GOLDEN QUEEN MINING CO LTD (Form: 10-Q, Received: 11/08/2018 06:54:37)

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 September 30, 2018

¨ 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.)

2300 – 1066 West Hastings Street

Vancouver, British Columbia

V6E 3X2 Canada

(Address of principal executive offices)

Issuer’s telephone number, including area code: (778) 373-1557

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 ¨ Non-accelerated filer x Smaller reporting company x Emerging growth 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 at November 8, 2018, the registrant’s outstanding common stock consisted of 300,101,444 shares.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GOLDEN QUEEN MINING CO. LTD.

Condensed Consolidated Interim Balance Sheets

(amounts expressed in thousands of US dollars - Unaudited)

	September 30, 2018			December 31, 2017
Assets
Current assets:
Cash	$	8,417		$	2,937
Inventories (Note 4)		20,327			9,028
Prepaid expenses and other current assets		309			699
Total current assets		29,053			12,664
Property, plant, equipment and mineral interests (Note 5)		137,981			141,848
Advance minimum royalties		471			304
Total Assets	$	167,505		$	154,816
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	6,888		$	6,320
Interest payable		677			664
Credit facility (Note 12 (v))		-			3,000
Current portion of note payable (Note 12 (ii))		25,096			7,712
Current portion of loan payable (Note 6)		7,534			7,629
Derivative liability – Warrants (Note 7)		236			441
Total current liabilities		40,431			25,766
Note payable (Note 12 (ii))		-			22,387
Loan payable (Note 6)		6,743			9,614
Asset retirement obligation (Note 8)		2,455			1,838
Deferred tax liability		8,197			8,197
Total liabilities		57,826			67,802
Temporary Equity
Redeemable portion of non-controlling interest (Note 12 (iv))		22,868			24,214
Shareholders’ Equity
Common shares, no par value, unlimited shares authorized (2017 - unlimited); 300,101,444 (2017 – 111,148,683) shares issued and outstanding (Note 9)		95,494			71,126
Additional paid-in capital		43,966			43,853
Deficit accumulated		(96,952	)		(88,500	)
Total shareholders’ equity attributable to GQM Ltd.		42,508			26,479
Non-controlling interest (Note 9 (iv))		44,303			36,321
Total Shareholders’ Equity		86,811			62,800
Total Liabilities, Temporary Equity and Shareholders’ Equity	$	167,505		$	154,816

Going Concern (Note 2)

Commitments and Contingencies (Note 13)

Subsequent Event (Note 15)

Approved by the Directors:

“Thomas M. Clay”		“Bryan A. Coates”
Thomas M. Clay, Director		Bryan A. Coates, Director

See Accompanying Notes to Condensed Consolidated Interim Financial Statements

GOLDEN QUEEN MINING CO. LTD.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

(amounts expressed in thousands of US dollars, except shares amounts - Unaudited)

	Three Months Ended September 30,			Three Months Ended September 30,			Nine Months Ended September 30,			Nine Months Ended September 30,
	2018			2017			2018			2017
Revenues
Sales	$	16,855		$	16,496		$	40,925		$	48,182

Cost of Sales
Direct mining costs		(14,469	)		(15,404	)		(35,615	)		(40,333	)
Depreciation and depletion (Note 5)		(3,615	)		(2,931	)		(9,955	)		(8,429	)
Loss from mine operations		(1,229	)		(1,839	)		(4,645	)		(580	)

General and administrative expenses (Note 10)		(839	)		(1,171	)		(2,972	)		(3,297	)
Operating loss		(2,068	)		(3,010	)		(7,617	)		(3,877	)

Other income (expenses)
Gain on derivative instruments (Note 7)		136			1,139			204			3,033
Finance expense (Note 12 (iii) and 12 (v))		(1,409	)		(1,295	)		(4,383	)		(3,592	)
Interest income		26			14			98			77
Other expenses		(42	)		(72	)		(118	)		(488	)
Total other income (expenses)		(1,289	)		(214	)		(4,199	)		(970	)
Net and comprehensive loss for the period	$	(3,357	)	$	(3,224	)	$	(11,816	)	$	(4,847	)
Less: Net and comprehensive loss attributable to the non-controlling interest for the period (Note 12 (iv))		954			1,335			3,364			1,495
Net and comprehensive loss attributable to Golden Queen Mining Co Ltd. for the period	$	(2,403	)	$	(1,889	)	$	(8,452	)	$	(3,352	)
Income (loss) per share – basic (Note 11)	$	(0.01	)	$	(0.02	)	$	(0.03	)	$	(0.03	)
Income (loss) per share – diluted (Note 11)	$	(0.01	)	$	(0.02	)	$	(0.03	)	$	(0.03	)

Weighted average number of common shares outstanding – basic		300,101,444			111,148,683			263,418,307			111,137,694
Weighted average number of common shares outstanding - diluted		300,101,444			111,148,683			263,418,307			111,137,694

See Accompanying Notes to Condensed Consolidated Interim Financial Statements

GOLDEN QUEEN MINING CO. LTD.

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

(amounts expressed in thousands of US dollars, except shares amounts- Unaudited)

	Common shares		Amount		Additional Paid-in Capital		Deficit Accumulated			Total Shareholders’ Equity attributable to GQM Ltd			Non- controlling Interest			Total Shareholders’ Equity			Redeemable Portion of Non- controlling Interest
Balance, December 31, 2016		111,048,683	$	71,067	$	43,652	$	(87,335	)	$	27,384		$	39,327		$	66,711		$	26,220
Issuance of common shares (Note 9)		100,000		59		-		-			59			-			59			-
Stock-based compensation		-		-		133		-			133			-			133			-
Net loss for the period		-		-		-		(3,352	)		(3,352	)		(897	)		(4,249	)		(599	)
Balance, September 30, 2017		111,148,683	$	71,126	$	43,785	$	(90,687	)	$	24,224		$	38,430		$	62,654		$	25,621

Balance, December 31, 2017		111,148,683	$	71,126	$	43,853	$	(88,500	)	$	26,479		$	36,321		$	62,800		$	24,214
Issuance of common shares (Note 9)		188,952,761		24,368		-		-			24,368			-			24,368			-
Capital contribution from non-controlling interest		-		-		-		-			-			10,000			10,000			-
Stock-based compensation		-		-		113		-			113			-			113			-
Net loss for the period		-		-		-		(8,452	)		(8,452	)		(2,018	)		(10,470	)		(1,346	)
Balance, September 30, 2018		300,101,444	$	95,494	$	43,966	$	(96,952	)	$	42,508		$	44,303		$	86,811		$	22,868

See Accompanying Notes to Condensed Consolidated Interim Financial Statements

GOLDEN QUEEN MINING CO. LTD.

Condensed Consolidated Interim Statements of Cash Flows

(amounts expressed in thousands of US dollars - Unaudited)

	Nine Months Ended September 30,			Nine Months Ended September 30,
	2018			2017
Operating Activities
Net loss for the period	$	(11,816	)	$	(4,847	)
Adjustment to reconcile net loss to cash used in operating activities:
Depreciation and depletion		9,955			8,429
Amortization of debt discount and interest accrual		1,708			1,250
Accretion expense		125			93
Change in fair value of derivative liabilities (Note 7)		(205	)		(3,033	)
Stock based compensation		113			133
Unrealized foreign exchange		(37	)		(48	)
Non-cash finder fees		-			59
Changes in non-cash working capital items:
Prepaid expenses & other current assets		390			267
Inventory		(11,299	)		(1,011	)
Accounts payable & accrued liabilities		(124	)		2,390
Interest payable		677			1,915
Cash generated from (used in) operating activities		(10,513	)		5,597
Investment activities:
Additions to property, plant, equipment and mineral interests		(2,585	)		(9,566	)
Cash used in investing activities		(2,585	)		(9,566	)
Financing activity:
Issuance of common shares (Note 9)		24,368			-
Repayment of credit facility		(3,000	)		-
Repayments of loan payable (Note 6)		(6,079	)		(4,649	)
Repayments of note payable and accrued interest (Note 12 (ii))		(6,711	)		-
Capital contribution from non-controlling interest		10,000			-
Cash generated from (used in) financing activities		18,578			(4,649	)
Net change in cash and cash equivalents		5,480			(8,618	)
Cash and cash equivalents, beginning balance		2,937			13,301
Cash and cash equivalents, ending balance	$	8,417		$	4,683

Supplementary Disclosure of Cash Flow Information

	Nine Months Ended September 30,		Nine Months Ended September 30,
	2018		2017
Cash paid during the period for:
Interest on loan and note payable	$	2,037	$	428
Non-cash financing and investing activities:
Asset retirement costs charged to mineral property interests	$	617	$	260
Mining equipment acquired through issuance of debt	$	3,113	$	5,895
Mineral property expenditures included in accounts payable	$	102	$	1,081
Non-cash finders’ fee	$	-	$	59
Non-cash amortization of discount and interest expense	$	1,708	$	1,250
Interest payable converted to principal balance	$	-	$	1,560

See Accompanying Notes to Condensed Consolidated Interim Financial Statements

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three and Nine Months Ended September 30, 2018 and 2017

(amounts expressed in thousands of US dollars - Unaudited)

1.	*Nature of Business*

Golden Queen Mining Co. Ltd. (“Golden Queen”, “GQM Ltd.” or the “Company”) is engaged in the operation of the Soledad Mountain Mine (“the Mine”), located in the Mojave Mining District, Kern County, California. The Company owns 50% of Golden Queen Mining Company, LLC (“GQM LLC”), the operator of the Mine. The remaining 50% is owned by Gauss LLC (“Gauss”).

2.	*Basis of Presentation and Going Concern*

These unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) applicable to going concern. The accounting policies followed in preparing these condensed consolidated interim financial statements are those used by the Company as set out in the audited consolidated financial statements for the year ended December 31, 2017 other than noted below.

Certain information and note disclosures normally included for annual consolidated financial statements prepared in accordance with US GAAP have been omitted. These unaudited condensed consolidated interim financial statements should be read together with the audited consolidated financial statements of the Company for the year ended December 31, 2017.

In the opinion of Management, all adjustments considered necessary (including reclassifications and normal recurring adjustments) to present fairly the financial position, results of operations and cash flows as at September 30, 2018 and for all periods presented, have been included in these unaudited condensed consolidated interim financial statements. The interim results are not necessarily indicative of results for the full year ending December 31, 2018, or future operating periods.

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

The Company is required to pay the following amounts to the Clay Group on the following dates: $1.7 million of interest and principal on and October 1, 2018 (paid on October 1, 2018), $1.7 million of interest and principal on January 1, 2019, $3.9 million of interest and principal on April 1, 2019 and $21.7 million of interest and principal on May 21, 2019. In the nine months ended September 30, 2018, the cash used in operating activities was $10.5 million, however, management believes the Company will be able to meet its financial obligations for the 12 months period following the date of these financial statements except that it is currently unlikely the Company will be able to reimburse the final two payments of $3.9 million and $21.7 million on April 1, 2019 and May 21, 2019 respectively. The Company will need to receive cash distributions from GQM LLC to service its debt and such distributions are contingent on GQM LLC’s ability to generate positive cash flows. The Company reviewed the mine plan in light of the results for the nine months ended September 30, 2018 and has determined it is unlikely it will receive sufficient distributions from GQM LLC during this fiscal year to service its debt in early 2019. This situation raises substantial doubt about the Company’s ability to continue as a going concern. Consequently, in the third quarter of 2018, the Company initiated discussions with the Clay Group to restructure the reimbursement of the last debt payment. While the Company has been successful in re-negotiating the debt repayment terms with the Clay Group in the past, there can be no assurance that will be achieved going forward.

The unaudited condensed consolidated interim financial statements do not reflect adjustments to the carrying values of the assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used, that would be necessary if the company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material.

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three and Nine Months Ended September 30, 2018 and 2017

(amounts expressed in thousands of US dollars - Unaudited)

3.	*Summary of Accounting Policies and Estimates and Judgements*

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and judgements have been made by Management in several areas including the accounting for the joint venture transaction and determination of the temporary and permanent non-controlling interest, the recoverability of mineral properties interests, royalty obligations, inventory valuation, asset retirement obligations, and derivative liability – warrants. Actual results could differ from those estimates.

New Accounting Pronouncements

Adopted

(i)

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606).” The amendments in ASU 2014-09 affect any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU superseded the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance, and creates a Topic 606, Revenue from Contracts with Customers. The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition.

The Company has completed its assessment of the impact of the new revenue standard on the Company's consolidated financial statements and disclosures. The Company has completed the review of all contracts and determined that the adoption of this guidance has no material impact on amounts and timing of revenue recognition. The Company's revenue arises from contracts with customers in which the delivery of doré is the single performance obligation under the customer contract. Product pricing is determined at the point when contract is created by reference to active and freely traded commodity markets, for example, the London Bullion Market for both gold and silver. The Company enters into the contracts with parties who have an ability and intention to meet its obligations with respect to consideration payment, thus ensuring the collectability of such consideration. These contracts are not modified and contain no variable consideration.

(ii)

In August 2016, ASC guidance was issued to amend the classification of certain cash receipts and cash payments in the statement of cash flows. The new guidance was effective for the Company’s fiscal year and interim periods beginning after December 15, 2017. The Company adopted the guidance effective January 1, 2018 and has retrospectively applied this guidance for all periods presented. There was no material impact from adoption of this guidance.

Not Yet Adopted

(iii)

February 2016, FASB issued ASC 842 that requires lessees to recognize lease assets and corresponding lease liabilities on the balance sheet for all leases with terms of more than 12 months. The update, which supersedes existing lease guidance, will continue to classify leases as either finance or operating, with the classification determining the pattern of expense recognition in the income statement.

The ASU will be effective for annual and interim periods beginning January 1, 2019, with early adoption permitted, and is applicable on a modified retrospective basis with various optional practical expedients. The Company is currently assessing the impact of this standard.

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three and Nine Months Ended September 30, 2018 and 2017

(amounts expressed in thousands of US dollars - Unaudited)

4.	*Inventories*

Inventories consist primarily of production from the Company’s operation, in varying stages of the production process and supplies and spare parts, all of which are presented at the lower of cost or net realizable value. Inventories of the Company are comprised of:

	September 30, 2018		December 31, 2017
Stockpile inventory	$	2,603	$	201
In-process inventory		14,473		6,495
Dore inventory		841		320
Supplies and spare parts		2,410		2,012
	$	20,327	$	9,028

During the nine months ended September 30, 2018, the Company recorded a charge of $122 to bring the Dore inventory down to net realizable value.

5.	*Property, Plant, Equipment and Mineral Interests*

Property, plant and equipment and mineral interests, are depreciated and depleted using either the units-of-production or straight-line method over the shorter of the estimated useful life of the asset or the expected life of mine. Assets under construction in progress are recorded at cost and re-allocated to its corresponding category when they become available for use.

	Land			Mineral property interest and claims		Mine development			Machinery and equipment			Buildings and infrastructure			Construction in progress			Interest capitalized		Total
Cost
At December 31, 2016	$	3,893		$	4,241	$	42,033		$	60,201		$	28,604		$	543		$	5,886	$	145,401
Additions		98			817		354			17			-			19,597			-		20,883
Transfers		-			222		8,625			11,239			-			(20,086	)		-		-
Disposals		(22	)		-		(239	)		(1,391	)		(207	)		-			-		(1,859	)
At December 31, 2017	$	3,969		$	5,280	$	50,773		$	70,066		$	28,397		$	54		$	5,886	$	164,425
Additions		163			5		499			9			-			5,412			-		6,088
Transfers		-			-		711			4,520			-			(5,231	)		-		-
Disposals		-			-		-			(8	)		(7	)		-			-		(15	)
At September 30, 2018	$	4,132		$	5,285	$	51,983		$	74,587		$	28,390		$	235		$	5,886	$	170,498

Accumulated depreciation and depletion
At December 31, 2016	$	-		$	67	$	971		$	7,129		$	2,679		$	-		$	5	$	10,851
Additions		-			261		2,444			6,489			2,358			-			466		12,018
Disposals		-			-		-			(265	)		(27	)		-			-		(292	)
At December 31, 2017	$	-		$	328	$	3,415		$	13,353		$	5,010		$	-		$	471	$	22,577
Additions		-			191		1,882			5,798			1,769			-			315		9,955
Disposals		-			-		-			(8	)		(7	)		-			-		(15	)
At September 30, 2018	$	-		$	519	$	5,297		$	19,143		$	6,772		$	-		$	786	$	32,517

Carrying values
At December 31, 2017	$	3,969		$	4,952	$	47,358		$	56,713		$	23,387		$	54		$	5,415	$	141,848
At September 30, 2018	$	4,132		$	4,766	$	46,686		$	55,444		$	21,618		$	235		$	5,100	$	137,981

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three and Nine Months Ended September 30, 2018 and 2017

(amounts expressed in thousands of US dollars - Unaudited)

6.	*Loan Payable*

As at September 30, 2018 and December 31, 2017, equipment financing balances are as follows:

	September 30, 2018			December 31, 2017
Balance, beginning of the period	$	17,243		$	15,150
Additions		3,751			10,727
Down payments and taxes		(638	)		(1,839	)
Settlements		-			(603	)
Principal repayments		(6,079	)		(6,192	)
Balance, end of the period	$	14,277		$	17,243

Current portion	$	7,534		$	7,629
Non-current portion	$	6,743		$	9,614

The terms of the equipment financing agreements are as follows:

	September 30, 2018		December 31, 2017
Total acquisition costs	$	39,443	$	35,692
Interest rates		0.00% ~ 4.50%		0.00% ~ 4.50%
Monthly payments	$	5 ~ 74	$	5 ~ 74
Average remaining life (years)		2.25		2.13

For the nine months ended September 30, 2018, the Company made total down payments of $638 (December 31, 2017 – $1,839). The down payments consist of the sales tax on the assets and a 10% payment of the pre-tax purchase price. All of the loan agreements are for a term of four years, except two which are for three years, and are secured by the underlying asset.

The following table outlines the principal payments to be made for each of the remaining years:

Years	Principal Payments
2018 and 2019	$	8,417
2020		3,307
2021		2,119
2022		434
Total	$	14,277

7.	*Derivative Liabilities*

Share Purchase Warrants – Clay loans (Related Party (see Note 12 (ii))

On June 8, 2015, the Company issued 10,000,000 share purchase warrants to the Clay Group (the “June 2015 Warrants”) in connection with the June 2015 Loan. On February 22, 2018, the Company completed a rights offering at a share price lower than the original exercise price of $0.95 of the June 2015 Warrants. As per an anti-dilution provision included in the June 2015 Loan agreement, the exercise price of the June 2015 Warrants was revised to $0.7831 on the rights offering completion date. The expiry date of June 8, 2020 of the June 2015 Warrants remains unchanged.

On November 18, 2016, the Company issued 8,000,000 share purchase warrants to the Clay Group (the “November 2016 Warrants”) in connection with the November 2016 Loan. On February 22, 2018, the Company completed a rights offering at a share price lower than the original exercise price of $0.85 of the November 2016 Warrants. As per an anti-dilution provision included in the November 2016 Loan agreement, the exercise price of the November 2016 Warrants was revised to $0.6650 on the rights offering completion date. The expiry date of November 18, 2021 of the November 2016 Warrants remains unchanged.

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three and Nine Months Ended September 30, 2018 and 2017

(amounts expressed in thousands of US dollars - Unaudited)

7.	*Derivative Liabilities (continued)*

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

The fair value of the derivative liabilities related to the Clay Group share purchase warrants as at September 30, 2018 was $235 (December 31, 2017 – $439). The derivative liabilities were calculated using the Black-Scholes pricing valuation model with the following assumptions:

Warrants related to June 2015 Loan	September 30, 2018			December 31, 2017
Risk-free interest rate		1.08	%		1.73	%
Expected life of derivative liability		1.69 years			2.44 years
Expected volatility		80.84	%		78.59	%
Dividend rate		0.00	%		0.00	%

Warrants related to November 2016 Loan	September 30, 2018			December 31, 2017
Risk-free interest rate		1.40	%		1.73	%
Expected life of derivative liability		3.15 years			3.89 years
Expected volatility		79.52	%		75.69	%
Dividend rate		0.00	%		0.00	%

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

	September 30, 2018			December 31, 2017
Balance, beginning of the period	$	439		$	5,458
Change in fair value		(204	)		(5,019	)
Balance, end of the period	$	235		$	439

Share Purchase Warrants

On July 25, 2016, the Company issued 6,317,700 share purchase warrants with an exercise price of C$2.00 and an expiry date of July 25, 2019. As at September 30, 2018, the Company re-measured the share purchase warrants and determined the fair value of the derivative liability to be $1 (December 31, 2017 - $2).

8.	*Asset Retirement Obligations*

Reclamation Financial Assurance

GQM LLC 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.

This estimate, once approved by state and county authorities, forms the basis of reclamation financial assurance. The reclamation assurance provided as at September 30, 2018 was $1,749 (December 31, 2017 – $1,465).

GQM LLC is also required to provide financial assurance with the Lahontan Regional Water Quality Control Board (the “Regional Board”) for closure and reclamation costs related to the lined impoundments, which are defined as the Stage 1 and Stage 2 heap leach pads, the overflow pond, and the solution collection channel. The reclamation financial assurance estimate as at September 30, 2018 was $2,450 (December 31, 2017 – $1,869).

In addition to the above, GQM LLC is required to obtain and maintain financial assurance for initiating and completing corrective action and remediation of a reasonably foreseeable release from the Project’s waste management units as required by the Regional Board. The reclamation financial assurance estimate as at September 30, 2018 is $278 (December 31, 2017 – $278).

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three and Nine Months Ended September 30, 2018 and 2017

(amounts expressed in thousands of US dollars - Unaudited)

8.	*Asset Retirement Obligations (continued)*

GQM LLC entered into $4,921 (2017 – $3,612) in surety bond agreements in order to release its reclamation deposits and a bond for power of $444. GQM LLC pays a yearly premium of $101 (2017 – $90). Golden Queen Ltd. has provided a corporate guarantee on the surety bonds.

Asset Retirement Obligation

The total asset retirement obligation as at September 30, 2018, was $2,455 (December 31, 2017 – $1,838).

The Company estimated its asset retirement obligations based on its understanding of the requirements to reclaim and remediate its property based on its activities to date. As at September 30, 2018, the Company estimates the cash outflow related to these reclamation activities will be incurred in 2028. Reclamation provisions are measured at the expected value of future cash flows discounted to their present value using a discount rate based on a credit adjusted risk-free interest rate of 8.34% and an inflation rate of 2.41%.

The following is a summary of asset retirement obligations:

	September 30, 2018		December 31, 2017
Balance, beginning of the period	$	1,838	$	1,366
Accretion		125		126
Changes in cash flow estimates		492		346
Balance, end of the period	$	2,455	$	1,838

9.	*Share Capital*

The Company’s common shares outstanding are no par value, voting shares with no preferences or rights attached to them.

Common shares

On January 17, 2017, the Company issued 100,000 shares for a total of $59 as finder fees which were recognized in general and administrative expenses in connection with the declaration of commercial production in December 2016.

On February 22, 2018, the Company closed a rights offering and issued 188,952,761 shares for total gross proceeds of $25,036. The Company paid associated fees of $668 which were classified as share issue costs.

Stock options

The Company’s current stock option plan (the “Plan”) was adopted by the Company in 2013 and approved by shareholders of the Company in 2013. The Plan provides a fixed number of 7,200,000 common shares of the Company that may be issued pursuant to the grant of stock options. The exercise price of stock options granted under the Plan shall be determined by the Company’s Board of Directors (the “Board”) but shall not be less than the volume-weighted, average trading price of the Company’s shares on the Toronto Stock Exchange (“TSX”) for the five (5) 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 (5) years.

The Company has elected to use the Black-Scholes option pricing model to determine the fair value of stock options granted. The compensation expense is amortized on a straight-line basis over the requisite service period, which approximates the vesting period.

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three and Nine Months Ended September 30, 2018 and 2017

(amounts expressed in thousands of US dollars - Unaudited)

9.	*Share Capital (continued)*

Stock options (continued)

The following is a summary of stock option activity during the nine months ended September 30, 2018:

	Shares			Weighted Average Exercise Price per Share
Options outstanding, December 31, 2016		1,555,000		$	0.85
Options granted		1,605,001		$	0.38
Options forfeited		(166,667	)	$	0.64
Options expired		(393,333	)	$	1.13
Options outstanding, December 31, 2017		2,600,001		$	0.54
Options forfeited		(75,000	)	$	0.29
Options expired		(200,000	)	$	1.48
Options outstanding, September 30, 2018		2,325,001		$	0.46

During the three and nine months ended September 30, 2018, the Company recognized $34 and $113 (the three and nine months ended September 30, 2017 - $48 and $133) in stock-based compensation relating to employee stock options that were issued and/or had vesting terms.

The following table summarizes information about stock options outstanding and exercisable as at September 30, 2018:

Expiry Date	Number Outstanding		Number Exercisable		Remaining Contractual Life (years)		Exercise Price
September 8, 2020		430,000		430,000		1.94	$	0.58
November 30, 2021		365,000		121,666		3.17	$	0.66
March 20, 2022		400,002		133,334		3.47	$	0.65
October 20, 2022		1,129,999		-		4.06	$	0.29
		2,325,001		685,000		3.43

As at September 30, 2018, the aggregate intrinsic value of the outstanding exercisable options was $nil (December 31, 2017 – $nil).

Warrants

As at September 30, 2018, 24,317,700 warrants were outstanding (December 31, 2017 – 24,317,700).

The following table summarizes information about share purchase warrants outstanding as at September 30, 2018:

Expiry Date	Number Outstanding		Remaining Contractual Life (years)		Exercise Price
June 8, 2020		10,000,000		1.69	$	0.7831
July 25, 2019 ⁽¹⁾		6,317,700		0.82	C$	2.0000
November 18, 2021		8,000,000		3.14	$	0.6650
		24,317,700		1.94

⁽¹⁾	Non-tradable share purchase warrants.

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three and Nine Months Ended September 30, 2018 and 2017

(amounts expressed in thousands of US dollars - Unaudited)

10.

General and Administrative Expenses

General and administrative expenses are incurred to support the administration of the business that are not directly related to production. Significant components of general and administrative expenses are comprised of the following:

	Three Months Ended September 30,		Three Months Ended September 30,		Nine Months Ended September 30,		Nine Months Ended September 30,
	2018		2017		2018		2017
Audit, legal and professional fees	$	115	$	165	$	524	$	561
Salaries and benefits and director fees		297		431		980		1,131
Regulatory fees and licenses		28		15		153		85
Insurance		163		122		446		369
Corporate administration		236		438		869		1,151
	$	839	$	1,171	$	2,972	$	3,297

11.

Loss Per Share

	Three Months Ended September 30,			Three Months Ended September 30,			Nine Months Ended September 30,			Nine Months Ended September 30,
	2018			2017			2018			2017
Numerator:
Net loss attributable to the shareholders of the Company - numerator for basic and diluted	$	(2,403	)	$	(1,889	)	$	(8,452	)	$	(3,252	)
Denominator:
Weighted average number of common shares outstanding -basic and diluted		300,101,444			111,148,683			263,418,307			111,137,694

Loss per share – basic and diluted	$	(0.01	)	$	(0.02	)	$	(0.03	)	$	(0.03	)

Weighted average number of shares for the three and nine months ended September 30, 2018 excludes 2,325,001 options (December 31, 2017 – 2,600,001) and 24,317,700 warrants (December 31, 2017 – 24,317,700) that were antidilutive.

12.

Related Party Transactions

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

(i)	Compensation of Key Management Personnel, Transactions with Related Parties and Related Party Balances

For the three and nine months ended September 30, 2018, the Company recognized $125 and $424 (for the three and nine months ended September 30, 2017 – $163 and $490) salaries and fees for Officers and Directors.

As at September 30, 2018, $nil (December 31, 2017 – $38) was included in prepaid expenses and other current assets for closing fees paid to related parties.

As at September 30, 2018, $nil (December 31, 2017 – $463 for amended fees and accrued interest payable to related parties) was included in accounts payable and accrued liabilities for accrued interest payable to related parties and salaries and fees payable to Officers and Directors.

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three and Nine Months Ended September 30, 2018 and 2017

(amounts expressed in thousands of US dollars - Unaudited)

(ii)	Note Payable

On November 18, 2016, the Company entered into a loan with the Clay Group for $31,000 (the “November 2016 Loan”), due on May 21, 2019 with an annual interest rate of 8%, payable quarterly. In connection with the November 2016 Loan the Company issued 8,000,000 common share purchase warrants exercisable for a period of five years expiring November 21, 2021. See Note 7.

12.

Related Party Transactions (continued)

(ii)	Note Payable (continued)

On November 10, 2017, the Company and the Clay Group agreed to amend the November 2016 Loan by reducing the 2018 quarterly and 2019 Q1 principal payments from $2,500 to $1,000, adding the reduction of such payments pro-rata to the remaining 2019 payments, and increasing the annual interest rate from 8% to 10% effective January 1, 2018 (the “November 2017 Loan”). This amendment was accounted for as a debt modification.

The following table summarizes activity on the notes payable:

	September 30, 2018			December 31, 2017
Balance, beginning of the period	$	30,099		$	26,347
Interest payable transferred to principal balance		-			2,212
Accretion of discount on loans		1,512			1,940
Capitalized financing and legal fees		-			(400	)
Accretion of capitalized financing and legal fees		196			-
Repayment of loans and interest		(6,711	)		-
Balance, end of the period	$	25,096		$	30,099

Current portion	$	25,096		$	7,712
Non-current portion	$	-		$	22,387

(iii)

Amortization of Discounts and Interest Expense

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

	Three Months Ended September 30,		Three Months Ended September 30,		Nine Months Ended September 30,		Nine Months Ended September 30,
	2018		2017		2018		2017
Accretion of the Nov 2017 Loan discount	$	518	$	510	$	1,512	$	1,250
Accretion of capitalized financing and legal fees		66		-		196		-
Interest expense related to the Nov 2017 Loan		678		642		2,087		1,914
Closing and commitment fees related to the Credit Facility		-		-		40		-
Interest expense related to Komatsu financial loans ⁽¹⁾		147		143		548		428
Accretion of discount and interest on loan	$	1,409	$	1,295	$	4,383	$	3,592

⁽¹⁾

Komatsu is not a related party and has only been included in the above table to reconcile the total interest expense incurred for the period … to the amounts capitalized and expensed.

(iv)	Joint Venture Transaction

The Company has presented Gauss’ ownership in GQM LLC as a non-controlling interest amount on the balance sheet within the equity section. However, there are terms in the agreement that provide for the exit from the investment in GQM LLC for an initial member whose interest in GQM LLC becomes less than 20%.

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three and Nine Months Ended September 30, 2018 and 2017

(amounts expressed in thousands of US dollars - Unaudited)

12.

Related Party Transactions (continued)

(iv)	Joint Venture Transaction (continued)

If a member becomes less than a 20% interest holder, its remaining interest will (ultimately) be terminated through one of 3 events at the non-diluted member’s option:

a. Through conversion to a net smelter royalty (“NSR”);

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

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

The net assets of GQM LLC as at September 30, 2018 and December 31, 2017 are as follows:

	September 30, 2018			December 31, 2017
Assets, GQM LLC	$	158,087		$	149,095
Liabilities, GQM LLC		(23,746	)		(28,024	)
Net assets, GQM LLC	$	134,341		$	121,071

Included in the assets above, is $3,980 (December 31, 2017 – $2,606) in cash held by GQM LLC which is directed specifically to fund capital expenditures required to continue with production and to settle GQM LLC’s obligations. The liabilities of GQM LLC do not have recourse to the general credit of Golden Queen except for $460 for two mining drill loans and $4,921 in surety bond agreements.

Non-Controlling Interest

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

	Three Months Ended September 30,			Three Months Ended September 30,			Nine Months Ended September 30,			Nine Months Ended September 30,
	2018			2017			2018			2017
Net and comprehensive income (loss) in GQM LLC	$	(1,909	)	$	(2,674	)	$	(6,728	)	$	(2,991	)
Non-controlling interest percentage		50	%		50	%		50	%		50	%
Net and comprehensive income (loss) attributable to non-controlling interest	$	(954	)	$	(1,335	)	$	(3,364	)	$	(1,495	)
Net and comprehensive income (loss) attributable to permanent non-controlling interest	$	(572	)	$	(801	)	$	(2,018	)	$	(897	)
Net and comprehensive income (loss) attributable to temporary non-controlling interest	$	(382	)	$	(534	)	$	(1,346	)	$	(598	)

	Permanent Non- Controlling Interest			Temporary Non- Controlling Interest
Carrying value of non-controlling interest, December 31, 2017	$	36,321		$	24,214
Capital contribution		10,000			-
Net and comprehensive loss for the period		(2,018	)		(1,346	)
Carrying value of non-controlling interest, September 30, 2018	$	44,303		$	22,868

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three and Nine Months Ended September 30, 2018 and 2017

(amounts expressed in thousands of US dollars - Unaudited)

12.

Related Party Transactions (continued)

(v)	Credit Facility

On May 23, 2017, GQM LLC entered into a $5,000 one-year revolving credit agreement (the “Credit Facility”) in which Gauss Holdings LLC and Auvergne, LLC agreed to extend credit in the form of loans to GQM LLC. The Credit Facility commenced on July 1, 2017, bears interest at a rate of 12% per annum and is subject to a commitment fee of 1% per annum. For the three and nine months ended September 30, 2018, GQM LLC paid commitment fees of $40 (2017 – $20 and $40, respectively). The balance of the Credit Facility was $3,000 as at December 31, 2017. The Credit Facility expired on May 22, 2018 and the balance of $5 million was repaid in cash.

13.

Commitments and Contingencies

Royalties

The Company has acquired a number of mineral property interests outright. It has acquired exclusive rights to explore, develop and mine other portions of the Mine under various mining lease agreements with landowners. Royalty amounts due to each landholder over the life of the Mine vary with each property.

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 mine, and cause changes or delays in the Company’s activities.

Corporate Guaranties

The Company has provided corporate guaranties for two of GQM LLC’s mining drill loans. The Company has also provided a corporate guaranty for GQM LLC’s surety bonds.

14.

Financial Instruments

Fair Value Measurements

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

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

Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2	Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;
Level 3	Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

	September 30, 2018
	Total		Level 1		Level 2		Level 3
Liabilities:
Share purchase warrants – Related Party (see Note 7)	$	235	$	-	$	235	$	-
Share purchase warrants – (see Note 7)		1		-		1		-
	$	236	$	-	$	236	$	-

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three and Nine Months Ended September 30, 2018 and 2017

(amounts expressed in thousands of US dollars - Unaudited)

14.

Financial Instruments (continued)

Fair Value Measurements (continued)

	December 31, 2017
	Total		Level 1		Level 2		Level 3
Liabilities:
Share purchase warrants – Related Party (see Note 7)	$	439	$	-	$	439	$	-
Share purchase warrants – (see Note 7)		2		-		2		-
	$	441	$	-	$	441	$	-

Under fair value accounting, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The fair value measurement of the financial instruments above use observable inputs in option price models such as the binomial and the Black-Scholes valuation models.

Credit Risk

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

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

Certain United States and Canadian bank accounts held by the Company exceed these federally insured limits or are uninsured as they relate to US Dollar deposits held in Canadian financial institutions. As at September 30, 2018, the Company’s cash balances held in United States and Canadian financial institutions include $8,417, which are not fully insured by the FDIC or CDIC. The Company has not experienced any losses on such accounts and management believes that using major financial institutions with high credit ratings mitigates the credit risk in cash.

Interest Rate Risk

The Company holds approximately 55% of its cash in bank deposit accounts with a single major financial institution. The interest rates received on these balances may fluctuate with changes in economic conditions. Based on the average cash balances during the three and nine months ended September 30, 2018, a 1% decrease in interest rates would have reduced the interest income for the three and nine months ended September 30, 2018, by an immaterial amount.

Foreign Currency Exchange Risk

Certain purchases of corporate overhead items are denominated in Canadian Dollar. As a result, currency exchange fluctuations may impact the costs of operations. Specifically, the appreciation of the Canadian Dollar against the US Dollar may result in an increase in the Canadian operating expenses in US dollar terms. As at September 30, 2018, the Company maintained the majority of its cash balance in US Dollars. The Company currently does not engage in any currency hedging activities.

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three and Nine Months Ended September 30, 2018 and 2017

(amounts expressed in thousands of US dollars - Unaudited)

15.

Subsequent Events

On October 12, 2018, GQM LLC entered into an agreement with Gauss Holdings LLC and Auvergne LLC (the “Lenders”) where by the Lenders are providing GQM LLC a revolving credit loan facility (the “Facility”) in the amount of $20 million. Through Gauss LLC, the Lenders are the other 50% owners of GQM LLC. Gauss Holdings LLC is wholly owned by Jefferies Financial Group, and Auvergne LLC is wholly owned by members of the Clay family.

Under the terms of the agreement, the maturity date of the Facility is March 31, 2020 and the annual interest rate on drawn amounts is 8%. The Company may prepay all or part of the Facility at any time prior to the maturity date, and amounts prepaid will not be subject to penalty.

GQM LLC has made an initial $5 million draw on the Facility.

In connection with the Facility, the Lenders were issued 21,486 warrants (the “GQM LLC Warrants”), with each warrant entitling the holder to purchase a unit of GQM LLC for a period of five (5) years at an exercise price of $475.384 per unit.

The GQM LLC Warrants represent a fully-diluted 7.5% interest in the equity of GQM LLC. If the GQM LLC warrants are exercised, the Company’s interest in GQM LLC will be diluted to 46.25%. The Company’s current interest in GQM LLC is 50%.

The Facility is secured by a pledge of the Company’s equity interest in GQM LLC.

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”, “GQM Ltd.”, “Company”, “we”, “our” or “us”) is as at November 8, 2018 and should be read in conjunction with the unaudited condensed consolidated interim financial statements of the Company for the three and nine months ended September 30, 2018 and the notes thereto.

All amounts herein are presented in thousands of US dollars, except per share amounts, or unless otherwise noted.

Cautionary Note Regarding Forward-looking Statements

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, results of operations and commodity prices. In addition, projected mining results, including quantity of ore, grade, production rates, operating costs 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.

Cautionary Note to US Investors

We advise US 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. Information concerning mineral resources and reserves set forth herein may not be comparable with information presented by companies using only US standards in their public disclosure.

Mr. Tim Mazanek, SME is a qualified person for the purposes of NI 43-101 and has reviewed and approved the technical information in this Form 10-Q.

The Soledad Mountain Mine

Overview

The Company is engaged in the operation of the Soledad Mountain Mine (“the Mine”), located in the Mojave Mining District, Kern County, California. The Company currently owns 50% of Golden Queen Mining Company, LLC (“GQM LLC”), the operator of the Mine. The remaining 50% is owned by Gauss LLC (“Gauss”). The Mine is located just outside the town of Mojave in southern California and utilizes conventional open pit mining methods and cyanide heap leach and Merrill-Crowe processes to recover gold and silver from crushed, agglomerated ore. The Mine also produces small quantities of aggregate.

Highlights: Third Quarter Highlights

Total of 4,837 kt of ore and waste (previous quarter 3,912 kt) were mined including 916 kt of ore (previous quarter 1,473 kt);

Plant processed a total of 931 kt of ore at an average grade of 0.025 oz/t (previous quarter 943 kt at an average grade of 0.020 oz/t);

Merrill-Crowe recovery was 95% in September, the highest recovery achieved since commencement; and

12,943 ounces of gold and 121,843 ounces of silver were produced (previous quarter was 9,976 and 99,846 ounces, respectively).

Project Update

In the third quarter of 2018, the Company continued to develop the East Pit. It is anticipated that the transition to the East Pit will provide the majority of ore production for at least the next two years where higher ore tonnage and grade and lower waste tons are expected. The plan is to increase the delivery of ounces to the heap leach pad by selectively mining higher grade tons as much as practical. Operations during the third quarter of 2018 show continued improvement in gold ounces loaded on the pad. As a result of the drill program completed during first quarter of the year, a new life of mine plan is currently being prepared.

During the third quarter of 2018, Soledad Mountain recorded a mined gold grade of 0.026 ounces per ton, the highest quarterly result since the beginning of mine operations. It is anticipated that higher grade ore mined and processed during the third quarter of 2018 will benefit gold production in the fourth quarter of 2018 and the first quarter of 2019. Production in the third quarter was 12,943 ounces of gold and 121,843 ounces of silver. The improved result compared to preceding quarters was driven by the higher-grade ore placed on the pad since the beginning of the year.

Through the first 13 benches mined in the East Pit, ore production has encountered almost 35% more gold ounces than indicated in the mine plan based on the geological model. The strip ratio in the East Pit has been near expectation and there has been an increase in waste stripping at the top of the mountain during the quarter to facilitate ore mining in 2019 and 2020. This advanced stripping negatively impacts current operating costs.

For the third quarter, ore mining rate has been roughly matched to pad-loading production (little stockpile movement). The amount of tons mined increased due to increased stripping in the East Pit phase 2. During the period, there was significant unplanned downtime associated with the jaw and secondary crushers. In addition, the maintenance crew replaced the rolls on the HPGR during the third quarter, a year later than forecast. Merrill-Crowe plant performance improved greatly in the third Quarter. The recovery of gold from solution averaged over 90% in the quarter from the low 80s in previous quarters. Better clarifier performance as well as a change in the procedure for restarting filter presses after cleaning were responsible for the improvement.

Column testing of monthly sample composites show that leaching is generally in line with the feasibility study predictions. Actual leach results from the heap show good recovery that ties well with the projected recovery curves in the feasibility study for ultimate gold recovery. However, East Pit ore leaching exhibits slightly slower leach kinetics than the Northwest/Main Pit phase 1 ore. In addition, recently stacked ore has not been leached for a full cycle yet. It is expected that full-cycle leaching will produce results close to feasibility study ultimate recovery. Currently, less than half the pad is under leach due to the stacking configuration and this significantly delays the recovery of gold and silver from the latter parts of the leach cycle.

The Company has initiated the process of permitting additional infrastructure for ongoing operations and planned activities that are expected to extend the mine life of Soledad Mountain beyond the initial 11 years contemplated in the 2015 Feasibility Study. The process is ongoing and it is anticipated to take approximately one to two years.

For the three months ended September 30, 2018, the Company recorded aggregate sales of $3.6. The Company was added to the California AB 3098 list last year which allows the Company to sell its aggregate to state and municipal agencies. The Company will not include the sale of aggregate in cash flow projections until such time as a long-term contract for the sale of products has been secured.

There are currently a total of 218 persons employed on site.

Results of Operations

The following are the results of operations for the three and nine months ended September 30, 2018 and 2017:

		Three months ended						Nine months ended
		30-Sep-18			30-Sep-17			30-Sep-18			30-Sep-17
Mining - Key Metrics
Ore mined	k ton		916			928			3,524			2,790
	ore mined
Waste mined: ore mined ratio	ratio		4.3:1			4.3:1			2.6:1			3.9:1
Gold grade placed	oz/ton		0.025			0.013			0.021			0.016
Silver grade placed	oz/ton		0.399			0.180			0.355			0.203
Gold sold	oz		12,798			12,255			29,219			36,068
Silver sold	oz		100,408			47,977			250,147			163,856
Apparent cumulative recovery - gold ⁽¹⁾	%		67.1	%		73.0	%		67.1	%		73.0	%
Apparent cumulative recovery - silver ⁽¹⁾	%		28.5	%		25.8	%		28.5	%		25.8	%

Financial ⁽¹⁾
Revenue	$		16,855			16,496			40,925			48,182
Cost of sales, excluding depreciation and depletion (or Direct mining costs)	$		14,469			15,404			35,615			40,333
Depreciation and depletion	$		3,615			2,931			9,955			8,429
Loss from mine operations	$		(1,229	)		(1,839	)		(4,645	)		(580	)
General and administrative expenses	$		(839	)		(1,171	)		(2,972	)		(3,297	)
Total other income (expenses)	$		(1,289	)		(214	)		(4,199	)		(970	)
Net and comprehensive loss	$		(3,357	)		(3,224	)		(11,816	)		(4,847	)
Net and comprehensive income (loss) attributable to Golden Queen Mining Co Ltd.	$		(2,403	)		(1,889	)		(8,452	)		(3,352	)
Average realized gold price ⁽¹⁾	$/oz sold		1,201			1,280			1,264			1,257
Average realized silver price ⁽¹⁾	$/oz sold		14.77			16.89			15.90			17.23
Total cash costs - net of by-product credits ⁽¹⁾⁽²⁾	$/Au oz produced		1,047			1,177			1,503			1,074
All-in sustaining costs - net of by-product credits ⁽¹⁾	$/Au oz produced		1,086			1,502			1,692			1,517
Total cash costs ⁽³⁾	$/t placed		19.47			16.99			18.02			15.40
Off-site costs ⁽¹⁾	$/t placed		0.53			0.78			0.59			0.77

⁽¹⁾

Total cash costs, all-in sustaining costs, apparent cumulative recovery, off-site costs, average realized gold price and average realized silver price are financial performance measures with no standard meaning under US GAAP. Refer to “ Non-US GAAP Financial Performance Measures ” for further information.

⁽²⁾

Total cash costs – net of by-product credits figure incorporates inventory changes and others adjustment, refer to total cash costs reconciliation in “ Non-US GAAP Financial Performance Measures ” for details.

⁽³⁾

Total cash costs figure does not incorporate inventory changes and others adjustment.

Financial Results

For the three and nine months ended September 30, 2018, the Company generated revenues from operations of $16,855 from the sale of 12,798 ounces of gold and 100,408 ounces of silver and $40,925 from the sale of 29,219 ounces of gold and 250,147 ounces of silver, respectively. In comparison, for the same periods of 2017 the Company generated revenues from operations of $16,496 from the sale of 12,255 ounces of gold and 47,977 ounces of silver and $48,182 from the sale of 36,068 ounces of gold and 163,586 ounces of silver. The decrease in revenue was caused by the lower gold price and, for the nine months, lower ounces sold.

The costs, excluding depreciation and depletion, applicable to sales incurred during the three and nine months ended September 30, 2018 were $14,469 and $35,615 (three and nine months ended September 30, 2017 - $15,404 and $40,333), respectively. The cost of sales, excluding depreciation and depletion, in the current period decreased in comparison with the prior period due to decreased revenues offset by increased stripping in preparation for East Pit phase 2. Costs of sales include mining, processing, maintenance and site support costs. Also, included in the costs of sales are refining, transportation costs, royalties and property taxes.

Depreciation and depletion expenses during the three and nine months ended September 30, 2018 were $3,615 and $9,955 (three and nine months ended September 30, 2017 – $2,931 and $8,429), respectively. The increase in 2018 compared to 2017 was mainly due to the addition of depreciable fixed assets of $19,409 in the third and fourth quarters of 2017 and the addition of depreciable fixed assets of $6,088 in the first three quarters of 2018. These new depreciable fixed assets consist primarily of mobile mining equipment.

General and administrative expenses for the three and nine months ended September 30, 2018 were $839 and $2,972 (three and nine months ended September 30, 2017 - $1,171 and $3,297), respectively. The decrease in 2018 compared to 2017 was mainly a result of lower legal and professional fees, salaries and benefits offset by higher insurance and regulatory fees. General and administrative expenses are being reduced in an effort to lower costs and improve liquidity.

For the three and nine months ended September 30, 2018, the Company incurred finance expenses of $1,409 and $4,383 compared to $1,295 and $3,592 for the three and nine months ended September 30, 2017. The increase in finance expenses was mainly due to an increase of 2% in the interest rate on the Clay Loan resulting in additional interest payable and increased accretion on the Clay Loan.

For the three and nine months ended September 30, 2018, the Company recorded gains of $136 and $204 on derivative instruments compared to gains of $1,139 and $3,033 on derivative instruments for the three and nine months ended September 30, 2017, respectively. The gain for the nine months ended September 30, 2018 was smaller due to insignificant downward movement of the Company’s share price compared to the same period of 2017.

Summary of Quarterly Results

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

	Results for the quarter ended:
	30-Sep-18			30-Jun-18			31-Mar-18			31-Dec-17
Revenue	$	16,855		$	14,485		$	9,585		$	13,939
Net and comprehensive income (loss)	$	(3,357	)	$	604		$	(9,063	)	$	(1,327	)
Net and comprehensive loss attributable to GQM Ltd.	$	(2,403	)	$	(632	)	$	(5,417	)		(2,188	)
Basic net loss per share	$	(0.01	)	$	(0.00	)	$	(0.03	)	$	(0.02	)
Diluted net loss per share	$	(0.01	)	$	(0.00	)	$	(0.03	)	$	(0.02	)

	Results for the quarter ended:
	30-Sep-17			30-Jun-17		31-Mar-17			31-Dec-16
Revenue	$	16,496		$	16,882	$	14,804		$	10,278
Net and comprehensive income (loss)	$	(3,224	)	$	1,192	$	(2,815	)	$	(434	)
Net and comprehensive income (loss) attributable to GQM Ltd.	$	(1,889	)	$	962		(2,425	)		868
Basic net income (loss) per share	$	(0.01	)	$	0.01	$	(0.02	)	$	(0.01	)
Diluted net income (loss) per share	$	(0.01	)	$	0.01	$	(0.02	)	$	(0.01	)

During the three months ended September 30, 2018, net and comprehensive loss of $3,357 was mainly due to the loss generated from mine operations of $1,229. Mine operations improvements and higher grade were offset by additional cost for East Pit phase 2 stripping, equipment overhauls and the lower gold price.

During the three months ended June 30, 2018, net and comprehensive income was $602 mainly as a result of income generated from mine operations of $2,112.

During the three months ended March 31, 2018, net and comprehensive loss was $9,063 mainly as a result of loss from mine operations of $6,449 due to higher direct mining costs as a result of developing the East Pit and lower revenues due to lower gold production as a result of fewer available gold ounces on the leach pad.

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

Reclamation Financial Assurance and Asset Retirement Obligation

Reclamation Financial Assurance

Asset Retirement Obligation

The total asset retirement obligation as at September 30, 2018, was $2,455 (December 31, 2017 – $1,838).

Off-balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Transactions with Related Parties

Except as noted elsewhere in this Form 10-Q, related party transactions are disclosed as follows:

(i)

Compensation of Key Management Personnel, Transactions with Related Parties and Related Party Balances

As at September 30, 2018, $nil (December 31, 2017 – $38) was included in prepaid expenses and other current assets for closing fees paid to related parties.

As at September 30, 2018, $nil (December 31, 2017 – $463) for amended fees and accrued interest payable to related parties was included in accounts payable and accrued liabilities for accrued interest payable to related parties and salaries and fees payable to Officers and Directors.

(ii)

Note Payable

On November 18, 2016, the Company entered into a loan with the Clay Group for $31,000 (the “November 2016 Loan”), due on May 21, 2019 and an annual interest rate of 8%, payable quarterly. In connection with the November 2016 Loan, the Company issued 8,000,000 common share purchase warrants exercisable for a period of five years expiring November 21, 2021. The common share purchase warrants have an exercise price of $0.85. As per an anti-dilution provision included in the November 2016 Loan agreement, the exercise price of the November 2016 Warrants was revised to $0.6650 on the rights offering completion date. The expiry date of November 18, 2021 of the November 2016 Warrants remains unchanged.

On November 10, 2017, the Company and the Clay Group entered into a letter agreement (the “Letter Agreement”) pursuant to which they agreed to amend the November 2016 Loan by reducing the 2018 quarterly and 2019 Q1 principal payments from $2,500 to $1,000, adding the reduction of such payments pro-rata to the remaining 2019 payments, and increasing the annual interest rate from 8% to 10% effective January 1, 2018 (the “November 2017 Loan”). On February 22, 2018, the Company and the Clay Group entered into definitive agreements to amend the terms of the November 2016 Loan and the registration rights agreement in accordance with the Letter Agreement. This amendment was accounted for as a debt modification.

The following table summarizes activity on the notes payable:

	September 30, 2018			December 31, 2017
Balance, beginning of the period	$	30,099		$	26,347
Interest payable transferred to principal balance		-			2,212
Accretion of discount on loans		1,512			1,940
Capitalized financing and legal fees		-			(400	)
Accretion of capitalized financing and legal fees		196			-
Repayment of loans and interest		(6,711	)		-
Balance, end of the period	$	25,096		$	30,099

Current portion	$	25,096		$	7,712
Non-current portion	$	-		$	22,387

(iii)

Amortization of Discounts and Interest Expense

The following table summarizes the amortization of discounts and interest on loan:

	Three Months Ended September 30,		Three Months Ended September 30,		Nine Months Ended September 30,		Nine Months Ended September 30,
	2018		2017		2018		2017
Accretion of the Nov 2017 Loan discount	$	518	$	510	$	1,512	$	1,250
Accretion of capitalized financing and legal fees		66		-		196		-
Interest expense related to the Nov 2017 Loan		678		642		2,087		1,914
Closing and commitment fees related to the Credit Facility		-		-		40		-
Interest expense related to Komatsu financial loans ⁽¹⁾		147		143		548		428
Accretion of discount and interest on loan	$	1,409	$	1,295	$	4,383	$	3,592

⁽¹⁾ Komatsu is not a related party and has only been included in the above table to reconcile the total interest expense incurred for the period to the amounts capitalized and expensed.

(iv)

Joint Venture Transaction

If a member becomes less than a 20% interest holder, its remaining interest will (ultimately) be terminated through one of three events at the non-diluted member’s option:

a. Through conversion to a net smelter royalty (“NSR”);

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

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

The net assets of GQM LLC as at September 30, 2018 and December 31, 2017 are as follows:

	September 30, 2018			December 31, 2017
Assets, GQM LLC	$	158,087		$	149,095
Liabilities, GQM LLC		(23,746	)		(28,024	)
Net assets, GQM LLC	$	134,341		$	121,071

Non-Controlling Interest

	Three Months Ended September 30,			Three Months Ended September 30,			Nine Months Ended September 30,			Nine Months Ended September 30,
	2018			2017			2018			2017
Net and comprehensive income (loss) in GQM LLC	$	(1,909	)	$	(2,674	)	$	(6,728	)	$	(2,991	)
Non-controlling interest percentage		50	%		50	%		50	%		50	%
Net and comprehensive income (loss) attributable to non-controlling interest	$	(954	)	$	(1,335	)	$	(3,364	)	$	(1,495	)
Net and comprehensive income (loss) attributable to permanent non-controlling interest	$	(572	)	$	(801	)	$	(2,018	)	$	(897	)
Net and comprehensive income (loss) attributable to temporary non-controlling interest	$	(382	)	$	(534	)	$	(1,346	)	$	(598	)

	Permanent Non- Controlling Interest			Temporary Non- Controlling Interest
Carrying value of non-controlling interest, December 31, 2017	$	36,321		$	24,214
Capital contribution		10,000			-
Net and comprehensive loss for the period		(2,018	)		(1,346	)
Carrying value of non-controlling interest, September 30, 2018	$	44,303		$	22,868

(v)

Credit Facilities

On May 23, 2017, GQM LLC entered into a $5,000 one-year revolving credit agreement (the “Credit Facility”) in which Gauss Holdings LLC and Auvergne, LLC agreed to extend credit in the form of loans to GQM LLC. The 2017 Credit Facility commenced on July 1, 2017, bore interest at a rate of 12% per annum and was subject to a commitment fee of 1% per annum. For the three and nine months ended September 30, 2018, GQM LLC paid commitment fees of $0 and $40, respectively (2017 – $20 and $40, respectively). The 2017 Credit Facility expired on May 22, 2018. The balance of the Credit Facility was $3,000 as at December 31, 2017, and the balance of $5,000 was repaid during the first quarter of 2018.

On October 12, 2018, the Company’s wholly-owned subsidiary, Golden Queen Mining Holdings, Inc., as a pledgor (“GQM Holdings” or “Borrower”), entered into a revolving credit agreement by and among GQM Holdings, Golden Queen Mining Company, LLC, as borrower, Gauss LLC, as a pledgor (“Gauss” and together with GQM Holdings, the “Pledgors”), Gauss Holdings LLC (“Gauss Holdings”) and Auvergne, LLC (“Auvergne” and together with Gauss Holdings, the “Lenders”), dated October 12, 2018 (the “Credit Agreement”).

Under the terms of the Credit Agreement, the Lenders have agreed to loan GQM LLC up to $20,000,000 (the “Commitment”) under a revolving credit facility (the “Facility”), which matures on March 31, 2020. GQM LLC may pre-pay all or part of the Facility at any time prior to the maturity date, and amounts prepaid will not be subject to penalty. Annual interest rate on drawn amounts under the Facility is 8% (plus an additional 2% upon an Event of Default (as defined in the Credit Agreement)), and GQM LLC agreed to pay the Lenders a commitment fee (the “Commitment Fee”) computed on a daily basis, equal to one percent (1%) per annum of the excess of (i) the Commitment, over (ii) the average daily amount of outstanding Facility balance for each fiscal quarter of the Borrower (increasing to 3% upon an Event of Default).

Under the terms of the Credit Agreement, GQM LLC issued 21,486 warrants (the “GQM LLC Warrants”), with each warrant entitling the holder to purchase a unit of GQM LLC for a period of five (5) years at an exercise price of $475.384 per unit.

The GQM LLC Warrants represent a fully-diluted 7.5% interest in the equity of GQM LLC. If the GQM LLC warrants are exercised, the Registrant’s interest in GQM LLC will be diluted to 46.25%. The Company’s current interest in GQM LLC is 50%.

The Facility is secured by a pledge of the Company’s equity interest in GQM LLC.

Fair Value of Financial Instruments

Fair Value Measurements

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

Level 1

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

Level 2

Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3

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

	September 30, 2018
	Total		Level 1		Level 2		Level 3
Liabilities:
Share purchase warrants – Related Party	$	235	$	-	$	235	$	-
Share purchase warrants		1		-		1		-
	$	236	$	-	$	236	$	-

	December 31, 2017
	Total		Level 1		Level 2		Level 3
Liabilities:
Share purchase warrants – Related Party	$	439	$	-	$	439	$	-
Share purchase warrants		2		-		2		-
	$	441	$	-	$	441	$	-

Under fair value accounting, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The fair value measurement of the financial instruments above uses observable inputs in option price models such as the binomial and the Black-Scholes valuation models.

Please refer also to the note on fair value of derivative liability under Results of operations above for more information.

Select Non-Consolidated Figures

The Company has a 50% interest in GQM LLC, which meets the definition of a Variable Interest Entity (“VIE”). The Company consolidates entities which meet the definition of a VIE for which it is the primary beneficiary. The Company has determined it is the member of the related party group that is most closely associated with GQM LLC and, as a result, is the primary beneficiary who consolidates GQM LLC.

The following table shows figures attributable to the Company only as at September 30, 2018:

	GQM LLC		GQM LLC 50% Attributable to GQM Ltd.		GQM Ltd. on a Non- Consolidated Basis *			GQM Ltd. Attributable
	100%		(1)		(2)			(1) + (2)
Cash	$	3,980	$	1,990	$	4,437		$	6,427
Short Term Debt	$	7,534	$	3,767	$	25,096		$	28,863
Long Term Debt	$	6,743	$	3,372	$	0		$	3,372
Working Capital/(Deficit)	$	17,536	$	8,768	$	(21,383	)	$	(12,615	)

* includes GQM Holdings

The following table shows figures attributable to the Company only for the nine months ended September 30, 2018:

	GQM LLC			GQM LLC 50% Attributable to GQM Ltd.			GQM Ltd. on a Non- Consolidated Basis *			GQM Ltd. Attributable
	100%			(1)			(2)			(1) + (2)
Revenue	$	40,925		$	20,463		$	-		$	20,463
Cost of sales including depreciation and depletion	$	(45,258	)	$	(22,629	)	$	(312	)	$	(22,941	)
Accretion expense	$	(126	)	$	(63	)	$	-		$	(63	)
G&A Expenses	$	(1,738	)	$	(869	)	$	(1,122	)	$	(1,991	)
Share based payments	$	-		$	-		$	(114	)	$	(114	)
Decrease in fair value of derivative liability	$	-		$	-		$	204		$	204
Finance Expense	$	(588	)	$	(294	)	$	(3,795	)	$	(4,089	)
Interest Income	$	52		$	26		$	49		$	75
Other	$	8		$	4		$	-		$	4
Net Loss	$	(6,725	)	$	(3,362	)	$	(5,090	)	$	(8,452	)

* includes GQM Holdings

Liquidity and Capital Resources

The Company has generated $130,239 in revenues from operations since inception and as at September 30, 2018, had an accumulated deficit of $96,952 and working capital deficit of $11,378.

Cash from operating activities:

For the nine months ended September 30, 2018, $10,513 of cash was used in operating activities compared to $5,597 of cash generated from operating activities for the nine months ended September 30, 2017. The increased use of cash in 2018 was primarily due to increased direct mining costs and reduced revenue arising from lower production in 2018 compared to 2017.

Cash used in investing activities:

For the nine months ended September 30, 2018, $2,585 of cash was used in investing activities compared to $9,566 of cash used in investing activities for the nine months ended September 30, 2017. The significant construction costs from the 2017 period related construction of the second phase of the heap leach pad. Since the second phase of the heap leach pad was completed in September 2017, no significant costs were incurred in that regard in the nine months ended September 30, 2018.

Cash from financing activities:

For the nine months ended September 30, 2018, $18,578 of cash was generated from financing activities compared to $4,649 of cash used in financing activities for the nine months ended September 30, 2017.

Working capital:

The following table shows working capital as at September 30, 2018:

	GQM LLC 100%			GQM Ltd. on a Non- Consolidated Basis *			GQM Ltd. on a Consolidated Basis **
Current assets	$	24,550		$	4,615		$	29,053
Current liabilities		(7,014	)		(25,999	)		(40,431	)
Working capital/(deficit)	$	17,536		$	(21,383	)	$	(11,378	)

includes GQM Holdings

includes GQM Holdings and GQM LLC

Golden Queen and GQM Holdings

As at September 30, 2018, Golden Queen and GQM Holdings had current assets of $4,615 (December 31, 2017 – $502) and current liabilities of $25,999 (December 31, 2017 – $9,194) for a working capital deficit of $21,383 (December 31, 2017 – working capital deficit of $8,692).

GQM LLC

As at September 30, 2018, GQM LLC had current assets of $24,550 (December 31, 2017 – $12,162) and current liabilities of $7,014 (December 31, 2017 – $16,572) for working capital of $17,536 (December 31, 2017 – working capital deficit of $4,410).

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 as at December 31, 2017		111,148,683
Shares issued as the result of a rights offering		188,952,761
Shares issued and outstanding as at September 30, 2018		300,101,444	Exercise Price	Expiry Date
Shares to be issued on exercise of directors and employees stock options		2,325,001	$0.29 to $0.66	From 11/30/21 to 10/20/22
Shares to be issued on exercise of warrants		24,317,700	$0.665 to $0.95 and CAD $2.00	From 06/08/20 to 11/18/21
Fully diluted November 8, 2018		326,744,145

The Company has unlimited authorized share capital.

Non-US GAAP Financial Performance Measures

Non-US GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles. These measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with US GAAP.

Total Cash Costs

Total cash costs are derived from amounts included in the statement of operations and include direct mining costs and site general and administrative costs. The direct mining costs shown on the table below include mine site operating costs such as mining, processing, smelting, refining, third party transportation costs, advanced minimum royalties and production costs less silver metals revenues. Management has determined that silver revenues when compared with gold revenues, are immaterial and therefore are considered a by-product of the production of gold.

The table below shows a reconciliation of total cash costs per gold ounce and cash costs per gold ounce on a by-product basis:

	Three Months Ended
	September 30, 2018			June 30, 2018			March 31, 2018			December 31, 2017
Total cash costs
Mining	$	9,311		$	8,087		$	7,376		$	7,174
Processing		5,940			4,707			4,488			4,346
Indirect mining cost		1,553			2,029			1,972			2,308
Inventory changes and others		(2,335	)		(6,693	)		(820	)		1,970
Cost of sales		14,469			8,130			13,016			15,798
Site general and administrative		576			416			732			897
Cash costs before by-product credits		15,045			8,546			13,748			16,695
Divided by gold produced (oz)		12,943			9,976			6,579			9,886
Cash costs per ounce of gold produced ($/oz)		1,162			857			2,090			1,689
Less: By-product silver credits per ounce ($/oz)		(115	)		(160	)		(136	)		(123	)
Total cash cost per ounce of gold produced on a by-product basis ($/oz)	$	1,047		$	697		$	1,954		$	1,566

Ore placed (tons)		930,776			943,148			806,450			837,779
Total Cash Costs ($/t placed)		19.47			16.56			18.06			17.52
Crusher mechanical availability (%)		67	%		73	%		65	%		69	%
Apparent cumulative recovery ⁽¹⁾ - gold (%)		67.1	%		69.1	%		71.5	%		75.5	%
Apparent cumulative recovery ⁽¹⁾ - silver (%)		28.5	%		27.7	%		27.1	%		27.4	%

⁽¹⁾ Note: Apparent cumulative recovery is the ratio of metal produced since beginning of leaching over total estimated metal contained in ore loaded to pad since beginning of operation.

All-in Sustaining Costs

Golden Queen defines all-in sustaining costs as the sum of direct mining costs (as defined under total cash costs), site and corporate general and administrative costs, share based payments, reclamation liability accretion and capital expenditures that are sustaining in nature. Adoption of the standard is voluntary and the cost measures presented may not be comparable to other similarly titled measures of other companies. Other companies may calculate these measures differently.

The table below shows a reconciliation of cash costs per gold ounce on a by-product basis and all-in sustaining costs per ounce:

	Three Months Ended
	September 30, 2018			June 30, 2018			March 31, 2018			December 31, 2017
All-in sustaining costs
Cash costs before by-product credits	$	15,045		$	8,546		$	13,748		$	16,695
Silver by-product		(1,483	)		(1,598	)		(895	)		(1,221	)
Total cash cost after by-product		13,562			6,948			12,853			15,474
Corporate general and administrative expenses		230			428			477			549
Share based payments		33			35			45			68
Accretion expense		42			42			42			32
Sustaining capital		190			2,974			2,412			3,303
All-in sustaining costs		14,057			10,427			15,829			19,426
Divided by gold produced (oz)		12,943			9,976			6,579			9,886
All-in sustaining costs per gold ounce on a by-product basis	$	1,086		$	1,045		$	2,406		$	1,965

The following table reconciles the above non-US GAAP measures to the most directly comparable US GAAP measures:

	Three Months Ended
	September 30, 2018			June 30, 2018			March 31, 2018			December 31, 2017
Cost of goods sold	$	18,084		$	11,494		$	16,034		$	19,450
Less: depreciation and depletion		(3,615	)		(3,364	)		(2,976	)		(3,526	)
Less: accretion expense		(42	)		(42	)		(42	)		(126	)
Direct mining costs		14,427			8,088			13,016			15,798
Add: site general and administrative expenses		576			416			732			897
Cash costs before by-product credits	$	15,003		$	8,504		$	13,748		$	16,695

Summary of Significant Accounting Policies and Estimates

Full disclosure of the Company’s significant accounting policies and estimates in accordance with US GAAP can be found in notes of its audited consolidated financial statements for the year ended December 31, 2017 and unaudited condensed consolidated interim financial statements for the nine months ended September 30, 2018.

Additional Information

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures.

Disclosure controls and procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report.

The Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the applicable Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s report on internal control over financial reporting

Changes in Internal Control

There were no 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 quarter ended September 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, other than the Company has implemented a remediation plan and has addressed the deficiencies previously noted in the areas of personnel and controls and has engaged an external consultant to assist in the documentation and review of its internal controls.

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:

Developing and maintaining effective controls to prevent fraud;

Ensuring that if fraud occurs a vigorous and prompt investigation takes place;

Taking appropriate disciplinary and legal actions;

Reviewing systems and procedures to prevent similar frauds;

Investigating whether there has been a failure in supervision and take appropriate disciplinary action if supervisory failures occurred; and

Recording and reporting all discovered cases of 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 nine months ended September 30, 2018 and the year ended December 31, 2017, there were no reported instances of fraud.

Part II – Other Information

Item 1. Legal Proceedings

From time to time, we are a party to routine litigation and proceedings that are considered part of the ordinary course of our business. We are not aware of any material current, pending, or threatened litigation with respect to the Company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

GQM LLC is the operator of the Soledad Mountain mine (the “Project”), which is located in Mojave in Kern County, California. The mine safety disclosures required by section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K are included in Exhibit 95.1 of this Quarterly Report. There were no reportable incidents at GQM LLC during the three months ended September 30, 2018.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

Exhibit No.	Description of Exhibit	Manner of Filing
10.1	First Amendment to Second Amended and Restated Term Loan Agreement dated February 22, 2018 among the Company, the Landon T. Clay 2009 Irrevocable Trust Dated March 6, 2009, EHT, LLC, and the Clay Family 2009 Irrevocable Trust Dated April 14, 2009	Incorporated by reference to Exhibit 10.1 to the Form 10-Q of the Company, filed with the SEC on May 10, 2018
10.2	First Amendment to Amended and Restated Registration Rights Agreement dated February 22, 2018 among the Company, the Landon T. Clay 2009 Irrevocable Trust Dated March 6, 2009, EHT, LLC, and the Clay Family 2009 Irrevocable Trust Dated April 14, 2009	Incorporated by reference to Exhibit 10.1 to the Form 10-Q of the Company, filed with the SEC on May 10, 2018
10.3*	Revolving Credit Agreement dated October 12, 2018 among Golden Queen Mining Company, LLC, Golden Queen Mining Holdings, Inc., Gauss LLC, Gauss Holdings LLC and Auvergne LLC	Filed herewith
31.1	Certification of the Principal Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the US Securities Exchange Act of 1934	Filed herewith
31.2	Certification of the Principal Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the US Securities Exchange Act of 1934	Filed herewith
32.1	Section 1350 Certification of the Principal Executive Officer	Filed herewith
32.2	Section 1350 Certification of the Principal Financial Officer	Filed herewith
95.1	Mine Safety Disclosure	Filed herewith
101	Financial Statements from the Quarterly Report on Form 10-Q of the Company for the three and nine months ended September 30, 2018, formatted in XBRL	Filed herewith

* Application has been made with the Securities and Exchange Commission to seek confidential treatment of certain provisions. Omitted materials for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission.

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: November 8, 2018

	GOLDEN QUEEN MINING CO. LTD.
	(Registrant)

	By:	/s/ Thomas M. Clay
		Thomas M. Clay
		Principal Executive Officer

	By:	/s/ Guy Le Bel
		Guy Le Bel
		Principal Financial Officer

Exhibit 10.3

Execution Version

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES AND EXCHANGE COMMISSION.

REVOLVING CREDIT AGREEMENT

dated as of

October 12, 2018

among

GOLDEN QUEEN MINING COmpany, Llc., as Borrower,

GOLDEN QUEEN MINING HOLDINGS, INC. and GAUSS LLC, as Pledgors

GAUSS HOLDINGS LLC, as Administrative Agent

and

auvergne, llc and GAUSS HOLDINGS LLC, as Lenders

TABLE OF CONTENTS

Section I DEFINITIONS		1
1.1	Definitions	1
1.2	Rules of Interpretation	9

Section II DESCRIPTION OF LOANS		10
2.1	The Loans	10
2.2	Interest Rates and Payments of Interest	10
2.3	Commitment Fee	11
2.4	Repayment of Loan	11
2.5	Prepayments	11
2.6	Method of Payments	11
2.7	Computation of Interest and Fees	12
2.8	Taxes	12

Section III CONDITIONS OF LENDING		13
3.1	Conditions Precedent to Initial Loans	13
3.2	Conditions Precedent to all Loans	14

Section IV REPRESENTATIONS AND WARRANTIES		15
4.1	Existence, Qualification and Power	15
4.2	Authorization; No Contravention	15
4.3	Governmental Authorization; Other Consents; Corrupt Practices	15
4.4	Binding Effect	16
4.5	Financial Statements	16
4.6	Litigation	16
4.7	No Default	16
4.8	Ownership of Property; Encumbrances	17
4.9	Environmental Compliance	17
4.10	Insurance	17
4.11	Taxes	17
4.12	Subsidiaries	17
4.13	Margin Regulations; Investment Company Act.	17
4.14	Compliance with Laws	17
4.15	Solvency	18
4.16	Compliance with OFAC Rules and Regulations	18
4.17	Foreign Assets Control Regulations, Etc	18

Section V AFFIRMATIVE COVENANTS		18
5.1	Financial Statements	18
5.2	Conduct of Business	20
5.3	Taxes	20
5.4	Inspection Rights	20
5.5	Maintenance of Books and Records	20
5.6	Use of Proceeds	20
5.7	Further Assurances	20

5.8	Notification Requirements	21
5.9	Environmental Compliance	21
5.10	Subsidiary Guaranties	21
5.11	Exploration of Strategic Alternatives	22

Section VI NEGATIVE COVENANTS		22
6.1	Indebtedness	22
6.2	Contingent Liabilities	23
6.3	Encumbrances	23
6.4	Merger; Dispositions; Liquidation	23
6.5	Restricted Payments	24
6.6	Investments; Purchases of Assets	24
6.7	Transactions with Affiliates	24
6.8	Fiscal Year	24

Section VII DEFAULTS		24
7.1	Events of Default	24
7.2	Remedies upon Event of Default	26

Section VIII GRANT OF SECURITY INTEREST		27
8.1	Security Interests	27
8.2	Use of Collateral	27
8.3	Possession; Sale of Collateral; etc	28
8.4	Financing Statements, Direct Payments	29
8.5	Remedies Not Exclusive	29

Section IX PLEDGE		29
9.1	Pledge	29
9.2	Covenant	30
9.3	Registration in Nominee Name; Denominations	30
9.4	Voting Rights; Dividends; etc	30
9.5	Remedies Upon Default	31
9.6	Waiver of Guarantor Defenses	32

Section X GENERAL		34
10.1	Notices	34
10.2	Successors and Assigns	36
10.3	Expenses	36
10.4	Indemnification	37
10.5	Survival of Covenants, Etc	37
10.6	No Waivers	37
10.7	Amendments, Waivers, etc.	38
10.8	Lost Note, Etc	38
10.9	Captions; Counterparts	38
10.10	Entire Agreement, Etc	38
10.11	Waiver of Jury Trial	38
10.12	Governing Law	39

10.13	Jurisdiction; Consent to Service of Process	39
10.14	Severability	40
10.15	Administrative Agent	40
10.16	Press Releases, etc	42

EXHIBIT

Form of Note

SCHEDULES

2.1(a)

Allocations

4.2

No Conflict

4.3

Governmental Authorizations

4.6

Litigation

4.7

No Default

6.1(f)

Existing Indebtedness

6.2

Contingent Liabilities

6.3

Permitted Encumbrances

9.1

Pledged Securities

iii

REVOLVING CREDIT AGREEMENT

REVOLVING CREDIT AGREEMENT made as of October 12, 2018, among GOLDEN QUEEN MINING COMPANY, LLC, a California limited liability company (the “ Borrower ”), GOLDEN QUEEN MINING HOLDINGS, INC., a California corporation (“ GQM Holdings Pledgor ”), GAUSS LLC, a Delaware limited liability company (“ Gauss Pledgor ”), GAUSS HOLDINGS LLC, a Delaware limited liability company (“ LUK Holdco ”), as administrative agent (in such capacity, the “ Administrative Agent ”), and AUVERGNE, LLC, a Delaware limited liability company (“ Auvergne ” and, together with LUK Holdco, the “ Initial Lenders ”).

WHEREAS, the Borrower has requested the Lenders to extend credit in the form of a senior secured revolving credit facility, on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

Section I

DEFINITIONS

1.1

Definitions .

All capitalized terms used in this Agreement or in the Notes or in any certificate, report or other document made or delivered pursuant to this Agreement (unless otherwise defined therein) shall have the meanings assigned to them below:

Administrative Agent . See the Preamble.

Affiliate . With reference to any Person, (i) any director or officer of that Person, or (ii) another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. For the purposes hereof, no Lender shall be deemed to be an Affiliate of the Borrower.

Agreement . This Revolving Credit Agreement, including the Exhibits and Schedules hereto, as the same may be amended, restated, supplemented or otherwise modified from time to time.

Attributable Indebtedness . On any date, in respect of any Capitalized Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP.

Borrower . See the Preamble.

Borrower’s Accountants . PricewaterhouseCoopers LLP, Chartered Accountants, or such other independent certified public accountants as are selected by the Borrower and reasonably acceptable to the Lenders.

Business Day . Any day other than a Saturday, Sunday or legal holiday on which banks in New York City, New York are open for the conduct of a substantial part of their commercial banking business.

Capitalized Leases . All leases that have been or should be, in accordance with GAAP recorded as capitalized leases.

Change of Control . (a) The acquisition of ownership or voting control, directly or indirectly, beneficially (within the meaning of Rules 13d-3 and 13d-5 of the Securities Exchange Act of 1934, as then in effect), on or after the Closing Date, by any Person or group (within the meaning of Sections 13d and 14d of the Securities Exchange Act of 1934, as then in effect) other than a Lender, an Affiliate of a Lender, or any Clay Family Member, of Equity Interests representing more than 35% percent of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Borrower; or (b) the occupation of a majority of the seats (other than vacant seats) on the board of managers of the Borrower by Persons who were not (i) managers of the Borrower on the Closing Date, (ii) appointed or nominated by the board of managers or other governing body of the Borrower (which constituted the board of managers or such other governing body on the Closing Date), or (iii) appointed or nominated by managers so nominated.

Clay Family . (i) Landon Clay, (ii) any lineal descendant (including adoptive relationships) of Landon Clay or Harris Clay, (iii) any trust primarily for the benefit of, or the estate of, one or more of the Persons described in the foregoing clauses (i) and (ii), and (iv) any partnership, corporation, joint venture, limited liability company, limited liability partnership, business trust, cooperative, association or other entity the entire beneficial ownership of which is held by one or more of the Persons described in the foregoing clauses (i), (ii) and (iii).

Clay Family Member . Any Person in the Clay Family.

[**]

Closing Date . The first date on which the conditions set forth in Section 3.1 have been satisfied.

Code . The Internal Revenue Code of 1986 and the rules and regulations thereunder, collectively, as the same may from time to time be supplemented or amended and remain in effect.

Collateral . (a) With respect to the Borrower, all of the Borrower’s right, title and interest in and to all personal property, tangible and intangible, wherever located or situated and whether now owned, presently existing or hereafter acquired or created, including, but not limited to, all goods, accounts, instruments, intercompany obligations, contract rights, partnership and joint venture interests, documents, chattel paper, general intangibles, payment intangibles, goodwill, equipment, machinery, inventory, investment property, copyrights, trademarks, trade names, insurance proceeds, cash, deposit accounts, letter of credit rights and the Pledged Securities and any other Pledged Collateral, and any proceeds thereof, products thereof or income therefrom and (b) with respect to each Pledgor, all of such Pledgor’s right, title and interest in and to all Pledged Securities and any proceeds thereof, products thereof or income therefrom, but in each of the foregoing clauses (a) and (b), excluding the Excluded Assets.

Commitment . See Section 2.1(a).

Commitment Fee . See Section 2.3(b).

Control . The possession, by one or more persons, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

Controlled Foreign Corporation. A Subsidiary of the Borrower which is a “controlled foreign corporation” as defined in Section 957(a) of the Code.

Corrupt Practices Laws . (i) The Foreign Corrupt Practices Act of 1977 (15 U.S.C. §§ 78dd-1, et seq.), as amended, and (ii) any other law, regulation, order, decree, or directive having the force of law in any applicable jurisdiction and relating to bribery, kick-backs, or similar business practices.

Default . An Event of Default or event or condition that, but for the requirement that time elapse or notice be given, or both, would constitute an Event of Default.

Disposition or Dispose . The sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person (or the granting of any option or other right to do any of the foregoing), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

Dollars or $ . United States dollars.

Encumbrances . See Section 6.3 .

Environmental Laws . All provisions of law (including the common law), statutes, ordinances, codes, rules, guidelines, policies, procedures, orders-in-council, regulations, permits, licenses, judgments, writs, injunctions, decrees, orders, awards and standards promulgated by a Governmental Authority or by any court, agency, instrumentality, regulatory authority or commission of any of the foregoing concerning environmental health or safety and protection of, or regulation of the discharge of substances into, the environment.

Equity Interests . With respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

Excluded Assets . The following assets: (a) real property, including leasehold interests, (b) the Borrower’s rights under any equipment lease, or other contract that contains a provision that would result in a default thereunder if a security interest were granted under this Agreement, except to the extent such provision is unenforceable by reason of the Uniform Commercial Code, (c) any other properties owned by the Borrower as to which the Lenders shall have determined that the cost to the Borrower of perfecting a security interest thereon is disproportionate to the benefit to be realized by the Lenders, (d) any funds reserved for accrued payroll held in a deposit account, and (e) any intent-to-use trademark application but only until such time as and until an amendment to allege use or a statement of use has been filed by the Borrower under 15 U.S.C. §1501(d) and accepted by the U.S. Patent and Trademark Office.

Event of Default . Any event described in Section 7.1 .

Fiscal Quarter . Each quarterly accounting period of the Borrower in any Fiscal Year.

Fiscal Year . The accounting year of the Borrower, commencing on January 1 and ending on December 31 in each calendar year.

Fixed Rate . 8.0% per annum.

Foreign Subsidiary Holding Company . Any Subsidiary of the Borrower with no material assets other than equity (or equity and debt interests) of one or more Controlled Foreign Corporations.

GAAP . Generally accepted accounting principles in the United States of America as in effect from time to time, consistently applied.

Governmental Authority . The government of the United States of America, Canada, and any other nation, and any political subdivision thereof, whether state, provincial, or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

Guarantees . As applied to the Borrower, all guarantees, endorsements or other contingent or surety obligations with respect to obligations of others, whether or not reflected on the balance sheet of the Borrower, including any obligation to furnish funds, directly or indirectly (whether by virtue of partnership arrangements, by agreement to keep-well or otherwise), through the purchase of goods, supplies or services, or by way of stock purchase, capital contribution, advance or loan, or to enter into a contract for any of the foregoing, for the purpose of payment of obligations of any other Person.

Indebtedness . As to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP: (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments; (b) the maximum amount of all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments; (c) net obligations of such Person under any swap agreement; (d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and not past due for more than 60 days after the date on which such trade account was created); (e) indebtedness (excluding prepaid interest thereon) secured by an Encumbrance on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; (f) all Attributable Indebtedness in respect of Capitalized Leases; (g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person or any warrant, right or option to acquire such Equity Interest, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and (h) all Guarantees of such Person in respect of any of the foregoing. For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person.

Initial Lenders . See the Preamble.

Investment . As applied to the Borrower, the purchase or acquisition of any Equity Interests of any other Person, any loan, advance or extension of credit (excluding accounts receivable arising in the ordinary course of business) to, or contribution to the capital of, any other Person, any real estate held for sale or investment, any securities or commodities futures contracts held, any other investment in any other Person, and the making of any commitment or acquisition of any option to make an Investment.

Lenders . The Initial Lenders and each other Person that may after the date hereof become an assignee of such Lender’s rights and obligations hereunder in accordance with the terms hereof and, thereby a party to this Agreement as a Lender hereunder, but from and after the effective date that any Person shall have assigned the entirety of its rights and obligations hereunder pursuant to Section 8.2 , “Lenders” shall no longer include such Person.

Loan Documents . This Agreement, the Notes, and the Subordination Agreement, together with any agreements, instruments or documents executed and delivered pursuant to or in connection with any of the foregoing.

Loans . See Section 2.1(a) .

Loan Party . The Borrower and each other Person that becomes a Loan Party hereafter pursuant to the execution of joinder documents.

Material Adverse Effect . Any of (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent) or condition (financial or otherwise) of the Borrower; (b) a material impairment of the rights and remedies of the Lenders under any Loan Document, or of the ability of any Borrower to perform its material obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Borrower of any Loan Document to which it is a party; provided that the term “Material Adverse Effect” shall not include any change, effect or circumstance to the extent resulting from (x) changes in general economic, financial market or geopolitical conditions, or (y) any failure by any Borrower to meet any published analyst estimates or expectations of their respective revenue, earnings or other financial performance or results of operations for any period, in and of itself, or any failure thereby to meet its respective internal or published projections, budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations, in and of itself and whether or not the same was delivered to the Lenders pursuant to the provisions hereof (it being understood that the facts or occurrences giving rise or contributing to such failure that are not otherwise excluded from this definition of a “Material Adverse Effect” may be taken into account in determining whether there has been a Material Adverse Effect); provided further that, in the case of the immediately preceding clause (x), such changes, effects or circumstances do not affect the relevant Borrower disproportionately relative to other companies operating in the same industry.

Maturity Date . March 31, 2020.

Moody’s . Moody’s Investors Service, Inc. and its successors.

Note Record . Any internal record, including a computer record, maintained by a Lender with respect to the Loan.

Notes . See Section 2.1(b) .

Obligations . The following:

(a) the due and punctual payment and satisfaction by the Borrower of (i) the principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loan, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all other obligations of the Borrower under this Agreement and under the other Loan Documents, including obligations to pay fees, expense reimbursement obligations and indemnification obligations, whether primary, secondary, direct, contingent, fixed or otherwise, arising under the Loan Documents (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), and

(b) the due and punctual performance of all the obligations of the Pledgors under or pursuant to this Agreement and each of the other Loan Documents.

OFAC . The U.S. Department of the Treasury’s Office of Foreign Assets Control.

Other Taxes . All present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

Permitted Encumbrances . See Section 6.3 .

Person . Any individual, corporation, partnership, trust, unincorporated association, business or other legal entity, and any government or governmental agency or political subdivision thereof.

Pledged Collateral. The Pledged Securities and any proceeds (as defined in Section 9-102(64) of the UCC) including cash proceeds (as defined in Section 9-102(9) of the UCC) of the Pledged Securities and all voting and other rights associated with the Pledged Securities.

Pledged Securities . 100% of all issued and outstanding Equity Interests issued by the Borrower or by any Subsidiary of the Borrower, whether now owned or hereafter acquired; provided , however , the definition of “Pledged Securities” shall not include more than 65% of the voting Equity Interests issued by a Controlled Foreign Corporation or a Foreign Subsidiary Holding Company.

Pledgors . Collectively, the Borrower (with respect to the Equity Interests in its Subsidiaries), and GQM Holdings Pledgor and Gauss Pledgor (with respect to their respective Equity Interests in the Borrower).

Public Official . Any individual who, even transitorily or without payment, holds a public office or official position in any Governmental Authority, any public company controlled by a Governmental Authority or any company in which a Governmental Authority participates in a material respect its affairs, as well as political parties.

Qualified Investments . As applied to the Borrower, investments in (i) notes, bonds or other obligations of the United States of America or any agency thereof that as to principal and interest constitute direct obligations of or are guaranteed by the United States of America and that have maturity dates not more than one year from the date of acquisition; (ii) notes, bonds or other obligations of the Federal Government of Canada or any agency thereof that as to principal and interest constitute direct obligations of or are guaranteed by the Federal Government of Canada and that have maturity dates not more than one year from the date of acquisition; (iii) certificates of deposit, demand deposit accounts or other deposit instruments or accounts maintained in the ordinary course of business with banks or trust companies organized under the laws of the United States or any state thereof that have capital and surplus of at least $50,000,000 which certificates of deposit and other deposit instruments, if not payable on demand, have maturities of not more than one year from the date of acquisition; (iv) certificates of deposit, demand deposit accounts or other deposit instruments or accounts maintained in the ordinary course of business with banks or trust companies organized under the laws of Canada or any province thereof that have capital and surplus of at least $50,000,000 which certificates of deposit and other deposit instruments, if not payable on demand, have maturities of not more than one year from the date of acquisition; (iv) commercial paper issued by any Person that is incorporated under the laws of the United States of America or any state thereof and rated at least A-2 by S&P or at least P-2 by Moody’s that is rated not less than P-2 or A-2 or their equivalents by Moody’s or S&P, respectively, or their successors, and in each case maturing not more than one year from the date of acquisition; (v) commercial paper issued by any Person that is incorporated or organized under the laws of Canada or any Province thereof, which is rated at least A-2 by S&P or at least P-2 by Moody’s, or any Canadian affiliate of the same rating agencies, in each case with maturities of not more than one year from the date acquired; or (vi) any repurchase agreement secured by any one or more of the foregoing.

Responsible Officer . The chief executive officer, president, vice-president, chief financial officer, treasurer (or assistant treasurer, if applicable), or secretary (or assistant secretary, if applicable), controller or administrators of the Borrower or any attorney-in-fact with powers to deliver documents on behalf of the Borrower in connection with the Loan Documents. Any document delivered hereunder that is signed by a Responsible Officer of the Borrower shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of the Borrower and such Responsible Officer shall be conclusively presumed to have acted on behalf of the Borrower.

Restricted Payment . Any of the following: (a) any dividend, distribution, loan, advance, guaranty, extension of credit or other payment, whether in cash or property, to or for the benefit of any Person who holds an Equity Interest in the Borrower, whether or not such Interest is evidenced by a security; (b) any purchase, redemption, retirement or other acquisition for value of any Equity Interest of the Borrower, whether now or hereafter outstanding, or of any options, warrants or similar rights to purchase such Equity Interest or any security convertible into or exchangeable for such Equity Interest and (c) any payment or prepayment of any kind, whether in cash or property, to or for the benefit of any Person (other than the Borrower) that is an Affiliate of the Borrower.

SDN List . See Section 4.16 .

Solvent and Solvency . With respect to any Person on any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital, and (e) such Person is able to pay its debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

S&P . Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc., and its successors.

Strategic Alternative Assessment . See Section 5.11 .

Subordination Agreement . That certain Subordination Agreement dated as of the Closing Date, among the Borrower, Golden Queen Mining Holdings, Inc., the Administrative Agent, The Landon T. Clay 2009 Irrevocable Trust Dated March 6, 2009, EHT, LLC, Harris Clay and the Clay Family 2009 Irrevocable Trust Dated April 14, 2009.

Subsidiary . With respect to any Person, a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.

Subsidiary Guaranty . See Section 5.10 .

Taxes . All present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

Uniform Commercial Code . The Uniform Commercial Code as in effect in the State of New York or, with respect to matters of perfection of the Administrative Agent’s security interest on the Collateral, the jurisdiction of formation or incorporation of the Borrower or a Pledgor, as applicable.

1.2

Rules of Interpretation .

(a) All terms of an accounting character used herein but not defined herein shall have the meanings assigned thereto by GAAP and in each case applied on a consistent basis.

(b) A reference to any document or agreement shall include such document or agreement as amended, modified or supplemented and in effect from time to time in accordance with its terms and the terms of this Agreement.

(c) The singular includes the plural and the plural includes the singular. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.

(d) A reference to any Person includes its permitted successors and permitted assigns.

(e) The words “include”, “includes” and “including” are not limiting.

(f) The words “herein”, “hereof”, “hereunder” and words of like import shall refer to this Agreement as a whole and not to any particular section or subdivision of this Agreement.

(g) All terms not specifically defined herein or by GAAP and which are defined in the Uniform Commercial Code, shall have the meanings assigned to them in the Uniform Commercial Code.

Section II

DESCRIPTION OF LOANS

2.1

The Loans .

(a) Revolving Credit Loans . Upon the terms and subject to the conditions of this Agreement, and in reliance upon the representations, warranties and covenants of the Borrower herein, the Lenders agree to make revolving credit loans (the “ Loans ”) to the Borrower at the Borrower’s request from time to time from and after the Closing Date and prior to the Maturity Date, provided that the total amount of outstanding Loans shall not at any time exceed $20,000,000 (the “ Commitment ”). Subject to the terms and conditions of this Agreement, the Borrower may borrow, repay, prepay and reborrow amounts, up to the limit imposed by this Section 2.1(a), from time to time between the Closing Date and the Maturity Date upon request given to the Lenders pursuant to Section 2.1(b). Each Lender shall fund and hold its respective portion of the Loans pursuant to the allocations set forth on Schedule 2.1(a) . The Commitment of the Lenders is several and not joint, with each Lender committing to the percentage of the Commitment shown on Schedule 2.1(a) .

(b) Notice and Manner of Borrowing Loans . Whenever the Borrower desires to obtain a Loan hereunder, the Borrower shall give the Lenders written notice of its request specifying the amount of the Loan and the effective date on which such Loan is requested to be made. Each Loan shall be in a minimum principal amount of $5,000,000 or in integral multiples of $5,000,000 in excess of such minimum amount. Such notice must be received by the Lenders at least ten (10) Business Days before the day on which the requested Loan is to be made.

(c) The Notes . The Loans shall be evidenced by separate promissory notes for each Lender, dated as of the Closing Date in the aggregate principal amount equal to the amount of each Lender’s share of the Commitment, such notes to be in substantially the form of Exhibit A hereto (together, the “ Notes ”).

2.2

Interest Rates and Payments of Interest .

(a) The Loans shall bear interest at a rate per annum equal to the Fixed Rate. Such interest shall not be paid in cash but shall be accrued and paid in kind and added to the principal balance of the Loans at the end of each fiscal quarter of the Borrower. Such interest shall be allocated among the Lenders in accordance with their respective percentages as set forth on Schedule 2.1(a) .

(b) If an Event of Default shall occur, then the unpaid balance of the Loans shall bear interest, to the extent permitted by law, compounded daily at an interest rate equal to 2% per annum above the Fixed Rate, until such Event of Default is cured or waived.

(c) All agreements between or among the Borrower and the Lenders are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of maturity of the Obligations or otherwise, shall the amount paid or agreed to be paid to the Lenders for the use or the forbearance of the Obligations exceed the maximum permissible under applicable law. As used herein, the term “applicable law” shall mean the law in effect as of the date hereof; provided , however , that in the event there is a change in the law which results in a higher permissible rate of interest, then the Loan Documents shall be governed by such new law as of its effective date. In this regard, it is expressly agreed that it is the intent of the Borrower and the Lenders in the execution, delivery and acceptance of the Loan Documents to contract in strict compliance with the laws of The State of New York from time to time in effect. If, under or from any circumstances whatsoever, fulfillment of any provision of any of the Loan Documents at the time of performance of such provision shall be due, shall involve transcending the limit of such validity prescribed by applicable law, then the Obligations to be fulfilled shall automatically be reduced to the limits of such validity, and if under or from circumstances whatsoever the Lenders should ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the principal balance of the Obligations and not to the payment of interest. This provision shall control every other provision of all Loan Documents.

2.3 Commitment Fee . The Borrower shall pay to the Lenders a commitment fee (the “ Commitment Fee ”) computed on a daily basis, equal to one percent (1%) per annum of the excess of (i) the Commitment, over (ii) the average daily amount of outstanding Loans for each fiscal quarter of the Borrower; provided , that if an Event of Default shall occur, then such rate shall be increased to three percent (3%) per annum in respect of the period during which such Event of Default is ongoing. The Commitment Fee shall not be paid in cash but shall be accrued and paid in kind and added to the principal balance of the Loans at the end of each fiscal quarter of the Borrower. The Commitment Fee shall be allocated among the Lenders in accordance with their respective percentages as set forth on Schedule 2.1(a) .

2.4 Repayment of Loan . The Borrower shall repay the principal amount of the Loan on the Maturity Date in an amount equal to the aggregate unpaid principal amount of the Loan, together with all accrued and unpaid interest, fees and other charges hereunder.

2.5 Prepayments . The Borrower may prepay the Loans in whole or in part at any time prior to the Maturity Date without premium, penalty or prepayment fee.

2.6 Method of Payments .

(a) All payments by the Borrower hereunder and under any of the other Loans Documents shall be made in lawful money of the United States in immediately available funds, and shall be deemed to have been made only when made in compliance with this Section 2.6(a) . All such payments shall be made without set-off or counterclaim and free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions or conditions of any nature now or hereafter imposed or levied by any jurisdiction or any political subdivision thereof or taxing or other authority therein unless the Borrower is compelled by law to make such deduction or withholding. If any such obligation is imposed upon the Borrower with respect to any amount payable by it hereunder or under any of the other Loan Documents, the Borrower will pay to the Lenders such additional amount in Dollars as shall be necessary to enable the Lenders to receive the same net amount which the Lenders would have received on such due date had no such obligation been imposed upon the Borrower. The Borrower will deliver promptly to the Lenders certificates or other valid vouchers or other evidence of payment reasonably satisfactory to the Lenders for all Taxes or other charges deducted from or paid with respect to payments made by the Borrower hereunder or under such other Loan Document.

(b) All such payments shall be made at the applicable Lender’s office or at such other location that each Lender may from time to time designate, in each case in immediately available funds.

2.7 Computation of Interest and Fees . All computation of fees and interest shall be made on the basis of a 365-day year and actual days elapsed. If the due date for any payment of principal is extended by operation of law, interest shall be payable for such extended time. If any payment required by this Agreement becomes due on a day that is not a Business Day such payment may be made on the next succeeding Business Day, and such extension shall be included in computing interest in connection with such payment.

2.8 Taxes .

(a) Payments Free of Taxes . Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Taxes; provided that if the Borrower shall be required by applicable law to deduct any Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) each Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b) Indemnification by the Borrower . The Borrower shall indemnify the Lenders, within ten days after demand therefor, for the full amount of any Taxes (including Taxes imposed or asserted on or attributable to amounts payable under this Section 2.8 ) paid by the Lenders, as the case may be, for or on account of Taxes in relation to a payment received or receivable (or any payment deemed to be received or receivable) under a Loan document, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by the Lenders shall be conclusive absent manifest error. The foregoing indemnification does not apply with respect to any Tax assessed on the Lender if that Tax is imposed on or calculated by reference to the net income received or receivable (under U.S. federal income tax principles) by the Lender.

(c) Evidence of Payments . As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Lenders the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Lenders.

(d) Tax Treatment . Each Lender and the Borrower agree to treat the Loans as “debt” for tax purposes, and where applicable as a transaction controlled by Section 707(a) of the Internal Revenue Code of 1986, as amended. Each party shall file all federal, state, county and local tax returns and information reporting forms required to be filed consistent with this treatment of the Loans. Except as otherwise required by law, no party to this Agreement shall take a position inconsistent with the foregoing on any tax return or otherwise.

Section III

CONDITIONS OF LENDING

3.1 Conditions Precedent to Initial Loans . The agreement of the Lenders to make the initial Loan is subject to the satisfaction of the following conditions precedent on or prior to the Closing Date:

(a) Closing Deliverables . The Lenders shall have received the following, each of which shall be originals, “pdfs” or telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the Borrower, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Lenders:

(i) an executed counterpart of this Agreement;

(ii) the Notes executed by the Borrower in favor of the Lenders;

(iii) evidence satisfactory to the Lenders that all approvals, consents, exemptions, authorizations, notices to or filings with any Governmental Authority or other Person set forth on Schedule 4.3 have been obtained or made by the Borrower or its applicable Subsidiary or Affiliate;

(iv) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of the Borrower and each Pledgor as the Lenders may require evidencing the authority of the Borrower and each Pledgor to consummate the transactions contemplated hereby and the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which the Borrower and each Pledgor is a party or is to be a party;

(v) such documents and certifications as the Lenders may reasonably require to evidence that the Borrower and each Pledgor is duly organized or formed; is validly existing and is in good standing and qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect;

(vi) a certificate signed by a Responsible Officer of the Borrower certifying that the conditions specified in Sections 3.1 and 3.2 have been satisfied;

(vii) certificates attesting to the Solvency of the Borrower, from the Borrower’s chief financial officer, treasurer, controller, administrator or other officer of equivalent responsibility;

(viii) such other assurances, certificates, documents, consents and opinions as the Lenders reasonably may require; and

(ix) an executed copy of the Subordination Agreement.

(b) Indebtedness . The Borrower shall not have outstanding any Indebtedness for money borrowed other than the Loans and any other Indebtedness permitted by Section 6.1 , including the Indebtedness set forth on Schedule 6.1(f) .

(c) Independent Director Approval . The Lenders shall have received written evidence satisfactory to them of the approval of this Agreement and the borrowing hereunder by a majority of the independent directors of Golden Queen Mining Co. Ltd.

3.2 Conditions Precedent to all Loans . The obligation of the Lenders to make any Loan, including the initial Loans, is further subject to the following conditions:

(a) Loan Limit . The outstanding Loans do not and, after giving effect to any requested Loan, will not exceed the limitation set forth in Section 2.1.

(b) Litigation; Investigations . No litigation, arbitration, proceeding or investigation shall be pending or, to the knowledge of the Borrower, threatened in writing which questions the validity or legality of the transactions contemplated by any Loan Document or seeks a restraining order, injunction or damages in connection therewith, or which, in the reasonable judgment of the Lenders, would reasonably be expected to adversely affect the transactions contemplated hereby or thereby.

(c) Accuracy of Representations and Warranties . The representations and warranties contained in Section IV hereof and all representations and warranties made by the Borrower under any other Loan Document shall be true and accurate in all material respects on and as of the date any Loan is made.

(d) No Default . No Default or Event of Default shall have occurred and be continuing.

(e) No Change in Law . No change shall have occurred in any law or regulation or interpretation thereof that, in the reasonable opinion of counsel for the Lenders, would make it illegal or against the formally adopted and published policy of any Governmental Authority for the Lenders to make the Loans hereunder.

(f) Approval of Borrower’s Board of Managers . The Lenders shall have received evidence satisfactory to them that the Borrower’s board of managers has approved the specific Loan being requested by action contemporaneous with such request (as distinguished from an advance blanket authorization by the Borrower to obtain Loan advances).

Section IV

REPRESENTATIONS AND WARRANTIES

The Borrower (and each Pledgor, with respect to Section 4.1, 4.2, 4.3, 4.4, 4.6, 4.16 and 4.17, as applied to itself only) represents and warrants to the Lenders that:

4.1 Existence, Qualification and Power . The Borrower and each Pledgor (a) is duly organized or formed, validly existing and, as applicable, in good standing under the laws of the jurisdiction of its incorporation, organization or formation, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party and (c) is duly qualified and is licensed and, as applicable, in good standing under the laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

4.2 Authorization; No Contravention . The execution, delivery and performance by the Borrower and each Pledgor of each Loan Document to which such Person is or is to be a party have been duly authorized by all necessary corporate or other organizational action, and, except as disclosed on Schedule 4.2, do not and will not (a) contravene the terms of any of such Person’s organizational documents; (b) conflict with or result in any breach or contravention of, or the creation of any Encumbrance under, or require any payment to be made under (i) any contractual obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any law, rule or regulation, except in each case referred to in clause (b)(i) or clause (c) to the extent any such conflict or violation could not reasonably be expected to have a Material Adverse Effect.

4.3 Governmental Authorization; Other Consents; Corrupt Practices . Except as disclosed on Schedule 4.3:

(a) no approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with (i) the execution, delivery or performance by, or enforcement against, the Borrower or any Pledgor of this Agreement or any other Loan Document, or (ii) the exercise by a Lender of its rights under the Loan Documents.

(b) The Borrower, each Pledgor and their respective officers, directors, employees, and agents have complied in all material respects with all applicable Corrupt Practices Laws in obtaining any Governmental Approvals, consents, licenses, approvals, permits, authorizations, rights, and privileges in respect of the Borrower’s business, and are otherwise conducting the business of the Borrower in compliance in all material respects with applicable Corrupt Practices Laws, the Borrower declares that at no time in the course of its business has the Borrower or its officers, directors, employees or agents offered or promised any undue advantage, directly or indirectly, to a Public Official, with the objective of influencing him or her to perform, omit or delay an official act, or to obtain improper business advantage for themselves or for the Borrower. (For purposes of this Agreement, “undue advantage” is not limited to payments or financial benefits, but consists of anything that has value to a Public Official.);

(c) The Borrower’s and each Pledgor’s internal management and accounting practices and controls are adequate to ensure compliance in all material respects with applicable Corrupt Practices Laws.

4.4 Binding Effect . This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by the Borrower and each Pledgor. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of the Borrower and each Pledgor, enforceable against the Borrower and each Pledgor in accordance with its terms except as limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights generally, and except as the remedy of specific performance or of injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought.

4.5 Financial Statements . The audited financial statements of the Borrower for the fiscal year of the Borrower ended December 31, 2017, furnished to the Lenders, are true and complete in all material respects, have been prepared in accordance with GAAP, and fairly present the financial condition of the Borrower as of the date of such financial statements and the results of their operations for the period then ending. Since the date of such statements, there has been no material change in the Borrower’s accounting procedures. Since the delivery to the Lenders of the most recently audited financial statements of the Borrower, there has been no material adverse change in the Borrower’s financial condition, properties or business, taken as a whole.

4.6 Litigation . There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower, threatened in writing, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any Pledgor or against any of their respective properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or (b) except as set forth on Schedule 4.6, either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect.

4.7 No Default . Except as set forth on Schedule 4.7, the Borrower is not in default under or with respect to, or a party to, any contractual obligation that would, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.

4.8 Ownership of Property; Encumbrances . The Borrower has good record and sufficient title to its material properties, including all real property necessary for the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Borrower’s properties are not subject to any Encumbrances, except for Permitted Encumbrances.

4.9 Environmental Compliance . The Borrower has duly complied with, and its business, operations, assets, equipment, property, leaseholds, and other facilities are in compliance with, the provisions of all applicable Environmental Laws, except as any noncompliance therewith could not reasonably be expected to have a Material Adverse Effect. The Borrower has (a) been issued and will maintain all required consents, permits, licenses, certificates, authorizations, and approvals relating to, and (b) received no complaint, order, directive, claim, citation, or notice by any Governmental Authority or any other Person with respect to, any and all Environmental Laws, except to the extent any such failure to have issued or maintained or any such receipt in each case could not reasonably be expected to have a Material Adverse Effect.

4.10 Insurance . The properties of the Borrower necessary for the ordinary conduct of its business are insured with financially sound and reputable insurance companies not Affiliates of the Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower operates and as required by applicable Governmental Authorities.

4.11 Taxes . The Borrower has filed all federal, state, provincial, and all material local tax returns and reports required by law to be filed in respect of the income, business, properties, and employees of the Borrower, and has paid all Taxes, assessments, fees and other charges levied or imposed by any Governmental Authority upon it or its properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. There is no proposed Tax assessment against the Borrower that is not being challenged by appropriate proceedings with adequate reserves made therefor that would, if made, have a Material Adverse Effect.

4.12 Subsidiaries . The Borrower has no Subsidiaries other than [**].

4.13 Margin Regulations; Investment Company Act .

(a) The Borrower has not engaged nor will engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.

(b) The Borrower is not required to be registered as an “investment company” under the Investment Company Act of 1940.

4.14 Compliance with Laws . The Borrower is in compliance in all material respects with the requirements of all laws, rules and regulations and all orders, writs, injunctions and decrees applicable to it or to its properties, except where the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

4.15 Solvency . The Borrower is Solvent.

4.16 Compliance with OFAC Rules and Regulations . The Borrower and each Pledgor is and will remain in compliance in all material respects with all United States economic sanctions laws, executive orders and implementing regulations as promulgated by OFAC and all applicable anti-money laundering and counter-terrorism financing provisions of the Bank Secrecy Act (P.L. 91-508, 84 Stat. 1118 (1970) and all regulations issued pursuant to it. None of the Borrower, the Pledgors, nor any Person directly or indirectly controlling the Borrower or any Pledgor (i) is a Person designated by the United States government on the list of the Specially Designated Nationals and Blocked Persons (the “SDN List”) with which a United States Person cannot deal with or otherwise engage in business transactions, (ii) is a Person who is otherwise the target of United States economic sanctions laws such that a United States Person cannot deal or otherwise engage in business transactions with such Person, or (iii) is controlled by (including by virtue of such person being a director or owning voting shares or interests), or acts, directly or indirectly, for or on behalf of, any person or entity on the SDN List or a foreign government that is the target of United States economic sanctions prohibitions such that the entry into, or performance under, this Agreement or any other Loan Document would be prohibited under United States law.

4.17 Foreign Assets Control Regulations, Etc . The Borrower and each Pledgor is not an “enemy” or an “ally of the enemy” within the meaning of Section 2 of the Trading with the Enemy Act of the United States of America (50 U.S.C. App. §§ 1 et seq.), as amended. The Borrower is not in violation of (a) the Trading with the Enemy Act, as amended, (b) any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto or (c) the USA Patriot A ct (Title III of Pub. L. 107-56 (signed into law October 26, 2001)). The Borrower (i) is not a blocked person described in Section 1 of the Executive Order 13224 issued on September 24, 2001, and (ii) to the Borrower’s knowledge, does not engage in any dealings or transactions, or is otherwise associated, with any such blocked person.

Section V

AFFIRMATIVE COVENANTS

Each Loan Party covenants that so long as the Loans or any other Obligation remain outstanding:

5.1 Financial Statements . The Borrower shall furnish to the Lenders:

(a) as soon as available to the Borrower, but in any event within 120 days after the end of each Fiscal Year, the balance sheet of the Borrower and its Subsidiaries as of the end of such year and related statements of income, retained earnings and cash flow of the Borrower and its Subsidiaries for such year, prepared in accordance with GAAP and audited and certified without qualification by the Borrower’s Accountants; and, concurrently with such financial statements, a copy of the Borrower’s Accountants management report and a written statement by the Borrower’s Accountants that in the making of the audit necessary for their report and opinion upon such financial statements, they have obtained no knowledge of any Default or, if in the opinion of such accountants any such Default exists, they shall disclose in such written statement the nature and status thereof; provided that the Borrower shall be deemed to be in compliance with its delivery obligations pursuant to this Section 5.1(a) with respect to any material or information set forth in this Section 5.1(a) to the extent such material or information is publicly filed via the Securities and Exchange Commission’s Electronic Data Gathering, Analysis and Retrieval System (EDGAR) or any public electronic filing system successor thereto;

(b) as soon as available to the Borrower, but in any event within 60 days after the end of each Fiscal Quarter of each Fiscal Year, a balance sheet of the Borrower and its Subsidiaries as of the end of, and related statements of income, retained earnings and cash flow of the Borrower and its Subsidiaries for, the Fiscal Quarter then ended and the portion of the Fiscal Year then ended, prepared in accordance with GAAP and certified by the chief financial officer or other officer of equivalent responsibility of the Borrower, subject to normal, recurring year-end adjustments that shall not in the aggregate be material in amount; provided that the Borrower shall be deemed to be in compliance with its delivery obligations pursuant to this Section 5.1(b) with respect to any material or information set forth in this Section 5.1(b) to the extent such material or information is publicly filed via the Securities and Exchange Commission’s Electronic Data Gathering, Analysis and Retrieval System (EDGAR) or any public electronic filing system successor thereto;

(c) concurrently with their filing, true and correct copies of the Borrower’s and its Subsidiaries’ Tax returns and each amendment thereto;

(d) promptly after the receipt thereof by the Borrower, copies of any reports (including any so-called management letters) submitted to the Borrower by independent public accountants in connection with any annual or interim review of the accounts of the Borrower or its Subsidiaries made by such accountants;

(e) promptly after the same are delivered or filed, copies of all financial statements and reports as any Loan Party shall send to owners of its Equity Interests or as the Borrower may file with any Governmental Authority at any time; provided that such Loan party shall be deemed to be in compliance with its delivery obligations pursuant to this Section 5.1(e) with respect to any material or information set forth in this Section 5.1(e) to the extent such material or information is publicly filed via the Securities and Exchange Commission’s Electronic Data Gathering, Analysis and Retrieval System (EDGAR) or any public electronic filing system successor thereto; and

(f) from time to time, such other financial data and information about the Loan Parties as the Lenders may reasonably request.

5.2 Conduct of Business .

(a) Each Loan Party shall duly observe and comply in all material respects with all material contracts and with all applicable laws, regulations, decrees, orders, judgments and valid requirements of any Governmental Authority applicable to its corporate existence, rights and franchises, to the conduct of its business and to its property and assets (including without limitation all Environmental Laws and Corrupt Practices Laws), except in any case where the failure to observe and comply would not reasonably be expected to have a Material Adverse Effect and shall maintain and keep in full force and effect and comply in all material respects with all licenses and permits necessary to the proper conduct of its business.

(b) Each Loan Party shall maintain its legal existence, comply with its organizational documents, and observe all legally necessary or contractually required formalities in its governance. The Borrower shall and remain or engage in substantially the same business as that in which it is now engaged.

5.3 Taxes . Each Loan Party shall pay or cause to be paid all Taxes on or against it or its properties on or prior to the time when they become delinquent; except for any Tax or charge that is being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been established and are being maintained in accordance with GAAP, if no Encumbrance shall have been filed (the enforcement of which shall not have been stayed within 30 days of the filing thereof) to secure such Tax, assessment or charge.

5.4 Inspection Rights . Each Loan Party shall permit any authorized representatives designated by a Lender to visit and inspect any of the properties of such Loan Party, to inspect, copy and take extracts from its financial and accounting records, and to discuss its affairs, finances and accounts with its officers and independent public accountants, all upon reasonable notice and at such reasonable times during normal business hours. The reasonable out-of-pocket expenses of the Lenders in connection with such inspections shall be payable by the Borrower.

5.5 Maintenance of Books and Records . Each Loan Party shall keep adequate books and records of account, in which true and complete entries will be made reflecting all of its business and financial transactions, and such entries will be made in accordance with GAAP, in each case consistently applied and applicable law. Each Loan Party shall keep internal management and accounting practices and controls that are adequate to ensure compliance with applicable Corrupt Practices Laws.

5.6 Use of Proceeds .

(a) The Borrower will use the proceeds of the Loans for general working capital and other corporate purposes of the Borrower.

(b) No portion of the Loans shall be used for the “purpose of purchasing or carrying” any “margin stock” or “margin security” as such terms are used in Regulations T, U and X of the Board of Governors of the Federal Reserve System, or otherwise in violation of such regulations.

5.7 Further Assurances . At any time and from time to time each Loan Party shall execute and deliver such further documents and take such further action as may reasonably be requested by the Lenders to effect the purposes of the Loan Documents.

5.8 Notification Requirements . Each Loan Party shall furnish to the Lenders:

(a) promptly upon becoming aware of the existence of any condition or event that constitutes a Default, written notice thereof specifying the nature and duration thereof and the action being or proposed to be taken with respect thereto;

(b) promptly upon becoming aware of any investigative proceedings by a Governmental Authority or of any litigation commenced or threatened in writing against any Loan Party of which it has notice, the outcome of which could reasonably be expected to have a Material Adverse Effect, written notice thereof and the action being or proposed to be taken with respect thereto; and

(c) promptly after becoming aware of any occurrence or any condition affecting any Loan Party which could reasonably be expected to have a Material Adverse Effect, written notice thereof.

5.9 Environmental Compliance .

(a) Except as could not reasonably be expected to have a Material Adverse Effect, (i) the Each Loan Party shall comply with, and shall conduct its business, operations, assets, equipment, property, leaseholds, and other facilities in compliance with, the provisions of all Environmental Laws; (ii) each Loan Party shall maintain in full force and effect all required permits, licenses, certificates, authorizations and approvals relating to Environmental Laws; and (iii) the business of each Loan Party shall be operated in a manner that will not pose any an unreasonable risk to public health or the environment.

(b) Each Loan Party shall provide the Lenders upon either Lender’s request with information related such Loan Party’s compliance with those Environmental Laws that are reasonably necessary to the ordinary conduct of its business within ten days as of the receipt by a Responsible Officer of such Loan Party of such request.

(c) The Borrower shall promptly inform the Lenders of the receipt of any (i) notice of violation of any environmental permits, licenses, certificates and authorizations (ii) notice of violation of any Environmental Laws, the violation of which could reasonably be expected to be material and adverse to the ordinary conduct of any Loan Party’s business.

5.10 Subsidiary Guaranties . Each Subsidiary of the Borrower created, acquired or held on any date subsequent to the Closing Date, shall as promptly as possible but in any event within thirty (30) days (or such later date as may be agreed upon by the Lenders) of such date, execute and deliver to the Lenders, along with any corporate governance and authorization documents, a guaranty of all Obligations (a “ Subsidiary Guaranty ”) in form and substance reasonably satisfactory to the Lenders.

5.11 Exploration of Strategic Alternatives . Promptly after the Closing Date the Borrower, in consultation with the Lenders, will commence and diligently engage in a process to explore, evaluate and pursue strategic alternatives to (i) repay the Obligations in full and (ii) finance the Borrower’s future capital needs (the “ Strategic Alternative Assessment ”). Upon the conclusion of the Strategic Alternative Assessment, the Borrower shall proceed with any resulting strategic alternative; provided that the Borrower shall not be obligated to proceed with such strategic alternative if the Borrower has identified a bona fide alternative transaction, satisfactory to the Lenders, that will repay in cash the Obligations in full by the Maturity Date. The Lenders shall have the right to approve all advisors used by the Borrower in connection with the Strategic Alternative Assessment.

5.12 Post-closing Obligations . Borrower shall cause ~~[**],~~ as promptly as possible but in any event within thirty (30) days of the Closing Date (or such later date as agreed by the Administrative Agent in their discretion), to execute and deliver to the Lenders, along with any corporate governance and authorization documents, a Subsidiary Guaranty in form and substance satisfactory to the Lenders.

Section VI

NEGATIVE COVENANTS

Each Loan Party covenants that so long as the Loans or any other Obligation remain outstanding:

6.1 Indebtedness . Each Loan Party shall not create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness other than the following:

(a) Obligations;

(b) Indebtedness for Taxes to the extent that payment therefor shall at the time not be required to be made in accordance with Section 5.3 ;

(c) current liabilities on open account for the purchase price of services, materials and supplies incurred by the Borrower in the ordinary course of business (not as a result of borrowing), so long as all of such open account current liabilities shall be promptly paid and discharged in conformity with customary trade terms and practices, except for any such open account Indebtedness which is being contested in good faith by the Borrower, as to which adequate reserves required by GAAP, as applicable, have been established and are being maintained and as to which no Encumbrance has been placed on any property of the Borrower (other than Permitted Encumbrances);

(d) mobile equipment financing and short term financing with or on behalf of one or more refineries in connection with their purchases of the Borrower’s gold and silver doré bars;

(e) Guarantees permitted under Section 6.2 hereof;

(f) Indebtedness existing as of the date of this Agreement and disclosed on Schedule 6.1(f) , together with any renewals, extensions or refinancing thereof, provided that the amount of such resulting Indebtedness shall not exceed the amount of Indebtedness originally being renewed, extended or refinanced; and

(g) endorsements of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business.

6.2 Contingent Liabilities . Each Loan Party shall not create, incur, assume, guarantee or be or remain liable with respect to any Guarantees other than (i) Guarantees resulting from the endorsement of negotiable instruments for deposit or collection in the ordinary course of business and (ii) reclamation obligations supported by surety bonds, as set forth on Schedule 6.2 , the amount of which may increase over time.

6.3 Encumbrances . Each Loan Party shall not create, grant, incur, assume or suffer to exist any direct or indirect mortgage, pledge, security interest, lien or other charge or encumbrance of any kind, including any negative pledge or any lien or retained security title of a conditional vendor, upon or with respect to any of its property or assets (“ Encumbrances ”), or assign or otherwise convey any right to receive income, including the sale or discount of accounts receivable with or without recourse, except the following (“ Permitted Encumbrances ”):

(a) liens of the Administrative Agent (for the benefit of the Lenders) under this Agreement, the other Loan Documents and any other document contemplated hereby or thereby;

(b) liens incurred in connection with the posting of cash collateral to support the surety bonds set forth on Schedule 6.2 , together with any replacement, extension or renewal thereof;

(c) liens existing as of the date of this Agreement and disclosed on Schedule 6.3 , together with any replacement, extension or renewal thereof upon or in the same property subject thereto arising out of the extension, renewal or replacement of the Indebtedness secured thereby;

(d) liens for Taxes to the extent that payment of the same may be postponed or is not required in accordance with the provisions of Section 5.3 ; and

(e) any Encumbrances arising by mandatory provision of law securing obligations incurred in the ordinary course of business that (i) do not interfere with the ordinary conduct of the business of any Loan Party, (ii) are not yet more than 90 days overdue or that are being contested or litigated in good faith, including (A) Encumbrances of carriers, warehousemen, mechanics, laborers, and materialmen incurred in the ordinary course of business for sums not yet due, (B) Encumbrances on real estate for real estate taxes not yet delinquent, (C) Encumbrances incurred in the ordinary course of business in connection with worker’s compensation and unemployment insurance, (D) easements, rights-of-way, restrictions, and other similar encumbrances on the use of real property approved in advance by the Lenders, and (E) employee claims regarding wages and benefits.

6.4 Merger; Dispositions; Liquidation .

(a) No Loan Party may merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or liquidate or dissolve.

(b) Each Loan Party shall not Dispose of any assets or properties reasonably necessary to the ordinary conduct of its business, other than sales of Qualified Investments in the ordinary course of business and consistent with past practices.

6.5 Restricted Payments . Each Loan Party shall not make any Restricted Payments, except that:

(a) the Borrower may declare and pay dividends and make other distributions and payments with respect to its Equity Interests if payable solely in its Equity Interests; and

(b) the Borrower may purchase or otherwise acquire Equity Interests in any Subsidiary of the Borrower using additional shares of its Equity Interests.

6.6 Investments; Purchases of Assets . Each Loan Party shall not make or maintain any Investments or purchase or otherwise acquire any material amount of assets other than:

(a) Qualified Investments;

(b) Subsidiaries created, acquired, or held in accordance with the terms of this Agreement; and

(c) to the extent permitted by applicable law, loans or other extensions of credit to officers, directors and employees of the Borrower in the ordinary course of business, for travel, entertainment, relocation and analogous ordinary business purposes, which Investments shall not exceed at any time $200,000 in the aggregate.

6.7 Transactions with Affiliates . Each Loan Party will not directly or indirectly, enter into any purchase, sale, lease or other transaction with any Affiliate except transactions on terms that are no less favorable to such Loan Party than those which might be obtained at the time in a comparable arm’s-length transaction with any Person who is not an Affiliate; except any such transaction (i) unanimously approved by the board of managers of such Loan Party or by a committee of its board of managers whose members have been unanimously appointed by its board of managers; or (ii) between any Loan Party and a Lender or an Affiliate of a Lender.

6.8 Fiscal Year . Each Loan Party shall not change its Fiscal Year without at least 90 days’ prior written notice to the Lenders.

Section VII

DEFAULTS

7.1 Events of Default . Any of the following shall constitute an Event of Default:

(a) Non-Payment . The Borrower fails to (i) pay when and as required to be paid in herein, any amount of principal of the Loans (including any interest and Commitment fee added to the principal of the Loans), or (ii) pay within ten (10) days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or

(b) Specific Covenants . (i) Any Loan party fails to perform or observe any term, covenant or agreement contained in any of Sections 5.1(a) , (b) , or (c) , Sections 5.2(b) , 5.4 , 5.6 , 5.7 , 5.8 , 5.10 , or 5.11 or Section VI , or (ii) a Subsidiary of Borrower violates or fails to perform or observe any term, covenant or agreement contained in any Subsidiary Guaranty; or

(c) Other Defaults . Any Loan Party fails to perform or observe any other covenant or agreement (not specified in Section 7.1(a) or 7.1(b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days; or

(d) Representations and Warranties . Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be materially incorrect or misleading when made or deemed made; or

(e) Cross-Default . (i) Each Loan Party (A) shall fail to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $150,000, or (B) shall fail to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) the Borrower shall fail to pay when due (after any applicable period of grace) any amount payable under one or more agreements for the use of real or personal property requiring aggregate payments in excess of $100,000 in any twelve month period, or fails to observe or perform any term, covenant or agreement or relating to such agreement(s) for the use of real or personal property, and the result of any such failure is to permit any other party to such agreement(s) to exercise remedies under or terminate such agreement(s) prior to the expiration date thereof; or

(f) Insolvency Proceedings, Etc . Any Loan Party institutes or consents to the institution of any proceeding under any bankruptcy, insolvency, reorganization, receivership or other debtor relief law, or makes a general assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any bankruptcy, insolvency, reorganization, receivership or other debtor relief law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or

(g) Inability to Pay Debts; Attachment . (i) The Borrower becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 45 days after its issue or levy; or

(h) Judgments . There is entered against any Loan Party (i) one or more final judgments or orders, not disclosed on Schedule 4.6 , for the payment of money in an aggregate amount (as to all such judgments and orders) exceeding $100,000 (to the extent not covered by independent third-party insurance as to which the insurer is rated at least “A” by A.M. Best Company, has been notified of the potential claim and does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 30 consecutive days while such judgment shall not have been discharged during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

(i) Invalidity of Loan Documents . Any material provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or the Borrower contests in any manner the validity or enforceability of any provision of any Loan Document; or the Borrower denies that it has any or further liability or obligation under any provision of any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document; or

(j) Change of Control . There occurs any Change of Control.

7.2 Remedies upon Event of Default . If any Event of Default occurs and is continuing, the Lenders, acting jointly, may take any or all of the following actions:

(a) declare the aggregate unpaid principal amount of the Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by each Loan Party; and

(b) exercise on behalf of themselves all rights and remedies available to them under the Loan Documents and applicable laws;

provided , however , that upon the occurrence of an Event of Default specified in Section 7.1(f) , the unpaid principal amount of the Loans and all interest and other amounts as aforesaid shall automatically become due and payable, without further act of the Lenders. All amounts collected from any enforcement of remedies hereunder, including any proceeds from the sale of Collateral, shall be applied to the amounts owing to each Lender under this Agreement in proportion to the amount of outstanding Loans owed to such Lender.

Section VIII

GRANT OF SECURITY INTEREST

8.1 Security Interests . The Borrower, as security for the due and punctual payment of the Obligations (including interest accruing on and after the filing of any petition in bankruptcy or of reorganization of the Borrower whether or not post filing interest is allowed in such proceeding), hereby grants, mortgages, pledges, assigns, transfers, sets over, conveys and delivers to the Administrative Agent (for the benefit of the Lenders), a security interest in the Collateral.

8.2 Use of Collateral . So long as no Event of Default shall have occurred and be continuing, and subject to the various provisions of this Agreement and the other Loan Documents, the Borrower may use its Collateral in any lawful manner.

8.3 Possession; Sale of Collateral; etc . In addition to any other rights and remedies granted to the Administrative Agent and the Lenders in the Loan Documents, if any Event of Default shall have occurred and be continuing, the Administrative Agent (on behalf of the Lenders and with the consent of both Lenders) may exercise all rights and remedies of a secured party under the Uniform Commercial Code or any other applicable law. Without limiting the generality of the foregoing, the Administrative Agent without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon the Borrower or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, or consent to the use by the Borrower of any cash collateral arising in respect of the Collateral on such terms as the Administrative deems reasonable, and/or may forthwith sell, lease, assign give an option or options to purchase or otherwise dispose of and deliver, or acquire by credit bid on behalf of the Lenders, the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of the Administrative Agent or any Lender or elsewhere, upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery, all without assumption of any credit risk, without demand of performance but with ten (10) days’ prior written notice of the time and place of any such public sale or sales (which notice the Borrower hereby agrees is commercially reasonable) and with such other notices as may be required by applicable law and cannot be waived. The Administrative Agent, on behalf of the Lenders, or the Lenders, acting jointly, shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in the Borrower, which right or equity is hereby waived and released. The Borrower further agrees, at the Administrative Agent’s request to assemble the Collateral and make it available to the Administrative Agent at places which the Administrative Agent shall reasonably select, whether at the Borrower’s premises or elsewhere and the Administrative Agent may enter upon the premises of the Borrower or wherever the Collateral may be, and take possession of the Collateral, and may demand and receive such possession from any Person who has possession thereof, and the Administrative Agent may take such measures as it deems necessary or proper for the care or protection thereof, including the right to remove all or any portion of the Collateral. The Administrative Agent shall apply the net proceeds of any action taken by it pursuant to this Section VIII, after deducting all costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any other way relating to the Collateral or the rights of the Administrative Agent and the Lenders hereunder, including attorneys’ fees and disbursements, to the payment in whole or in part of the obligations of the Borrower under the Loan Documents, in such order as the Administrative Agent may elect, and only after such application and after the payment by the Administrative Agent of any other amount required by any provision of law, including Section 9-615(a)(3) of the Uniform Commercial Code, need the Administrative Agent account for the surplus, if any, to the Borrower. None of the Administrative Agent or the Lenders shall have any liability should the proceeds resulting from a private sale of any Collateral be less than the proceeds realizable from a public sale of such Collateral, and the Administrative Agent (on behalf of the Lenders) or any other Person may be the purchaser of all or any portion of the Collateral so sold and thereafter hold the same absolutely, free (to the fullest extent permitted by applicable law) from any claim or right of whatever kind, including any equity of redemption, of the Borrower, any such demand, notice, claim, right or equity being hereby expressly waived and released. The Administrative Agent (on behalf of the Lenders) shall in any such sale make no representations or warranties with respect to the Collateral or any part thereof, and none of the Administrative Agent or any Lender shall be chargeable with any of the obligations or liabilities of the Borrower. The Borrower hereby agrees that (i) it will indemnify and hold the Administrative Agent and the Lenders harmless from and against any and all claims with respect to any Collateral asserted before the taking of actual possession or control of such Collateral by the Administrative Agent pursuant to this Section VIII, or arising out of any act of, or omission to act on the part of, any Person (other than the Administrative Agent or the Lenders) prior to such taking of actual possession or control by the Administrative Agent (whether asserted before or after such taking of possession or control), or arising out of any act on the part of the Borrower or its Affiliates or agents before or after the commencement of such actual possession or control by the Administrative Agent but excluding therefrom all claims with respect to the Collateral resulting from (x) the gross negligence or willful misconduct of the Administrative Agent or any Lender, as finally determined by a court of competent jurisdiction in a non-appealable decision or in an appealable decision that the party seeking indemnification does not appeal within the time required, or (y) any claims with respect to the Collateral asserted against an indemnified party by the Borrower in which the Borrower is the prevailing party (i.e., the party in whose favor a monetary award is issued); and (ii) none of the Administrative Agent or any Lender shall have any liability or obligation to the Borrower arising out of any such claim except for acts of willful misconduct or gross negligence of such Person, as finally determined by a court of competent jurisdiction in a non-appealable decision or in an appealable decision that the party seeking indemnification does not appeal within the time required. To the extent permitted by applicable law, the Borrower waives all claims, damages and demands it may acquire against the Administrative Agent or any Lender arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or other disposition. In any action hereunder, the Administrative Agent shall be entitled, if permitted by applicable law, to the appointment of a receiver without notice, to take possession of all or any portion of the Collateral and to exercise such powers as a court shall confer upon the receiver. Notwithstanding the foregoing, upon the occurrence and during the continuance of an Event of Default, the Administrative Agent and the Lenders shall be entitled to apply, without prior notice to the Borrower, any cash or cash items constituting Collateral in the possession of the Administrative Agent and the Lenders in any manner at their sole discretion.

8.4 Financing Statements, Direct Payments . The Borrower hereby authorizes the Administrative Agent to file financing statements under the Uniform Commercial Code and any amendments thereto and continuations thereof and any other reasonably appropriate security documents or instruments and to give any notices necessary or desirable as determined by the Administrative Agent to perfect the security interest of the Administrative Agent (for the benefit of the Lenders) in the Collateral, in all cases without the signature of the Borrower or to execute such items as attorney-in-fact for the Borrower; provided , that the Administrative Agent shall provide copies of any such documents or instruments to the Borrower. The Borrower hereby specifically authorizes the Administrative Agent to describe and indicate the collateral covered by any such financing statement as “all assets” and/or “all personal property” of the Borrower now owned or hereafter acquired. The Borrower further authorizes the Administrative Agent to notify, at the time that any Event of Default shall have occurred and be continuing and is not waived, any account debtors that all sums payable to the Borrower relating to the Collateral shall be paid directly to the Administrative Agent or as otherwise directed by the Administrative Agent, and to confirm directly with account debtors the amounts payable by them to the Borrower with regard to the Collateral and the terms of all accounts receivable.

8.5 Remedies Not Exclusive . The remedies conferred upon or reserved to the Administrative Agent in this Section VIII are intended to be in addition to, and not in limitation of, any other remedy or remedies available to the Administrative Agent. Without limiting the generality of the foregoing, the Administrative Agent and the Lenders shall have all rights and remedies of a secured creditor under Article 9 of the Uniform Commercial Code and under any other applicable law.

Section IX

PLEDGE

9.1 Pledge .

(a) Each Pledgor, as security for the due and punctual payment in full of the Obligations (including interest accruing on and after the filing of any petition in bankruptcy or of reorganization of the Borrower whether or not post filing interest is allowed in such proceeding), hereby grants, pledges, hypothecates, assigns, transfers, sets over, conveys and delivers unto the Administrative Agent (for the benefit of the Lenders) a first priority security interest in all Pledged Collateral (including without limitation the Borrower’s Equity Interests in ~~[**]~~ ) now owned or hereafter acquired by them, senior in right and priority to the claims of any other Persons. The foregoing will constitute the approval of each Pledgor to a transfer of units of the Borrower forming part of the Pledged Collateral pursuant to Section 11.1 of the Golden Queen Mining Company, LLC Amended and Restated Limited Liability Company Agreement.

(b) On or prior to the Closing Date, the Pledgors shall deliver to the Administrative Agent the definitive instruments (if any) representing all Pledged Securities, accompanied by undated stock or transfer powers (or any comparable documents for non-corporate entities to the extent certificated), duly endorsed or executed in blank by the appropriate Pledgor, and such other instruments or documents as the Administrative Agent or its counsel shall reasonably request. Schedule 9.1 sets forth all of the Pledged Securities as of the Closing Date.

9.2 Covenant . Each Pledgor covenants that as the owner of Equity Interests in each of its respective Subsidiaries it will not take any action to allow any additional Equity Interests of such Subsidiaries or any securities convertible or exchangeable into Equity Interest of such Subsidiaries to be issued, or grant any options or warrants, unless all such interests (or in the case of such Subsidiaries that are Controlled Foreign Corporations or Foreign Subsidiary Holding Companies, 65% of such voting Equity Interests and 100% of such non-voting Equity Interests) are pledged to the Administrative Agent (for the benefit of the Lenders) as security for the Obligations.

9.3 Registration in Nominee Name; Denominations . Until an Event of Default shall have occurred and be continuing, the Administrative Agent shall have the right to hold the certificates (if any) representing any Pledged Securities in the name of the appropriate Pledgor, endorsed or assigned in blank or in favor of the Administrative Agent. The Administrative Agent shall have the right to exchange the certificates representing any of the Pledged Securities for certificates of smaller or larger denominations for any purpose consistent with this Agreement.

9.4 Voting Rights; Dividends; etc .

(a) The appropriate Pledgor shall be entitled to exercise any and all voting and/or consensual rights and powers accruing to an owner of the Pledged Securities being pledged by it hereunder or any part thereof for any purpose not inconsistent with the terms hereof, at all times, except that upon the occurrence and during the continuance of an Event of Default and notice to the applicable Pledgor from the Administrative Agent of the transfer of such rights to the Administrative Agent, all rights of such Pledgor with respect to such Pledged Securities to exercise the voting and/or consensual rights and powers which it is permitted to exercise pursuant to this Section 9.4 shall cease.

(b) All dividends or distributions of any kind whatsoever (other than cash dividends or cash distributions paid while no Event of Default is continuing and distributions made pursuant to Section 6.5(a) ) received by a Pledgor on account of any Pledged Securities, whether resulting from a subdivision, combination, or reclassification of the outstanding capital stock or other Equity Interests of the issuer or received in exchange for the Pledged Securities or any part thereof or as a result of any merger, consolidation, acquisition, or other exchange of assets to which the issuer may be a party, or otherwise, shall be and become part of the Pledged Securities pledged hereunder and shall immediately be delivered to the Administrative Agent, to be held subject to the terms hereof. All dividends and distributions which are received by a Pledgor contrary to the provisions of this clause (b) shall be received in trust for the benefit of the Lenders, segregated from such Pledgor’s own assets, and shall be delivered to the Administrative Agent.

(c) So long as no Event of Default shall have occurred and be continuing, any cash dividends or cash distributions received by the Borrower in accordance with the terms hereof may be used for any purpose not prohibited hereunder.

9.5 Remedies Upon Default . If an Event of Default shall have occurred and be continuing, the Administrative Agent (on behalf of the Lenders and with the consent of both Lenders) may sell the Pledged Securities or any part thereof at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Administrative Agent shall deem appropriate subject to the terms hereof or as otherwise provided in the UCC. The Administrative Agent shall be authorized at any such sale (if the Administrative Agent deems it advisable to do so) to restrict to the fullest extent permitted by applicable law the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Pledged Securities for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale, the Administrative Agent shall have the right to assign, transfer, and deliver to the purchaser or purchasers thereof the Pledged Securities so sold. Each such purchaser at any such sale shall hold the property sold absolutely, free from any claim or right on the part of any Pledgor. The Administrative Agent shall give the Pledgors ten (10) days’ prior written notice of any such public or private sale, or sale at any broker’s board or on any such securities exchange, or of any other disposition of the Pledged Securities. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Pledged Securities, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Administrative Agent may fix and shall state in the notice of such sale. At any such sale, the Pledged Securities, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Administrative Agent may (in its sole and absolute discretion) determine. The Administrative Agent shall not be obligated to make any sale of the Pledged Securities if it shall determine not to do so, regardless of the fact that notice of sale of the Pledged Securities may have been given. The Administrative Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case the sale of all or any part of the Pledged Securities is made on credit or for future delivery, the Pledged Securities so sold may be retained by the Administrative Agent until the sale price is paid by the purchaser or purchasers thereof, but the Administrative Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Pledged Securities so sold and, in case of any such failure, such Pledged Securities may be sold again upon like notice. At any sale or sales made pursuant to this Section 9.5, the Administrative Agent (on behalf of the Secured Parties) may bid for or purchase, free from any claim or right of whatever kind, including any equity of redemption, of the Pledgors, any such demand, notice, claim, right or equity being hereby expressly waived and released to the maximum extent permitted by applicable law, any or all of the Pledged Securities offered for sale, and may make any payment on the account thereof by using any claim for moneys then due and payable to the Administrative Agent or any other consenting Lender by the Borrower as a credit against the purchase price; and the Administrative Agent, upon compliance with the terms of sale, may hold, retain and dispose of the Pledged Securities without further accountability therefor to any Pledgor or any third party (other than the other Lenders). The Administrative Agent shall in any such sale make no representations or warranties with respect to the Pledged Securities or any part thereof, and shall not be chargeable with any of the obligations or liabilities of the Pledgors with respect thereto. Each Pledgor hereby agrees that (i) it will indemnify and hold the Administrative Agent and the Lenders harmless from and against any and all claims with respect to the Pledged Securities asserted before the taking of actual possession or control of the Pledged Securities by the Administrative Agent pursuant to this Agreement, or arising out of any act of, or omission to act on the part of, any Person prior to such taking of actual possession or control by the Administrative Agent (whether asserted before or after such taking of possession or control), or arising out of any act on the part of any Pledgor, its agents or Affiliates before or after the commencement of such actual possession or control by the Administrative Agent, but excluding therefrom all claims with respect to the Pledged Securities resulting from (x) the gross negligence or willful misconduct of the Administrative Agent or any Lender, as finally determined by a court of competent jurisdiction in a non-appealable decision or in an appealable decision that the party seeking indemnification does not appeal within the time required, or (y) any claims with respect to the Pledged Securities asserted against an indemnified party by a Pledgor in which such Pledgor is the prevailing party (i.e., the party in whose favor a monetary award is issued), and (ii) none of the Administrative Agent or any Lender shall have any liability or obligation to any Pledgor arising out of any such claim except for acts of willful misconduct or gross negligence of such Person, as finally determined by a court of competent jurisdiction in a non-appealable decision or in an appealable decision that the party seeking indemnification does not appeal within the time required. As an alternative to exercising the power of sale herein conferred upon it, the Administrative Agent may proceed by a suit or suits at law or in equity to foreclose upon the Collateral and Pledged Securities under this Agreement and to sell the Pledged Securities, or any portion thereof, pursuant to a judgment or decree of a court or courts having competent jurisdiction.

9.6 Waiver of Guarantor Defenses . The intent of the Pledgors is that the provisions of this Section IX not be construed as a guaranty or surety and that they not have available to them any defenses available to a guarantor or surety under applicable law. To the extent that, notwithstanding such intent, this pledge herein is construed or is asserted to be a guaranty or surety, the Pledgors agree as follows:

(a) Each Pledgor waives presentment to, demand for payment from and protest to, as the case may be, Borrower or any other guarantor of any of the Obligations, and also waives notice of protest for nonpayment, notice of acceleration and notice of intent to accelerate. The obligations of each Pledgor hereunder shall not be affected by (i) the failure of the Administrative Agent or the Lenders to assert any claim or demand or to enforce any right or remedy against Borrower or any Pledgor or any other guarantor under the provisions of this Agreement or any other agreement or otherwise, (ii) any extension or renewal of any provision hereof or thereof, (iii) the failure of the Administrative Agent or the Lenders to obtain the consent of such Pledgor with respect to any rescission, waiver, compromise, acceleration, amendment or modification of any of the terms or provisions of this Agreement, or any other agreement, (iv) the release, exchange, waiver or foreclosure of any security held by the Administrative Agent (on behalf of the Lenders) for the Obligations or any of them, (v) the failure of the Administrative Agent or the Lenders to exercise any right or remedy against any other Pledgor or any other guarantor of the Obligations, (vi) any bankruptcy, reorganization, liquidation, dissolution or receivership proceeding or case by or against the Borrower or any other Pledgor, or any change in the corporate existence, structure, ownership or control of the Borrower or any other Pledgor (including any of the foregoing arising from any merger, consolidation, amalgamation, reorganization or similar transaction), or (vii) the release or substitution of any Pledgor or any other guarantor of the Obligations. Without limiting the generality of the foregoing or any other provision hereof (including, without limitation, Section 13.6 and Section 13.12), to the extent permitted by Applicable Law, each Pledgor hereby expressly waives any and all benefits which might otherwise be available to it under California Civil Code Sections 2799, 2809, 2810, 2815, 2819, 2820, 2821, 2822, 2838, 2839, 2845, 2848, 2849, 2850, 2899 and 3433 or similar applicable law.

(b) Each Pledgor further agrees that the pledge herein is a continuing pledge, shall secure the Obligations and any ultimate balance thereof, notwithstanding that Borrower or any other Persons may from time to time satisfy the Obligations in whole or in part and thereafter incur further Obligations, and waives any right to require that any resort be had by the Administrative Agent or any Lender to any security held for payment of the Obligations or to any balance of any deposit, account or credit on the books of the Administrative Agent or any Lender in favor of Borrower or any Pledgor, or to any other Person.

(c) Each Pledgor’s obligations under the this Section IX shall not be affected by the genuineness, validity, regularity or enforceability of the Obligations or any other instrument evidencing any Obligations, or by the existence, validity, enforceability, perfection, or extent of any collateral therefor or by any other circumstance relating to the Obligations which might otherwise constitute a defense to the pledge in this Section IX. The Administrative Agent and the Lenders make no representation or warranty with respect to any such circumstances and have no duty or responsibility whatsoever to any Pledgor with respect to the management and maintenance of the Obligations or any collateral security for the Obligations.

(d) The obligations of each Pledgor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (except payment and performance in full of the Obligations), including, without limitation, any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or set-off, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Pledgor hereunder shall not be discharged or impaired or otherwise affected by the failure of the Administrative Agent or any Lender to assert any claim or demand or to enforce any remedy under this Agreement or any other agreement, by any waiver or modification of any provision hereof or thereof, by any default, failure or delay, willful or otherwise, in the performance of the Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of such Pledgor or would otherwise operate as a discharge of such Pledgor as a matter of law, unless and until the Obligations are indefeasibly paid and performed in full and the commitments to lend herein have terminated.

Section X

GENERAL

10.1 Notices .

(a) Notices Generally . Subject to Section 10.1(c) , all notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by facsimile or .pdf), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made (a) when delivered by hand, (b) when transmitted via facsimile to the number set out herein, (c) when delivered by electronic mail, when delivered, or (d) the second Business Day following the day on which the same has been delivered prepaid to a reputable national express air courier service, addressed as follows in the case of the Borrower and the Lenders, or to such other address as may be hereafter notified by the respective parties hereto:

If to the Borrower:	Golden Queen Mining Company, LLC
	P.O. Box 1030
	Mojave, CA 93502
	Attention:	Robert C. Walish, President & CEO
	Email:	rwalish@goldenqueen.com

with a copy to:	Dorsey & Whitney LLP
	1400 Wewatta Street, Suite 400
	Denver, CO 80202-5549
	Attention:	Kenneth G. Sam
	Email:	Sam.kenneth@dorsey.com
	Facsimile:	(303) 629-3450

If to Auvergne:	c/o East Hill Management Company
	70 Main Street
	Suite 300
	Petersborough, NH 03458
	Email:	thomas.clay@easthillmgt.com
	Facsimile:	(603) 371-9034

with a copy to:	Sullivan & Worcester LLP
	One Post Office Square
	Boston, MA 02109
	Attention:	William A. Levine, Esq.
	Facsimile:	(617) 338-2880
	E-mail:	wlevine@sandw.com

If to LUK Holdco or Gauss Pledgor:	c/o Jeffries Financial Group
	520 Madison Avenue
	New York, NY 10022
	Attention:	H. Jimmy Hallac
	Facsimile:	212-598-4869
	Email:	jhallac@leucadia.com

With a copy to:	Mike Sharp	msharp@jefferies.com

If to GQM Holdings Pledgor:	Golden Queen Mining Co. Ltd.
	2300-1066 West Hastings Street
	Vancouver, British Columbia, Canada V6E3X2
	Attention:	Guy Lebel (Chief Financial Officer)
	Email:	glebel@goldenqueen.com

With a copies to:	Dorsey & Whitney LLP
	1400 Wewatta Street, Suite 400
	Denver, CO 80202-5549
	Attention:	Kenneth G. Sam
	Email:	Sam.kenneth@dorsey.com
	Facsimile:	(303) 629-3450

and	Morton Law LLP
	1200 – 750 West Pender Street
	Vancouver, British Columbia, Canada, V6C 2T8
	Attention:	Edward L. Mayerhofer, Esq.
	Email:	elm@mortanlaw.com
	Facsimile:	(604) 681-9652

(b) Reliance by the Lenders . The Lenders shall be entitled to rely and act upon any notices purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify each Lender from all losses, costs, expenses and liabilities resulting from the reliance by a Lender on each notice purportedly given by or on behalf of the Borrower, provided that such indemnity shall not be available to the extent that such losses, costs, expenses and liabilities have been determined in a final non-appealable judgment of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Lender.

(c) Telephone, Facsimile and E-mail Notices . Each Lender is authorized to rely on and to act on any telephone, any facsimile-transmitted, or any e-mail transmitted instructions concerning the transactions contemplated by the Agreement which a Lender believes without any need to inquire or investigate as to, or verify, the genuineness or authenticity of the instructions, to be from the Borrower, and no Lender shall be liable to the Borrower or any third party for so acting or refraining from acting, except in the case of gross negligence or willful misconduct of such Lender. No Lender shall further be under any duty to make any inquiry or investigation with respect to, or verification of, the telephone, facsimile-transmitted or e-mail transmitted instructions, except to confirm that its records show that the person purporting to be issuing the instructions on behalf of the Borrower has authority to do so. No Lender shall be under any duty or obligation to accept any telephone, facsimile, or e-mail instructions from the Borrower, and each Lender may refuse to accept any such instructions in its sole and absolute discretion. The Borrower shall at all times indemnify, defend and hold each Lender, and its officers, directors, employees, attorneys, agents, and Affiliates, harmless from all actions or claims arising in connection with any action or failure to act with respect to telephone, facsimile-transmitted, or e-mail transmitted instructions, except in the case of gross negligence or willful misconduct of such Persons.

10.2 Successors and Assigns . The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder or the other Loan Documents without the prior written consent of the Lenders. Each Lender may at any time assign all or a portion of its rights and obligations under this Agreement only to an U.S. Affiliate of such Lender. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby) any legal or equitable right, remedy or claim under or by reason of this Agreement.

10.3 Expenses . Whether or not the transactions contemplated herein shall be consummated, the Borrower shall reimburse the Lenders for all reasonable out-of-pocket fees, disbursements, expenses (including all reasonable attorneys’ fees) incurred or expended in connection with the preparation, negotiation, filing or recording and interpretation of this Agreement and the other Loan Documents, or any amendment, modification, approval, consent or waiver hereof or thereof, or in connection with the enforcement of any Obligations or the satisfaction of any Indebtedness of the Borrower hereunder or thereunder, or in connection with any litigation, proceeding or dispute in any way related to the credit hereunder; provided that all of the foregoing incurred in connection with this Agreement and the transactions contemplated by Section III hereof shall not exceed $50,000 without mutual consent.

10.4 Indemnification . The Borrower agrees to indemnify and hold harmless each Lender, as well as its shareholders, directors, offices, agents, attorneys, subsidiaries and Affiliates, from and against all damages, losses, settlement payments, obligations, liabilities, claims, suits, penalties, assessments, citations, directives, demands, judgments, actions or causes of action, whether statutorily created or under the common law, all reasonable out-of-pocket costs and expenses (including, without limitation, reasonable fees and disbursements of attorneys, engineers and consultants) and all other liabilities whatsoever (including, without limitation, liabilities under Environmental Laws) which shall at any time or times be incurred, suffered, sustained or required to be paid by any such indemnified Person (except any of the foregoing which result from the gross negligence or willful misconduct of the indemnified Person) on account of or in relation to or any way in connection with any of the arrangements or transactions contemplated by, associated with or ancillary to this Agreement, the other Loan Documents or any other documents executed or delivered in connection herewith or therewith, all as the same may be amended from time to time, whether or not all or part of the transactions contemplated by, associated with or ancillary to this Agreement, any of the Loan Documents or any such other documents are ultimately consummated. In any investigation, proceeding or litigation, or the preparation therefor, each Lender shall select its own counsel and, in addition to the foregoing indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses of such counsel. In the event of the commencement of any such proceeding or litigation, the Borrower shall be entitled to participate in such proceeding or litigation with counsel of its choice at its own expense, provided that such counsel shall be reasonably satisfactory to each Lender. The Borrower authorizes each Lender to charge any deposit account or Note Record which it may maintain with any of them for any of the foregoing. The covenants of this Section 10.4 shall survive payment or satisfaction of payment of all amounts owing with respect to the Notes, any other Loan Document or any other Obligation.

10.5 Survival of Covenants, Etc . All covenants, agreements, representations and warranties made herein, in the other Loan Documents or in any documents or other papers delivered by or on behalf of the Borrower pursuant hereto shall be deemed to have been relied upon by the Lenders, notwithstanding any investigation heretofore or hereafter made by it, and shall survive the making by the Lenders of the Loans as herein contemplated, and shall continue in full force and effect so long as any Obligation remains outstanding and unpaid or a Lender has any obligations hereunder. All statements contained in any certificate or other writing delivered by or on behalf of the Borrower pursuant hereto or in connection with the transactions contemplated hereby shall constitute representations and warranties by the Borrower hereunder.

10.6 No Waivers . No failure or delay by a Lender in exercising any right, power or privilege hereunder, under the Notes or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. No waiver shall extend to or affect any Obligation not expressly waived or impair any right consequent thereon. No course of dealing or omission on the part of a Lender in exercising any right shall operate as a waiver thereof or otherwise be prejudicial thereto. No notice to or demand upon the Borrower shall entitle the Borrower to other or further notice or demand in similar or other circumstances, except as otherwise specifically provided in the Loan Documents. The rights and remedies herein and in the Notes and the other Loan Documents are cumulative and not exclusive of any rights or remedies otherwise provided by agreement or law.

10.7 Amendments, Waivers, etc .

(a) Neither this Agreement nor the Notes nor any other Loan Document nor any provision hereof or thereof may be amended, waived, discharged or terminated except by a written instrument signed by each Lender, and, in the case of amendments, by the Borrower.

(b) Any action to be taken (including the giving of notice) by the Lenders may be taken, and any consent or approval required or permitted by this Agreement or any other Loan Document to be given by the Lenders may be given, and any term of this Agreement, any other Loan Document or any other instrument, document or agreement related to this Agreement or the other Loan Documents or mentioned therein may be amended, and the performance or observance by the Borrower or any other Person of any of the terms thereof and any Default or Event of Default (as defined in any of the above-referenced documents or instruments) may be waived (either generally or in a particular instance and either retroactively or prospectively), in each case only with the written consent of both Lenders.

10.8 Lost Note, Etc . Upon receipt of an affidavit of a Lender as to the loss, theft, destruction or mutilation of a Note and, in the case of any such loss, theft, destruction or mutilation, upon cancellation of a Note, if available, the Borrower will issue, in lieu thereof, a replacement Note in the same principal amount thereof and otherwise of like tenor.

10.9 Captions; Counterparts . The captions in this Agreement are for convenience of reference only and shall not define or limit the provisions hereof. This Agreement and any amendment hereof may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original, but all of which together shall constitute one instrument. In proving this Agreement it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought. This Agreement shall become effective when it shall have been executed by the Lenders and when the Lenders shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.

10.10 Entire Agreement, Etc . The Loan Documents and any other documents executed in connection herewith or therewith express the entire understanding of the parties with respect to the transactions contemplated hereby and supersede all prior agreements with respect to the subject matter hereof.

10.11 Waiver of Jury Trial . THE BORROWER AND EACH LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THEIR RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF A LENDER RELATING TO THE ADMINISTRATION OR ENFORCEMENT OF THE LOANS AND THE LOAN DOCUMENTS, AND AGREE THAT THEY WILL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.

EXCEPT AS PROHIBITED BY LAW, THE BORROWER AND EACH LENDER HEREBY WAIVE ANY RIGHT THEY MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.

THE BORROWER (a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF A LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT ANY LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (b) ACKNOWLEDGES THAT EACH LENDER HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH EACH IS A PARTY BECAUSE OF, AMONG OTHER THINGS, THE BORROWER’S WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.

10.12 Governing Law . This Agreement and each of the other Loan Documents are contracts under the laws of the State of New York and shall for all purposes be construed in accordance with and governed by the laws of said State without reference to its conflict or choice of laws principles (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law, which shall apply to this Agreement).

10.13 Jurisdiction; Consent to Service of Process . (a) The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court for the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final, non-appealed judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Borrower or the Lenders may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any other party hereto or their properties in the courts of any jurisdiction.

(b) The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (a) of this Section 10.13 . Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.1 . Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

10.14 Severability . The provisions of this Agreement are severable and if any one clause or provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction, and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Agreement in any jurisdiction.

10.15 Administrative Agent .

(a) Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Loan Documents, and, subject to the express limitations contained herein, each such Lender irrevocably authorizes the Administrative Agent, in such capacity, to take or refrain from taking such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise or refrain from exercising such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto, including, without limitation. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent.

(b) The Administrative Agent shall not exercise any discretion or take any action unless it has received written instructions from both Lenders. The Administrative Agent shall be fully protected in acting pursuant to any such instruction and from refraining to act in the absence of any such instruction. The Administrative Agent shall not be required to take any action that (i) the Administrative Agent in good faith believes exposes it to liability unless the Administrative Agent receives an indemnification satisfactory to it from the Lenders with respect to such action or (ii) is contrary to this Agreement or any other Loan Document or applicable law, including any action that may be in violation of the automatic stay under any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors; provided , further, that the Administrative Agent may seek clarification or direction from the Lenders prior to the exercise of any such instructed action and may refrain from acting until such clarification or direction has been provided. Except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower, any Subsidiary or any Affiliate of any of the foregoing that is communicated to or obtained by the Person serving as Administrative Agent or any of its Affiliates in any capacity. Nothing in this Agreement shall require the Administrative Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

(c) In performing its functions and duties hereunder and under the other Loan Documents, the Administrative Agent is acting solely on behalf of the Lenders, and its duties are entirely mechanical and administrative in nature.

(d) The Lenders agree to indemnify the Agent and any of its Affiliates and their respective officers, directors, employees, agents, attorneys and advisers (each, an “Agent Indemnitee”) (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective outstanding principal balances of Loans in effect on the date on which indemnification is sought under this Section (or, if indemnification is sought after the date upon which the Loans shall have been paid in full, ratably in accordance with such principal balances immediately prior to such date of repayment), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, arbitrations, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against such Agent Indemnitee in any way relating to or arising out of, the Loans, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent Indemnitee under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, arbitrations, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent Indemnitee’s gross negligence or willful misconduct. The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

(e) The Administrative Agent and its affiliates may make loans to, make equity investments in, hold warrants from, and generally engage in any kind of business with the Borrower or any Pledgor as though such Agent were not an Agent. With respect to its Loans made or renewed by it, the Administrative Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include the Administrative Agent in its individual capacity.

(f) The Administrative Agent may resign at any time by giving fifteen (15) days’ prior written notice thereof to the Lenders and the Borrower, but (except as provided below), such resignation shall not become effective until acceptance by a successor agent of its appointment pursuant hereto. Upon any such resignation, the retiring Administrative Agent shall consult with the Borrower and promptly appoint a successor agent from among the Lenders; provided , that such replacement is reasonably acceptable (as evidenced in writing) to the Lenders and the Borrower; provided , however, that such approval by the Borrower shall not be required at any time when an Event of Default is continuing. If no successor agent shall have been so appointed by the retiring Administrative Agent and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent’s giving of notice of resignation, the Lenders may appoint a successor agent (which successor may be replaced by the Lenders). Whether or not a successor agent has been appointed, such resignation shall become effective in accordance with such notice on the date that is forty-five (45) days after the date of such notice. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor agent, such successor agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement, the other Loan Documents and any other credit documentation. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor agent or the effectiveness of any resignation notice without the appointment of a successor agent, the retiring Administrative Agent shall automatically be discharged from its duties and obligations under this Agreement, the other Loan Documents or any related agreement or document. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Section X shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Administrative Agent under this Agreement.

10.16 Press Releases, etc. Each Loan Party and each Pledgor will not, and will not permit any of its respective Affiliates, to publish any press release or other similar public disclosure or announcements (including any marketing materials) regarding this Agreement or the other Loan Documents without first providing a draft of any such press release or disclosure to the Administrative Agent for review and comment prior to publication thereof.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the undersigned have duly executed this Revolving Credit Agreement under seal as of the date first above written.

	BORROWER:

	GOLDEN QUEEN MINING COMPANY, LLC

	By:	/s/ Robert Walish
		Name: Robert Walish
		Title: President & CEO

[Signature page to Revolving Credit Agreement]

	GAUSS HOLDINGS LLC, as Administrative Agent and Lender

	By:	/s/ H. Jimmy Hallac
		Name: H. Jimmy Hallac
		Title: Vice President

	AUVERGNE, LLC, as Lender

	By:	/s/ Thomas M. Clay
		Name: Thomas M. Clay
		Title: Manager

[Signature page to Revolving Credit Agreement]

	PLEDGORS :

	GOLDEN QUEEN MINING HOLDINGS, INC.

	By:	/s/ Guy Lebel
		Name: Guy Lebel
		Title:

	GAUSS LLC

	By:	/s/ H. Jimmy Hallac
		Name: H. Jimmy Hallac
		Title: President

[Signature page to Revolving Credit Agreement]

Schedule 2.1(a)

Loan Allocation

Name of Lender	Percentage

LUK Holdco		50	%

Auvergne		50	%

Total:		100	%

Schedule 4.2

No Conflict

Nil

Schedule 4.3

Governmental Authorizations

Nil

Schedule 4.6

Litigation

Private Attorney General Act (PAGA) claim filed on behalf of Mr. Ricky Windham, a former employee. The claim was filed with the Los Angeles County and alleges wage and hour violations on the part of Golden Queen Mining Company LLC.

Schedule 4.7

No Defaults

Nil

Schedule 6.1(f)

Existing Indebtedness

See attached.

Schedule 6.2

Contingent Liabilities

See attached.

Schedule 6.3

Permitted Encumbrances

Liens securing the reclamation obligations listed on Schedule 6.2.

Schedule 9.1

Pledged Securities

Issuing

Entity

Parent

Entity

Authorized

Capitalization

Issued

Capitalization

Certificated

(Y/N)

Certificate

No. (if any)

Percentage

Ownership

Interest

Golden Queen Mining Company LLC

Golden Queen Mining Holdings Inc.

265,000 units

No.

N/A

Gauss LLC

[**]

Golden Queen Mining Company LLC

Limited Liability Company Membership interests

Limited Liability Company Membership Interests

No.

N/A

100

Exhibit 31.1

CERTIFICATION

PURSUANT TO RULE 13a-14(a) OR 15d-14(a)

OF THE U.S. SECURITIES EXCHANGE ACT OF 1934

I, Thomas M. Clay, certify that:

1.	I have reviewed this quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2018 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 this 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; and

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 functions):

	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 internal control over financial reporting.

Date: November 8, 2018	By:	/s/ Thomas M. Clay
		Thomas M. Clay
		Principal Executive Officer

Exhibit 31.2

CERTIFICATION

PURSUANT TO RULE 13a-14(a) OR 15d-14(a)

OF THE U.S. SECURITIES EXCHANGE ACT OF 1934

I, Guy Le Bel, certify that:

1.	I have reviewed this quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2018 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 this 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; and

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 functions):

	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 signi ficant role in the registrant’s internal control over financial reporting.

Date: November 8, 2018	By:	/s/ Guy Le Bel
		Guy Le Bel
		Principal Fin ancial Officer

EXHIBIT 32.1

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

AND RULE 13a-14(b) OR RULE 15d-14(b)

OF THE U.S. SECURITIES EXCHANGE ACT OF 1934

In connection with the Quarterly Report of Golden Queen Mining Co. Ltd. (the “ Company ”) on Form 10-Q for the fiscal quarter ended September 30, 2018 (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:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 8, 2018	/s/ Thomas M. Clay
	Thomas M. Clay
	Principal Executive Officer

EXHIBIT 32.2

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

AND RULE 13a-14(b) OR RULE 15d-14(b)

OF THE U.S. SECURITIES EXCHANGE ACT OF 1934

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 8, 2018	/s/ Guy Le Bel
	Guy Le Bel
	Principal Financ ial Officer

Exhibit 95.1

Mine Safety Disclosure

Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States, and that is subject to regulation by the Federal Mine Safety and Health Administration under the Mine Safety and Health Act of 1977 (“Mine Safety Act”), are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities.

The following table sets out the information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd Frank Wall Street Reform and Consumer Protection Act for the period July 1, 2018 through September 30, 2018 covered by this report:

Property

Section 104(a) S&S Citations ¹

(#)

Section 104b)

Orders ²

(#)

Section 104(d)

Citations and Orders ³

(#)

Section 110(b)(2) Violations ⁴

(#)

Section 107(a)

Orders ⁵

(#)

Total Dollar Value of MSHA Assessments Proposed ⁶

($)

Total Number of Mining Related Fatalities

(#)

Received Notice of Pattern of Violations or Potential Thereof Under Section 104(e) ⁷

(yes/no)

Legal Actions Pending As of Last Day of Period ⁸

(#)

Legal Actions Initiated During Period (#)

Legal Actions Resolved During Period (#)

Soledad Mountain

1.	Citations and Orders are issued under Section 104 of the Federal Mine Safety and Health Act of 1977 (30 U.S.C. 814) (the “Act”) for violations of the Act or any mandatory health or safety standard, rule, order or regulation promulgated under the Act. A Section 104(a) “Significant and Substantial” or “S&S” citation is considered more severe than a non-S&S citation and generally is issued in a situation where the conditions created by the violation do not cause imminent danger, but the violation is of such a nature as could significantly and substantially contribute to the cause and effect of a mine safety or health hazard. It should be noted that, for purposes of this table, S&S citations that are included in another column, such as Section 104(d) citations, are not also included as Section 104(a) S&S citations in this column.
2.	A Section 104(b) withdrawal order is issued if, upon a follow up inspection, an MSHA inspector finds that a violation has not been abated within the period of time as originally fixed in the violation and determines that the period of time for the abatement should not be extended. Under a withdrawal order, all persons, other than those required to abate the violation and certain others, are required to be withdrawn from and prohibited from entering the affected area of the mine until the inspector determines that the violation has been abated.
3.	A citation is issued under Section 104(d) where there is an S&S violation and the inspector finds the violation to be caused by an unwarrantable failure of the operator to comply with a mandatory health or safety standard. Unwarrantable failure is a special negligence finding that is made by an MSHA inspector and that focuses on the operator’s conduct. If during the same inspection or any subsequent inspection of the mine within 90 days after issuance of the citation, the MSHA inspector finds another violation caused by an unwarrantable failure of the operator to comply, a withdrawal order is issued, under which all persons, other than those required to abate the violation and certain others, are required to be withdrawn from and prohibited from entering the affected area until the inspector determines that the violation has been abated.

4.	A flagrant violation under Section 110(b)(2) is a violation that results from a reckless or repeated failure to make reasonable efforts to eliminate a known violation of a mandatory health or safety standard that substantially and proximately caused, or reasonable could have been expected to cause, death or serious bodily injury.
5.	An imminent danger order under Section 107(a) is issued when an MSHA inspector finds that an imminent danger exists in a mine. An imminent danger is the existence of any condition or practice which could reasonably be expected to cause death or serious physical harm before such condition or practice can be abated. Under an imminent danger order, all persons, other than those required to abate the condition or practice and certain others, are required to be withdrawn from and are prohibited from entering the affected area until the inspector determines that such imminent danger and the conditions or practices which caused the imminent danger no longer exist.
6.	These dollar amounts include the total amount of all proposed assessments from MSHA under the Act relating to any type of violation during the period, including proposed assessments for non-S&S citations that are not specifically identified in this exhibit, regardless of whether the Company has challenged or appealed the assessment.
7.	A Notice is given under Section 104(e) if an operator has a pattern of S&S violations. If upon any inspection of the mine within 90 days after issuance of the notice, or at any time after a withdrawal notice has been given under Section 104(e), an MSHA inspector finds another S&S violation, an order is issued, under which all persons, other than those required to abate the violation and certain others, are required to be withdrawn from and prohibited from entering the affected area until the inspector determines that the violation has been abated.
8.	There were no legal actions pending before the Federal Mine Safety and Health Review Commission as of the last day of the period covered by this report. In addition, there were no pending actions that are (a) contests of citations and orders referenced in Subpart B of 29 CFR Part 2700; (b) complaints for compensation referenced in subpart D of 29 CFR Part 2700; (c) complaints of discharge, discrimination or interference referenced in Subpart E of 29 CFR Part 2700; (d) applications for temporary relief referenced in Subpart F of 29 CFR Part 2700; or (e) appeals of judges’ decisions or orders to the Federal Mine Safety and Health Review Commission referenced in Subpart H of 29 CFR Part 2700.