Outlook

17 August 2011

Yukon-Nevada Gold
Year End 12/09 12/10 12/11e 12/12e Revenue (US$m) 9.9 71.4 217.0 199.9 PBT* (US$m) (41.4) (84.3) 131.2 55.7 EPS* (c) (12.2) (12.8) 14.1 6.0 DPS (c) 0.0 0.0 0.0 0.0 P/E (x) N/A N/A 3.4 8.0 Yield (%) N/A N/A N/A N/A

Price Market Cap

Share price graph

C$0.47 C$437m

Note: *PBT and EPS are normalised, excluding intangible amortisation and exceptional items. C$0.98/US$.

Investment summary: The golden asset

Yukon-Nevada Gold (YNG) currently produces gold at its Jerritt Canyon site in Nevada in the US, which it has sought to re-establish as a leading mid-tier Nevada gold producer since recommencing production in 2009. Based on its four-year mine plan being extended to 2018 and its Yukon Territory project, Ketza River, coming on line in 2013, we value the company at US$0.69/share.

Share details Codes and listings Sector Shares in issue Price 52 week

TSX: YNG Frankfurt: NG6 Mining 929.3m

Re-modelling historic data already reaps rewards

Employing the services of an experienced Nevada geologist has resulted in total NI 43-101 compliant resources at Jerritt Canyon increasing to 3.43Moz (vs 2.48Moz Au previously) and, more significantly, identified further open pit resources. This not only demonstrates the value of YNGs 14,000 proprietary historic drill hole database, but also how well endowed (though complex) the ore is, and shows the scope for further significant mineable gold discoveries at Jerritt Canyon.

High C$0.95

Low C$0.38

Balance Sheet as at 31 December 2010 Debt/Equity (%) 26.7 NAV per share (c) 11.6 Net debt ($m) 21.5 Business Yukon-Nevada Gold operates its Jerritt Canyon mine and processing plant in north Nevada, US. It also explores for gold and base metals in the Yukon Territory at its Ketza River project. Valuation 2010 P/E relative P/CF EV/Sales ROE N/A N/A 4.6 N/A 2011e 43% 4.8 1.2 34% 2012e 112% 5.5 1.3 14%

The roaster: One of only three permitted in Nevada

Most significant to YNGs ability to ramp up production at Jerritt Canyon is its outright ownership and operation of one of just three permitted roasters capable of processing the prolific amounts of refractory sulphide gold ore available in Nevada. YNGs roaster has a processing capacity of c 6,000tpd (or c 400koz Au per year at Jerritt Canyons grade of c 7.0g/t Au and 90% recovery), and the company estimates its replacement value is c US$1bn or US$1.08 per share.

Valuation: US$0.69 per share

We have valued the Jerritt Canyon property on managements current four-year mine plan (2011-14) extended to 2018 using Jerritts existing reserve base, with production from the Smith and SSX mines. We assume Starvation Canyon is online by H212. Ketza River is expected to enter production during H113. On the basis of these assumptions and the current Jerritt Canyon mine plan, we value YNGs assets at US$0.69 per share. While our forecasts are conservative compared with YNGs own targets, we believe they are valid pending further clarification of costs and production scheduling from both the underground and open pit operations.

Revenues by geography UK Europe N/A N/A

US N/A

Other 100%

Analysts Charles Gibson Tom Hayes

+44 (0)20 3077 5724 +44 (0)20 3077 5725

mining@edisoninvestmentresearch.co.uk

Yukon-Nevada Gold is a research client of Edison Investment Research Limited

2 | Edison Investment Research | Outlook | Yukon-Nevada Gold | 17 August 2011

Investment summary: Jerritt Canyon 30 years on and still potential for more
Yukon-Nevada Gold operates its main asset, the Jerritt Canyon mine site in north Nevada, US, through its wholly-owned subsidiary Queenstake Resources. The site has been in operation since 1981 and has produced over 7.7Moz gold from 13 open pits and seven underground operations. YNG bought the property in 2007 and operates two underground mines, Smith and SSX/Steer.

Valuation: NPV10 US$0.69c per share

Based on the current mine plan at Jerritt Canyon and the assumptions made above, and applying our long-term gold price of $1,350/oz, our dividend discount model yields a valuation for YukonNevadas assets of US$0.69 per share.

Jerritt Canyon undergoing extensive exploration in 2011

The current ore reserve estimates for Jerritt Canyon indicate sufficient gold for a further four years of mine production. However, little of the historic drilling penetrated to depth or was undertaken in the south of the project area, and throughout 2011 YNG is undertaking an aggressive $10m, c 10,000m drill campaign to delineate at least a further four years of reserves in 2011. Having visited the site in 2010 and understanding the complexity of the ground, we believe Yukon-Nevada should be able to extend the life of mine beyond its current four-year limit (based on current reserves).

Sensitivities: Maintaining environmental compliancy

The Nevada Department of Environmental Protection issued the Consent Decree in October 2009, after the successful completion of mercury emission testing of the Jerritt Canyon processing plant stacks. The Calomel mercury scrubbing system installed now achieves mercury emissions 90% below the maximum allowed threshold set by the state. These very low emission levels have been maintained since the mill was re-started in October 2009. Further investment in the mill is taking place to install instrumentation to monitor key operating parameters and automated emission control and operating systems.

Financials
On 31 May 2011 Yukon-Nevada announced the closing of a private placement and warrant exercise for total gross proceeds of US$59.3m. This comprised US$14.4m from issuing 33,488,372 units at a price of US$0.43 per unit to Deutsche Bank AG (London branch). The remaining US$44.9m comprised 140,400,000 warrants held by Orifer (a shareholder) transferred to Deutsche Bank and other institutional investors, who immediately exercised the warrants. On 3 August YNG also announced a forward gold purchase agreement with Deutsche Bank whereby c 173koz Au will be delivered to by YNG to Deutsche over 48 months for the prepaid amount of US$120m (see page 10). These funds allow the company to complete an extensive programme of capital expenditure, which will include a planned one-month shutdown of the mill in September 2011. This will allow Yukon-Nevada to modernise and restore the mill, which is critical to the company achieving its production targets.

3 | Edison Investment Research | Outlook | Yukon-Nevada Gold | 17 August 2011

Company description: The golden assets

Jerritt Canyon is a longstanding gold project that has experienced significant mining in the past, under the ownership of Anglo American, Freeport and Minorco. Yukon-Nevada intends to inject new life into the project by fully using its mill and roaster. It also intends to redevelop its other prospective project, Ketza River, in Canadas Yukon Territory. Due to the existing site infrastructure at both of its main projects, increasing gold production will require lower levels of initial capital expenditure.

Reinvigorating a historic Nevada goldfield

With all the permitting and environmental woes of the recent past now behind it, Yukon-Nevada intends to turnaround a run of operating losses to an operating profit by 2011. The companys strategy is fourfold, as shown in Exhibit 1. Exhibit 1: Yukon-Nevadas four-stage business strategy
Note: completed, underway/ongoing, to be completed.
Phase 1 Phase 2 Obtain Consent Decree, achieving compliance with the NDEP Re-start production using low-grade stockpiles and contract underground mining at Smith mine Re-capitalise (complete via exercise of warrants and forward gold purchase agreement with Deutsche Bank). Refurbish and winterise production facilities (underway) Re-start underground mining at SSX and Steer projects Complete Consent Decree obligations Construct new tailings facility Re-start open pit mining (concentrating on re-modelled ore extensions of existing pits) Start new open pits (following positive results of southern exploration targets) Acquisition of properties able of producing refractory sulfide concentrates for shipment to Jerritt Re-open wet milling (oxide) process circuits Acquire oxide gold resources/properties to feed wet mill circuit S tatus Obtained Oct 2009 Recommenced Oct 2009 US$59.3m (warrants) & US$120m (Deutsche) Ongoing Due Q311 Ongoing Due 2012 Due mid-2012 Potentially from 2013 Potentially 2013-15 Potentially 2013-15 Potentially 2013-15

Phase 3 Phase 4

Source: Edison Investment Research, Yukon-Nevada Gold

New management in place

To achieve all of its milestones and become a mid-tier producer in two to three years, Yukon-Nevada has sought to strengthen its management team. Since the appointment of Robert Baldock as CEO and president in May 2009, a number of key milestones have been reached. Mr Baldock has 30 years experience in restructuring and refurbishing distressed mine assets. Supporting staff have a breadth of knowledge of dealing with processing plants, and include mine engineers and geologists who understand the local geology and who have worked in the project area before. Further YNG has hired Randy Reichert as new COO. Mr Reichert has 23 years experience from his international work at various operating mines and process facilities. Most recently Mr Reichert was president and COO for Colossus Minerals Inc, responsible for the development of the Serra Pelada project in Brazil. Prior to this he was COO of Oriel Resources plc and Orsu Metals Corp and has held numerous managerial positions at Russian gold mines.

Operations before 2003 an indication of future potential

To appreciate the potential of a longstanding project, especially one that has suffered performance issues, it is prudent to examine where the project has come from. Exhibit 2 shows the past eight years production dropping from 2003 the year previous custodians Anglo American left Jerritt Canyon and Queenstake Resources took over. The drop in production after 2003 reflects the lack

4 | Edison Investment Research | Outlook | Yukon-Nevada Gold | 17 August 2011

of sustaining capital employed by Queenstake until 2007, when Yukon-Nevada took control. A steady accumulation in creditors and payables to approximately $39m most likely contributed not only to the suspension of underground mining in August 2008, but also to a stop work order by the Nevada Division of Environmental Protection (NDEP) being imposed in May 2009, due to excessive amounts of mercury being emitted from the mill. Further complications arose from the then mining contractor incorrectly reporting the amount of stockpiled ore (a shortfall of c 90,000 tonnes) and the amount of gold in the processing circuit at the time of the May 2009 shutdown. Exhibit 2: Jerritt Canyon historic (light blue) and forecast production (dark blue)
400,000 300,000

Oz

200,000 100,000 0

198 7

198 9

1991

1995

1993

1997

1999

2001

2010

2012

2003

2006

2008

2014

2016
Tota l kt 16,18 2

Gold production

Average gold production (1987-2003)

Forecas t gold production (2011-2018)

Source: Infomine, Edison Investment Research

Lack of ore not a key factor in production decline

The operational issues faced by the company do not indicate that a lack of ore was the primary reason for a steady decrease in production figures from 2004 onwards; instead, a lack of investment in exploration activities between 2003 and 2007 only exacerbated the decline in production by not replacing depleted ore reserves. This is of particular importance to Jerritt Canyon, where the gold is hosted within relatively high grade but small, discrete pods, with their location governed by the structural complexity of the ground.

Back in steady state production

With a new CEO and an experienced technical management team, Jerritt Canyon re-entered production following an agreement with the NDEP in October 2009 to lift the stop work order. The mills refurbishment during its scheduled annual shutdown in May 2010 resulted in mercury and sulphide dioxide emission figures 90% below the allowed threshold, a level the mill has maintained since the May re-start. Ongoing re-investment is underway to install better monitoring equipment for key parameters in the processing circuit.

Jerritt Canyon
The following exhibits detail Yukon-Nevadas current resources and reserves at Jerritt Canyon.

Jerritt Canyon resources

Exhibit 3: Yukon-Nevadas Jerritt Canyon resources (as of 1 January 2011)
Mea s ur ed kt 4,602 g/t 7.3 koz 1,08 0 kt 7,090 I ndica t ed g/t 6.41 koz 1,461 kt 4,490 I nfer r ed g/t 6.16 koz 8 91 koz 3,432

Source: Yukon-Nevada Gold NI43-101 Technical Report

2018

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Exhibit 4: Jerritt Canyon reserves (as of 1 January 2011)

Prove n D e pos it/Mine Smith SSX/Steer Saval Starvation Wright Window S ub tota l Stockpiles Tota l 1406 .1 0.19 3 271.0 1406 .1 0.19 3 271.0 k t ( s hort) 713.1 548 .3 19.7 125 oz/s t 0.18 3 0.18 8 0.229 0.262 k oz 130.6 103.1 4.5 32.8 k t ( s hort) 918 .6 667.1 149.3 237.9 8 4.5 2057.4 902.2 29 59 .6 Proba ble oz/s t 0.163 0.18 9 0.207 0.265 0.127 0.18 5 0.073 0.151 k oz 149.4 126.1 31 63 10.7 3 8 0.2 65.9 446 .1 Prove n a nd proba ble k t ( s hort) 1631.7 1215.4 169.0 363.0 8 4.5 3 46 3 .6 902.2 43 6 5.8 oz/s t 0.172 0.18 9 0.21 0.264 0.127 0.18 8 0.073 0.16 4 k oz 279.9 229.2 35.4 95.8 10.7 6 51.0 65.9 716 .9

Source: Yukon-Nevada Gold NI43-101 Technical Report

Jerritt Canyon reserves

The company has upgraded specific resources amenable to mining into reserves and applied a revised gold price of US$1,100/oz to its resource estimation process. In doing so, the cut-off grade has dropped, resulting in a greater proportion of the gold mineralisation being captured in the economic model and therefore increasing ounces. It should be noted that, historically, the conversion of resources to reserves is greater than 100% at Jerritt Canyon, demonstrating the irregular shape and diffuse mineralisation of each ore body. Typical resources to reserve conversions for other gold mines are in the region of 50-70%.

A four-year rolling reserve

Exploration at Jerritt Canyon will concentrate on delineating new gold resources and reserves to replenish depleted stocks. Yukon-Nevada currently has a four-year life of mine plan at Jerritt Canyon. While a greater reserve base is more favourable and will reassure the investor, such complex and podiform gold deposits rarely allow for mine reserves to be delineated more than three to four years ahead of actual mining, due to the irregular nature of ore distribution and the amount of drilling required to produce NI 43-101 compliant resource estimates. To accommodate this, Yukon-Nevada has employed a policy of continual production drilling to define further pods of ore. This is accomplished using the companys underground reverse circulation drill rig, while contracting external drilling companies to identify resources at surface.

2011 exploration programme to double mine life

A $10m, 10,200m surface and underground drill programme is underway at the Jerritt Canyon site. This is to test mineralised areas that are either open along strike or at depth, as indicated from previous drilling, or prospective zones in proximity to previous mine workings. Such zones are related to intrusive dykes and fault intersections. With a very large historical drilling database at hand, and few surface holes penetrating 100m below surface, the company is confident that the 2011 drill programme will delineate further resources, in addition to the revised estimates given in Exhibit 4, equal to an additional four-year mine life.

Hard mining in Nevada

Mining through sedimentary horizons can be problematic due to their weak strength, which increases the cost of mining as greater amounts of ground support are required. The mining method used at the Smith mine, which will also be employed at SSX once commissioned, is that of underhand drift and fill. The process requires that all stoped-out areas are backfilled with concrete to maintain stability in the rock mass during mining.

6 | Edison Investment Research | Outlook | Yukon-Nevada Gold | 17 August 2011

Tried and trusted processing facility

Because mines along the Carlin Trend have become deeper, the ore has become more refractory. So, when considering gold mining ventures in Nevada, the amount of available processing capacity is key. Also, processing plants capable of treating refractory ores create harmful emissions that must be tightly controlled, so it can be very hard to get planning permission for these facilities in Nevada. However, Yukon-Nevada Gold has a fully operational, environmentally-compliant mill that can process both oxide and refractory ore types.

Ketza River and Yukon Territory projects

Ketza River: Old mine infrastructure still serviceable
The Ketza River project enjoyed a brief period of mining between July 1988 and November 1990, producing 100,030oz gold at an average head grade of 11.6g/t Au. It consists of a number of prospective zones, including the Manto, Peel, Hoodoo and Shamrock Zones. Ketza River consists of a mothballed milling facility with unused tailings dam capacity and is located 42km off the Campbell highway in the south-east of the Yukon Territory. The site also includes a mine camp, exploration camp, office buildings, workshop and water treatment works. We see the presence of this serviceable infrastructure as a key reason to assume Yukon-Nevada will re-develop the Ketza River mine site in the near term (see Valuation section on page 7).

Current drilling activities at Ketza River

At present, drilling is taking place across numerous manto (limestone replacement) and stock work targets at the Ketza River project, which comprises 506 mining claims. Recent drilling reported gold grades from 1.42g/t over 2.13m to 84.50g/t over 3.05m and 32.98g/t over 9.14m. Yukon-Nevada is required, as a condition of its exploration permit, to spend $5m in 2011; this is being used to delineate further resources at known deposits within the Ketza River project.

Ketza River resources

Exhibit 5: Ketza River NI43-101 compliant resources
Note: Totals may not add up due to rounding.
D e pos it/Mine Me a s ure d kt Pit re s ourc e s ( 1 g/t c ut of f ) Subtotal Subtotal Tota l a ll s ourc e s 691 21 6.4 6.4 142 4 3,021 349 4.56 5.09 4.6 1 443 57 500 762 313 1076 2.65 4.74 3 .3 65 48 113 4474 68 4 5157 650 109 759 U /G re s ourc e s ( 3 g/t c ut of f ) g/t koz Indic a te d kt g/t koz Inf e rre d kt g/t koz Tota l a ll c a te gorie s kt koz

712 6 .40

147 3 3 70

Source: Edison Investment Research, Yukon-Nevada Gold, SRK Consulting 2008 NI43-101 Technical Report

Other exploration projects and joint ventures

JV with Northwest Non-Ferrous International Investment Company
Yukon-Nevada has formed a joint venture with Northwest Non-Ferrous International Investment Company Limited (NWI), a Chinese investment company, to carry out early-stage exploration for molybdenum, titanium, rare earth metals, aluminium, lead, zinc, gold, silver, uranium, copper and

7 | Edison Investment Research | Outlook | Yukon-Nevada Gold | 17 August 2011

vanadium. The JV has formed a new Canadian company, Yukon-Shaanxi Mining Company, through which Yukon-Nevada aims to strengthen early-stage exploration capabilities in Canada. The following exhibit lists Yukon-Nevadas other Yukon Territory exploration interests. Exhibit 6: Yukon exploration projects
Ownership YNG % Partner Exploration focus Silver Valley Property 100 Ag, Pb, Au Located 8km east of the Ketza River mine. Geochemical sampling in 1968 identified a number of soil anomalies, with follow-up work identifying the Key 18B vein, which assayed 55oz per tonne Ag and 49% Pb over a width of 2.4m. Two exploratory mine adits were driven in on the vein, 20m and 50m below surface. Underground sampling yielded further comparable results. A non-compliant inferred resource of 15kt at 17opt Ag and 12% Pb exists at the project. YNG has drilled further holes along one small portion of the strike and has undertaken ground and airborne geophysical surveys to identify further extensions of the vein system. Wolf Property 34.42 Atna Resources Zn, Pb, Ag The Wolf property consists of 36 mineral claims. Atna earned its interest by spending $1.5m between 1995-99. It is located in the Pelly Mountains near the YTT boundary. A non-JORC resource of 4.1Mt grading 6.2% Zn, 1.8% Pb and 84g/t Ag has been outlined on the Wolf Zone. Two additional satellite structures have been drilled and all deposits are open at depth and along strike. Money Property 100 Cu, Ag, Gold The project area covers 1,030 hectares and is located 5km east of the Wolverine deposit. The claims were drilled in 1996 with five holes totalling 682m. Mineralisation consists of massive sulphides hosted within mafic volcanic rocks. The best drill intersection was 1.0m grading 1.75% copper, 21g/t silver and 0.4g/t gold. The property is optioned by Yukon Zinc. Source: Edison Investment Research, Yukon-Nevada Gold

Assumptions, valuation and sensitivities

Our valuation assumes the Smith mine continues to produce until 2012 and the SSX mine comes into production in H211. However, it is reasonable to assume Yukon-Nevada will manage to replenish depleted reserves within the vicinity of existing mine infrastructure. This is consistent not only with Jerritt Canyons historic mining strategy (as used by Anglo American during its tenure), but also with other gold mines at which it is not economic nor practically feasible to delineate reserves beyond a three- to four-year mine plan due to the irregular nature of ore distribution. Therefore we have assumed that additional mineable reserves are delineated to maintain gold production of 150koz per year at Jerritt Canyon between 2015 (the end of the current official mine plan) and 2018. To further support this assumption, Yukon-Nevada employed an experienced Nevadan geologist to re-model certain mineral domains. As a result, further open-pit resources have been identified adjacent to the old pits, where previously they were thought to be nearly exhausted of ore. We see this as further proof that the geological complexity at Jerritt Canyon can (and has already) result in further ore resources being identified. Furthermore, a 150koz annual production rate should be seen as conservative in light of historic annual gold production figures (see Exhibit 2) of around 300koz gold.

Current Jerritt Canyon mine plan

The Smith mine will produce on average c 69koz per year from 2011 to 2013. As SSX comes on line in 2011, it will contribute on average c 82koz per year between 2011 and 2014. Assuming Starvation Canyon is permitted and fast-tracked through the initial waste development phase, we assume a start up to this Jerritt Canyon project in H212, producing an average of c 29koz gold per year for four years. We also forecast that c 584koz (or c 46% of YNGs current measured resources) are converted to reserves and mined such that production ramps up to 250koz Au per annum from 2014 to 2018. This represents our assumption that YNG brings online its openpittable resources as part of Phase 3 of its business strategy (Exhibit 1). The gold recovery factor used for all production figures is 89%. There was no production in 2008, with underground mining

8 | Edison Investment Research | Outlook | Yukon-Nevada Gold | 17 August 2011

recommencing at Smith in February 2009. A stockpile of 900,000 tonnes at a grade of 2.1g/t Au for around 62koz was accrued during this period. We forecast that this stockpile will be depleted by end 2012.

Ketza River production forecast and assumptions

Due to the existing site infrastructure, production history and recent positive drilling results demonstrating additional resource potential, we consider it appropriate to value the Ketza River project. We have used cost and production forecast data given in the January 2008 SRK Consulting NI 43-101 Ketza River Project Technical Report updated for recent company announcements. We assume a total of 552koz is recovered over eight years at an average rate of production of 69koz per year. The main assumptions per project are shown in Exhibit 7. Exhibit 7: Key production and capital expenditure assumptions per project
S mith Total ore tonnes mined Average gold grade Total ounces produced Existing mine life S S X/S teer/S aval Unit Value S tarvation Canyon Total ore tonnes mined Gold grade Total ounces produced Estimated mine life Exis ting s tock piles Total stockpiled ore tonnes Gold grade Total contained gold ounces Production from stockpiles ending Ketza R iver as s umptions Ketza River gold recovery factor Total ore tonnes Gold grade Total ounces produced Mining cost Processing cost Surface facilities Site administration % Mt g/t koz US$/t US$/t US$/t US$/t Unit Value Mt 1.05 g/t 6.84 koz 205 yr 2011-2013 Mt 0.57 g/t 8.40 koz 137 yr H212-2016

Total ore tonnes mined Mt 1.68 Gold grade g/t 6.97 Total ounces produced koz 328 Current mine life yr 2011-2014 J erritt Canyon mining, proces s ing and capex data Jerritt Canyon gold recovery factor Mining cost Cost of backfilling Processing cost Tailings dam capex SSX Initial capex Assumed Starvation Canyon initial capex Estimated average unit cost Smith and Starvation sustaining capital SSX/Steer/Saval sustaining capital % US$/t US$/t US$/t US$m US$m US$m US$/oz US$m US$m 89.0 37.5 7.2 27.6 32.0 4.2 12.0 817 4.8 1.8

Mt g/t koz yr

0.90 2.41 62 2012

77.0 3.7 6.0 552 2.8 12.0 5.0 3.0 25.0 5.0

Assumed initial capex US$m Assumed sustaining capex per annUS$m Estimated mine life

yr 2013-2020

Source: Edison Investment Research, Yukon-Nevada Gold

Valuation
Assuming Yukon-Nevada pays out all its spare cash in the form of dividends, we estimate the dividend stream to investors from 2011 to 2020 will be worth US$0.69 per share in current money terms (at a discount rate of 10% to reflect general equity risk). Of note is that dividends are depressed between 2011 and 2016 due to impact of the forward gold purchase agreement currently under negotiation with Deutsche Bank (see financials section on page 10 for further details); and also 2019 and 2020 as a result of our forecast for production at Jerritt Canyon finishing in 2018 and only Ketza River producing gold from then on, as shown in Exhibit 8. However, our valuation is unlikely to reflect the situation at Jerritt Canyon post 2018 and we await further information from the company to establish our production forecasts beyond this date.

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Exhibit 8: Edison estimate of base case EPS, fully diluted EPS and theoretical DPS, FY11-FY20
Note: DDF = Discounted dividend flow.

0.40

0.20

0.00

$0.8 0 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00

US$

2011

2012

2014

2015

2013

2016

2017

2018

EPS

Dil EPS

DPS

2019

DDF (RHS)

Source: Edison Investment Research

Sensitivities
Geological risk and reward
As with all mining ventures, the greatest unknown is hidden below the surface of the earth. Accurately drilling an ore body and reporting probable or proven reserves minimises the risk in mining and producing gold. The risk concerning the nature of the deposit geometry at Jerritt Canyon, which is sporadic and irregular in size and shape, is also the opportunity. With over 20 years of solid production history, many of which were never proceeded by more than three years of reserves, there is an indication that the licence area is a well developed gold system.

Maintaining environmental compliancy

The Consent Decree issued by the Nevada Department of Environmental Protection in October 2009 followed the successful completion of mercury emission testing of the Jerritt Canyon processing plant stacks. The installed Calomel mercury scrubbing system now achieves mercury emissions 90% below the maximum allowed threshold set by the state. These very low emission levels have been maintained since the mill was re-started in October.

Jerritt Canyon production targets

Yukon-Nevada has announced that it plans to achieve upwards of 350koz annual gold production at Jerritt Canyon based on the current mill and roaster permits, with additional capacity available to produce upwards of 400koz per year pending regulatory approval and securing sufficient ore feeds. The company will now have to follow-through on its plans to identify further gold resources and reserves by undertaking extensive exploration and resource definition drilling at Jerritt Canyon. The main sensitivities to Yukon-Nevadas valuation are presented in Exhibits 9, 10 and 11. Exhibit 9: Sensitivity to gold price
Gold US$/oz NPV (US$) 1,000 0.32 1,200 0.53 1 ,3 5 0 0 .6 9 1,500 0.8 6 1,700 1.09 1,900 1.32

Source: Edison Investment Research

2020

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Exhibit 10: Sensitivity to discount rate

Dis count rate NPV (US$) 5 0.8 9 7.5 0.78 10 0 .6 9 20 0.46 30 0.33 40 0.26

Source: Edison Investment Research Exhibit 11: Sensitivity to percentage change in unit costs (Jerritt Canyon and Ketza River)
Percentage change NPV (US$) (10) 0.78 (5) 0.74 0 0 .6 9 5 0.65 10 0.61 15 0.56

Source: Edison Investment Research

Financials
On 31 May 2011 Yukon-Nevada announced the closing of a private placement and warrant exercise for total gross proceeds of US$59.3m. This comprised US$14.4m from issuing 33,488,372 units at a price of US$0.43 per unit to Deutsche Bank AG (London branch). Each unit comprises one 24-month term warrant exercisable at US$0.55 per share. Further, 140,400,000 warrants held by Orifer (a shareholder) were transferred to Deutsche Bank and other institutional investors, who immediately exercised the warrants for proceeds of US$25.6m and US$19.33m respectively. These funds allow the company to complete an extensive programme of capital expenditure, which will include a planned one-month shutdown of the mill in September 2011. This will allow Yukon-Nevada to modernise and restore the mill, which has had no significant expenditures made on it since it was first commissioned in 1981, and is critical to the company achieving its stated production rates.

Forward gold purchase agreement with Deutsche Bank

On 3 August 2011 Yukon-Nevada announced it has entered into advanced negotiations with Deutsche Bank over the delivery of 173,380ozs of gold over a 48 month term, in return for an upfront pre-payment of US$120m (equivalent to YNG selling each ounce for US$690.13). Deutsche will receive in return scheduled monthly deliveries of gold at a base rate of US$850/oz for gross proceeds of US$147.37m or an equivalent 5.79% interest over the initial US$120m payment (exclusive of costs). Subsequent to the receipt of the US$120m, the remainder of the purchase price of the gold will be paid to YNGs wholly owned subsidiary, Queenstake Resources, upon completion of the monthly gold deliveries to Deutsche Bank and will be equal to the amount that the gold price exceeds US$850/oz and up to a maximum price of US$1,700/oz. For the purposes of our valuation we have used the current average LME gold price for 2011 (to 8 August) of US$1,475/oz to model the current financial year, and US$1,350/oz thereafter.

11 | Edison Investment Research | Outlook | Yukon-Nevada Gold | 17 August 2011

Exhibit 12: Financials

U S $ '000s Year end 31 December PR OFIT & LOS S R e ve nue Cost of Sales Gross Profit E B ITD A Ope ra ting Prof it ( be f ore a mort. a nd e xc e pt.) Intangible Amortisation Exceptionals Other Ope ra ting Prof it Net Interest Other finanical items Exceptionals Prof it B e f ore Ta x ( norm) Prof it B e f ore Ta x ( FR S 3 ) Tax Prof it Af te r Ta x ( norm) Prof it Af te r Ta x ( FR S 3 ) Average Number of Shares Outstanding (m) EPS - normalised (c) EPS - normalised and fully diluted (c) EPS - (IFRS) (c) Dividend per share (c) Gross Margin (%) EBITDA Margin (%) Operating Margin (before GW and except.) (%) B ALAN C E S H E E T Fixe d As s e ts Intangible Assets Tangible Assets Mineral Properties Restricted funds/other C urre nt As s e ts Stocks Debtors Cash Other C urre nt Lia bilitie s Creditors Short term borrowings Other Long Te rm Lia bilitie s Long term borrowings Derivatives Other long term liabilities N e t As s e ts C AS H FLOW Ope ra ting C a s h Flow Net Interest Tax Capex Acquisitions/disposals Financing Forward gold purchase repayment Dividends Equity portion of debt/derivatives/other Net Cash Flow Ope ning ne t de bt/( c a s h) HP finance leases initiated Other C los ing ne t de bt/( c a s h) 2008 IFR S 48 ,9 8 1 (58 ,742) (9,761) ( 29 ,08 3 ) ( 3 8 ,3 6 2) 0 (76,363) (1,056) ( 115,78 1) 3,968 (1,090) (4,532) ( 3 5,48 4) ( 117,43 5) 12,075 ( 23 ,409 ) ( 105,3 6 0) 18 5.1 (12.6) (12.6) (56.9) 0.0 N/A (59.4) (78 .3) 2009 IFR S 9 ,9 13 (26,049) (16,136) ( 3 2,712) ( 3 8 ,9 8 3 ) 0 (653) (78 8 ) ( 40,424) (255) (2,125) 0 ( 41,3 6 3 ) ( 42,8 04) 144 ( 41,219 ) ( 42,6 6 0) 339.0 (12.2) (12.2) (12.6) 0.0 (162.8 ) (330.0) (393.3) 2010 IFR S 71,3 70 (8 3,378 ) (12,008 ) ( 18 ,413 ) ( 23 ,8 41) 0 (1,625) (4,112) ( 29 ,578 ) 134 (60,58 4) (4,612) ( 8 4,29 1) ( 9 4,6 40) 1,545 ( 8 2,746 ) ( 9 3 ,09 5) 646.7 (12.8 ) (8 .6) (14.4) 0.0 (16.8 ) (25.8 ) (33.4) 2011e IFR S 217,03 4 (65,949) 151,08 5 144,26 2 13 6 ,754 0 0 (4,112) 13 2,6 42 (5,573) 0 0 13 1,18 1 127,06 9 0 13 1,18 1 127,06 9 929.3 14.1 10.6 13.7 0.0 69.6 66.5 63.0 2012e IFR S 19 9 ,8 8 5 (108 ,511) 91,374 71,9 01 6 1,29 3 0 0 (4,112) 57,18 1 (5,573) 0 0 55,720 51,6 08 0 55,720 51,6 08 929.3 6.0 4.5 5.6 0.0 45.7 36.0 30.7

170,6 04 0 93,8 50 47,347 29,407 29 ,03 2 24,019 2,171 1,106 1,736 ( 3 6 ,8 56 ) (36,8 56) 0 (8 ,257) ( 41,13 2) 0 0 (41,132) 121,6 48

179 ,8 8 2 0 8 9,270 60,526 30,08 6 15,559 9,930 4,549 18 5 8 95 ( 44,402) (44,402) 0 (4,8 38 ) ( 51,3 29 ) 0 0 (51,329) 9 9 ,710

18 9 ,6 27 0 8 8 ,625 67,926 33,076 28 ,18 5 21,28 0 4,505 2,400 0 ( 57,8 75) (48 ,949) (8 ,926) 0 ( 70,575) (15,030) 0 (55,545) 8 9 ,3 6 2

23 2,507 0 112,317 8 2,726 37,464 245,49 3 18 ,08 6 17,8 38 209,568 0 ( 10,9 28 ) (8 ,371) (2,557) (2,950) ( 8 2,203 ) (14,767) (9,012) (58 ,424) 3 8 4,8 6 9

26 8 ,3 9 9 0 148 ,209 8 2,726 37,464 23 7,6 21 16,657 16,429 204,535 0 ( 3 8 ,9 21) (36,364) (2,557) (27,446) ( 78 ,451) (8 ,136) (9,012) (61,303) 3 8 8 ,6 48

( 22,3 8 0) 3,968 0 (47,331) 4,48 0 22,415 0 (1,150) (39,998 ) ( 41,104) 0 0 ( 1,106 )

( 19 ,13 4) (255) 0 (6,434) 112 24,8 35 0 (45) (921) ( 1,106 ) 0 0 ( 18 5)

( 20,741) 134 0 (16,292) 340 17,005 0 (2,58 8 ) (22,142) ( 18 5) 0 401 21,556

9 3 ,473 (5,573) 0 (50,38 8 ) 0 179,238 (2,950) 0 0 213,8 00 21,556 0 0 ( 19 2,244)

8 1,117 (5,573) 0 (46,500) 0 0 (27,446) 0 0 1,599 ( 19 2,244) 0 0 ( 19 3 ,8 43 )

Source: Edison Investment Research, Yukon-Nevada Gold

12 | Edison Investment Research | Outlook | Yukon-Nevada Gold | 17 August 2011

Growth
15.0

Profitability
100% 80%

Balance sheet strength

200 150

Sensitivities evaluation Litigation/regulatory Pensions Currency Stock overhang Interest rates

EPS norm alised (c)

10.0 5.0 0.0 -5.0

Interest cover

60%

100 50 0 -50 -100 -150 -200

ROCE

40% 20% 0%

-10.0 -15.0

-20% -40%

2008

2009

2010

2011e

2012e

-60%

2008

2009

2010

2011e 2012e

2008

2009

2010

2011e

2012e

Oil/commodity prices

Growth metrics EPS CAGR 08-12e EPS CAGR 10-12e EBITDA CAGR 08-12e EBITDA CAGR 10-12e Sales CAGR 08-12e Sales CAGR 10-12e

% N/A N/A N/A N/A 42.1 67.4

Profitability metrics ROCE 11e Avg ROCE 08-12e ROE 11e Gross margin 11e Operating margin 11e Gr mgn / Op mgn 11e

% 90.1 4.8 34.1 69.6 63.0 1.1

Balance sheet metrics Gearing 11e Interest cover 11e CA/CL 11e Stock turn 11e Debtor days 11e Creditor days 11e N/A 24.5 22.5 30.4 30.0 9.1

Company details Address: 900-688 West Hastings St Vancouver, BC V6B 1P1 Canada Phone +1 604 688 9427 Fax +1 604 688 9426
www.yukon-nevadagold.com

Principal shareholders Orifer S.A. Sprott Asset Management LP Deutsche Bank Marland (Francois) A. R. Schmeidler & Co., Inc. Dickson (Graham C) Perennial Partners, L.L.C. Forthcoming announcements/catalysts Conference call April 2012 Date * 17 August 2011 Full year results

%
20.17 14.47 12.20 9.41 0.67 0.27 0.25

Management team CEO: Robert Baldock Robert Baldock is an experienced mining executive and a qualified and experienced accountant with over 30 years of hands-on management of public and private corporations across a wide range of industries, focusing on mining. Chairman: John Greenslade John Greenslade has been involved in the funding of numerous mining projects in Canada, the United States, Mexico and Peru, at all stages of exploration, development, construction and production. This has been in various capacities, including legal counsel, senior management, and as director of a TSE-listed company from October 1995 to July 1999 and as president and CEO of Baja Mining Corp. COO: Randy Reichert Mr Reichert has 23 years experience from his international work at various operating mines and process facilities. Most recently Mr Reichert was president and COO for Colossus Minerals Inc responsible for the development of the Serra Pelada project in Brazil. Prior to this he was COO of Oriel Resources plc and Orsu Metals Corp. Mr Reichert spent over five years in Russia with Bema Gold, and subsequently Kinross Gold Corporation.

Note: * = estimated

Companies named in this report Newmont Mining, Resolute Mining, Harmony Australia, Newcrest Mining, Rapallo Pty
EDISON INVESTMENT RESEARCH LIMITED Edison Investment Research is a leading international investment research company. It has won industry recognition, with awards both in the UK and internationally. The team of more than 75 includes over 40 analysts supported by a department of supervisory analysts, editors and assistants. Edison writes on more than 350 companies across every sector and works directly with corporates, fund managers, investment banks, brokers and other advisers. Edisons research is read by institutional investors, alternative funds and wealth managers in more than 100 countries. Edison, founded in 2003, has offices in London and Sydney and is authorised and regulated by the Financial Services Authority (www.fsa.gov.uk/register/firmBasicDetails.do?sid=181584). DISCLAIMER Copyright 2011 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Yukon-Nevada Gold and prepared and issued by Edison Investment Research Limited for publication in the United Kingdom. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison Investment Research Limited at the time of publication. The research in this document is intended for professional advisers in the United Kingdom for use in their roles as advisers. It is not intended for retail investors. This is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment. A marketing communication under FSA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison Investment Research Limited has a restrictive policy relating to personal dealing. Edison Investment Research Limited is authorised and regulated by the Financial Services Authority for the conduct of investment business. The company does not hold any positions in the securities mentioned in this report. However, its directors, officers, employees and contractors may have a position in any or related securities mentioned in this report. Edison Investment Research Limited or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. This communication is intended for professional clients as defined in the FSAs Conduct of Business rules (COBs 3.5).

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