UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended~~September 30, 2017~~March 31, 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. Yesx 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). Yesx No¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of ~~"large~~“large accelerated ~~filer", "accelerated filer", "smaller~~filer,” “accelerated filer,” “smaller reporting ~~company"~~company,” and “emerging growth company” in Rule 12b-2 of the Exchange ~~Act:~~Act.

Large accelerated filer¨

Accelerated ~~filer~~ ¨

~~Non-accelerated~~ filer ¨

Non-accelerated filer¨

Smaller reporting companyx

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

Check whether the registrant is a shell company, as defined in Rule 12b-2 of the Exchange Act. Yes¨ Nox

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:As ~~of November 14, 2017,~~at May 9, 2018, the registrant’s outstanding common stock consisted of ~~111,148,683 shares.~~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, 2017			December 31, 2016			March 31, 2018			December 31, 2017
Assets
Current assets:
Cash	$	4,683		$	13,301		$	18,230		$	2,937
Inventories (Note 5)		11,952			10,941
Prepaid expenses and other current assets		344			611			685			699
Inventories (Note 4)								9,928			9,028
Total current assets		16,979			24,853			28,843			12,664
Property, plant, equipment and mineral interests (Note 6)		141,194			134,550
Property, plant, equipment and mineral interests (Note 5)								141,641			141,848
Advance minimum royalties		304			303			304			304
Total Assets	$	158,477		$	159,706		$	170,788		$	154,816
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	5,960		$	4,265		$	5,894		$	6,984
Interest payable		651			296
Current portion of note payable (Note 9 (ii))		9,061			-
Current portion of loan payable (Note 16)		6,998			5,656
Derivative liability – Related party warrants (Note 10)		3,129			5,458
Derivative liability – Warrants (Note 10)		268			972
Credit facility (Note 12 (v))								-			3,000
Current portion of note payable (Note 12 (ii))								4,000			7,712
Current portion of loan payable (Note 6)								7,709			7,629
Derivative liability – Related party warrants (Note 7)								303			441
Total current liabilities		26,067			16,647			17,906			25,766
Note payable (Note 9 (ii))		20,096			26,347
Loan payable (Note 16)		9,398			9,494
Note payable (Note 12 (ii))								21,942			22,387
Loan payable (Note 6)								8,150			9,614
Asset retirement obligation (Note 8)		1,719			1,366			2,229			1,838
Deferred tax liability		12,922			12,922			8,197			8,197
Total liabilities		70,202			66,776			58,424			67,802
Temporary Equity
Redeemable portion of non-controlling interest (Note 9 (iv))		25,621			26,219
Redeemable portion of non-controlling interest (Note 12 (iv))								22,756			24,214
Shareholders’ Equity
Common shares, no par value, unlimited shares authorized (2016 - unlimited); 111,148,683 (2016 – 111,048,683) shares issued and outstanding (Note 7)		71,126			71,067
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		43,785			43,652			43,898			43,853
Deficit accumulated		(90,687	)		(87,335	)		(93,917	)		(88,500	)
Total shareholders’ equity attributable to GQM Ltd.		24,224			27,384			45,475			26,479
Non-controlling interest (Note 9 (iv))		38,430			39,327
Non-controlling interest (Note 12 (iv))								44,133			36,321
Total Shareholders’ Equity		62,654			66,711			89,608			62,800
Total Liabilities, Temporary Equity and Shareholders’ Equity	$	158,477		$	159,706		$	170,788		$	154,816

~~Ability to Continue as a~~

Going Concern (Note 2)

Commitments and Contingencies (Note ~~12)~~

~~Subsequent Events (Note 17)~~13)

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

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GOLDEN QUEEN MINING CO. LTD.

Condensed Consolidated Interim Statements of Income (Loss) and Comprehensive Income (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,
2017 2016 2017 2016
Revenues
Metal Sales $ 16,496 $ 13,451 $ 48,182 $ 16,915

Cost of Sales
Direct mining costs (15,404 ) (9,111 ) (40,333 ) (12,674 )
Depreciation and depletion (Note 6) (2,931 ) (2,232 ) (8,429 ) (4,081 )
Income (loss) from mine operations (1,839 ) 2,108 (580 ) 160

General and administrative expenses (Note 14) (1,171 ) (657 ) (3,297 ) (3,167 )
Operating income (loss) (3,010 ) 1,451 (3,877 ) (3,007 )

Other income (expenses)
Gain (loss) on derivative instruments (Note 10) 1,139 3,944 3,033 (1,952 )
Interest expense (Note 9 (iii)) (1,295 ) (1,814 ) (3,592 ) (4,369 )
Interest income 14 33 77 116
Other expenses (72 ) (23 ) (488 ) (45 )
Total other income (expenses) (214 ) 2,140 (970 ) (6,250 )
Net and comprehensive income (loss) for the period $ (3,224 ) $ 3,591 $ (4,847 ) $ (9,257 )
Less: Net and comprehensive loss (income) attributable to the non-controlling interest for the period (Note 9 (iv)) 1,335 (853 ) 1,495 961
Net and comprehensive income (loss) attributable to Golden Queen Mining Co Ltd. for the period $ (1,889 ) $ 2,738 $ (3,352 ) $ (8,296 )
Income (loss) per share – basic (Note 15) $ (0.02 ) $ 0.03 $ (0.03 ) $ (0.08 )
Income (loss) per share – diluted (Note 15) $ (0.02 ) $ 0.03 $ (0.03 ) $ (0.08 )

Weighted average number of common shares outstanding - basic 111,148,683 108,026,944 111,137,694 102,657,767
Weighted average number of common shares outstanding - diluted 111,148,683 108,402,626 111,137,694 102,657,767

	Three Months Ended March 31,			Three Months Ended March 31,
	2018			2017
Revenues
Metal Sales	$	9,585		$	14,804

Cost of Sales
Direct mining costs		(13,016	)		(11,561	)
Depreciation and depletion (Note 5)		(2,976	)		(2,756	)
Accretion expense		(42	)		(30	)
Income (loss) from mine operations		(6,449	)		457

General and administrative expenses (Note 10)		(1,254	)		(1,416	)
Operating loss		(7,703	)		(959	)

Other income (expenses)
Gain (loss) on derivative instruments (Note 7)		138			(481	)
Finance expense (Notes 12 (iii) and 12 (v)))		(1,533	)		(1,047	)
Interest income		35			25
Other expenses		-			(354	)
Net and comprehensive loss for the period	$	(9,063	)		(2,816	)
Less: Net and comprehensive loss attributable to the non-controlling interest for the period (Note 12 (iv))		3,646			390
Net and comprehensive loss attributable to Golden Queen Mining Co Ltd. for the period	$	(5,417	)	$	(2,426	)
Loss per share – basic (Note 11)	$	(0.03	)	$	(0.02	)
Loss per share – diluted (Note 11)	$	(0.03	)	$	(0.02	)

Weighted average number of common shares outstanding - basic		188,829,263			111,080,008
Weighted average number of common shares outstanding - diluted		188,829,263			111,080,008

See Accompanying Notes to Condensed Consolidated Interim Financial Statements

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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)~~amounts)

	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				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, 2015		99,928,683	$	62,860	$	43,628	$	(79,906	)	$	26,582		$	40,686		$	67,268		$	27,124
Issuance of common shares, private placement net of share issuance cost (Note 4)		11,120,000		8,207		-		-			8,207			-			8,207			-
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		-		-		11		-			11			-			11			-				-		-		34		-			34			-			34			-
Net loss for the period		-		-		-		(8,296	)		(8,296	)		(577	)		(8,873	)		(384	)			-		-		-		(2,426	)		(2,426	)		(234	)		(2,660	)		(156	)
Balance, September 30, 2016		111,048,683	$	71,067	$	43,639	$	(88,202	)	$	26,504		$	40,109		$	66,613		$	26,740
Balance, March 31, 2017																						��		111,148,683	$	71,126	$	43,686	$	(89,761	)	$	25,051		$	39,093		$	64,144		$	26,064

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 7)		100,000		59		-		-			59			-			59			-
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, net of share issue costs (Note 9)																								188,952,761		24,368		-		-			24,368			-			24,368			-
Capital contribution from non-controlling interest																								-		-		-		-			-			10,000			10,000			-
Stock-based compensation		-		-		133		-			133			-			133			-				-		-		45		-			45			-			45			-
Net loss for the period		-		-		-		(3,352	)		(3,352	)		(897	)		(4,249	)		(599	)			-		-		-		(5,417	)		(5,417	)		(2,188	)		(7,605	)		(1,458	)
Balance, September 30, 2017		111,148,683	$	71,126	$	43,785	$	(90,687	)	$	24,224		$	38,430		$	62,654		$	25,621
Balance, March 31, 2018																								300,101,444	$	95,494	$	43,898	$	(93,917	)	$	45,475		$	44,133		$	89,608		$	22,756

See Accompanying Notes to Condensed Consolidated Interim Financial Statements

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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,			Three Months Ended March 31,			Three Months Ended March 31,
	2017			2016			2018			2017
Operating Activities
Net loss for the period	$	(4,847	)	$	(9,257	)
Net loss for the year							$	(9,063	)	$	(2,816	)
Adjustment to reconcile net loss to cash used in operating activities:
Depreciation and depletion		8,429			4,081			2,976			2,756
Amortization of debt discount and interest accrual		1,250			4,071			555			286
Accretion expense		93			45			42			30
Change in fair value of derivative liabilities (Note 10)		(3,033	)		1,952
Change in fair value of derivative liabilities (Note 7)								(138	)		481
Stock based compensation		133			11			45			34
Unrealized foreign exchange		(48	)		(273	)		(43	)		(5	)
Non-cash finder fees		59			-
Non-cash finder’s fee								-			59
Changes in non-cash working capital items:
Prepaid expenses & other current assets		267			154			14			(88	)
Inventory		(1,011	)		(7,326	)		(900	)		(873	)
Accounts payable & accrued liabilities		2,390			3,454			(1,595	)		2,301
Interest payable		1,915			(18	)		713			626
Cash generated from (used in) operating activities		5,597			(3,106	)		(7,394	)		2,791
Investment activities:
Investing activities:
Additions to property, plant, equipment and mineral interests		(9,566	)		(11,401	)		(2,071	)		(5,236	)
Release (purchase) of reclamation financial assurance deposit		-			902
Cash used in investing activities		(9,566	)		(10,499	)		(2,071	)		(5,236	)
Financing activity:
Issuance of common shares and warrants, net of share issue costs (Note 7)		-			10,909
Repayments of loan payable (Note 16)		(4,649	)		(3,736	)
Cash used in financing activities		(4,649	)		7,173
Financing activities:
Issuance of common shares, net of share issue costs (Note 9)								24,368			-
Repayment of credit facility								(3,000	)		-
Repayments of loan payable (Note 6)								(1,898	)		(1,405	)
Repayments of note payable and accrued interest								(4,712	)		-
Capital contribution from non-controlling interest								10,000			-
Cash generated from (used in) financing activities								24,758			(1,405	)
Net change in cash and cash equivalents		(8,618	)		(6.432	)		15,293			(3,850	)
Cash and cash equivalents, beginning balance		13,301			37,587			2,937			13,301
Cash and cash equivalents, ending balance	$	4,683		$	31,155		$	18,230		$	9,451

Supplementary Disclosures of Cash Flow Information ~~(Note 11)~~

	Three Months Ended March 31,		Three Months Ended March 31,
	2018		2017
Cash paid during the period for:
Interest on loan payable	$	235	$	135
Non-cash financing and investing activities:
Asset retirement costs charged to mineral property interests	$	349	$	87
Mining equipment acquired through issuance of debt	$	514	$	2,481
Mineral property expenditures included in accounts payable	$	165	$	1,524
Non-cash finders’ fee	$	-	$	59
Non-cash amortization of discount and interest expense	$	555	$	286
Interest payable converted to principal balance	$	-	$	296

See Accompanying Notes to Condensed Consolidated Interim Financial Statements

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GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~

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

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”).

~~Ability to Continue as a~~Basis of Presentation and Going Concern

The unaudited condensed consolidated interim financial statements of Golden Queen Mining Co Ltd. have been prepared using accounting principles generally accepted in the United States (“US GAAP”) applicable to a going concern.

~~The Company generated $6.0 million in cash from operating activities during the nine months ended September 30, 2017. The Company had a working capital deficit of $9.1 million at September 30, 2017.~~

The Company is required to pay the following to the Clay Group on the following dates: $5.4 million of accrued interest and principal on January 1, 2018; $3.1 million of interest and principal on April 1, 2018; $3.0 million of interest and principal on July 1, 2018; $3.0 million of interest and principal on and October 1, 2018. 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 nine months ended September 30, 2017 results and has determined it is unlikely it will receive sufficient distributions from GQM LLC during this fiscal year to service its debt in early 2018. This situation raises substantial doubt about the Company’s ability to continue as a going concern. Consequently, discussions with the Clay Group to restructure the reimbursement schedule have been initiated. While the Company has been successful in re-negotiating the debt reimbursement schedule with the Clay Group on previous occasions, there can be no assurance that will be achieved going forward.

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 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.

~~Basis of Presentation~~

~~The~~These unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US ~~GAAP.~~GAAP”). 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, ~~2016.~~

~~5 | Page~~

~~GOLDEN QUEEN MINING CO. LTD.~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~For the Three and Nine Months Ended September 30, 2017 and 2016~~

~~(amounts expressed in thousands of US dollars - Unaudited)~~2017.

~~Basis of Presentation (continued)~~

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, ~~2016.~~2017.

In the opinion of ~~management,~~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, 2017~~March 31, 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, ~~2017,~~2018, or future operating periods. For further information, see the Company’s annual consolidated financial statements, including the accounting policies and notes thereto.

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

These ~~unaudited condensed~~ consolidated ~~interim~~ financial statements include the accounts of Golden Queen, a limited liability Canadian corporation (Province of British Columbia), its wholly-owned subsidiary, GQM Holdings, a US (State of California) corporation, and GQM LLC, a limited liability company in which Golden Queen has a 50% interest, through GQM Canada’s ownership of GQM Holdings. GQM LLC meets the definition of a Variable Interest ~~Entity (“VIE”).~~Entity. Golden Queen has determined it is the member of the related party group that is most closely associated with GQM LLC and, as a result, is the primary beneficiary who consolidates GQM LLC.

The Company is required to pay the following to the Clay Group on the following dates: $1.7 million of interest and principal on April 1, 2017 (paid); $1.7 million of interest and principal on July 1, 2018; $1.7 million of interest and principal on and 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. Management believes the Company will meet its financial obligations for the 12 months period following the date of these financial statements. However, it is currently unlikely the Company can reimburse the final payment on May 21, 2019. 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 three months ended March 31, 2018 results 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, later in 2018, discussions with the Clay Group to restructure the reimbursement of the last debt payment will be initiated. 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.

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GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three Months Ended March 31, 2018 and 2017

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

4.2.

Basis of Presentation and Going Concern (continued)

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.

~~Recently Adopted~~New Accounting Pronouncements

~~(i)~~

In July 2015, ASU No. 2015-11 was issued related to the inventory, simplifying the subsequent measurement of inventories by replacing the lower of cost or market test with a lower of cost and net realizable value test. The update was effective in fiscal years, including interim periods beginning after December 15, 2016. The Company records inventory at the lower of cost or net realizable value and the adoption of this guidance effective January 1, 2017 had no impact on the consolidated financial statements.

~~(ii)~~

In March 2016, ASU No. 2016-09 was issued related to stock-based compensation. The new guidance simplifies the accounting for stock-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This update was effective for the Company’s fiscal year and interim periods beginning after December 15, 2016. The adoption of this guidance as of January 1, 2017 had no impact on the consolidated financial statements.

~~6 | Page~~

~~GOLDEN QUEEN MINING CO. LTD.~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~For the Three and Nine Months Ended September 30, 2017 and 2016~~

~~(amounts expressed in thousands of US dollars - Unaudited)~~

~~Summary of Accounting Policies and Estimates and Judgements (continued)~~

~~New Accounting Policies~~

(i)

In May 2014, ASU 2014-09 was issued related to revenue from contracts with customers. The ASU was further amended in August 2015, March 2016, April 2016, and May 2016 by ASU 2015-14, 2016-08, 2016-10 and 2016- 12. The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition.

In August 2015, the effective date was deferred to reporting periods, including interim periods, beginning after December 31, 2017, and will be applied retrospectively. Early adoption is not permitted.

We are currently assessing the impact of implementation of ASU No. 2014-09, however, management does not believe it will change the point of revenue recognition or amount of revenue recognized compared to how we recognize revenue under our current policies. Our revenues involve a relatively limited number of types of contracts and customers. In addition, our revenue contracts do not involve multiple types of performance obligations. Revenues from doré are recognized, and the transaction price is known, at the time the metals sold are delivered to the customer. We will finalize ourThe Company has completed its assessment of the impact of ~~ASU No. 201-09~~the new revenue standard on ~~our~~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 will not materially impact amounts and timing of revenue ~~recognition during 2017 and assess~~recognition. The Company's revenue arises from contracts with customers in which the ~~additional disclosure requirements~~delivery of doré is the single performance obligation under the ~~guidance.~~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 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 assessing the impact of this standard.

(iii)

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 is effective for the Company’s fiscal year and interim periods beginning after December 1, 2018. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period.15, 2017. The Company ~~is currently evaluating~~adopted the guidance effective January 1, 2018 and has retrospectively applied this guidance ~~and the~~for all periods presented. There is no material impact ~~on its consolidated financial statements.~~from adoption of this guidance.

5.4.

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. For the three months ended March 31, 2018, the Company directly expensed $4.5 million of costs to ensure inventory was recognized at net realizable value. Inventories of the Company are comprised of:

	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
Stockpile inventory	$	50	$	318	$	251	$	201
In-process inventory		9,425		9,491		7,123		6,495
Dore inventory		414		76		461		320
Supplies and spare parts		2,063		1,056		2,093		2,012
	$	11,952	$	10,941	$	9,928	$	9,028

~~The amounts above are net of allowances of $804 (2016 - $nil), the provision of which has been recognized within cost of sales.~~

7 | ~~Page~~P a g e

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~

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

6.5.

Property, Plant, Equipment and Mineral Interests

	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		39			-		350			-			-			2,380			-		2,769
Transfers		-			-		-			1,190			-			(1,190	)		-		-
Disposals		-			-		-			-			-			-			-		-
At March 31, 2018	$	4,008		$	5,280	$	51,123		$	71,256		$	28,397		$	1,244		$	5,886	$	167,194

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		-			42		407			1,847			582			-			98		2,976
Disposals		-			-		-			-			-			-			-		-
At March 31, 2018	$	-		$	370	$	3,822		$	15,200		$	5,592		$	-		$	569	$	25,553

Carrying values
At December 31, 2017	$	3,969		$	4,952	$	47,358		$	56,713		$	23,387		$	54		$	5,415	$	141,848
At March 31, 2018	$	4,008		$	4,910	$	47,301		$	56,056		$	22,805		$	1,244		$	5,317	$	141,641

~~Property, plant~~

Loan Payable

As at March 31, 2018 and December 31, 2017, equipment ~~and mineral interests,~~financing balances are ~~depreciated and depleted using either the units-of-production or straight-line method over the shorter~~as follows:

	March 31, 2018			December 31, 2017
Balance, beginning of the year	$	17,243		$	15,150
Additions		654			10,727
Principal repayments		(1,898	)		(6,192	)
Down payments and taxes		(140	)		(1,839	)
Settlements		-			(603	)
Balance, end of the year	$	15,859		$	17,243

Current portion	$	7,709		$	7,629
Non-current portion	$	8,150		$	9,614

The terms of the ~~estimated useful life~~equipment financing agreements are as follows:

	March 31, 2018		December 31, 2017
Total acquisition costs	$	37,690	$	35,692
Interest rates		0.00% ~ 4.50%		0.00% ~ 4.50%
Monthly payments	$	5 ~ 74	$	5 ~ 74
Average remaining life (years)		1.91		2.13

For the three months ended March 31, 2018, the Company made total down payments of $140 (December 31, 2017– $1,839). The down payments consist of the ~~asset or~~sales tax on the ~~expected life~~assets and a 10% payment of ~~mine. Assets under construction in progress~~the pre-tax purchase price. All of the loan agreements are ~~recorded at cost~~for a term of four years, except two which are for three years, and ~~re-allocated to its corresponding category when they become available for use.~~are secured by the underlying asset.

Land Mineral
property
interest and
claims Mine
development Machinery
and
equipment Buildings and
infrastructure Construction
in progress Interest
capitalized Total
Cost
At December 31, 2015 $ 110 $ 4,459 $ 84,798 $ 28,085 $ 8,565 $ - $ - $ 126,017
Additions 3,777 9,391 542 5,674 19,384
Transfers 6 (6 ) (42,765 ) 32,117 10,648 - - -
Disposals - - - - - - - -
At December 31, 2016 $ 3,893 $ 4,453 $ 42,033 $ 60,202 $ 28,604 $ 542 $ 5,674 $ 145,401
Additions 69 547 8,511 8,051 - 8,488 - 25,666
Transfers - (58 ) - - (36 ) (8,867 ) - (8,961 )
Disposals (23 ) - - (1,344 ) (171 ) - - (1,538 )
At September 30, 2017 $ 3,939 $ 4,942 $ 50,544 $ 66,909 $ 28,397 $ 163 $ 5,674 $ 160,568

Accumulated depreciation and depletion
At December 31, 2015 $ - $ - $ 654 $ 1,462 $ 350 $ - $ - $ 2,466
Additions - 72 317 5,666 2,330 - - 8,385
Disposals - - - - - - - -
At December 31, 2016 $ - $ 72 $ 971 $ 7,128 $ 2,680 $ - $ - $ 10,851
Additions - 211 1,805 4,676 1,765 - 348 8,779
Disposals - - - (256 ) (26 ) - - (282 )
At September 30, 2017 $ - $ 283 $ 2,776 $ 11,548 $ 4,419 $ - $ 348 $ 19,374

Carrying values
At December 31, 2016 $ 3,893 $ 4,381 $ 41,062 $ 53,074 $ 25,924 $ 542 $ 5,674 $ 134,550
At September 30, 2017 $ 3,939 $ 4,659 $ 47,768 $ 55,361 $ 23,978 $ 163 $ 5,326 $ 141,194

8 | P a g e

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three Months Ended March 31, 2018 and 2017

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

Loan Payable (continued)

~~During~~The following table outlines the ~~nine months ended September 30, 2017,~~principal payments to be made for each of the remaining years:

Years	Principal Payments
2019	$	7,709
2020		4,748
2021		2,523
2022		879
Total	$	15,859

Derivative Liabilities

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

On June 8, 2015, the Company ~~acquired 4 pieces~~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 ~~mining equipment (2016~~ $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.

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 March 31, 2018 is $303 (December 31, 2017– ~~1) from Komatsu through financing agreements~~ $441). The derivative liabilities were calculated using the binomial and ~~disposed~~the Black-Scholes pricing valuation models with the following assumptions:

Warrants related to June 2015 Loan	March 31, 2018			December 31, 2017
Risk-free interest rate		1.88	%		1.73	%
Expected life of derivative liability		2.19 years			2.44 years
Expected volatility		69.63	%		78.59	%
Dividend rate		0.00	%		0.00	%

Warrants related to November 2016 Loan	March 31, 2018			December 31, 2017
Risk-free interest rate		1.88	%		1.73	%
Expected life of derivative liability		3.65 years			3.89 years
Expected volatility		75.16	%		75.69	%
Dividend rate		0.00	%		0.00	%

9 | P a g e

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three Months Ended March 31, 2018 and 2017

(amounts expressed in thousands of ~~2 pieces of mining equipment (2016 – nil). See Note 16 for further details.~~US dollars, except shares amounts - Unaudited)

Derivative Liabilities (continued)

Share Purchase Warrants – Clay loans (Related Party) (continued)

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

	March 31, 2018			December 31, 2017
Balance, beginning of the period	$	439		$	5,458
Change in fair value		(137	)		(5,019	)
Balance, end of the period	$	302		$	439

Share Purchase Warrants

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

Asset Retirement Obligations

Reclamation Financial Assurance

The Company is required to provide the Bureau of Land Management, the State Office of Mine Reclamation and Kern County with a revised reclamation cost estimate annually. The financial assurance is adjusted once the cost estimate is approved.

This estimate, once approved by state and county authorities, forms the basis of reclamation financial assurance. The reclamation assurance provided as at March 31, 2018 was $1,500 (December 31, 2017– $1,465).

The Company 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 March 31, 2018, is $2,450 (December 31, 2017– $1,869).

10 | P a g e

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three Months Ended March 31, 2018 and 2017

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

Asset Retirement Obligations (continued)

Reclamation Financial Assurance (continued)

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

The Company entered into $4,228 (2017–$3,612) in surety bond agreements in order to release its reclamation deposits and posted a portion of the financial assurance due in 2017. The Company pays a yearly premium of $90 (2017– $90). Golden Queen Ltd. has provided a corporate guarantee on the surety bonds.

Asset Retirement Obligation

The total asset retirement obligation as at March 31, 2018, was $2,229 (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 March 31, 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:

	March 31, 2018		December 31, 2017
Balance, beginning of the period	$	1,838	$	1,366
Accretion		42		126
Changes in cash flow estimates		349		346
Balance, end of the period	$	2,229	$	1,838

Share Capital

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

Common shares ~~– 2016~~

~~In July 2016,~~On January 17, 2017, the Company ~~completed~~issued 100,000 shares for a ~~financing~~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 $12.2 million (C$16.1 million) consisting of 11,120,000 units at a price of $1.10 (C$1.45) per unit. Each unit consisted of one common share of the Company and one-half of one common share purchase warrant. Each whole warrant entitles the holder to acquire one additional common share of the Company at a price of C$2.00 per common share until July 25, 2019.The aggregate fair value of the common share purchase warrants at the time of issuance was $2.4 million, which was recorded as a derivative liability and the Company allocated the remaining proceeds of $9.8 million to the common shares (See Note 10).

~~8 | Page~~

~~GOLDEN QUEEN MINING CO. LTD.~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~For the Three and Nine Months Ended September 30, 2017 and 2016~~

~~(amounts expressed in thousands of US dollars - Unaudited)~~

~~Share Capital (continued)~~

$25,036. The Company ~~also issued 757,700 common~~paid associated fees of $668 which were classified as share purchase warrants to brokers with the same terms as the common share purchase warrants issued with the financing units. The aggregate fair value of the common share purchase warrants issued to the brokers at the time of issuance was $0.3 million which was recorded as a derivative liability (See Note 10).

~~In addition, the Company incurred cash share~~ issue ~~costs totalling $1.3 million, which consisted of legal fees, commission and other direct financing~~ 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 Plan provides that the expiry date of the vested portion of a stock option will be the earlier of the date so fixed by the Board at the time the stock option is awarded and the early termination date (the “Early Termination Date”).

11 | P a g e

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three Months Ended March 31, 2018 and 2017

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

Share Capital (continued)

Stock options (continued)

The Early Termination Date will be the date the vested portion of a stock option expires following the option holder ceasing to be a director, employee or consultant, as determined by the Board at the time of grant, or in the absence thereof at any time prior to the time the option holder ceases to be a director, employee or consultant, in accordance with and subject to the provisions of the Plan. All options granted under the 2013 Plan will be subject to such vesting requirements as may be prescribed by the TSX, if applicable, or as may be imposed by the Board. ~~A total of 1,395,002 (December 31, 2016 – 1,555,000) common shares were issuable pursuant to such stock options as at September 30, 2017.~~

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.

The following is a summary of stock option activity during the ~~nine~~three months ended ~~September 30, 2017 and 2016:~~March 31, 2018:

Shares Weighted Average
Exercise Price per
Share
Options outstanding, December 31, 2015 1,070,000 $ 0.94
Options granted 485,000 $ 0.66
Options outstanding, December 31, 2016 1,555,000 $ 0.85
Options granted 400,002 $ 0.65
Options forfeited (166,667 ) $ 0.64
Options expired (393,333 ) $ 1.10
Options outstanding, September 30, 2017 1,395,002 $ 0.75

On March 20, 2017, the Company granted 400,002 options to the Company’s Chief Financial Officer (“CFO”) which are exercisable at a price of $0.65 for a period of five years from the date of grant. 133,334 options vest on March 20, 2018, 133,334 options vest on March 20, 2019 and 133,334 options on March 20, 2020.

~~9 | Page~~

~~GOLDEN QUEEN MINING CO. LTD.~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~For the Three and Nine Months Ended September 30, 2017 and 2016~~

~~(amounts expressed in thousands of US dollars - Unaudited)~~

~~Share Capital (continued)~~

~~Stock options~~ ~~(continued)~~

	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 and March 31, 2018		2,600,001		$	0.54

On March 14, 2017, the former CFO of the Company resigned. 146,667 stock options were forfeited on this date as they did not meet the vesting conditions. Accordingly, the share-based compensation associated with the unvested stock options was reversed. The expiry date of 393,333 stock options that had vested was modified to June 14, 2017 pursuant to the terms of the employment agreement.

These stock options were not exercised, thus expired during the ~~nine months~~year ended ~~September 30,~~December 31, 2017.

The fair value of stock options granted as above was calculated using the following weighted average assumptions:

2017 2016
Expected life (years) 5.00 4.92
Interest rate 1.18 % 1.00 %
Volatility 77.29 % 81.27 %
Dividend yield 0.00 % 0.00 %

	2017
Expected life (years)		5.00
Interest rate		1.18% ~ 1.70	%
Volatility		77.29% ~ 79.17	%
Dividend yield		0.00	%

During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018, the Company recognized ~~$0.05 million and $0.1 million (three and nine months ended September 30, 2016 - $0.01 million)~~$45 (2017– $34) 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 at September 30, 2017:~~

Expiry
Date Number
Outstanding Number
Exercisable Remaining
Contractual Life
(years) Weighted
Average
Exercise Price
June 3, 2018 50,000 50,000 0.67 $ 1.16
September 3, 2018 150,000 150,000 0.93 $ 1.59
September 8, 2020 430,000 430,000 2.94 $ 0.58
November 30, 2021 365,000 - 4.17 $ 0.66
March 20, 2022 400,002 - 4.47 $ 0.65
Balance, September 30, 2017 1,395,002 630,000 3.40 $ 0.75

~~As at September 30, 2017, the aggregate intrinsic value of the outstanding exercisable options was $nil (December, 31, 2016 - $0.4 million).~~

~~Warrants~~

~~The following is a summary of common share purchase warrants activity:~~

September 30, 2017 December 31, 2016
Balance, beginning of the period 24,317,700 10,000,000
Issued - financing units - 5,560,000
Issued - financing brokers⁽¹⁾ - 757,700
Issued - debt restructuring⁽¹⁾ - 8,000,000
Balance, end of the period 24,317,700 24,317,700

⁽¹⁾

~~Non-tradable share purchase warrants.~~

12 | ~~Page~~P a g e

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~

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

7.9.

Share Capital (continued)

~~Warrants~~Stock options (continued)

The following table summarizes information about stock options outstanding and exercisable as at March 31, 2018:

Expiry Date	Number Outstanding		Number Exercisable		Remaining Contractual Life (years)		Weighted Average Exercise Price
June 3, 2018		50,000		50,000		0.18	$	1.16
September 3, 2018		150,000		150,000		0.43	$	1.59
September 8, 2020		430,000		430,000		2.44	$	0.58
November 30, 2021		365,000		121,666		3.67	$	0.66
March 20, 2022		400,002		133,334		3.97	$	0.65
October 20, 2022		1,204,999		-		4.56	$	0.29
Balance, March 31, 2018		2,600,001		885,000		3.67	$	0.54

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

Warrants

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

The following table summarizes information about share purchase warrants ~~outstanding and exercisable at September 30, 2017:~~outstanding:

Expiry Date	Number Outstanding		Remaining Contractual Life (years)		Exercise Price
June 8, 2020⁽¹⁾		10,000,000		2.19	$	0.7831
July 25, 2019		6,317,700		1.32	C$	2.0000
November 18, 2021⁽¹⁾		8,000,000		3.64	$	0.6650
Balance, March 31, 2018		24,317,700		2.44

⁽¹⁾

Non-tradable share purchase warrants.

Expiry
Date Number
Outstanding Remaining
Contractual Life
(periods) Exercise
Price
June 8, 2020 10,000,000 2.69 $ 0.95
July 25, 2019 6,317,700 1.82 C$ 2.00
November 18, 2021 8,000,000 4.15 $ 0.85

8.10.

~~Asset Retirement Obligation~~General and ~~Financial Reclamation Assurance~~Administrative Expenses

~~Asset Retirement Obligation~~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 March 31,		Three Months Ended March 31,
	2018		2017
Audit, legal and professional fees	$	240	$	288
Salaries and benefits and director fees		503		560
Regulatory fees and licenses		79		53
Insurance		139		133
Corporate administration		293		382
	$	1,254	$	1,416

~~The total asset retirement obligation as of September 30, 2017, was $1.7 million (December 31, 2016 - $1.4 million).~~

The Company estimated its asset retirement obligation based on its requirements to reclaim and remediate its property based on its activities to date. As at September 30, 2017, the Company estimates the primary cash outflow related to these reclamation activities will commence 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 8.7% and an inflation rate of 2.45%.

~~The following is a summary of asset retirement obligations:~~

September 30,
2017 December 31,
2016
Balance, beginning of the period $ 1,366 $ 978
Accretion 92 90
Changes in cash flow estimates 261 298
Balance, end of the period $ 1,719 $ 1,366

~~Reclamation Financial Assurance~~

The Company is required to provide the Bureau of Land Management, the State Office of Mine Reclamation and Kern County, California with a revised reclamation cost estimate annually. The financial assurance is adjusted once the cost estimate is approved. The Company’s provision for reclamation of the property is estimated each year by an independent consulting engineer. This estimate, once approved by state and county authorities, forms the basis for a cash deposit of reclamation financial assurance. The reclamation assurance provided as at September 30, 2017 is $1.5 million (December 31, 2016 - $1.5 million).

The Company 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 heap leach pad, the overflow pond, and the solution collection channel. The reclamation financial assurance estimate as of September 30, 2017 is $1.2 million (December 31, 2016 - $1.2 million).

In addition to the above, the Company is required to obtain and maintain financial assurance for initiating and completing corrective action and remediation of a reasonably foreseeable release from the Mine’s waste management units as required by the Regional Board. The reclamation financial assurance estimate as of September 30, 2017, is $0.3 million (December 31, 2016 - $0.3 million).

13 | ~~Page~~P a g e

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~

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

8.11.

~~Asset Retirement Obligation and Financial Reclamation Assurance (continued)~~Loss Per Share

~~Asset Retirement Obligation (continued)~~

	Three Months Ended March 31,			Three Months Ended March 31,
	2018			2017
Numerator:
Net loss attributable to the shareholders of the Company - numerator for basic and diluted loss per share	$	(6,050	)	$	(2,426	)
Denominator:
Weighted average number of common shares outstanding - basic and diluted		188,829,263			111,080,008

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

~~During 2016,~~Weighted average number of shares for the ~~Company entered into $3.0 million in surety bond agreements to maintain the necessary financial assurance as required by the relevant regulatory bodies, as described in the paragraphs above,~~three months ended March 31, 2018 excludes 2,600,001 options (December 31, 2017– 2,600,001) and ~~in order to release its reclamation deposits. The Company pays a yearly premium of $0.1 million. Golden Queen Mining Co. Ltd. has provided a corporate guaranty on the surety bonds (See Note 12).~~24,317,700 warrants (December 31, 2017 – 24,317,700) that were antidilutive.

9.12.

Related Party Transactions

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

(i)

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

~~During~~For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018, the Company ~~paid a total of $0.03 million and $0.09 million (three and nine~~recognized $195 (for the three months ended ~~September 30, 2016 - $0.02 million~~March 31, 2017– $218) salaries and ~~$0.08 million respectively), respectively,~~fees for Officers and Directors.

As at March 31, 2018, $nil (December 31, 2017– $38) was included in prepaid expenses and other current assets for closing fees paid to ~~the three independent directors of the Company. Additionally, the Company paid $0.02 million (2016 - $Nil)~~related parties.

As at March 31,2018, $835 (December 31, 2017–$463 for ~~consulting services~~amended fees and accrued interest payable to ~~Behre Dolbear, a company of which a director of Golden Queen serves~~related parties) was included in ~~the capacity of an executive officer.~~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 ~~December 31, 2014,~~November 18, 2016, the Company entered into a loan ~~(the “December 2014 Loan”)~~ with the Clay Group for $12.5 million, due on July 1, 2015. On June 8, 2015, the Company amended the December 2014 Loan to extend the maturity to December 8, 2016 and increased the principal amount from $12.5 million to $37.5 million (the “June 2015 Loan”).

On December 31, 2014, the Company entered into a loan (the “December 2014 Loan”) with the Clay Group for $12.5 million, due on July 1, 2015. On June 8, 2015, the Company amended the December 2014 Loan to extend the maturity to December 8, 2016 and increased the principal amount from $12.5 million to $37.5 million (the “June 2015 Loan”). On November 18, 2016, the Company repaid $12.2 million of the June 2015 Loan and accrued interest with cash on hand and net proceeds of $10.1 million from an equity financing. The Company restructured the remaining debt with a new loan with a principal amount of $31.0 million$31,000 (the “November 2016 Loan”)~~. The November 2016 Loan has a thirty-month term~~, due on May 21, 2019 and an annual interest rate of 8%, payable on a quarterly basis commencing during the first quarter of 2017. Quarterly principal payments of $2.5 million commence during the first quarter of 2018, with a payment of the remaining balance at the maturity date. Under terms of the November 2016 loan, at the Company’s option, the payment of the first three quarterly interest payments due have been deferred to January 1, 2018. On November 10, 2017, the Company amended the terms of the November 2016 Loan (see Note 17).

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. ~~The~~

On November 10, 2017, the Company ~~also incurred~~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 ~~financing fee to secure the loan in the amount of $0.9 million, all of which was paid on November 18, 2016.~~debt modification.

14 | ~~Page~~P a g e

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~

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

9.12.

Related Party Transactions (continued)

(ii)

Note Payable (continued)

The following table ~~below~~ summarizes ~~the~~ activity on the ~~November 2016 Loan:~~notes payable:

	September 30, 2017		December 31, 2016			March 31, 2018			December 31, 2017
Balance, beginning of the period	$	26,347	$	36,053		$	30,099		$	26,347
Interest payable transferred to principal balance		1,560		2,977			-			2,212
Accretion of discount on loans		1,250		1,996			490			1,940
Capitalized financing fee and legal fees		-		(930	)
Reduction of debt upon issuance of warrants		-		(3,090	)
Capitalized financing and legal fees							-			(400	)
Accretion of capitalized financing and legal fees							65			-
Repayment of loans and interest		-		(10,659	)		(4,712	)		-
Balance, end of the period	$	29,157	$	26,347		$	25,942		$	30,099

Current portion	$	9,061	$	-		$	4,000		$	7,712
Non-current portion	$	20,096	$	26,347		$	21,942		$	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,
2017 2016 2017 2016
Accretion of the November 2016 Loan discount $ 510 $ - $ 1,250 $ -
Interest expense related to the November 2016 Loan 642 - 1,914 -
Interest expense related to Komatsu financial loans⁽¹⁾ 143 144 428 464
Accretion of the June 2015 Loan discount - 621 - 1,853
Interest expense related to the June 2015 Loan - 1,050 - 3,057
Accretion of discount and interest on loan $ 1,295 $ 1,815 $ 3,592 $ 5,374

	Three Months Ended March 31,		Three Months Ended March 31,
	2018		2017
Accretion of the November 2017 Loan discount	$	490	$	286
Accretion of capitalized financing and legal fees		65		-
Interest expense related to the November 2017 Loan		713		626
Closing and commitment fees related to the Credit Facility		30		-
Interest expense related to Komatsu financial loans⁽¹⁾		235		135
Accretion of discount and interest on loan	$	1,533	$	1,047

⁽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.

⁽²⁾

~~Interest capitalization ended on March 31, 2016 because the mine went into production on April 1, 2016.~~

~~13 | Page~~

~~GOLDEN QUEEN MINING CO. LTD.~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~For the Three and Nine Months Ended September 30, 2017 and 2016~~

~~(amounts expressed in thousands of US dollars - Unaudited)~~

~~Related Party Transactions (continued)~~

(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%.

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

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

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

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

The net assets of GQM LLC as ~~of September 30, 2017,~~at March 31, 2018 and December 31, ~~2016~~2017 are as follows:

	March 31, 2018			December 31, 2017
Assets, GQM LLC	$	156,998		$	149,095
Liabilities, GQM LLC		(23,221	)		(28,024	)
Net assets, GQM LLC	$	133,777		$	121,071

September 30,
2017 December 31,
2016
Assets, GQM LLC $ 152,193 $ 151,802
Liabilities, GQM LLC (24,092 ) (20,710 )
Net assets, GQM LLC $ 128,101 $ 131,092

15 | P a g e

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three Months Ended March 31, 2018 and 2017

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

12.

Related Party Transactions (continued)

(iv)

Joint Venture Transaction (continued)

Included in the assets above, is ~~$3.8 million~~$9,622 (December 31, ~~2016 - $11.1 million)~~2017– $2,606) in cash held ~~as at September 30, 2017. The cash in~~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 ~~$2.2 million~~$2,203 for 2two mining drill loans and ~~$3.0 million~~$4,228 in surety bond agreements.

~~14 | Page~~

~~GOLDEN QUEEN MINING CO. LTD.~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~For the Three and Nine Months Ended September 30, 2017 and 2016~~

~~(amounts expressed in thousands of US dollars - Unaudited)~~

~~Related Party Transactions (continued)~~

~~(iv)~~

~~Joint Venture Transaction (continued)~~

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,			Three Months Ended March 31,			Three Months Ended March 31,
	2017			2016			2017			2016			2018			2017
Net and comprehensive income (loss) in GQM LLC	$	(2,674	)	$	1,706		$	(2,991	)	$	(1,922	)
Net and comprehensive loss in GQM LLC													$	(7,294	)	$	(779	)
Non-controlling interest percentage		50	%		50	%		50	%		50	%		50	%		50	%
Net and comprehensive loss attributable to non-controlling interest	$	(1,335	)	$	853		$	(1,495	)	$	(961	)	$	(3,646	)	$	(390	)

Net and comprehensive loss attributable to permanent non-controlling interest	$	(801	)	$	512		$	(897	)	$	(577	)	$	(2,188	)	$	(234	)
Net and comprehensive loss attributable to temporary non-controlling interest	$	(534	)	$	341		$	(598	)	$	(384	)	$	(1,458	)	$	(156	)

Permanent Non-
Controlling
Interest Temporary Non-
Controlling
Interest
Carrying value of non-controlling interest, December 31, 2016 $ 39,327 $ 26,219
Net and comprehensive loss for the period (897 ) (598 )
Carrying value of non-controlling interest, September 30, 2017 $ 38,430 $ 25,621

~~15 | Page~~

~~GOLDEN QUEEN MINING CO. LTD.~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~For the Three and Nine Months Ended September 30, 2017 and 2016~~

~~(amounts expressed in thousands of US dollars - Unaudited)~~

~~Related Party Transactions (continued)~~

	Permanent Non-Controlling Interest			Temporary Non-Controlling Interest
Carrying value of non-controlling interest, December 31, 2016	$	39,326		$	26,219
Net and comprehensive loss for the year		(3,005	)		(2,005	)
Carrying value of non-controlling interest, December 31, 2017	$	36,321		$	24,214
Capital contribution		10,000			-
Net and comprehensive loss for the period		(2,188	)		(1,458	)
Carrying value of non-controlling interest, March 31, 2018	$	44,133		$	22,756

(v)

~~Revolving credit~~Credit Facility

On May 23, 2017, GQM LLC entered into a $5,000 one-year revolving credit ~~facility of $5 million with~~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 ~~revolving credit~~Credit Facility commenced on July 1, 2017, bears interest at a rate of 12% per annum and is ~~available until May 23,~~subject to a commitment fee of 1% per annum. For the three months ended March 31, 2018, ~~and bears a 12% simple annual interest.~~ GQM LLC paid ~~a closing fee~~commitment fees of $0.1 million which was classified as prepaid expenses and other current assets. $0.02 million and $0.04 million of the closing fee was amortized during the three and nine months ended September 30, 2017, respectively.$30 (2017 – $nil). As at ~~September 30,~~March 31, 2018, GQM LLC has drawn $nil (December 31, 2017 ~~no amounts had been drawn under this facility.~~– $3,000) from the Credit Facility.

~~10.~~

~~Derivative Liabilities~~

~~Share Purchase Warrants – Clay loans (Related Party)~~

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

On November 18, 2016, the Company issued 8,000,000 share purchase warrants to the Clay Group in connection with the November 2016 Loan. The share purchase warrants are exercisable until November 18, 2021 at an exercise price of $0.85. Included in the November 2016 Loan agreement was an anti-dilution provision. If the Company were to complete a financing at a share price lower than the exercise price of the share purchase warrants, the exercise price of the share purchase warrants would be adjusted to match the price at which the financing was completed.

The fair value of the derivative liabilities related to the share purchase warrants as at September 30, 2017 is $3.1 million (December 31, 2016 - $5.5 million). The derivative liabilities were calculated using the binomial and the Black-Scholes pricing valuation models with the following assumptions:

Warrants related to June 2015 Loan September 30,
2017 December 31,
2016
Risk-free interest rate 1.58 % 0.84 %
Expected life of derivative liability 2.69 years 3.44 years
Expected volatility 76.50 % 78.79 %
Dividend rate 0.00 % 0.00 %

Warrants related to November 2016 Loan September 30,
2017 December 31,
2016
Risk-free interest rate 1.58 % 1.11 %
Expected life of derivative liability 4.15 years 4.89 years
Expected volatility 75.21 % 77.21 %
Dividend rate 0.00 % 0.00 %

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

September 30,
2017 December 31,
2016
Balance, beginning of the period $ 5,458 $ 2,498
Fair value at inception - 3,090
Change in fair value (2,329 ) (130 )
Balance, end of the period $ 3,129 $ 5,458

~~16 | Page~~

~~GOLDEN QUEEN MINING CO. LTD.~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~For the Three and Nine Months Ended September 30, 2017 and 2016~~

~~(amounts expressed in thousands of US dollars - Unaudited)~~

~~10.~~

~~Derivative Liabilities (continued)~~

~~Share Purchase Warrants – July 2016 financing~~

On July 25, 2016, the Company issued a total of 6,317,700 share purchase warrants in connection with the July 2016 financing with an exercise price of C$2.00 and expiry date of July 25, 2019. In accordance with the guidance in ASC 815-40-15, the share purchase warrants met the criteria of a derivative instrument liability because they were exercisable in a currency other than the functional currency of the Company and thus did not meet the “fixed-for-fixed” criteria of that guidance. As a result, the Company was required to separately account for the share purchase warrants as derivative liabilities recorded at fair value and marked-to-market each period with the changes in the fair value each period charged or credited to income.

As at September 30, 2017, the Company had re-measured the share purchase warrants and determined the fair value of the derivative liability to be $0.3 million (December 31, 2016 - $1.0 million) using the Black-Scholes option pricing model with the following assumptions:

September 30,
2017 December 31,
2016
Risk-free interest rate 1.52 % 0.84 %
Expected life of derivative liability in years 1.82 years 2.56 years
Expected volatility 74.89 % 79.40 %
Dividend rate 0.00 % 0.00 %

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

September 30,
2017 December 31,
2016
Fair value of warrants issued $ 972 $ 2,701
Change in fair value of warrants (704 ) (1,729 )
Balance, end of the period $ 268 $ 972

~~11.~~

~~Supplementary Disclosures of Cash Flow Information~~

Nine Months Ended
September 30, Nine Months Ended
September 30,
2017 2016
Cash paid during the period for:
Interest on loan payable $ 428 $ 468
Non-cash financing and investing activities:
Asset retirement costs charged to mineral property interests $ 260 $ 245
Mining equipment acquired through issuance of debt $ 5,895 $ 295
Mineral property expenditures included in accounts payable $ 1,081 $ 318
Interest cost capitalized to mineral property interests $ - $ 839
Non-cash finder fess $ 59 $ -
Non-cash amortization of discount and interest expense $ 1,250 $ 1,853
Interest payable converted to principal balance $ 1,560 $ 2,977

~~17 | Page~~

~~GOLDEN QUEEN MINING CO. LTD.~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~For the Three and Nine Months Ended September 30, 2017 and 2016~~

~~(amounts expressed in thousands of US dollars - Unaudited)~~

~~12.~~13.

Commitments and Contingencies

Royalties

The Company has acquired a number of mineral ~~properties~~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 ~~amount~~amounts due to each landholder over the life of the Mine ~~varies~~vary with each property.

16 | P a g e

GOLDEN QUEEN MINING CO. LTD.

Notes to Condensed Consolidated Interim Financial Statements

For the Three Months Ended March 31, 2018 and 2017

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

13.

Commitments and Contingencies (continued)

Compliance with Environmental Regulations

The Company’s exploration and development activities are subject to laws and regulations controlling not only the exploration and mining of mineral properties, but also the effect of such activities on the environment. Compliance with such laws and regulations may necessitate additional capital outlays or affect the economics of a mine, and cause changes or delays in the Company’s activities.

Corporate Guaranties

The Company has provided corporate guaranties for 2two of GQM LLC’s mining drill loans. The Company has also provided a corporate guaranty for GQM LLC’s surety bonds.

~~13.~~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).

~~18 | Page~~

March 31, 2018
Total Level 1 Level 2 Level 3
Liabilities:
Share purchase warrants – Related Party (see Note 8) $ 302 $ - $ 302 $ -
Share purchase warrants – (see Note 8) 1 - 1 -
$ 303 $ - $ 303 $ -

~~GOLDEN QUEEN MINING CO. LTD.~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~For the Three and Nine Months Ended September 30, 2017 and 2016~~

~~(amounts expressed in thousands of US dollars - Unaudited)~~

~~13.~~

~~Financial Instruments (continued)~~

~~Fair Value Measurements (continued)~~

September 30, 2017
Total Level 1 Level 2 Level 3
Liabilities:
Share purchase warrants – Related Party (Note 10) $ 3,129 $ - $ 3,129 $ -
Share purchase warrants – (Note 10) 268 - 268 -
$ 3,397 $ - $ 3,397 $ -
December 31, 2016
Total Level 1 Level 2 Level 3
Liabilities:
Share purchase warrants – Related Party (Note 10) $ 5,458 $ - $ 5,458 $ -
Share purchase warrants – (Note 10) 972 - 972 -
$ 6,430 $ - $ 6,430 $ -
December 31, 2017
Total Level 1 Level 2 Level 3
Liabilities:
Share purchase warrants – Related Party (see Note 8) $ 439 $ - $ 439 $ -
Share purchase warrants – (see Note 8) 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.

17 | P a g e
GOLDEN QUEEN MINING CO. LTD.
Notes to Condensed Consolidated Interim Financial Statements
For the Three Months Ended March 31, 2018 and 2017
(amounts expressed in thousands of US dollars, except shares amounts - Unaudited)
14. Financial Instruments (continued)
Credit Risk (continued)
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 ~~$0.3 million~~$250 and Canadian Dollar cash deposits held in Canada are insured by the Canada Deposit Insurance Corporation (“CDIC”) for up to C$~~0.1 million.~~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 ~~of September 30, 2017,~~at March 31, 2018, the Company’s cash balances held in United States and Canadian financial institutions include ~~$4.7 million,~~$17,880, 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 ~~98%~~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 ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018, a 1% decrease in interest rates would have reduced the interest income for ~~2017~~the three months ended March 31, 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 ~~our~~ operations. Specifically, the appreciation of the Canadian Dollar against the US Dollar may result in an increase in the Canadian operating expenses in US dollar terms. As ~~of September 30, 2017,~~at March 31, 2018, the Company maintained the majority of its cash balance in US ~~Dollar.~~Dollars. The Company currently does not engage in any currency hedging activities.
19 18 | ~~Page~~P a g e

~~GOLDEN QUEEN MINING CO. LTD.~~
~~Notes to Condensed Consolidated Interim Financial Statements~~
~~For the Three and Nine Months Ended September 30, 2017 and 2016~~
~~(amounts expressed in thousands of US dollars - Unaudited)~~
~~14.~~ ~~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,
2017 2016 2017 2016
Audit, legal and professional fees $ 165 $ 125 $ 561 $ 1,097
Salaries and benefits and director fees 431 437 1,131 1,176
Regulatory fees and licenses 15 (15 ) 85 68
Insurance 122 116 369 356
Corporate administration 438 (6 ) 1,151 470
$ 1,171 $ 657 $ 3,297 $ 3,167
~~15.~~ ~~Income (Loss) Per Share~~
Three Months
Ended
September 30, Three Months
Ended
September 30, Nine Months
Ended
September 30, Nine Months
Ended
September 30,
2017 2016 2017 2016
Numerator:
Net gain (loss) attributable to the shareholders of the Company - numerator for basic and diluted LPS $ (1,889 ) $ 2,738 $ (3,352 ) $ (8,296 )
Denominator:
Weighted average number of common shares outstanding -basic and diluted 111,148,683 108,026,944 111,137,694 102,657,767

Loss per share – basic and diluted $ (0.02 ) $ 0.03 $ (0.03 ) $ (0.08 )
Weighted average number of shares for the nine months ended September 30, 2017 excludes 1,395,002 options (September 30, 2016 - 1,070,000) and 24,317,700 warrants (September 30, 2016 – 10,000,000) that were antidilutive.
~~16.~~ ~~Loan Payable~~
During the nine months ended September 30, 2016, the Company sold 2 (December 31, 2016 – nil) pieces of equipment with a net book value of $1.0 million in consideration for settlement of 2 loans by $0.6 million plus $0.1 million in cash. The Company also recorded $0.3 million as a loss in disposition of fixed assets.
During the nine months ended September 30, 2017, the Company entered into 4 new loan agreements for a total of $7.6 million for the acquisition of 4 (December 31, 2016 – 2) pieces of mining equipment from Komatsu.
~~20 | Page~~
~~GOLDEN QUEEN MINING CO. LTD.~~
~~Notes to Condensed Consolidated Interim Financial Statements~~
~~For the Three and Nine Months Ended September 30, 2017 and 2016~~
~~(amounts expressed in thousands of US dollars - Unaudited)~~
~~16.~~ ~~Loan Payable (continued)~~
~~As at September 30, 2017 and December 31, 2016, the finance agreement balances are as follows:~~
September 30, 2017 December 31,
2016
Balance, beginning of the period $ 15,150 $ 18,373
Additions 7,646 2,047
Down payments and taxes (1,338 ) (264 )
Settlements (414 ) -
Principal repayments (4,648 ) (5,006 )
Balance, end of the period $ 16,396 $ 15,150

Current portion $ 6,998 $ 5,656
Non-current portion $ 9,398 $ 9,494
For the nine months ended September 30, 2017, the Company made total down payments of $1.3 million (2016 - $0.3 million). 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 4 years, except 2 which are for 3 years, and are secured by the underlying asset except for 2 mining drill loans for which GQM Ltd. has provided a corporate guarantee. Interest rates range from 0.00% to 4.50% with monthly payments in the range of $0.005 to $0.03 million.
~~The following table outlines the principal payments to be made for each of the remaining years:~~
Years Principal Payments
2017 $ 6,998
2018 6,146
2019 2,060
2020 1,191
Total $ 16,395
~~17.~~ ~~Subsequent Events~~
On October 20, 2017, the Company granted 1,204,999 options to certain directors and employees of Golden Queen. The options are exercisable at a price of $0.29 for a period of five years from the date of grant. 401,666 options vest on October 20, 2018; 401,666 options vest on October 20, 2019; and 401,667 options vest on October 20, 2020.
On November 10, 2017, the Company and the Clay Group agreed to amend the November 2016 Loan by reducing the quarterly principal payments that commence the first quarter of 2018 from $2.5 million to $1.0 million and increasing the annual interest rate from 8% to 10% effective January 1, 2018. As well, all interest payments in 2017 that were deferred at the Company’~~s option along with a $2.5 million principal payment and a $0.40 amendment fee are payable on January 1, 2018. At the Company~~’~~s option, interest and principal payments due on January 1, 2018 can be delayed until February 15, 2018 to accommodate delays in the Offering process.~~
On November 13, 2017, the Company filed a preliminary prospectus with the securities regulatory authorities in each of the provinces and territories of Canada in connection with qualifying an offering of the Company (the “Offering"), in connection with a marketed offering of common shares in the capital of the Company for aggregate gross proceeds of $25 million. Closing of the Offering is subject to receipt of applicable regulatory approvals including approval of the Toronto Stock Exchange. The net proceeds of the Offering will be used to reduce the corporate debt, purchase additional equipment for the mine and general corporate and working capital purposes.
~~21 | Page~~

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 14, 2017~~May 9, 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, 2017~~March 31, 2018 and the notes thereto.

The information in this Management’s Discussion and Analysis of Financial Condition and Results of Operations is prepared in accordance with US generally accepted accounting principles (“US GAAP”). 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~~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. ~~Peter A. Herrera, CPG~~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

~~Golden Queen Mining Co. Ltd. (“Golden Queen”, “GQM Ltd.” or the “Company”)~~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”). The Mine is located just outside the town of Mojave in southern California and utilizes conventional open pit mining methods and ~~the~~ cyanide heap leach and Merrill-Crowe processes to recover gold and silver from crushed, agglomerated ore. The Mine also produces aggregate.

Highlights: First Quarter Highlights

· Total of ~~4.9~~3.8 million tons of ore and waste were mined ~~in the third quarter~~ including ~~928~~1,135 kt of ~~ore~~ore;
· Plant processed a total of ~~898~~806 kt of ore at an average grade of ~~0.013~~0.019 oz/tt; and
· ~~Third quarter production was 12,275~~6,579 ounces of gold and ~~48,631~~58,024 ounces of silver
· ~~Purchase of new shovel at a capital cost of $3.9 million~~
· ~~Completion of leach pad phase 2 at a capital cost of $8.4 million~~ were produced.

Project Update
~~The~~In the fourth quarter of 2017, management accelerated the development of the East Pit to access production of sufficient higher-grade ore. In the first quarter of 2018, almost all of the Mine’s production was sourced from the East Pit. Mining results from the East Pit have shown significant positive reconciliation for both tons and grade with the mine ~~acquired a new shovel~~plan. Operations during the first quarter of 2018 showed continued improvement in ~~late August as planned at a capital cost~~gold ounces loaded on the pad. Mining of ~~$3.9 million. The performance~~the East Pit progressed on schedule.
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In the second half of ~~this unit is expected to enhance mining productivity over~~2017, the ~~life of mine. In addition,~~plant extracted more gold from the leach pad ~~phase 2~~than the net recoverable ounces loaded due to the low grade of the ore loaded during this period, as shown in the figure below. In the first quarter of 2018, the Mine has experienced a lack of available ounces translating to doré as the gold loaded solution circulating on the pad was ~~completed~~purged of its gold content during the fourth quarter ~~at a capital cost~~ of ~~$8.4 million, and ore leaching has commenced~~2017. The monthly recoverable gold ounces loaded on leach pad have steadily increased since September 2017, but the ~~first lift.~~ impact on production will be from the second quarter of 2018 onward.

Leaching performance is matching the feasibility study - total apparent gold recovery to ~~September 30, 2017~~March 31, 2018 is ~~73%~~71.5%, which Management believes is on track to achieve the life of mine 80% gold ~~recovery sometime in 2018.~~recovery.

~~22 | Page~~
~~As a result~~In the first quarter of 2018, the ~~lower tonnage and grade in the North-West and Main (Phase 1) Pits, the ore grade was lowered~~Company continues to ~~a value near cut-off in an effort to operate the pad-loading operations at capacity. However, periodic shortfalls in ore supplied to the crusher have been experienced, despite the lower target grade.~~
~~Management is accelerating~~develop the East ~~Pit development to access higher-grade ore tons as soon as possible to make up for~~Pit. It is anticipated that the shortfall in ore supplied and the lower than expected gold ore grades from the North-West and Main (Phase 1) Pits. During the period of development of the East Pit, it is expected that gold production will be lower than plan. The transition to the East Pit will provide the majority of ~~anticipated~~ ore production for at least the next ~~three years.~~ two years where higher ore tonnage and grade and lower waste tons are expected. The plan is to increase delivery of ounces to the heap leach pad by selectively mining higher grade tons as much as practical.
In ~~anticipation~~the process area, pad-loading tonnage and average grade are expected to increase compared to the fourth quarter of 2017. Taking advantage of the ~~development~~good porosity of the heap, flow to the Merrill-Crowe plant is expected to be at capacity. As a result of higher grades in the East Pit ~~an additional two trucks were recently purchased~~ and ~~are expected~~the improved plant throughput, gold production is anticipated to ~~be in service before year-end. There are an additional three trucks planned for purchase early next~~increase throughout the year.

~~The mine has generated positive operating cash flow year-to-date,~~A drilling program commenced in January 2018 and ~~this~~ is ~~expected~~now complete. A total of 19,520 feet of reverse circulation drilling was completed over 21 holes. This drill program was designed to resume once ore mining has been established within the defined ore-zone developed by the East Pit. In the meantime, preliminary estimates indicate that mining operations at Soledad Mountain will require between $15m and $20m of capitalincrease confidence in the ~~near term~~currently modelled ore grades and tonnage associated with the Golden Queen vein structure, to ~~execute this plan. This amount would likely need~~improve the Company’s understanding of the Patience vein structure potentially adding ounces to the Company’s reserves and to investigate the Silver Queen vein structure (where historical underground development is illustrated on historic maps but not evidenced in historic extraction reports). The drill results will be ~~funded equally between~~analyzed during the second quarter of the year.
As well, the Company ~~and its 50% joint venture partner.~~
For the nine months ended September 30, 2017, the Company recorded aggregate sales of $0.01 million. The Company was recently added to the California AB 3098 list, which allows the Company to sell its aggregates to state and municipal agencies. The Company will not include the sale of aggregateis in ~~cash flow projections until such time as a long-term contract for the sale of products has been secured.~~
~~During the third quarter, the Company initiated~~ the process ~~to support~~of permitting of 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 anticipated to take approximately 21 to 32 years.
For the three months ended March 31, 2018, the Company recorded aggregate sales of $6. In 2017, the Company was added to the California AB 3098 list, which allows the Company to sell its aggregate to state and municipal agencies. The Company will not include the sale of aggregate in cash ~~balance~~flow projections until such time as ~~at September 30, 2017 was $4.7 million.~~ a long-term contract for the sale of products has been secured.
There is a total of ~~199~~218 employees currently on site.
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Results of Operations

The following are the results of operations for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018 and ~~the corresponding periods ended September 30, 2016.~~2017:

Three months ended Nine months ended
30-Sep-17 30-Sep-16 30-Sep-17 30-Sep-16
Mining - Key Metrics ⁽¹⁾
Ore mined k ton 928 808 2,790 1,759
Waste mined: ore mined ratio ore mined ratio 4.3:1 2.2:1 3.9:1 2.2:1
Gold grade placed oz/ton 0.013 0.015 0.016 0.013
Silver grade placed oz/ton 0.180 0.362 0.203 0.349
Gold sold oz 12,255 8,715 36,068 11,197
Silver sold oz 47,977 97,430 163,856 124,930
Apparent cumulative recovery - gold ⁽²⁾ % 73.0 % 53.1 % 73.0 % 53.1 %
Apparent cumulative recovery - silver ⁽²⁾ % 25.8 % 21.9 % 25.8 % 21.9 %

Financial ⁽¹⁾
Revenue $ 16,496 13,451 48,182 16,915
Income (loss) from mine operations $ (1,839 ) 2,108 (580 ) 160
General and administrative expenses $ (1,171 ) (657 ) (3,297 ) (3,167 )
Total other income (expenses) $ (214 ) 2,140 (970 ) (6,250 )
Net and comprehensive income (loss) $ (3,224 ) 3,591 (4,847 ) (9,257 )
Net and comprehensive income (loss) attributable
to Golden Queen Mining Co Ltd. $ (1,889 ) 2,738 (3,352 ) (8,296 )
Average realized gold price ⁽²⁾ $/oz sold 1,280 1,329 1,257 1,303
Average realized silver price ⁽²⁾ $/oz sold 16.89 19.22 17.23 18.60
Total cash costs - net of by-product credits ⁽²⁾ $/Au oz produced 1,177 1,086 1,074 1,948
All-in sustaining costs - net of by-product
credits ⁽²⁾ $/Au oz produced 1,502 1,200 1,517 2,102
Total cash costs $/t placed 16.99 13.80 15.40 13.69
Off-site costs ⁽²⁾ $/t placed 0.78 0.67 0.77 0.38
Three months ended:
March 31, March 31,
2018 2017
Mining - Key Metrics
Ore mined k ton 1,135 852
Waste mined: ore mined ratio ore mined ratio 2.3:1 3.8:1
Gold grade placed oz/ton 0.019 0.019
Silver grade placed oz/ton 0.313 0.232
Gold sold oz 6,529 11,160
Silver sold oz 53,612 62,095
Apparent cumulative recovery - gold⁽¹⁾ % 71.5 % 63.3 %
Apparent cumulative recovery - silver⁽¹⁾ % 27.1 % 25.3 %

Financial⁽¹⁾
Revenue $ 9,585 14,804
Income (loss) from mine operations $ (6,449 ) 457
General and administrative expenses $ (1,254 ) (1,416 )
Total other expenses $ (1,360 ) (1,857 )
Net and comprehensive loss $ (9,063 ) (2,816 )
Net and comprehensive loss attributable to GQM Ltd. $ (5,417 ) (2,426 )
Average realized gold price⁽¹⁾ $/oz sold 1,330 1,228
Average realized silver price⁽¹⁾ $/oz sold 16.70 17.59
Total cash costs - net of by-product credits⁽¹⁾ $/Au oz produced 2,090 1,019
All-in sustaining costs - net of by-product credits⁽¹⁾ $/Au oz produced 2,413 1,663
Total cash costs⁽¹⁾ $/t placed 18.06 16.08
Off-site costs⁽¹⁾ $/t placed 0.61 0.84
⁽¹⁾ ~~For accounting purposes, the transition to the production phase commenced on April 1, 2016. As such, comparative figures for certain measures or data are not available or are not meaningful.~~
⁽²⁾ ~~Total~~total cash costs, all-in sustaining costs, apparent cumulative recovery, ~~and~~ 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-GAAP~~Non-US GAAP Financial Performance Measures” for further information. ~~As transition to the production phase commenced April 1, 2016, year-to-date amounts for these measures only include data starting April 1, 2016.~~
~~23 | Page~~
The strip ratio and gold grade for the three and nine months ended September 30, 2016 were not representative of the life-of-mine estimated averages due to the commencement of production on April 1, 2016 and the limited equipment and crew available during these periods. Notwithstanding the strip ratio and gold grade for the three and nine months ended September 30, 2016, the higher strip ratio as a result of mining more waste than ore for the three and nine months ended September 30, 2017 compared to the same periods in 2016, contributed to the higher total cost per ton placed.

Financial Results

~~The~~For the three months ended March 31, 2018, the Company generated revenues from operations of ~~$16.5 million~~$9,585 from the sale of ~~12,255~~6,529 ounces of gold and ~~47,977~~53,612 ounces of silver ~~for the three months ended September 30, 2017 and $48.2 million~~compared to revenues of $14,804 from the sale of ~~36,068~~11,160 ounces of gold and ~~163,586~~62,095 ounces of silver during the ~~nine months ended September 30, 2017.~~ comparable period in 2017, a decrease in revenue of $5,219.
The ~~Company generated revenues~~decrease in revenue is mainly due to a lack of ~~$13.5 million from~~available ounces translating to doré on the ~~sale of 8,715~~leach pad. Although 15,094 ounces of gold ~~and 97,430~~was placed on the leach pad in the first quarter of 2018 compared to 14,178 ounces in the first quarter of ~~silver for the three months ended September 30, 2016 and $16.9 million~~2017, revenues from ~~the sale of 11,197~~ ounces of gold placed on the leach pad will not be realized until later in the year. Because of this situation, the Mine recorded a higher cost per ton (less tons mined) and 124,930 ounces of silver during the nine months ended September 30, 2016. Production commenced on April 1, 2016 and therefore the Company did not generate any revenues during the first fiscal quarter of 2016.
~~The Company generated $0.39 million less revenue during the three months ended September 30, 2017 compared to the three months ended June 30, 2017, mostly as~~ a ~~result of fewer ounces of gold and silver sold. Although the average realized gold price~~higher cost per ounce ~~was $18 higher for the three months ended September 30, 2017 compared to the three months ended June 30, 2017 ($1,280 vs. $1,262 respectively), 398 fewer~~(less ounces of gold were sold in the current quarter compared to the previous quarter (12,255 ounces of gold sold vs. 12,653 ounces of gold sold respectively). The average realized silver price per ounce was slightly lower for the three months ended September 30, 2017 compared to the three months ended June 30, 2017 and 5,537 fewer ounces of silver were sold in the current quarter compared to the previous quarter (47,977 ounces of silver sold vs. 53,514 ounces of silver sold respectively)produced).

The costs, excluding depreciation and depletion, applicable to sales incurred during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 were ~~$15.4 million and $40.3~~$14.6 million (three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2017 - ~~$9.1 million and $12.7~~$11.6 million)~~, respectively.~~. The cost of sales, excluding depreciation and depletion, ~~increased mainly as a result of higher mining costs due to mining more waste and less ore compared to~~in the current quarter were relatively consistent with the prior quarter (three months ended ~~June 30,~~December 31, 2017 - ~~$13.4~~$15.9 million) and ~~recording an~~increased compared to respective quarter in prior year due to expensing $4.5 million of costs to ensure inventory ~~allowance of $0.80 million in the current quarter.~~was recognized at net realizable value. 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.

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Depreciation and depletion expenses during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 were $2.9 million and $8.4 million (three and nine months ended September 30, 2016 - $2.2 million and $4.1 million), respectively. Production commenced on April 1, 2016 and therefore the Company did not record significant depreciation and depletion until after this date. The depreciation and depletion expenses for three months ended September 30, 2017 increased slightly$2,976 compared to $2,756 for the ~~previous quarter (three months ended June 30,~~same period in 2017, ~~- $2.7 million) as a result~~an increase of ~~recording more expense~~$220. The increase in 2018 compared to 2017 was mainly due to ~~a change~~the addition of depreciable fixed assets of $19,409 in ~~Management’s estimate of~~ the ~~useful lives of certain pieces of equipment being reduced from ten to seven years.~~third and fourth quarters in 2017.

General and administrative expenses ~~increased by $0.5 million to $1.2 million during~~for the three months ended ~~September 30, 2017~~March 31, 2018 were $1,254 compared to ~~$0.7 million~~$1,416 for the ~~same period~~three months ended March 31, 2017, a decrease of $162. The decrease in ~~2016 primarily as~~2018 compared to 2017 was mainly a result of a decrease in foreign exchange gains as the Canadian dollar has strengthened against the US dollar. General and administrative expenses increased slightly by $0.1 million to $3.3 million during the nine months ended September 30, 2017 compared to $3.2 million for the same period in 2016.corporate administration costs.
~~24 | Page~~

For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018, the Company incurred ~~total interest expense~~finance expenses of ~~$1.3 million and $3.6 million (three and nine~~$1,533 compared to $1,047 for the three months ended ~~September 30, 2016 - $1.8 million and $4.4 million, respectively, related~~March 31, 2017, an increase of $486. The increase in finance expenses was mainly due to ~~its various loans. The decrease resulted from the fact the June 2015 Loan was replaced by a new loan in November 2016 with a lower principal and a reduction~~an increase of 2% in the interest rate on the Clay Loan resulting in additional interest ~~rate. Please refer to Note 9(ii)~~of $87 payable, and ~~9(iii)~~increased accretion of $269 recorded on the unaudited condensed consolidated interim financial statements. Also, during the nine months ended September 30, 2017 there was no interest capitalized to mineral properties, compared to $1.0 million in the same periods of 2016.Clay Loan.

The Company’s derivative liability as at September 30, 2017 and for the nine months then ended includes the warrants issued in conjunction with the November 2016 Clay Loan, the June 2015 Loan and the July 2016 Financing. DuringFor the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018, the Company recorded a ~~decrease in~~gain on derivative instruments of $138 compared to a loss on derivative instruments of $481 for the ~~derivative liability of $1.1 million and $3.0 million (three and nine~~three months ended ~~September 30, 2016 – a decrease of $3.9 million and an increase of $2.0 million, respectively).~~March 31, 2017. The ~~significant decrease during the nine months ended September 30, 2017~~gain in 2018 was due to a decrease in the Company’s share price whereas the ~~significant increase for the comparable period~~loss in ~~2016~~2017 was due to an increase in the Company’s share price. ~~Refer to Note 10 of the unaudited condensed consolidated interim financial statements for a detailed analysis of the changes in fair value of the derivative liability.~~
Summary of Quarterly Results ~~(in thousands of US dollars, except per share)~~

Results for the eight most recent quarters are set out in the table ~~below (in $000 other than per share amounts):~~below:

Results for the quarter ended on: Results for the quarter ended:
30-Sep-17 30-Jun-17 31-Mar-17 31-Dec-16 31-Mar-18 31-Dec-17 30-Sep-17 30-Jun-17
Revenue $ 16,496 $ 16,882 $ 14,804 $ 10,278 $ 9,585 $ 13,939 $ 16,496 $ 16,882
Net and comprehensive income (loss) $ (3,224 ) $ 1,192 $ (2,816 ) $ (434 ) $ (9,063 ) $ (1,327 ) $ (3,224 ) $ 1,192
Net and comprehensive income (loss) attributable
to Golden Queen Mining Co Ltd. $ (1,889 ) $ 962 $ (2,426 ) 868
Net and comprehensive income (loss) attributable
to GQM Ltd. $ (5,417 ) $ 2,188 $ (1,889 ) 962
Basic net income (loss) per share $ (0.02 ) $ 0.01 $ (0.02 ) $ 0.01 $ (0.03 ) $ 0.02 $ (0.02 ) $ 0.01
Diluted net income (loss) per share $ (0.02 ) $ 0.01 $ (0.02 ) $ 0.01 $ (0.03 ) $ 0.02 $ (0.02 ) $ 0.01

Results for the quarter ended on:
30-Sep-16 30-Jun-16 31-Mar-16 31-Dec-15
Revenue $ 13,451 $ 3,464 $ Nil $ Nil
Net and comprehensive income (loss) $ 3,591 $ (3,568 ) $ (9,280 ) $ (1,217 )
Net and comprehensive income loss attributable to
Golden Queen Mining Co Ltd. $ 2,738 $ (2,109 ) (8,926 ) (722 )
Basic net loss per share $ 0.03 $ (0.02 ) $ (0.09 ) $ (0.01 )
Diluted net loss per share $ 0.03 $ (0.02 ) $ (0.09 ) $ (0.01 )
Results for the quarter ended:
31-Mar-17 31-Dec-16 30-Sep-16 30-Jun-16
Revenue $ 14,804 $ 10,278 $ 13,451 $ 3,464
Net and comprehensive income (loss) $ (2,816 ) $ (434 ) $ 3,591 $ (3,568 )
Net and comprehensive income (loss) attributable to
GQM Ltd. $ (2,426 ) $ 868 2,738 (2,109 )
Basic net income (loss) per share $ (0.02 ) $ 0.01 $ 0.03 $ (0.02 )
Diluted net income (loss) per share $ (0.02 ) $ 0.01 $ 0.03 $ (0.02 )

During the three months ended ~~September 30, 2017,~~March 31, 2018, net and comprehensive loss was ~~$3.2 million compared to net and comprehensive income~~$9,063 mainly as a result of ~~$1.2 million during the three months ended June 30, 2017. This change is primarily due to the movement in the value of the Company’s derivative liability (discussed above) and the~~ loss from mine operations of ~~$1.8 million during~~$6,449 due to higher direct mining costs as a result of developing the ~~three months ended September 30, 2017 compared~~East Pit and lower revenues due to ~~income from mine operations~~lower production as a result of ~~$0.8 million during~~less available gold ounces on the ~~three months ended June 30, 2017.~~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.

~~Please refer to the~~~~Results of Operations~~ ~~section above for the results of operations for the three and nine months ended September 30, 2017.~~
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Reclamation Financial Assurance and Asset Retirement Obligation

Reclamation Financial Assurance

The Company is required to provide the Bureau of Land Management, the State Office of Mine Reclamation and Kern County ~~California~~ with a revised reclamation cost estimate ~~on an annual basis. An independent consulting engineer provides this estimate.~~ annually. The financial assurance is adjusted once the cost estimate is approved.
This ~~cost~~ estimate, once approved by state and county authorities, forms the basis ~~for a surety bond for~~of reclamation financial assurance. The reclamation assurance provided as at ~~September 30, 2017 is $1.5 million~~March 31, 2018 was $1,500 (December 31, ~~2016 - $1.5 million)~~2017– $1,465).
~~25 | Page~~
The Company 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 ~~pad,~~pads, the overflow pond, and the solution collection channel. The reclamation financial assurance estimate as ~~of September 30, 2017~~at March 31, 2018, is ~~$1.2 million~~$2,450 (December 31, ~~2016 - $1.2 million)~~2017– $1,869).

In addition to the above, the Company is required to obtain and maintain financial assurance for initiating and completing corrective action and remediation of a reasonably foreseeable release from the ~~Mine’s~~Project’s waste management units as required by the Regional Board. The reclamation financial assurance estimate as ~~of September 30, 2017,~~at March 31, 2018 is ~~$0.3 million~~$278 (December 31, ~~2016 - $0.3 million)~~2017– $278).

~~During 2016, the~~The Company entered into ~~$3.0 million~~$4,228 (2017–$3,612) in surety bond agreements ~~to maintain the necessary financial assurance as required by the relevant regulatory bodies, as described in the paragraphs above, and~~ in order to release its reclamation ~~deposits.~~deposits and posted a portion of the financial assurance due in 2017. The Company pays a yearly premium of ~~$0.1 million. Golden Queen Mining Co.~~$90 (2016– $90). GQM Ltd. has provided a corporate ~~guaranty~~guarantee on the surety ~~bonds (see Note 12 of the unaudited condensed consolidated financial statements).~~bonds.

Asset Retirement Obligation

The total asset retirement obligation as ~~of September 30, 2017,~~at March 31, 2018, was ~~$1.7 million~~$2,229 (December 31, ~~2016 - $1.4 million)~~2017– $1,838).
The Company estimated its asset retirement ~~obligation~~obligations based on its understanding of the requirements to reclaim and remediate its property based on its activities to date. As at ~~September 30, 2017,~~March 31, 2018, the Company estimates the ~~primary~~ cash outflow related to these reclamation activities will ~~commence~~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 ~~8.7%~~8.34% and an inflation rate of ~~2.45%~~2.41%.
The following is a summary of asset retirement obligations:
March 31,
2018 December 31,
2017
Balance, beginning of the period $ 1,838 $ 1,366
Accretion 42 126
Changes in cash flow estimates 349 346
Balance, end of the period $ 2,229 $ 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 ~~Agreement~~Personnel, Transactions with Related Parties and Related Party Balances

~~During~~For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018, the Company ~~paid a total of $0.03 million and $0.09 million (the~~recognized$195 (for the three ~~and nine~~ months ended ~~September 30, 2016 - $0.03 million~~March 31, 2017– $218) salaries and ~~$0.09 million, respectively), respectively,~~fees for Officers and Directors.
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As at March 31, 2018, $nil (December 31, 2017– $38) was included in prepaid expenses and other current assets for closing fees paid to ~~the three independent directors of the Company.~~related parties.
As at March 31,2018, $835 (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.
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.
The following table summarizes activity on the notes payable:
March 31,
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 490 1,940
Capitalized financing and legal fees - (400 )
Accretion of capitalized financing and legal fees 65 -
Repayment of loans and interest (4,712 ) -
Balance, end of the period $ 25,942 $ 30,099

Current portion $ 4,000 $ 7,712
Non-current portion $ 21,942 $ 22,387
(iii) Amortization of Discounts and Interest Expense

The following table summarizes the amortization of discounts and interest on ~~loan ($000):~~loan:

Three Months
Ended
Sep 30, Three Months
Ended
Sep 30, Nine Months Ended
Sep 30, Nine Months
Ended
Sep 30,
2017 2016 2017 2016
Accretion of the Nov 2016 Loan discount $ 510 $ - $ 1,250 $ -
Interest expense related to the Nov 2016 Loan 642 - 1,914 -
Interest expense related to Komatsu financial loans⁽¹⁾
143 144 428 464
Accretion of the June 2015 Loan discount - 621 - 1,853
Interest expense related to the June 2015 Loan - 1,050 - 3,057
Accretion of discount and interest on loan $ 1,295 $ 1,815 $ 3,592 $ 5,374
Three Months
Ended
March 31, Three Months
Ended
March 31,
2018 2017
Accretion of the November 2017 Loan discount $ 490 $ 286
Accretion of capitalized financing and legal fees 65 -
Interest expense related to the November 2017 Loan 713 626
Closing and commitment fees related to the Credit Facility 30 -
Interest expense related to Komatsu financial loans⁽¹⁾ 235 135
Accretion of discount and interest on loan $ 1,533 $ 1,047
⁽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.
Three Months
Ended
Sep 30, Three Months
Ended
Sep 30, Nine Months Ended
Sep 30, Nine Months
Ended
Sep 30,
2017 2016 2017 2016
Accretion of discounts and interest on loan⁽¹⁾ $ 1,295 $ 1,815 $ 3,592 $ 5,374
Less: Interest costs capitalized⁽²⁾ - - - (1,005 )
Interest expense $ 1,295 $ 1,815 $ 3,592 $ 4,369
⁽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.~~
⁽²⁾ ~~Interest capitalization ended on March 31, 2016 because the mine went into production on April 1, 2016.~~

26 24 | ~~Page~~P a g e

(iv) Joint Venture

The net assets of GQM LLC as ~~of September 30, 2017,~~at March 31, 2018 and December 31, ~~2016~~2017 are as follows:

September 30, 2017 December 31, 2016 March 31,
2018 December 31,
2017
Assets, GQM LLC $ 152,193 $ 151,802 $ 156,998 $ 149,095
Liabilities, GQM LLC (24,092 ) (20,710 ) (23,221 ) (28,024 )
Net assets, GQM LLC $ 128,101 $ 131,092 $ 133,777 $ 121,071
Included in the assets above, is ~~$3.8 million~~$9,622 (December 31, ~~2016 - $11.1 million)~~2017– $2,606) in cash held ~~as at September 30, 2017. The cash in~~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 ~~the primary beneficiary~~Golden Queen except for 2$2,203 for two mining drill loans and ~~$3.0 million~~$4,228 in surety bond agreements.

(v) Revolving credit

On May 23, 2017, GQM LLC entered into a $5,000 one-year revolving credit ~~facility of $5 million with~~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 ~~revolving credit~~Credit Facility commenced on July 1, 2017, bears interest at a rate of 12% per annum and is ~~available until May 23,~~subject to a commitment fee of 1% per annum. For the three months ended March 31, 2018, ~~and bears a 12% simple annual interest.~~ GQM LLC paid ~~a closing fee~~commitment fees of ~~$0.1 million which was classified as prepaid expenses and other current assets. $0.02 million of the closing fee was amortized during the nine months ended September 30, 2017.~~$30 (2017 – $nil). As at ~~September 30,~~March 31, 2018, GQM LLC has drawn $nil (December 31, 2017 ~~and November 9, 2017, no amounts had been drawn under this facility.~~– $3,000) from the Credit Facility.

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, 2017 ($000)
Total Level 1 Level 2 Level 3
Liabilities:
Share purchase warrants – Related Party (Note 10) $ 3,129 $ - $ 3,129 $ -
Share purchase warrants – (Note 10) 268 - 268 -
$ 3,397 $ - $ 3,397 $ -
March 31, 2018
Total Level 1 Level 2 Level 3
Liabilities:
Share purchase warrants – Related Party (see Note 8) $ 302 $ - $ 302 $ -
Share purchase warrants – (see Note 8) 1 - 1 -
$ 303 $ - $ 303 $ -

December 31, 2016
Total Level 1 Level 2 Level 3
Liabilities:
Share purchase warrants – Related Party (Note 10) $ 5,458 $ - $ 5,458 $ -
Share purchase warrants – (Note 10) 972 - 972 -
$ 6,430 $ - $ 6,430 $ -
~~27 | Page~~
December 31, 2017
Total Level 1 Level 2 Level 3
Liabilities:
Share purchase warrants – Related Party (see Note 8) $ 439 $ - $ 439 $ -
Share purchase warrants – (see Note 8) 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 underResults of operations above for more information.
25 | P a g e

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 ~~of September 30, 2017 and for nine months then ended ($000):~~at March 31, 2018:
GQM LLC 100% GQM LLC
50% Attributable
to GQM Ltd. GQM Ltd.
on a Non-
Consolidated
Basis * GQM Ltd.
Attributable
(1) (2) (1) + (2)
Cash $ 9,622 $ 4,811 $ 8,608 $ 13,419
Short Term Debt $ 7,709 $ 3,855 $ 4,000 $ 7,855
Long Term Debt $ 8,150 $ 4,075 $ 21,942 $ 26,017
Working Capital $ 7,341 $ 3,671 $ 3,596 $ 7,267
* includes GQM Holdings

The following table shows figures attributable to the Company only for the three months ended March 31, 2018:
GQM LLC 100% GQM LLC
50% Attributable to LTD LTD on a Non-Consolidated Basis * LTD Attributable
(1) (2) (1) + (2)
Cash $ 3,755 $ 1,878 $ 928 $ 2,806
Short Term Debt $ 7,024 $ 3,512 $ 9,061 $ 12,573
Long Term Debt $ 9,372 $ 4,686 $ 20,096 $ 24,782
Working Capital / (Deficit) $ (9,114 ) $ (4,557 ) $ (12,133 ) $ (16,690 )

GQM LLC 100% GQM LLC
50% Attributable
to GQM Ltd. GQM Ltd.
on a Non-
Consolidated
Basis * GQM Ltd.
Attributable
(1) (2) (1) + (2)
Revenue $ 9,585 $ 4,793 $ - $ 4,793
Cost of sales including depreciation and depletion $ (15,894 ) $ (7,947 ) $ (98 ) $ (8,045 )
Accretion expense $ (42 ) $ (21 ) $ - $ (21 )
G&A Expenses $ (703 ) $ (352 ) $ (505 ) $ (857 )
Share based payments $ - $ - $ (45 ) $ (45 )
Decrease in fair value of derivative liability $ - $ - $ 138 $ 138
Interest Expense $ (265 ) $ (133 ) $ (1,269 ) $ (1,387 )
Interest Income $ 25 $ 13 $ 9 $ 22
Net Loss $ (7,294 ) $ (3,647 ) $ (1,770 ) $ (5,417 )
GQM LLC 100% GQM LLC
50% Attributable to LTD LTD on a Non-Consolidated Basis * LTD Attributable
(1) (2) (1) + (2)
Revenue $ 48,182 $ 24,091 $ - $ 24,091
Cost of sales including depreciation and depletion $ (48,431 ) $ (24,216 ) $ (331 ) $ (24,547 )
Accretion expense $ (94 ) $ (47 ) $ - $ (47 )
G&A Expenses $ (1,896 ) $ (948 ) $ (1,316 ) $ (2,264 )
Share based payments $ - $ - $ (133 ) $ (133 )
Foreign exchange gain (loss) $ - $ - $ 48 $ 48
(Increase) / Decrease in fair value of derivative liability $ - $ - $ 3,033 $ 3,033
Interest Expense $ (428 ) $ (214 ) $ (3,164 ) $ (3,378 )
Interest Income $ 70 $ 35 $ 7 $ 42
Others $ (394 ) $ (197 ) $ - $ (197 )
Net Loss $ (2,991 ) $ (1,496 ) $ (1,856 ) $ (3,352 )
* includes GQM Holdings

Liquidity and Capital Resources

The Company has generated ~~$75.4 million~~$98,899 in revenues from operations since inception and as at ~~September 30, 2017~~March 31, 2018, had an accumulated deficit of ~~$90.7 million~~$93,917 and a working capital ~~deficit~~ of ~~$9.1 million. The Company used $1.2 million in operations for the three months ended September 30, 2017 and generated $4.3 million in operations for the nine months ended September 30, 2017.~~
$10,937. On ~~December 31, 2014,~~February 20, 2018, the Company ~~entered into~~successfully closed a ~~loan (the “December 2014 Loan”) with the Clay Group~~rights offering for $12.5 million, due on July 1, 2015. On June 8, 2015, the Company amended the December 2014 Loan to extend the maturity to December 8, 2016 and increased the principal amount from $12.5 million to $37.5 million (the “June 2015 Loan”). On November 18, 2016, the Company repaid $12.2 million of the June 2015 Loan and accrued interest with cash on hand and net proceeds of ~~$10.1 million from an equity financing.~~$24,368. The Company ~~restructured~~issued the ~~remaining~~full allotment of 188,952,761 common shares pursuant to the terms of the Offering. Partial proceeds were used to reduce the corporate debt, ~~with a new loan with a principal amount~~fund the Company’s 50% portion of ~~$31.0 million (the “November 2016 Loan”). The November 2016 Loan has a thirty-month term~~costs required for the purchase of additional equipment for the Mine and ~~an annual interest rate of 8%, payable on a quarterly basis commencing during~~to repay the ~~first quarter of 2017.~~Credit Facility.

28 26 | ~~Page~~P a g e

As per terms of the November 2016 Loan, the Company is required to pay the following to the Clay Group on the following dates: $5.4 million of accrued interest and principal on January 1, 2018; $3.1 million of interest and principal on April 1, 2018; $3.0 million of interest and principal on July 1, 2018; $3.0 million of interest and principal on and October 1, 2018. 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 nine months ended September 30, 2017 results and has determined it is unlikely it will receive sufficient distributions from GQM LLC during this fiscal year to service its debt in early 2018. This situation raises substantial doubt about the Company’s ability to continue as a going concern. Consequently, discussions with the Clay Group to restructure the reimbursement schedule have been initiated. While the Company has been successful in re-negotiating the debt reimbursement schedule with the Clay Group on previous occasions, there can be no assurance that will be achieved going forward.
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.

Cash from operating activities:

~~Cash generated by~~For the three months ended March 31, 2018, $7,394 of cash was used in operating activities ~~was $6.0 million~~compared to $2,791 of cash generated from operating activities for the ~~nine~~three months ended ~~September 30, 2017 (used~~March 31, 2017. The increased use of cash in ~~the nine months ended September 30, 2016 - $3.1 million). The increase in cash generated by operating activities is~~2018 was primarily due to increased direct mining costs and reduced revenue in 2018 compared to 2017.
In the ~~increase in revenues since~~first quarter of 2018, the Company ~~started~~was still developing the East Pit resulting in higher costs in 2018 compared to 2017. As well, gold production in ~~the second quarter of 2016, improvements~~2018 has been lower compared to 2017 resulting in ~~working capital and operating cost.~~lower revenues.

Cash used in investing activities:

~~Cash~~For the three months ended March 31, 2018, $2,071 of cash was used in investing activities ~~totaled $10.0 million during~~compared to $5,236 of cash used in investing activities for the ~~nine~~three months ended ~~September 30,~~March 31, 2017. The major use of cash in 2017 ~~(nine months ended September 30, 2016 – $10.5 million). Construction~~was the start of ~~the second stage~~construction of ~~the~~ leach pad ~~commenced in the first quarter of 2017 and~~phase 2; it was completed in ~~September.~~the third quarter of 2017.

Cash from financing activities:

~~Cash~~For the three months ended March 31, 2018, $24,758 of cash was generated from financing activities compared to $1,405 of cash used in financing activities ~~totaled $4.6 million during~~for the ~~nine~~three months ended ~~September 30, 2017 (nine months ended September 30, 2016 – cash generated of $7.2 million).~~March 31, 2017. The main financing activities of the Company during in 2018 was the ~~nine months ended September 30, 2017 were related~~closing of a rights offering partial proceeds from which was used to ~~loans payable on mining~~reduce the corporate debt, fund the Company’s 50% portion of costs required for the purchase of additional equipment for the Mine and ~~machinery.~~to repay the Credit Facility and a capital contribution of $10,000 from the non-controlling interest.

Working capital:
The following table shows working capital ~~($000):~~as at March 31, 2018:
LTD on a
Non-Consolidated
Basis * LTD on a
Consolidated
Basis **

Current Assets $ 959 $ 16,979
Current Liabilities $ (13,092 ) $ (26,093 )
Working Capital / (Deficit) $ (12,133 ) $ (9,114 )

* Includes GQM Holdings
** Includes GQM Holdings and GQM LLC

GQM LLC
100%
GQM Ltd. on a
Non-Consolidated
Basis * GQM Ltd. on a
Consolidated
Basis **
Current assets $ 20,183 $ 8,660 $ 28,843
Current liabilities (12,842 ) (5,064 ) (17,906 )
Working capital $ 7,341 $ 3,596 $ 10,937
* includes GQM Holdings
** includes GQM Holdings and GQM LLC
Golden Queen and GQM Holdings

As at ~~September 30, 2017,~~March 31, 2018, Golden Queen and GQM Holdings had current assets of ~~$1.0 million~~$8,660 (December 31, ~~2016 - $2.3 million)~~2017 – $502) and current liabilities of ~~$13.1 million~~$5,064 (December 31, ~~2016 - $6.9 million)~~2017 – $9,194) for aworking capital of $3,596 (December 31, 2017 – working capital deficit of ~~$12.1 million (December 31, 2016 – $4.6 million)~~$8,692). The ~~decrease~~increase in current assets from December 31, ~~2016~~2017 is the mainly a result of ~~general corporate expenditures such as corporate salary expenses, legal fees, audit fees,~~ and ~~interest expenses.~~increase in cash from funds received from the rights offering. The ~~increase~~decrease in current liabilities is ~~the~~a result of ~~the~~paying off principal ~~payments of the November 2016 Clay Loan due within 12 months now being included in current liabilities.~~
~~29 | Page~~
~~Golden Queen will use its cash for general corporate expenditures such as accounting fees, legal fees~~ and ~~corporate salary expenses. Interest expenses~~accrued interest payable on the November ~~2016~~2017 Clay Loan ~~due during 2017 have been added to~~from the ~~loan principal balance rather than paid in cash, at~~proceeds of the ~~Company’s option.~~rights offering.

GQM LLC

As at ~~September 30, 2017,~~March 31, 2018, GQM LLC had current assets of ~~$16.0 million~~$20,183 (December 31, ~~2016 - $22.7 million)~~2017 – $12,162) and current liabilities of ~~$13.0 million~~$12,842 (December 31, ~~2016 - $9.9 million)~~2017 – $16,572) for a working capital ~~surplus~~ of ~~$3.0 million~~$7,341 (December 31, ~~2016~~2017 – ~~$12.8 million)~~working capital deficit of $4,410). The ~~decrease~~increase in current assets from December 31, ~~2016~~2017 is a result of ~~cash spent on project-related expenditures~~capital contributions of $10,000 received from each of its Members, Golden Queen and ~~working capital.~~Gauss. The ~~increase~~decrease in current liabilities is due to ~~an increase in accounts payable and an increase of~~paying off the ~~short-term portion of~~Credit Facility from the ~~mobile equipment loans.~~capital contribution proceeds.
27 | P a g e

~~GQM LLC will use its cash on hand for sustaining capital expenditures and for working capital needs.~~

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 onas at December 31, ~~2016~~2017 ~~111,048,683~~ 111,148,683
Shares issued as the result of a ~~purchase agreement~~ ~~100,000~~rights offering 188,952,761
~~Shares issued pursuant to the exercise of stock options~~ ~~Nil~~
Shares issued and outstanding ~~on September 30, 2017~~as at March 31, 2018 ~~111,148,683~~ 300,101,444 Exercise Price Expiry Date
Shares to be issued on exercise of directors and employees stock options 2,600,001 $0.29 to $1.59
From 06/03/18 to 10/20/22
Shares to be issued on exercise of warrants 24,317,700 $0.85 to $0.95 and
CAD $2.00 From 06/08/20 to
11/18/21
Fully diluted ~~November~~ May9, ~~2017~~2018
~~138,066,384~~ 327,019,145
~~The company~~
The Company has an unlimited authorized share capital
~~Subsequent Events~~

On October 20, 2017, the Company granted 1,204,999 options to certain directors and employees of Golden Queen. The options are exercisable at a price of $0.29 for a period of five years from the date of grant. 401,666 options vest on October 20, 2018; 401,666 options vest on October 20, 2019; and 401,667 options vest on October 20, 2020.
On November 10, 2017, the Company and the Clay Group agreed to amend the November 2016 Loan by reducing the quarterly principal payments that commence the first quarter of 2018 from $2.5 million to $1.0 million and increasing the annual interest rate from 8% to 10% effective January 1, 2018. As well, all interest payments in 2017 that were deferred at the Company’s option along with a $2.5 million principal payment and a $0.40 amendment fee are payable on January 1, 2018. At the Company’s option, interest and principal payments due on January 1, 2018 can be delayed until February 15, 2018 to accommodate delays in the Offering process.
On November 13, 2017, the Company filed a preliminary prospectus with the securities regulatory authorities in each of the provinces of British Columbia, Alberta and Ontario, Canada and the United Sates except for the states of Arizona, Arkansas, California, Minnesota and Wisconsin in connection with qualifying an offering of the Company (the “Offering"), in connection with a marketed offering of common shares in the capital of the Company for aggregate gross proceeds of $25.0 million. Closing of the Offering is subject to receipt of applicable regulatory approvals including approval of the Toronto Stock Exchange. The net proceeds of the Offering will be used to reduce the corporate debt, purchase additional equipment for the mine and general corporate and working capital purposes.
~~Non-GAAP~~Non-US GAAP Financial Performance Measures

~~Non-GAAP~~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 ~~metals~~ revenues when compared with gold ~~metals~~ revenues, are immaterial and therefore are considered a by-product of the production of gold.
~~30 | Page~~

The table below shows a reconciliation of total cash costs per gold ounce and cash costs per gold ounce on a by-product ~~basis (expressed in thousands of US dollars except ounce and per ounce amounts):~~basis:

Three months ended
Three Months Ended March 31, December 31,
September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016 2018 2017
Total Cash Costs
Mining $ 7,178 $ 6,583 $ 5,624 $ 4,933 $ 7,376 $ 7,174
Processing 5,055 4,797 4,379 4,243 4,488 4,346
Indirect mining cost 2,189 1,795 1,880 1,901 1,972 2,308
Inventory changes and others 982 192 (322 ) (2,181 ) (820 ) 1,970
Direct mining costs 15,404 13,367 11,561 8,896 13,016 15,798
Site general and administrative 830 658 838 776
Site general and administrative expenses 732 897
Cash costs before by-product credits 16,234 14,025 12,399 9,672 13,748 16,695
Divided by gold produced (oz) 12,275 12,632 11,406 7,779 6,579 9,886
Cash costs per ounce of gold produced ($/oz) 1,323 1,110 1,087 1,243 2,090 1,689
Less: By-product silver credits per ounce ($/oz) (66 ) (72 ) (98 ) (148 ) (136 ) (123 )
Total cash cost per ounce of gold produced on a by-product basis ($/oz) $ 1,257 $ 1,038 $ 989 $ 1,096 $ 1,954 $ 1,566

Ore placed (tons) 897,549 1,026,332 791,232 894,754 806,450 837,779
Total Cash Costs ($/t placed) 16.99 13.48 16.08 13.25
Total cash costs ($/t placed) 18.06 17.52
Crusher mechanical availability (%) 74 % 81 % 63 % 70 % 65 % 69 %
Apparent cumulative recovery⁽¹⁾ – gold 73.0 % 68.0 % 64.2 % 59.7 % 71.5 % 75.5 %
Apparent cumulative recovery⁽¹⁾ – silver 25.8 % 25.3 % 25.3 % 24.0 %
Apparent cumulative recovery⁽¹⁾ - silver 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.

⁽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.~~28 | P a g e

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.

~~31 | Page~~
The table below shows a reconciliation of cash costs per gold ounce on a by-product basis and all-in sustaining costs per ~~ounce (expressed in thousands of US dollars except ounce and per ounce amounts):~~ounce:

Three months ended
Three Months Ended March 31, December 31,
September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016 2018 2017
All-in sustaining costs
Cash costs before by-product credits $ 16,234 $ 14,025 $ 12,399 $ 9,672
Cash costs before by-product credits* $ 13,748 $ 16,695
Silver by-product (810 ) (915 ) (1,092 ) (1,150 ) (895 ) (1,221 )
Total cash cost after by-product 15,424 13,110 11,307 8,522 12,853 15,474
Corporate general and administrative expenses 341 54 578 311 522 549
Share based payments 48 51 34 17
Stock based compensation 45 68
Accretion expense 93 32 31 23 42 32
Sustaining capital 3,990 4,781 7,288 2,648 2,412 3,303
All-in sustaining costs 19,896 18,028 19,238 11,521 15,874 19,426
Divided by gold produced (oz) 12,275 12,632 11,406 7,779 6,579 9,886
All-in sustaining costs per gold ounce on a by-product basis $ 1,621 $ 1,427 $ 1,687 $ 1,481 $ 2,413 $ 1,965

*The following table reconciles the above non-US GAAP measures to the most directly comparable US GAAP measures:
Three months ended
March 31, December 31,
2018 2017
Cost of goods sold 16,034 19,450
Less: depreciation and depletion $ (2,976 ) $ (3,526 )
Less: accretion expense (42 ) (126 )
Direct mining costs 13,016 15,798
Add: site general and administrative expenses 732 897
Cash costs before by-product credits $ 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 ~~as at~~for the year ended December 31, ~~2016.~~
~~Other Legal Matters~~
~~The Center for Biodiversity Petition to List the Mohave Shoulderband Snail as an Endangered Species~~
As a result of a petition filed by the Center for Biological Diversity (“CBD”) to list the Mohave Shoulderband snail as an endangered species under the Endangered Species Act, the United States Fish and Wildlife Service (“USFWS”) is required to issue a 12-Month Finding on the species by November 30, 2017. The Company, the USFWS, and the CBD have jointly surveyed for the presence of the snail on and around Soledad Mountain. The Company believes that conservation of the snail can be accomplished without material adjustments to the Mine plan, but if the USFWS ultimately finds that the snail is ‘endangered’ or ‘threatened’ and no agreed conservation plan is established, material adjustments to the Mine plan may be required.

Additional Information

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

~~Item 3. Quantitative and Qualitative Disclosures About Market Risk~~
~~Credit Risk~~
Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Company by failing to discharge its obligations. To mitigate exposure to credit risk on financial assets the Company has established policies to ensure liquidity of funds and ensure counterparties demonstrate minimum acceptable credit worthiness.
The Company maintains its US Dollar and Canadian Dollar cash in bank accounts with major financial institutions with high credit standings. Cash deposits held in the United States are insured by the Federal Deposit Insurance Corporation (“FDIC”) for up to $250,000 and Canadian Dollar cash deposits held in Canada are insured by the Canada Deposit Insurance Corporation (“CDIC”) for up to C$100,000.
Certain United States and Canadian bank accounts held by the Company exceed these federally insured limits or are uninsured as they relate to US Dollar deposits held in Canadian financial institutions. As of September 30, 2017, the Company’s cash balances held in United States and Canadian financial institutions include $4.7 million, 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.
32 29 | ~~Page~~P a g e

~~Interest Rate Risk~~
The interest rates received on these balances may fluctuate with changes in economic conditions. Based on the average cash balances during the three and six months ended September 30, 2017, a 1% decrease in interest rates would have reduced the interest income by a trivial amount.
~~Foreign Currency Exchange Risk~~
Certain purchases of labour are denominated in Canadian dollars. As a result, currency exchange fluctuations may impact the costs of our operations. Specifically, the appreciation of the Canadian dollar against the US dollar may result in an increase in the Canadian operating expenses in US dollar terms. As of September 30, 2017, the Company maintained the majority of its cash balance in US currency.
~~Commodity Price Risk~~
The Company’s primary business activity is the development of the open pit, gold and silver, heap leach project on the Property. Decreases in the price of either of these metals from current levels have the potential to negatively impact the future viability of the Mine. A 10% change in the gold spot price would have a trivial impact on the change in the fair value of the derivative contracts held by the Company. The Company may enter into hedging contracts from time to time to protect the cash flows from commodity price volatility.

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, 2017~~March 31, 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 deficiency 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:

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

~~33 | Page~~
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 atwww.goldenqueen.com

For the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and the year ended December 31, ~~2016,~~2017, there were no reported instances of fraud.

30 | P a g e
Part II – Other Information

Item 1. Legal Proceedings

~~See “The Center for Biodiversity Petition~~Fromtime to ~~List~~time, we are a party to routine litigation and proceedings that are considered part of the ~~Mojave Shoulderband Snail as an Endangered Species” and “Other Legal Matters” contained in Item 2. Management’s Discussion and Analysis~~ordinary course of ~~Financial Condition and Results~~our business. We are not aware of ~~Operations of this Form 10-Q.~~any material current, pending, or threatened litigation.

Item ~~1A. Risk Factors~~2. Unregistered Sales of Equity Securities and Use of Proceeds

Golden Queen and its future business, operations and financial condition are subject to various risks and uncertainties due to the nature of its business and the present stage of development of the Mine. Certain of these risks and uncertainties are under the heading “Risk Factors” under Golden Queen’s Form 10-K dated March 15, 2017 which is available on SEDAR at~~www.sedar.com, EDGAR atwww.sec.gov~~ ~~and on our website atwww.goldenqueen.com~~.Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.

Item 4. Mine Safety Disclosures

GQM LLC is the operator of 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~~was one lost-time ~~accidents~~accident at GQM LLC during the three months ended ~~September 30, 2017.~~March 31, 2018.
Item 5. Other Information
Not applicable.

Item 6. Exhibits

Exhibit
No. Description of Exhibit Manner of Filing
~~3.1~~10.1 ~~Notice of Articles~~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 Filed herewith
~~3.2~~10.2 ~~Articles~~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 3.2 to the Form 8-K of the Company, filed with the SEC on September 2, 2010~~Filed herewith
~~4.1~~31.1 ~~Warrant Indenture dated July 25, 2016~~ ~~Incorporated by reference to Exhibit 4.1 to the Form 8-K of the Company, filed with the SEC on July 25, 2016~~
~~4.2~~ ~~Form of Warrant Certificate~~ ~~Incorporated by reference to Exhibit 4.1 to the Form 8-K of the Company, filed with the SEC on July 28, 2016~~
~~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 months ended ~~September 30, 2017,~~March 31, 2018, formatted in XBRL Filed herewith

34 31 | ~~Page~~P a g e

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 14, 2017~~
May 10, 2018
GOLDEN QUEEN MINING CO. LTD.
(Registrant)

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

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

35 32 | ~~Page~~P a g e

	Shares			Weighted Average Exercise Price per Share
Options outstanding, December 31, 2015		1,070,000		$	0.94
Options granted		485,000		$	0.66
Options outstanding, December 31, 2016		1,555,000		$	0.85
Options granted		400,002		$	0.65
Options forfeited		(166,667	)	$	0.64
Options expired		(393,333	)	$	1.10
Options outstanding, September 30, 2017		1,395,002		$	0.75

Expiry Date	Number Outstanding		Number Exercisable		Remaining Contractual Life (years)		Weighted Average Exercise Price
June 3, 2018		50,000		50,000		0.67	$	1.16
September 3, 2018		150,000		150,000		0.93	$	1.59
September 8, 2020		430,000		430,000		2.94	$	0.58
November 30, 2021		365,000		-		4.17	$	0.66
March 20, 2022		400,002		-		4.47	$	0.65
Balance, September 30, 2017		1,395,002		630,000		3.40	$	0.75

Expiry Date	Number Outstanding		Remaining Contractual Life (periods)		Exercise Price
June 8, 2020		10,000,000		2.69	$	0.95
July 25, 2019		6,317,700		1.82	C$	2.00
November 18, 2021		8,000,000		4.15	$	0.85

	September 30, 2017		December 31, 2016
Balance, beginning of the period	$	1,366	$	978
Accretion		92		90
Changes in cash flow estimates		261		298
Balance, end of the period	$	1,719	$	1,366

	Permanent Non- Controlling Interest			Temporary Non- Controlling Interest
Carrying value of non-controlling interest, December 31, 2016	$	39,327		$	26,219
Net and comprehensive loss for the period		(897	)		(598	)
Carrying value of non-controlling interest, September 30, 2017	$	38,430		$	25,621

	September 30, 2017			December 31, 2016
Fair value of warrants issued	$	972		$	2,701
Change in fair value of warrants		(704	)		(1,729	)
Balance, end of the period	$	268		$	972

	March 31, 2018
	Total		Level 1		Level 2		Level 3
Liabilities:
Share purchase warrants – Related Party (see Note 8)	$	302	$	-	$	302	$	-
Share purchase warrants – (see Note 8)		1		-		1		-
	$	303	$	-	$	303	$	-

	December 31, 2017
	Total		Level 1		Level 2		Level 3
Liabilities:
Share purchase warrants – Related Party (see Note 8)	$	439	$	-	$	439	$	-
Share purchase warrants – (see Note 8)		2		-		2		-
	$	441	$	-	$	441	$	-

		Three months ended						Nine months ended
		30-Sep-17			30-Sep-16			30-Sep-17			30-Sep-16
Mining - Key Metrics ⁽¹⁾
Ore mined	k ton		928			808			2,790			1,759
Waste mined: ore mined ratio	ore mined ratio		4.3:1			2.2:1			3.9:1			2.2:1
Gold grade placed	oz/ton		0.013			0.015			0.016			0.013
Silver grade placed	oz/ton		0.180			0.362			0.203			0.349
Gold sold	oz		12,255			8,715			36,068			11,197
Silver sold	oz		47,977			97,430			163,856			124,930
Apparent cumulative recovery - gold ⁽²⁾	%		73.0	%		53.1	%		73.0	%		53.1	%
Apparent cumulative recovery - silver ⁽²⁾	%		25.8	%		21.9	%		25.8	%		21.9	%

Financial ⁽¹⁾
Revenue	$		16,496			13,451			48,182			16,915
Income (loss) from mine operations	$		(1,839	)		2,108			(580	)		160
General and administrative expenses	$		(1,171	)		(657	)		(3,297	)		(3,167	)
Total other income (expenses)	$		(214	)		2,140			(970	)		(6,250	)
Net and comprehensive income (loss)	$		(3,224	)		3,591			(4,847	)		(9,257	)
Net and comprehensive income (loss) attributable to Golden Queen Mining Co Ltd.	$		(1,889	)		2,738			(3,352	)		(8,296	)
Average realized gold price ⁽²⁾	$/oz sold		1,280			1,329			1,257			1,303
Average realized silver price ⁽²⁾	$/oz sold		16.89			19.22			17.23			18.60
Total cash costs - net of by-product credits ⁽²⁾	$/Au oz produced		1,177			1,086			1,074			1,948
All-in sustaining costs - net of by-product credits ⁽²⁾	$/Au oz produced		1,502			1,200			1,517			2,102
Total cash costs	$/t placed		16.99			13.80			15.40			13.69
Off-site costs ⁽²⁾	$/t placed		0.78			0.67			0.77			0.38

		Three months ended:
		March 31,			March 31,
		2018			2017
Mining - Key Metrics
Ore mined	k ton		1,135			852
Waste mined: ore mined ratio	ore mined ratio		2.3:1			3.8:1
Gold grade placed	oz/ton		0.019			0.019
Silver grade placed	oz/ton		0.313			0.232
Gold sold	oz		6,529			11,160
Silver sold	oz		53,612			62,095
Apparent cumulative recovery - gold⁽¹⁾	%		71.5	%		63.3	%
Apparent cumulative recovery - silver⁽¹⁾	%		27.1	%		25.3	%

Financial⁽¹⁾
Revenue	$		9,585			14,804
Income (loss) from mine operations	$		(6,449	)		457
General and administrative expenses	$		(1,254	)		(1,416	)
Total other expenses	$		(1,360	)		(1,857	)
Net and comprehensive loss	$		(9,063	)		(2,816	)
Net and comprehensive loss attributable to GQM Ltd.	$		(5,417	)		(2,426	)
Average realized gold price⁽¹⁾	$/oz sold		1,330			1,228
Average realized silver price⁽¹⁾	$/oz sold		16.70			17.59
Total cash costs - net of by-product credits⁽¹⁾	$/Au oz produced		2,090			1,019
All-in sustaining costs - net of by-product credits⁽¹⁾	$/Au oz produced		2,413			1,663
Total cash costs⁽¹⁾	$/t placed		18.06			16.08
Off-site costs⁽¹⁾	$/t placed		0.61			0.84

	Results for the quarter ended on:												Results for the quarter ended:
	30-Sep-17			30-Jun-17			31-Mar-17			31-Dec-16			31-Mar-18			31-Dec-17			30-Sep-17			30-Jun-17
Revenue	$	16,496		$	16,882		$	14,804		$	10,278		$	9,585		$	13,939		$	16,496		$	16,882
Net and comprehensive income (loss)	$	(3,224	)	$	1,192		$	(2,816	)	$	(434	)	$	(9,063	)	$	(1,327	)	$	(3,224	)	$	1,192
Net and comprehensive income (loss) attributable to Golden Queen Mining Co Ltd.	$	(1,889	)	$	962		$	(2,426	)		868
Net and comprehensive income (loss) attributable to GQM Ltd.													$	(5,417	)	$	2,188		$	(1,889	)		962
Basic net income (loss) per share	$	(0.02	)	$	0.01		$	(0.02	)	$	0.01		$	(0.03	)	$	0.02		$	(0.02	)	$	0.01
Diluted net income (loss) per share	$	(0.02	)	$	0.01		$	(0.02	)	$	0.01		$	(0.03	)	$	0.02		$	(0.02	)	$	0.01

	Results for the quarter ended on:
	30-Sep-16			30-Jun-16			31-Mar-16			31-Dec-15
Revenue	$	13,451		$	3,464		$	Nil		$	Nil
Net and comprehensive income (loss)	$	3,591		$	(3,568	)	$	(9,280	)	$	(1,217	)
Net and comprehensive income loss attributable to Golden Queen Mining Co Ltd.	$	2,738		$	(2,109	)		(8,926	)		(722	)
Basic net loss per share	$	0.03		$	(0.02	)	$	(0.09	)	$	(0.01	)
Diluted net loss per share	$	0.03		$	(0.02	)	$	(0.09	)	$	(0.01	)

	Three Months Ended Sep 30,		Three Months Ended Sep 30,		Nine Months Ended Sep 30,		Nine Months Ended Sep 30,
	2017		2016		2017		2016
Accretion of the Nov 2016 Loan discount	$	510	$	-	$	1,250	$	-
Interest expense related to the Nov 2016 Loan		642		-		1,914		-
Interest expense related to Komatsu financial loans⁽¹⁾		143		144		428		464
Accretion of the June 2015 Loan discount		-		621		-		1,853
Interest expense related to the June 2015 Loan		-		1,050		-		3,057
Accretion of discount and interest on loan	$	1,295	$	1,815	$	3,592	$	5,374

	September 30, 2017 ($000)
	Total		Level 1		Level 2		Level 3
Liabilities:
Share purchase warrants – Related Party (Note 10)	$	3,129	$	-	$	3,129	$	-
Share purchase warrants – (Note 10)		268		-		268		-
	$	3,397	$	-	$	3,397	$	-

	GQM LLC 100%		GQM LLC 50% Attributable to GQM Ltd.		GQM Ltd. on a Non- Consolidated Basis *		GQM Ltd. Attributable
			(1)		(2)		(1) + (2)
Cash	$	9,622	$	4,811	$	8,608	$	13,419
Short Term Debt	$	7,709	$	3,855	$	4,000	$	7,855
Long Term Debt	$	8,150	$	4,075	$	21,942	$	26,017
Working Capital	$	7,341	$	3,671	$	3,596	$	7,267

	GQM LLC 100%			GQM LLC 50% Attributable to LTD			LTD on a Non-Consolidated Basis *			LTD Attributable
	(1)			(2)			(1) + (2)
Cash	$	3,755		$	1,878		$	928		$	2,806
Short Term Debt	$	7,024		$	3,512		$	9,061		$	12,573
Long Term Debt	$	9,372		$	4,686		$	20,096		$	24,782
Working Capital / (Deficit)	$	(9,114	)	$	(4,557	)	$	(12,133	)	$	(16,690	)

	LTD on a Non-Consolidated Basis *			LTD on a Consolidated Basis **

Current Assets	$	959		$	16,979
Current Liabilities	$	(13,092	)	$	(26,093	)
Working Capital / (Deficit)	$	(12,133	)	$	(9,114	)

* Includes GQM Holdings ** Includes GQM Holdings and GQM LLC

	GQM LLC 100%			GQM Ltd. on a Non-Consolidated Basis *			GQM Ltd. on a Consolidated Basis **
Current assets	$	20,183		$	8,660		$	28,843
Current liabilities		(12,842	)		(5,064	)		(17,906	)
Working capital	$	7,341		$	3,596		$	10,937

Item	No. of Shares
Shares issued and outstanding onas at December 31, ~~2016~~2017	~~111,048,683~~	111,148,683
Shares issued as the result of a ~~purchase agreement~~	~~100,000~~rights offering		188,952,761
~~Shares issued pursuant to the exercise of stock options~~	~~Nil~~
Shares issued and outstanding ~~on September 30, 2017~~as at March 31, 2018	~~111,148,683~~	300,101,444		Exercise Price	Expiry Date
Shares to be issued on exercise of directors and employees stock options		2,600,001		$0.29 to $1.59	From 06/03/18 to 10/20/22
Shares to be issued on exercise of warrants		24,317,700		$0.85 to $0.95 and CAD $2.00	From 06/08/20 to 11/18/21
Fully diluted ~~November~~ May9, ~~2017~~2018	~~138,066,384~~	327,019,145
~~The company~~

	Three months ended
	March 31,			December 31,
	2018			2017
Cost of goods sold		16,034			19,450
Less: depreciation and depletion	$	(2,976	)	$	(3,526	)
Less: accretion expense		(42	)		(126	)
Direct mining costs		13,016			15,798
Add: site general and administrative expenses		732			897
Cash costs before by-product credits	$	13,748		$	16,695

Exhibit No.	Description of Exhibit	Manner of Filing
~~3.1~~10.1	~~Notice of Articles~~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	Filed herewith
~~3.2~~10.2	~~Articles~~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 3.2 to the Form 8-K of the Company, filed with the SEC on September 2, 2010~~Filed herewith
~~4.1~~31.1	~~Warrant Indenture dated July 25, 2016~~	~~Incorporated by reference to Exhibit 4.1 to the Form 8-K of the Company, filed with the SEC on July 25, 2016~~
~~4.2~~	~~Form of Warrant Certificate~~	~~Incorporated by reference to Exhibit 4.1 to the Form 8-K of the Company, filed with the SEC on July 28, 2016~~
~~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 months ended ~~September 30, 2017,~~March 31, 2018, formatted in XBRL	Filed herewith

GOLDEN QUEEN MINING CO. LTD.
(Registrant)


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


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