan payable	10,000,000	0
Property rent payments	0	6,351
Total current liabilities	12,788,240	1,521,954
Asset retirement obligations	552,250	552,250
Derivative liability-Convertible debenture	6,946,682	2,833,987
Convertible debenture	5,772,276	4,642,620
Total liabilities	26,059,448	9,550,811
Shareholders' Equity (Deficiency)
Preferred shares, no par value, 3,000,000 shares authorized; no shares outstanding	0	0
Common shares, no par value, unlimited shares authorized (2013-unlimited); 99,778,683 (2013 - 99,233,383) shares issued and outstanding	62,709,015	62,289,402
Additional paid-in capital	9,835,578	9,927,142
Deficit accumulated	(74,176,094)	(65,975,612)
Total shareholders' equity (Deficiency)	(1,631,501)	6,240,932
Total Liabilities and Shareholders' Equity (Deficiency)	$ 24,427,947	$ 15,791,743

XML

Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 1	$ (705,843)
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 2	1,226,780
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 3	(8,200,482)
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 4	1,394,084
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 5	0
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 6	0
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 7	0
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 8	0
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 9	(1,634,681)
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 10	0
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 11	0
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 12	0
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 13	0
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 14	(1,672,861)
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 15	0
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 16	(2,284,810)
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 17	(2,340,524)
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 18	(446,081)
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 19	(8,200,482)
Earnings (loss) Per Share Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block 20	$ (890,726)

XML

Condensed Consolidated Interim Statements of Cash Flows (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Operating activities:
Net income (loss) for the period	$ (8,200,482)	$ 1,394,084
Adjustments to reconcile net income (loss) to cash used in operating activities:
Amortization and depreciation	18,223	5,224
Amortization of debt discount and interest accrual	955,417	0
Change in fair value of derivative liability including change in foreign exchange	4,112,695	(2,284,810)
Stock option compensation	192,148	66,359
Unrealized foreign exchange	18,369	0
Changes in assets and liabilities:
Receivables	(14,752)	6,793
Prepaid expenses and other current assets	(100,102)	23,799
Accounts payable and accrued liabilities	203,275	66,745
Cash used in operating activities	(2,815,209)	(721,806)
Investment activities:
Additions to mineral property interests	(7,250,113)	(1,777,025)
Deposits on mineral properties	0	0
Release (purchase) of financial assurance	0	(14,434)
Cash used in investing activities	(7,250,113)	(1,791,459)
Financing activities:
Borrowing under short-term debt	10,000,000	0
Issuance of special warrants	0	76,396
Issuance of common shares upon exercise of stock options	111,421	0
Cash provided by financing activities	10,111,421	76,396
Net change in cash	46,099	(2,436,869)
Cash, Beginning balance	5,030,522	4,031,403
Cash, Ending balance	$ 5,076,621	$ 1,594,534

XML

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Share Capital Schedule Of Share-based Payment Award, Stock Options, Valuation Assumptions 1	$ 0
Share Capital Schedule Of Share-based Payment Award, Stock Options, Valuation Assumptions 2	5
Share Capital Schedule Of Share-based Payment Award, Stock Options, Valuation Assumptions 3	0
Share Capital Schedule Of Share-based Payment Award, Stock Options, Valuation Assumptions 4	1.78%
Share Capital Schedule Of Share-based Payment Award, Stock Options, Valuation Assumptions 5	0
Share Capital Schedule Of Share-based Payment Award, Stock Options, Valuation Assumptions 6	98.25%
Share Capital Schedule Of Share-based Payment Award, Stock Options, Valuation Assumptions 7	$ 0
Share Capital Schedule Of Share-based Payment Award, Stock Options, Valuation Assumptions 8	0.00%

XML

Derivative Liability Options and Warrants (Tables)

6 Months Ended

Jun. 30, 2014

Schedule of Derivative Liabiity, Options and Warrants [Table Text Block]

		June 30,		December 31,
		2014		2013
Balance, beginning of the period	$	-	$	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 period	$	-	$	-

XML

Schedule of Stock Options Outstanding and Exercisable (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Share Capital Schedule Of Stock Options Outstanding And Exercisable 1	$ 50,000
Share Capital Schedule Of Stock Options Outstanding And Exercisable 2	0.80
Share Capital Schedule Of Stock Options Outstanding And Exercisable 3	1.22
Share Capital Schedule Of Stock Options Outstanding And Exercisable 4	300,000
Share Capital Schedule Of Stock Options Outstanding And Exercisable 5	3.93
Share Capital Schedule Of Stock Options Outstanding And Exercisable 6	1.16
Share Capital Schedule Of Stock Options Outstanding And Exercisable 7	50,000
Share Capital Schedule Of Stock Options Outstanding And Exercisable 8	3.93
Share Capital Schedule Of Stock Options Outstanding And Exercisable 9	1.16
Share Capital Schedule Of Stock Options Outstanding And Exercisable 10	150,000
Share Capital Schedule Of Stock Options Outstanding And Exercisable 11	4.18
Share Capital Schedule Of Stock Options Outstanding And Exercisable 12	1.59
Share Capital Schedule Of Stock Options Outstanding And Exercisable 13	300,000
Share Capital Schedule Of Stock Options Outstanding And Exercisable 14	4.22
Share Capital Schedule Of Stock Options Outstanding And Exercisable 15	1.26
Share Capital Schedule Of Stock Options Outstanding And Exercisable 16	850,000
Share Capital Schedule Of Stock Options Outstanding And Exercisable 17	3.89
Share Capital Schedule Of Stock Options Outstanding And Exercisable 18	$ 650,000
Share Capital Schedule Of Stock Options Outstanding And Exercisable 19	3.84

XML

Basis of Presentation and Ability to Continue as a Going Concern (Narrative) (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Basis Of Presentation And Ability To Continue As A Going Concern 1	$ 74,176,094
Basis Of Presentation And Ability To Continue As A Going Concern 2	65,975,612
Basis Of Presentation And Ability To Continue As A Going Concern 3	7,520,028
Basis Of Presentation And Ability To Continue As A Going Concern 4	3,585,305
Basis Of Presentation And Ability To Continue As A Going Concern 5	10,000,000
Basis Of Presentation And Ability To Continue As A Going Concern 6	$ 110,000,000
Basis Of Presentation And Ability To Continue As A Going Concern 7	50.00%

XML

Basis of Presentation and Ability to Continue as a Going Concern

6 Months Ended

Jun. 30, 2014

Basis of Presentation and Ability to Continue as a Going Concern [Text Block]

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 June 30, 2014 had a deficit of $74,176,094 (December 31, 2013 - $65,975,612) and a working capital deficit of $7,520,028 (December 31, 2013 – surplus of $3,585,305). Management plans to control current costs and anticipates that the remaining funds from the $10 million loan from January 2014 ( Note 6(iii) – Related Party Transactions) , will fund project development and administrative activities over the next several months. The proceeds from the July 2, 2014 Loan from Leucadia and Auvergne ( Note 10 – Subsequent Events ) will also fund the Company’s project development activities over the next several months.

The Company announced on June 9, 2014 that it entered into an agreement (the “Transaction Agreement”) regarding a proposed joint venture with Gauss LLC. Pursuant to the Transaction Agreement, the Company’s joint venture partner will invest US$110 million in cash in exchange for a 50% interest in the Project. Closing of the joint venture is subject to approval by Golden Queen’s disinterested shareholders and certain other conditions. Please refer to the Form 10-Q dated August 11, 2014 for further details on the proposed joint venture transaction.

A production decision will be made if and when the joint venture transaction closes.

The ability of the Company to obtain financing for its ongoing activities and thus maintain solvency, or to fund construction of the Project (including funding its portion of capital requirements under the joint venture to be formed upon closing of the joint venture pursuant to the Transaction Agreement), is dependent on equity market conditions, the market for precious metals, the willingness of other parties to lend the Company money or the ability to find a merger partner. While the Company has been successful at certain of these efforts in the past, there can be no assurance that future efforts will be successful. This raises substantial doubt about the Company’s ability to continue as a going concern.

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

XML

Condensed Consolidated Interim Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Preferred Stock, No Par Value	$ 0	$ 0
Preferred Stock, Shares Authorized	3,000,000	3,000,000
Preferred Stock, Shares Outstanding	0	0
Common Stock, No Par Value	$ 0	$ 0
Common Stock, Shares Authorized	0	0
Common Stock, Shares, Issued	99,778,683	99,233,383
Common Stock, Shares, Outstanding	99,778,683	99,233,383

XML

Mineral Properties (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2014

Dec. 31, 2013

Schedule of Mineral Properties [Table Text Block]

Balance, December 31, 2013	$	9,919,486
Acquisition costs:
Mineral properties		1,221,743
Deferred costs:
Property rent payments		97,480
Road construction		193,428
Site infrastructure development		723,148
Site development costs		3,300,879
Workshop and warehouse		1,543,602
Crushing-Screening Plant		1,360,426
Leach pad construction		52,771
		8,493,477
Balance, June 30, 2014	$	18,412,963

Balance, December 31, 2012	$	1,799,301
Acquisition costs:
Mineral properties		1,392,081
Deferred costs:
Property rent payments		161,190
Road construction		962,828
Site infrastructure development		1,604,929
Site development costs		2,673,869
Workshop and warehouse		700,390
Leach pad construction		548,586
		8,043,873
Asset retirement obligation (Note 4)		76,312
Balance, December 31, 2013	$	9,919,486

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Aug. 11, 2014
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2014
Trading Symbol	gqm
Entity Registrant Name	GOLDEN QUEEN MINING CO LTD
Entity Central Index Key	0001025362
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		99,778,683
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well Known Seasoned Issuer	No
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2

XML

Share Capital (Tables)

6 Months Ended

Jun. 30, 2014

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

			Weighted
			Average Exercise
	Shares		Price per Share
Options outstanding and exercisable: December 31, 2013	1,380,000		$0.87
Stock options issued	-		-
Stock options exercised	(530,000	)	$0.21
Options outstanding, June 30, 2014	850,000		$1.27
Options exercisable, June 30, 2014	650,000		$1.29

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	2014	2013
Expected life years	-	5
Interest rate	-	1.78%
Volatility	-	98.25%
Dividend yield	-	0%

Schedule of Stock Options Outstanding and Exercisable [Table Text Block]

		Weighted
	Number	Average
	Outstanding	Remaining
Expiry	and	Contractual Life	Exercise
Date	Exercisable	(Years)	Price
April 18, 2015	50,000	0.80	$1.22
June 3, 2018	300,000	3.93	$1.16
June 3, 2018	50,000	3.93	$1.16
September 3, 2018	150,000	4.18	$1.59
September 18, 2018	300,000	4.22	$1.26
Outstanding, June 30, 2014	850,000	3.89
Exercisable, June 30, 2014	650,000	3.84

XML

Condensed Consolidated Interim Statements of Income/(Loss) and Comprehensive Income/( Loss) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
General and administrative expenses	$ (2,081,950)	$ (452,804)	$ (3,147,208)	$ (902,501)
Change in fair value of derivative liability including change in foreign exchange	1,634,681	1,672,861	(4,112,695)	2,284,810
Total Operating Expenses	(447,269)	1,220,057	(7,259,903)	1,382,309
Interest expense	(264,120)	0	(955,417)	0
Interest income	5,546	6,723	14,838	11,775
Net and comprehensive income (loss) for the period	$ (705,843)	$ 1,226,780	$ (8,200,482)	$ 1,394,084
Earnings (Loss) per share :
Earnings (Loss) per share - basic	$ (0.01)	$ 0.01	$ (0.08)	$ 0.01
Earnings (Loss) per share - diluted	$ (0.02)	$ 0.00	$ (0.08)	$ (0.01)
Weighted average number of common shares outstanding -basic	99,619,562	98,228,768	99,441,099	98,116,201
Weighted average number of common shares outstanding - diluted	109,418,434	99,376,903	99,441,099	99,334,081

XML

Related Party Transactions

6 Months Ended

Jun. 30, 2014

Related Party Transactions [Text Block]

6. Related Party Transactions

Except as noted elsewhere in these consolidated financial statements, related party transactions are disclosed as follows:

(i)	Consulting Fees
	For the three and six months ended June 30, 2014, the Company paid $39,032 and $84,059 (2013 - $37,371 and $74,523) to Mr. H. L. Klingmann for services as President of the Company of which $13,797 (December 31, 2013 - $47,967 ; June 30, 2013 - $Nil) is payable as at June 30, 2014.
	During the three and six months ended June 30, 2014, the Company paid a total of $11,815 and $23,439 (2013 - $Nil and $Nil) to its three independent directors. The two non independent directors, Lutz Klingmann and Thomas M. Clay, were not paid directors’ fees during the three and six months ended June 30, 2014 or 2013.
(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). The convertible debentures are unsecured and bear interest at 2% per annum, calculated on the outstanding principal balance, payable annually. The principal amounts of the notes are convertible into shares of the Company at a price of C$1.03 per share for a period of two years. If the notes 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.

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 meets 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. As a result, the conversion feature of the notes is required to be recorded as a derivative liability recorded at fair value and marked-to-market each period with the changes in fair value each period being charged or credited to income or loss.

On inception of the debentures, the fair value of the derivative liability related to the conversion feature was $5,741,520 and as at June 30, 2014, was $6,946,682 (December 31, 2013 - $2,833,987). The derivative liability was calculated using an acceptable option pricing valuation model with the following assumptions:

	2014	2013
Risk-free interest rate	1.07% - 1.09%	1.13% - 1.15%
Expected life of derivative liability	1.07 - 1.32 years	1.57 - 2 years
Expected volatility	95.87 - 98.71%	73.43% - 89.52%
Dividend rate	0.00%	0.00%

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

		June 30, 2014		December 31, 2013
Balance, beginning of the period	$	2,833,987	$	-
Fair value at inception		-		5,741,520
Change in fair value of derivative liability including
foreign exchange		4,112,695		(2,907,533	)
Balance, end of the period	$	6,946,682	$	2,833,987

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

The change in the convertible debentures is as follows:

		June 30, 2014		December 31, 2013
Balance, beginning of the year	$	4,642,620	$	-
Discounted convertible debentures		-		3,975,480
Amortization of discount		1,113,618		811,327
Foreign exchange		16,038		(144,187	)
Balance, end of the period	$	5,772,276	$	4,642,620

During the three and six months ended June 30, 2014, in addition to the amortization of the discount on the convertible debenture, the Company incurred interest expense of $45,799 and $91,516 (June 30, 2013 - $Nil and $Nil) based on the 2% per annum stated interest rate for a total interest expense of $638,837 and $1,205,134 for the three and six months ended June 30, 2014 (June 30, 2013- $Nil and $Nil). As at June 30, 2014, a total of $990,813 (2013 - $Nil) has been capitalized to mineral property interest. See Note 6 (iv).

(iii)	Loan Payable
	On January 1, 2014, the Company entered into an agreement to secure a $10,000,000 loan (the “Loan”). The 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 Loan has a twelve-month term and bears an annual interest rate of 5%, payable on the maturity date.
	The Loan will be repaid on a date that is less than 183 days before the maturity date As a result, the Company will pay the Lenders a prepayment penalty in the amount that is equivalent to 105% of the principal amount, plus interest on the principal amount at the rate of 5% per annum accrued to the date the Loan is repaid. The estimated $500,000 finance charge, included in the $741,096 interest payable balance, represents the prepayment penalty to the Lenders.

		June 30, 2014
Balance, beginning of the period	$	-
Proceeds from the loan		10,000,000
Balance, end of the period	$	10,000,000

The interest expense and prepayment finance charge of $741,096 has been accrued on this loan since inception and is included in interest payable as at June 30, 2014.

(iv)       Amortization of discount and Interest Expense

The following summarizes the capitalized amortization of discount and interest expense as at June 30, 2014 and December 31, 2013.

		June 30, 2014			December 31, 2013
Amortization of discount and interest on loan and convertible debenture	$	1,946,230		$	888,026
Less: Interest costs capitalized		(990,813	)		-
Amortization of discount and interest expensed	$	955,417		$	-

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2014

Commitments and Contingencies [Text Block]

5. 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 six months ended June 30, 2014 were $99,980 of which $24,480 was related to common shares issued (Year ended December 31, 2013 - $161,190 of which $22,568 related to common shares issued), and the Company is expected to make approximate payments of $184,000 in 2014 to various landowners under the existing lease agreements. The payments are at the discretion of the Company and will cease if and when the Company goes into production and then begins paying royalty payments on production yields.

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 June 30, 2014, 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, a bonus of 150,000 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 is for a term of three years and shall automatically renew for two years. As at June 30, 2014, none of the milestones had been reached and no commitment to issue the common shares has been recorded in connection with these arrangements.

During the year ended December 31, 2013, the Company entered into employment agreements with a new Chief Financial Officer (“CFO”) and a Chief Operating Officer (“COO’). 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. Included in the agreement with the COO is a provision that if the COO’s position is lost upon a change of control or within six months of a change of control the COO would be entitled to a onetime payment equal to 100% of the annual base salary of $150,000.

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.

XML

Earnings (Loss) Per Share (Tables)

6 Months Ended

Jun. 30, 2014

Schedule Of Calculation Of Numerator In Earnings Per Share Table Text Block [Table Text Block]

		Three Months			Three Months			Six Months			Six Months
		Ended			Ended			Ended			Ended
		June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
Numerator:
Net income (loss) – numerator for basic EPS	$	(705,843	)	$	1,226,780		$	(8,200,482	)	$	1,394,084
Amortization of discount		-			-			-			-
Change in derivative liability – Convertible debentures		(1,634,681	)		-			-			-
Change in derivative – Stock options		-			(1,672,861	)		-			(2,284,810	)
Numerator for diluted EPS	$	(2,340,524	)	$	(446,081	)	$	(8,200,482	)	$	(890,726	)

Schedule Of Calculation Of Denominator In Earnings Per Share Table Text Block [Table Text Block]

		Three Months			Three Months			Six Months			Six Months
		Ended			Ended			Ended			Ended
		June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
Denominator:
Denominator for basic EPS		99,619,562			98,228,768			99,441,099			98,116,201
Effect of dilutive securities:
Employee stock options		90,134			1,148,136			-			1,217,880
Convertible debenture		9,708,738			-			-			-
Denominator for diluted EPS		109,418,434			99,376,903			99,441,099			99,334,081
Basic earnings(loss) per share	$	(0.01	)	$	0.01		$	(0.08	)	$	0.01
Diluted loss per share	$	(0.02	)	$	(0.00	)	$	(0.08	)	$	(0.01	)

XML

Asset Retirement Obligations (Tables)

6 Months Ended

Jun. 30, 2014

Schedule of Change in Asset Retirement Obligation [Table Text Block]

		2014		2013
Balance, beginning of the period	$	552,250	$	475,938
Changes in cash flow estimates		-		76,312
Balance, end of the period	$	552,250	$	552,250

XML

Earnings (Loss) Per Share

6 Months Ended

Jun. 30, 2014

Earnings (Loss) Per Share [Text Block]

9. Earnings (Loss) Per Share

		Three Months			Three Months			Six Months			Six Months
		Ended			Ended			Ended			Ended
		June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
Numerator:
Net income (loss) – numerator for basic EPS	$	(705,843	)	$	1,226,780		$	(8,200,482	)	$	1,394,084
Amortization of discount		-			-			-			-
Change in derivative liability – Convertible debentures		(1,634,681	)		-			-			-
Change in derivative – Stock options		-			(1,672,861	)		-			(2,284,810	)
Numerator for diluted EPS	$	(2,340,524	)	$	(446,081	)	$	(8,200,482	)	$	(890,726	)

		Three Months			Three Months			Six Months			Six Months
		Ended			Ended			Ended			Ended
		June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
Denominator:
Denominator for basic EPS		99,619,562			98,228,768			99,441,099			98,116,201
Effect of dilutive securities:
Employee stock options		90,134			1,148,136			-			1,217,880
Convertible debenture		9,708,738			-			-			-
Denominator for diluted EPS		109,418,434			99,376,903			99,441,099			99,334,081
Basic earnings(loss) per share	$	(0.01	)	$	0.01		$	(0.08	)	$	0.01
Diluted loss per share	$	(0.02	)	$	(0.00	)	$	(0.08	)	$	(0.01	)

For the three and six month periods ended June 30, 2014, 150,000 (June 30, 2013 – 400,000) options were not included above as their impact would be anti-dilutive. In addition, for the six month period ended June 30, 2014, the convertible debenture was not included above as its effect would be anti-dilutive.

XML

Supplementary Disclosures of Cash Flow Information

6 Months Ended

Jun. 30, 2014

Supplementary Disclosures of Cash Flow Information [Text Block]

7. Supplementary Disclosures of Cash Flow Information

		Six Months Ended			Six Months Ended
		June 30, 2014			June 30, 2013
Cash paid during year for:
Interest	$	-		$	-
Income taxes	$	-		$	-
Non-cash financing and investing activities:
Stock option compensation	$	192,148		$	-
Common shares issued for mineral property	$	24,480		$	-
Gain (loss) on change in fair value of derivative liability	$	(4,112,695	)	$	2,284,810
Mineral property expenditures included in accounts payable	$	228,071		$	313,847
Non-cash interest cost capitalized to mineral property interests	$	990,813		$	-
Non-cash amortization of discount and interest expense	$	955,417		$	-

XML

Derivative Liability Options and Warrants

6 Months Ended

Jun. 30, 2014

Derivative Liability Options and Warrants [Text Block]

8. 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-up 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 three month period ended June 30, 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:

		June 30,		December 31,
		2014		2013
Balance, beginning of the period	$	-	$	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 period	$	-	$	-

XML

Subsequent Events

6 Months Ended

Jun. 30, 2014

Subsequent Events [Text Block]

10. Subsequent Events

July 2, 2014 Advance with Leucadia and Auvergne

The Company announced on July 2 that the Company and its wholly owned subsidiary entered into a loan agreement with Leucadia National Corporation (“Leucadia”) and Auvergne, LLC, an entity controlled by certain members of the Clay family (“Auvergne”, and together with Leucadia, the “Lenders”), with the Company as guarantor, in respect of an advance of $10,000,000 (the “Loan”) by the Lenders (as to $6,500,000 from Leucadia and $3,500,000 from Auvergne) to the subsidiary. The Loan is collateralized against certain assets of the subsidiary and the Company, and ranks in priority to existing debt. Proceeds will be used to advance the development of the Soledad Mountain Project.

The maturity date of the Loan will be the closing of the joint venture transaction with Gauss LLC (Refer to Note 1) the “JV Closing”). In the event the JV Closing occurs later than September 30, 2014, the maturity date can be extended to December 1, 2014 by paying a $1,000,000 extension fee. The extension fee is not payable if the JV Closing occurs before the extended maturity date.

The Loan will bear interest at a rate of 10.0% per annum, compounded monthly. After the occurrence and during the continuation of an event of default, interest on the Loan will accrue at a rate of 12.0% per annum.

The repayment of the Loan, accrued interest and extension fee, if any, will be funded from the proceeds of the joint venture transaction upon the JV Closing.

Significant Commitments on Site in July 2014

The Company entered into the following significant commitments during July 2014:

• Confirmed an order for a high-pressure grinding roll with ThyssenKrupp Industrial Solutions (USA), Inc. (Formerly Polysius Corporation) and made a deposit of approximately $1.0 million in July;

• Committed to the construction and commissioning of the basic water supply for the Project approximately $1.2 million and;

• Committed to the construction of the assay laboratory building with plumbing and electrical items approximately $1.0 million.

XML

Schedule of Share-based Compensation, Stock Options, Activity (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Share Capital Schedule Of Share-based Compensation, Stock Options, Activity 1	$ 1,380,000
Share Capital Schedule Of Share-based Compensation, Stock Options, Activity 2	0.87
Share Capital Schedule Of Share-based Compensation, Stock Options, Activity 3	0
Share Capital Schedule Of Share-based Compensation, Stock Options, Activity 4	0
Share Capital Schedule Of Share-based Compensation, Stock Options, Activity 5	(530,000)
Share Capital Schedule Of Share-based Compensation, Stock Options, Activity 6	0.21
Share Capital Schedule Of Share-based Compensation, Stock Options, Activity 7	850,000
Share Capital Schedule Of Share-based Compensation, Stock Options, Activity 8	1.27
Share Capital Schedule Of Share-based Compensation, Stock Options, Activity 9	650,000
Share Capital Schedule Of Share-based Compensation, Stock Options, Activity 10	$ 1.29

XML

Supplementary Disclosures of Cash Flow Information (Tables)

6 Months Ended

Jun. 30, 2014

Schedule of Cash Flow, Supplemental Disclosures [Table Text Block]

		Six Months Ended			Six Months Ended
		June 30, 2014			June 30, 2013
Cash paid during year for:
Interest	$	-		$	-
Income taxes	$	-		$	-
Non-cash financing and investing activities:
Stock option compensation	$	192,148		$	-
Common shares issued for mineral property	$	24,480		$	-
Gain (loss) on change in fair value of derivative liability	$	(4,112,695	)	$	2,284,810
Mineral property expenditures included in accounts payable	$	228,071		$	313,847
Non-cash interest cost capitalized to mineral property interests	$	990,813		$	-
Non-cash amortization of discount and interest expense	$	955,417		$	-

XML

Share Capital (Narrative) (Details)	6 Months Ended
	Jun. 30, 2014 USD ($) M	Jun. 30, 2014 CAD
Share Capital 1	300,000	300,000
Share Capital 2	300,000	300,000
Share Capital 3	$ 0.21
Share Capital 4	$ 63,000
Share Capital 5	160,592
Share Capital 6	170,000	170,000
Share Capital 7	170,000	170,000
Share Capital 8	$ 0.21
Share Capital 9	35,700
Share Capital 10	91,002
Share Capital 11	15,300	15,300
Share Capital 12	24,480
Share Capital 13	60,000	60,000
Share Capital 14	60,000	60,000
Share Capital 15	$ 0.21
Share Capital 16	12,721
Share Capital 17	32,118
Share Capital 18	15,000	15,000
Share Capital 19	22,568
Share Capital 20		23,250
Share Capital 21	200,000	200,000
Share Capital 22	200,000	200,000
Share Capital 23		0.26
Share Capital 24	50,674
Share Capital 25		52,000
Share Capital 26	132,011
Share Capital 27	100,000	100,000
Share Capital 28	100,000	100,000
Share Capital 29		0.26
Share Capital 30	25,722
Share Capital 31		26,000
Share Capital 32	90,496
Share Capital 33	20,000	20,000
Share Capital 34	20,000	20,000
Share Capital 35		0.26
Share Capital 36	5,017
Share Capital 37		5,200
Share Capital 38	24,724
Share Capital 39	500,000	500,000
Share Capital 40	500,000	500,000
Share Capital 41		0.26
Share Capital 42	126,373
Share Capital 43		130,000
Share Capital 44	355,351
Share Capital 45	300,000	300,000
Share Capital 46	300,000	300,000
Share Capital 47		0.26
Share Capital 48	74,677
Share Capital 49		78,000
Share Capital 50	100,000	100,000
Share Capital 51	100,000	100,000
Share Capital 52		0.26
Share Capital 53	24,900
Share Capital 54		26,000
Share Capital 55	68,849
Share Capital 56	96,074
Share Capital 57	192,148
Share Capital 58	0
Share Capital 59	0
Share Capital 60	800,000	800,000
Share Capital 61	475,263
Share Capital 62	271,137
Share Capital 63	204,126
Share Capital 64	50,000	50,000
Share Capital 65	150,000	150,000
Share Capital 66	600,000	600,000
Share Capital 67	100,000	100,000
Share Capital 68	500,000	500,000
Share Capital 69	300,000	300,000
Share Capital 70	100,000	100,000
Share Capital 71	6	6
Share Capital 72	18	18
Share Capital 73	200,000	200,000
Share Capital 74	100,000	100,000
Share Capital 75	6	6
Share Capital 76	12	12
Share Capital 77	650,000	650,000
Share Capital 78	140,385
Share Capital 79	325,995
Share Capital 80	1,020,208
Share Capital 81	530,000	530,000
Share Capital 82	678,494
Share Capital 83	881,816
Share Capital 84	134,014
Share Capital 85	325,158
Share Capital 86	$ 0

XML

Schedule of Loan Payable (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Related Party Transactions Schedule Of Loan Payable 1	$ 0
Related Party Transactions Schedule Of Loan Payable 2	10,000,000
Related Party Transactions Schedule Of Loan Payable 3	$ 10,000,000

XML

Condensed Consolidated Interim Statements of Shareholders Equity (USD $)	Common Shares [Member]	Additional Paid-in Capital [Member]	Deficit Accumulated [Member]	Total
Beginning Balance at Dec. 31, 2012	$ 61,959,471	$ 8,407,935	$ (67,953,626)	$ 2,413,780
Beginning Balance (Shares) at Dec. 31, 2012	97,998,383
Issuance of common shares for mineral property	22,568			22,568
Issuance of common shares for mineral property (Shares)	15,000
Stock options exercised	307,363			307,363
Stock options exercised (Shares)	1,220,000
Stock-based compensation		271,137		271,137
Reclassification of derivative liability on the exercise of stock options		910,054		910,054
Reclassification of derivative liability upon conversion of exercise price of stock		338,016		338,016
Net income for the period			1,978,014	1,978,014
Ending Balance at Dec. 31, 2013	62,289,402	9,927,142	(65,975,612)	6,240,932
Ending Balance (Shares) at Dec. 31, 2013	99,233,383
Issuance of common shares for mineral property	24,480			24,480
Issuance of common shares for mineral property (Shares)	15,300
Stock options exercised	395,133	(283,712)		111,421
Stock options exercised (Shares)	530,000
Stock-based compensation		192,148		192,148
Net income for the period			(8,200,482)	(8,200,482)
Ending Balance at Jun. 30, 2014	$ 62,709,015	$ 9,835,578	$ (74,176,094)	$ (1,631,501)
Ending Balance (Shares) at Jun. 30, 2014	99,778,683

XML

Asset Retirement Obligations

6 Months Ended

Jun. 30, 2014

Asset Retirement Obligations [Text Block]

4. Asset Retirement Obligations

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 Company has provided reclamation financial assurance to the Bureau of Land Management, the State and Kern County totaling $478,739 (2013 - $478,742). This deposit earns interest at 0.1% per annum and is not available for working capital purposes.

The Company estimated its asset retirement obligations based on its understanding of the requirements to reclaim and clean-up the property within the Project based on its activities and planned activities to date.

Management made the decision to capitalize all development expenditures directly related to the Project in July 2012, $Nil (December 31, 2013- $76,312) was capitalized as the asset portion of the retirement obligation for the period ended June 30, 2014. The following is a summary of asset retirement obligations:

		2014		2013
Balance, beginning of the period	$	552,250	$	475,938
Changes in cash flow estimates		-		76,312
Balance, end of the period	$	552,250	$	552,250

XML

Asset Retirement Obligations (Narrative) (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Asset Retirement Obligations 1	$ 478,739
Asset Retirement Obligations 2	478,742
Asset Retirement Obligations 3	0.10%
Asset Retirement Obligations 4	0
Asset Retirement Obligations 5	$ 76,312

XML

Schedule of Fair Value of the Derivative Liability (Details)	6 Months Ended
	Jun. 30, 2014 Y
Related Party Transactions Schedule Of Fair Value Of The Derivative Liability 1	1.07%
Related Party Transactions Schedule Of Fair Value Of The Derivative Liability 2	1.09%
Related Party Transactions Schedule Of Fair Value Of The Derivative Liability 3	1.13%
Related Party Transactions Schedule Of Fair Value Of The Derivative Liability 4	1.15%
Related Party Transactions Schedule Of Fair Value Of The Derivative Liability 5	1.07
Related Party Transactions Schedule Of Fair Value Of The Derivative Liability 6	1.32
Related Party Transactions Schedule Of Fair Value Of The Derivative Liability 7	1.57
Related Party Transactions Schedule Of Fair Value Of The Derivative Liability 8	2
Related Party Transactions Schedule Of Fair Value Of The Derivative Liability 9	95.87
Related Party Transactions Schedule Of Fair Value Of The Derivative Liability 10	98.71%
Related Party Transactions Schedule Of Fair Value Of The Derivative Liability 11	73.43%
Related Party Transactions Schedule Of Fair Value Of The Derivative Liability 12	89.52%
Related Party Transactions Schedule Of Fair Value Of The Derivative Liability 13	0.00%
Related Party Transactions Schedule Of Fair Value Of The Derivative Liability 14	0.00%

XML

Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2014

Schedule of Fair Value of the Derivative Liability [Table Text Block]

	2014	2013
Risk-free interest rate	1.07% - 1.09%	1.13% - 1.15%
Expected life of derivative liability	1.07 - 1.32 years	1.57 - 2 years
Expected volatility	95.87 - 98.71%	73.43% - 89.52%
Dividend rate	0.00%	0.00%

Schedule of Changes in the Derivative Liability [Table Text Block]

		June 30, 2014		December 31, 2013
Balance, beginning of the period	$	2,833,987	$	-
Fair value at inception		-		5,741,520
Change in fair value of derivative liability including
foreign exchange		4,112,695		(2,907,533	)
Balance, end of the period	$	6,946,682	$	2,833,987

Schedule of Change in the Convertible Debentures [Table Text Block]

		June 30, 2014		December 31, 2013
Balance, beginning of the year	$	4,642,620	$	-
Discounted convertible debentures		-		3,975,480
Amortization of discount		1,113,618		811,327
Foreign exchange		16,038		(144,187	)
Balance, end of the period	$	5,772,276	$	4,642,620

Schedule of Loan Payable [Table Text Block]

		June 30, 2014
Balance, beginning of the period	$	-
Proceeds from the loan		10,000,000
Balance, end of the period	$	10,000,000

Schedule of Amortization of discount and Interest Expense [Table Text Block]

		June 30, 2014			December 31, 2013
Amortization of discount and interest on loan and convertible debenture	$	1,946,230		$	888,026
Less: Interest costs capitalized		(990,813	)		-
Amortization of discount and interest expensed	$	955,417		$	-