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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-K

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

For the fiscal year ended December 31, 2009

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

For the transition period
from  ________ to  ________

Commission file number:000-53811

BE RESOURCES INC.(Exact
name of registrant as specified in its charter)

|Colorado                                        | 42-1737182         
|----------------------------------------------- | -------------------
|(State or other jurisdiction of                 | (I.R.S. Employer   
|incorporation or organization)                  | Identification No.)
|                                                |                    
|107 Hackney Circle, Box 684, Elephant Butte, NM | 87935              
|(Address of principal executive offices)        | (Zip Code)         

(575) 744-4014(Registrants telephone number,
including area code)

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the
Act:

Common Stock, no par valueTitle of each
class

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
[     ]   No [ x ]

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act. Yes
[     ]   No [ x ]

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

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

---

Indicate by checkmark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ x
]

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

|Large accelerated filer [     ] | Accelerated filer [    
    ]          
|------------------------------- | ---------------------------------------
|Non-accelerated filer [     ]   | Smaller reporting company
      [  x  ]

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes [    
]   No [ x ]

As of June 30, 2009 (the last business day of the registrants
second fiscal quarter) there was no active trading market for the Common Stock
of BE Resources Inc nor was the Common Stock listed on any exchange. At such
date, the aggregate market value of the Common Stock of BE Resources Inc. held
by non-affiliates was $3,111,500 (based upon the price at which the Common Stock
was last sold as of June 30, 2009 of Cdn$0.25 per share and utilizing the noon
buying rate of the Bank of Canada for June 30, 2009 of US$1.00 = Cdn$1.16 as the
applicable exchange rate). As of March 29, 2010, there were 32,945,000 shares of
Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:Portions of the
Proxy Statement for the 2010 Annual Meeting of Shareholders are incorporated
into Part III, Items 10 through 14 of this report.

---

TABLE OF CONTENTS

|                    |                                                                                                            | Page
|------------------- | ---------------------------------------------------------------------------------------------------------- | ----
|                    | PART I                                                                                                     |     
|                    |                                                                                                            |     
|ITEM
      1:       | BUSINESS                                                                                                   | 1   
|ITEM
      1A:      | RISK
      FACTORS                                                                                         | 6   
|ITEM
      1B:      | UNRESOLVED
      STAFF COMMENTS                                                                            | 15  
|ITEM
      2:       | PROPERTIES                                                                                                 | 15  
|ITEM
      3:       | LEGAL
      PROCEEDINGS                                                                                    | 22  
|ITEM
      4:       | RESERVED                                                                                                   | 22  
|                    |                                                                                                            |     
|                    | PART II                                                                                                    |     
|                    |                                                                                                            |     
|ITEM
      5:       | MARKET
      FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND PURCHASES OF EQUITY
      SECURITIES       | 22  
|ITEM
      6:       | SELECTED
      FINANCIAL DATA                                                                              | 25  
|ITEM
      7:       | MANAGEMENTS
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION                 | 25  
|ITEM
      7A.      | QUANTITATIVE
      AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                                            | 34  
|ITEM
      8:       | FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA                                                          | 34  
|ITEM
      9:       | CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE           | 59  
|ITEM
      9A:      | CONTROLS
      AND PROCEDURES                                                                              | 59  
|ITEM
      9B:      | OTHER
      INFORMATION                                                                                    | 59  
|                    |                                                                                                            |     
|                    | PART III                                                                                                   |     
|                    |                                                                                                            |     
|ITEM
      10:      | DIRECTORS,
      EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE                                              | 59  
|ITEM
      11:      | EXECUTIVE
      COMPENSATION                                                                               | 59  
|ITEM
      12:      | SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS | 59  
|ITEM
      13:      | CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE                            | 60  
|ITEM
      14:      | PRINCIPAL
      ACCOUNTING FEES AND SERVICES                                                               | 60  
|                    |                                                                                                            |     
|                    | PART IV                                                                                                    |     
|                    |                                                                                                            |     
|ITEM
      15:      | EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES                                                              | 60  
|                    |                                                                                                            |     
|SIGNATURES          |                                                                                                            | 63  
|EXHIBIT
      INDEX | 64                                                                                                        

ADDITIONAL INFORMATION

Descriptions of agreements or
other documents contained in this report are intended as summaries and are not
necessarily complete. Please refer to the agreements or other documents filed or
incorporated herein by reference as exhibits. Please see the exhibit index at
the end of this report for a complete list of those exhibits.

i

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve
risks and uncertainties. The statements contained in this report that are not
purely historical are forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of
1934, and the applicable Canadian Securities laws. When used in this report, the
words plan, target, anticipate, believe, estimate, intend and
expect and similar expressions are intended to identify such forward-looking
statements. Such forward-looking statements include, without limitation, the
statements regarding BE Resources Inc.s strategy, future plans for exploration,
future expenses and costs, future liquidity and capital resources, and estimates
of mineralized material. All forward-looking statements in this report are based
upon information available to BE Resources Inc. on the date of this report, and
the company assumes no obligation to update any such forward-looking statements
whether as a result of new information, future events or otherwise. Forward
looking statements involve a number of risks and uncertainties, and there can be
no assurance that such statements will prove to be accurate. BE Resources Inc.s
actual results could differ materially from those discussed in this report.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in the Item 1A. Risk Factors section of
this Form 10-K.

In addition to the specific factors identified under Item
1A. Risk Factors in this report, other uncertainties that could affect the
accuracy of forward-looking statements include:

- unexpected changes in business and economic conditions;
- timing and amount of production, if any;
- technological changes in the mining industry;
- our costs;
- changes in exploration and overhead costs;
- access and availability of materials, equipment, supplies, labor and
  supervision, power and water;
- results of future feasibility studies;
- the level of demand for our products;
- changes in our business strategy;
- interpretation of drill hole results and the geology, grade and continuity
  of mineralization;
- the uncertainty of mineralized material estimates and timing of
  development expenditures; and
- commodity price fluctuations.

This list, together with the factors identified under Item
1A. Risk Factors, is not exhaustive of the factors that may affect any of
our forward-looking statements. You should read this report completely and with
the understanding that our actual future results may be materially different
from what we expect. These forward-looking statements represent our beliefs,
expectations, opinions and what we believe to be reasonable assumptions only as
of the date of this report. We do not intend to update these forward looking
statements except as required by law. Accordingly, the reader is cautioned not
to place undue reliance on forward-looking statements. We qualify all of our
forward-looking statements by these cautionary statements.

ii

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CONVERSION FACTORS

The following units of measure may be used in this report:

|To Convert
      From             | To                      | Multiply By
|--------------------------------- | ----------------------- | -----------
|Feet                              | Metres                  | 0.305      
|Metres                            | Feet                    | 3.281      
|Miles                             | Kilometres              | 1.609      
|Kilometres                        | Miles                   | 0.6214     
|Acres                             | Hectares                | 0.405      
|Hectares                          | Acres                   | 2.471      
|Grams                             | Ounces (Troy)           | 0.03215    
|Grams/Tonne                       | Ounces (Troy)/Short Ton | 0.02917    
|Tonnes (metric)                   | Pounds                  | 2,204.62   
|Tonnes (metric)                   | Short Tons              | 1.1023     
|Parts per million                 | Percent (%)             | 0.0001     
|Percentage                        | Parts per million       | 10,000     
|Grams/Tonne                       | Parts per billion       | 1,000      
|Parts per billion                 | Grams/Tonne             | 0.001      
|Parts per million                 | Grams/Tonne             | 1.0        
|*United States Dollar (U.S.$) (1) | Canadian Dollar (Cdn$)  | 1.05       

__________________________(1) The applicable exchange rate
is based upon the noon buying rate of the Bank of Canada as of December 31,
2009. Note that specific calculations pertaining to the disclosure of particular
transactions or events throughout this report may utilize an exchange rate
different from that set forth above as may be appropriate under the
circumstances. In the event a different exchange rate is utilized, the
applicable exchange rate and the date will be set forth in a footnote to the
disclosure. As of March 29, 2010, the applicable exchange rate was US$1 = Cdn$
1.02.

iii

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PART I

ITEM 1. BUSINESS

History and Organization

BE Resources Inc. (we, us, BE or the Company) is a
mineral exploration company engaged in the exploration and evaluation of mineral
exploration properties in the State of New Mexico. We were incorporated under
the laws of the State of Colorado on August 8, 2007. We were formed primarily to
evaluate the grade and tonnage of beryllium in the New Mexico Beryllium Project.
As of March 29, 2010, we are awaiting permits to commence exploratory drilling
on this property.

On October 1, 2007, we acquired a 100% interest in mineral
leases and claims covering an area of approximately 20,000 acres in the State of
New Mexico (the Acquired Property) from Great Western Exploration, LLC
(GWE). In May 2008, we staked 690 additional lode claims overlying certain of
the association placer claims previously acquired from GWE, of which 5 were
subsequently dropped. We refer to the mineral leases and claims acquired from
GWE along with the additional claims staked by us as the New Mexico Beryllium
Project.

Between October 1, 2007 and November 28, 2007, we completed a
seed capital financing in which we issued a total of 13,895,000 shares of our
common stock to approximately 80 accredited investors (as defined under
applicable Canadian Securities laws) for a price of Cdn$0.20 per share. The
gross proceeds of the offering totaled Cdn$2,779,000, which we have used for the
preparation of the Technical Report (as described below) and other
organizational expenses, including expenses incurred in connection with our
initial public offering. As discussed in more detail below, we completed an
initial public offering of our common stock in 2009 at Cdn$0.30 per share and
received gross proceed from the offering of Cdn$1,725,000.

Our principal office address is 107 Hackney Circle, Elephant
Butte, New Mexico 87935. Our registered and records office address is 1700
Broadway, Suite 2100, Denver, Colorado 80290 and our telephone number is (575)
744-4014. We maintain a web site at www.be-res.com and through a link on our web
site you can view the periodic filings that we make with the Securities and
Exchange Commission (SEC) and on the System for Electronic Document Analysis
and Retrieval (SEDAR). Our common stock is listed on the TSX Venture Exchange
under the symbol BER-V.

Overview of Properties and Permitting

The New Mexico Beryllium Project consists of two prospects
referred to by the Company as the Warm Springs area and the outlying
hydrothermal areas. A map showing the general location of the Warm Springs area
and the outlying hydrothermal areas is included on page 16.

Warm Springs.The Warm Springs area consists of 680
acres located in Socorro County, New Mexico. The vast majority of this area,
totaling 520 acres, is privately owned by the Sullivan family and leased to us
(the Sullivan Lease). Additionally, we are the holder of New Mexico State
mining leases and various lode and association placer claims in the area which
we acquired as part of the Acquired Property from GWE. In June 2009, we obtained
a technical report on the Warm Springs area recognizing the presence of
beryllium mineralization in amounts greater than what would be expected in
average soil samples. The Technical Report is discussed in more detail in
Developments During 2009 below.

In April 2008, the Company submitted an application to the New
Mexico Energy, Minerals and Natural Resource Department, Mining and Minerals
Division (MMD) for an exploration permit to enable the Company to carry out
the initial phase of the program recommended by the Technical Report at Warm Springs. The application is a Subpart 4 Non-Minimal Impact
Exploration Permitapplication (the Subpart 4 Application). Non-minimal
impact exploration permits are required when the proposed exploration activities
are likely to have more than a minimal impact on the environment such as when
the proposed exploration activities may potentially disturb the habitat of
endangered species, negatively impact ground water in the vicinity of the
drilling activities, or encroach upon historical or cultural resources.
Applications for these permits are subject to a higher level of scrutiny than
minimal impact permits and incorporate additional procedural safeguards such as
public notice and an opportunity for public comment. Therefore, obtaining the
exploration permit is a complex, time consuming process and  the permit may not be granted. In the event
that the permit is denied, the Company can either appeal the decision or focus
its efforts on the outlying hydrothermal areas where GWE has successfully
obtained exploration permits in the past.

1

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Outlying Hydrothermal Areas.The outlying hydrothermal
areas consist of three state mining leases and 817 unpatented mining claims
located in Socorro County and Sierra County, New Mexico. The outlying
hydrothermal areas lie to the south and east of the Warm Springs area and total
approximately 19,008 acres. We acquired the three state leases and 132 of the
unpatented mining claims as part of our acquisition transaction with GWE. The
remaining unpatented mining claims were staked by us in May 2008.

In 2004, predecessors of the Company succeeded in
obtaining minimal impact exploration permits for the outlying hydrothermal
areas. Since the renewal date for those permits has expired, the Company has
reapplied for two such permits. In the fall of 2008, the Company submitted a
Subpart 3, Minimal Impact Exploration Permitapplication (the Subpart 3
Application), requesting approval to drill three exploratory holes in one
portion of the outlying hydrothermal area. Minimal impact exploration permits
are discretionary, do not require public notice or hearings, and may only be
granted if the Director of MMD determines that the proposed operation will have
only minimal environmental impacts. In the fall of 2008, the Company submitted a
second Subpart 3 Application requesting approval to drill twenty exploratory
holes in another portion of the outlying hydrothermal area. Additional
information concerning our recent permitting efforts is contained in
Developments During 2009 below. See also Item 2. Properties for more
information about our properties.

Developments During 2009

Initial Public Offering.On October 26, 2009, the
Company completed its initial public offering of 5,000,000 shares of common
stock at a price of Cdn$0.30 per share for gross proceeds of Cdn$1,500,000.
Canaccord Capital Corporation acted as the underwriter for the offering. On
November 13, 2009 Canaccord Capital Corporation exercised its over-allotment
option and purchased an additional 750,000 shares of the Companys common stock
at a price of Cdn$0.30 per share for additional gross proceeds of Cdn$225,000.
Trading of the Companys common stock commenced on the TSX Venture Exchange on
October 29, 2009 under the symbol BER-V.

To March 29, 2010, we have used the funds provided by our initial
public offering primarily to fund our permitting efforts in an effort to execute
the exploration program outlined in the Technical Report. See Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operationfor more detailed information.

Technical Report.In late 2007, we commissioned a
technical report from an independent mining consulting firm to obtain an
independent evaluation of the New Mexico Beryllium Project. The report, dated
June 5, 2009, was prepared by Fred Brown, CPG, Pr. Sci. Nat. and Tracy
Armstrong, P. Geo, of P&E Mining Consultants, Inc. (the Technical Report).
The Technical Report was prepared in accordance with National Instrument 43-101
Standards of Disclosure for Mineral Projectsof the Canadian
Securities Administrators.

2

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The Technical Report provided that reconnaissance drilling on
the Warm Springs property has recognized the presence of beryllium
mineralization in amounts greater than what would be expected in an average soil
sample. A phased program combining geological mapping with exploration drilling
is recommended by the Technical Report to determine if economically significant
mineralization is present.

The Technical Report is available for inspection and review
during normal business hours at our registered and records office and has been
filed on SEDAR at www.sedar.com.

Permitting. In 2009, we continued our efforts to obtain
the permits necessary to commence exploration of our property. Specifically, in
January 2009, we revised the Subpart 4 Application for Warm Springs and the
application was deemed by the MMD to be administratively complete pursuant to
application requirements. Following the MMDs submission of the application to a
group of other agencies for comment, which is a requirement of the rules under
the New Mexico Mining Act, the MMD received comments back and distilled those
comments in a letter to the Company, which comments relate to the details of
drilling and plugging of wells and questions regarding the monitoring of species
habitat that are some distance from the project site. In addition, the MMD
initiated a routine tribal consultation process pursuant to policies contained
in an Executive Order and recent legislation. The Company has responded to those
comments and the concerns regarding the potential impact of drilling on historic
and cultural sites. On December 1, 2009, the MMD held a public meeting as
required by the rules under the New Mexico Mining Act in order to receive
additional input from all interested parties.  At the public hearing, we
faced opposition to the permit from local residents and the Sierra Club of
Southern New Mexico.  The New Mexico Department of Game & Fish ("NMDGF")
has also opposed the permit.  As we believe that the MMD has not considered
our application respecting Warm Springs and rendered a decision in a timely
manner, we are considering our legal options.

In the spring of 2009, the Company also revised its Subpart 3
Applications pertaining to the outlying hydrothermal areas. The revisions were
intended to address comments raised by the MMD regarding access to the proposed
exploration locations and containment of drilling fluids. The Company has been advised that, as of March 29, 2010, upon
posting the financial assurance required by the MMD, a favorable recommendation
for the Subpart 3 Application on one of the sites would be made by the staff of
the MMD to the director. With regard to the other site, we were requested to
submit a Plan of Operation to the United States Forest Service (USFS) to
support the Subpart 3 Application, which we did in February 2010. We are
currently awaiting a review of the Plan by the USFS.

Overview of the Beryllium Market

Beryllium is a lightweight metal possessing unique mechanical
and thermal properties. Its specific stiffness is much greater than other
engineered structured material such as steel. The physical and mechanical
properties of beryllium include high stiffness-to-weight and strength-to-weight
ratios, stability within a broad range of temperatures, resistance to corrosion
and fatigue, excellent electric conductivity and one of the highest melting
points of all light metals. Beryllium products are used in a variety of high
performance applications in the defense, aerospace, industrial, scientific
equipment, electronics (including acoustics), medical, automotive, optical
scanning and oil and gas markets. It is estimated that close to half of the
beryllium sold is used in computer and telecommunications products, with the
remainder used in aerospace and defense applications, automotive electronics,
industrial components and other applications.

Only two beryllium minerals are commercially important:
bertrandite, which contains less than 1% beryllium (and approximately 40%
beryllium oxide or BeO) and is the principal beryllium mineral mined in the
United States, and beryl which contains about 4% beryllium and is the principal
beryllium mineral mined outside of the United States (U.S.). According to the
U.S. Department of the Interiors 2007 Minerals Yearbook (the Yearbook), the
U.S. is one of only three countries known to process beryllium ores and concentrates into beryllium products. A subsidiary of
Brush Engineered Materials Inc. produces beryllium hydroxide from bertrandite
mined from open pit mines in the Spor Mountain area of Utah and from purchased
beryl ore. The beryllium hydroxide is used as a raw material to make
beryllium-copper master alloy, beryllium metal or beryllium oxide.

3

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According to the Yearbook, beryl is frequently stockpiled for
later processing. China is thought to be a significant producer, but does not
report its beryl production. As a result, world production and the U.S. share of
world production have a high degree of uncertainty. According to the Yearbook,
the United States accounted for 85% of estimated world production.

Large quantities of beryllium are imported and exported
annually on the world market. Since no public market and thus no spot or futures
market exists for beryllium trading, beryllium is priced based on the
transaction price of private contracts. Thus, the price largely reflects the
operating expenses, supply and demand of beryllium at the time it is being sold.
Current beryllium price information is not readily available. The most recent
report on beryllium prices by the United States Geological Service discloses the
year-end average price from 1947 to 1998. This report indicates that the price
of beryllium rose from $269 per pound in 1990 to $385 per pound in 1998.
However, the report states that these figures may not reflect true transaction
prices as they represent the price of the high-end/high-purity form of
beryllium.

Regulation of the Mining Industry in New Mexico/United
States

U.S. federal laws deal with both the acquisition of mineral
rights in federal lands and the development of the mineral interests secured in
these lands in the U.S. The principal U.S. federal law dealing with the
acquisition of mineral rights is the Mining Law of 1872. In general, it states
that unless otherwise provided, all valuable mineral deposits in lands owned by
the U.S. shall be free and open to mineral exploration by U.S. citizens. This
law and accompanying regulations and court interpretations provide the means and
methods for securing interests in these lands owned by the U.S.

On state land in New Mexico, State Trust Land Leases
administered by the Commissioner of Public Land of the New Mexico State Land
Office can be granted for exploration and development activities under the State
Trust Land Leasing Statutes. The leases provide for the controlled development
of state property and the protection of natural resources. In applying for a
lease, the applicant must submit its plans for the leased land and receive the
approval of the Commissioner. The leases are granted for an initial term of
three years and can be renewed.

Our mineral interests are comprised of a combination of private
land leases, State Trust Land Leases and federal claims.

Exploration and potential development of the mineral interests
controlled by us are governed by both federal and New Mexico state laws. A
comprehensive body of law requires the securing of various permits relating to
the exploration of mineral properties and the operation of mines at both the
federal and state level. In order to secure a permit involving any federal
lands, the National Environmental Policy Act (federal) may require the
preparation of an Environmental Assessment (EA) or an Environmental Impact
Statement (EIS) for any potential development of a mining site. Generally, an
EA briefly outlines the need for the proposed action, evaluates the
environmental impacts of the proposed action and potential alternatives, and
provides a listing of agencies and persons consulted in preparing the EA. If the
EA results in a determination that the environmental consequences of the
proposed exploration may be significant, an EIS is required to be prepared. An
EIS analyzes of the environmental impact of the proposed action in greater
detail, describes adverse environmental effects which cannot be avoided should
the proposed action be implemented and provides alternatives to the proposed
action. The preparation of the EIS is generally a collaborative effort between
the Federal and State government with a primary agency from the state or federal
government taking the lead role in the development of the EIS and acting to
secure input and coordinate action between the agencies.

4

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At the state level, environmental matters fall under the
Environmental Improvement Act (state) and the New Mexico Mining Act which is
administered by the MMD and the New Mexico Department of Energy, Minerals and
Natural Resources and associated regulations contained in the New Mexico
Administrative Code. Permits are required for mineral exploration and mining
activities, and applicants for permits must demonstrate that their activities
will be in compliance with all state and federal environmental laws and
regulations. Applicants must provide detailed site assessments, reclamation
plans and address approximately 24 additional requirements, including potential
impacts on the site, surface water, groundwater, wildlife, nearby communities,
traditional cultural and historic properties, and others, as set out in NMSA
1978 §§ 69-36-1, et seq. The Act also provides for significant public input and
input from various state and federal agencies regarding the project.

Should we explore or develop the New Mexico Beryllium Project
and construct mining facilities and cease to operate, we will also have to
comply with the Mining Act reclamation program under the New Mexico Mining Act
to return the land to its original state.

Environmental and Other Matters

Like all other mining companies doing business in the U.S., we
are subject to a variety of federal, state and local statutes, rules and
regulations designed to protect the quality of the air and water, and threatened
or endangered species, in the vicinity of its operations. These include
permitting or pre-operating approval requirements designed to ensure the
environmental integrity of a proposed mining facility, operating requirements
designed to mitigate the effects of discharges into the environment during
exploration, mining operations, and reclamation or post-operation requirements
designed to remediate the lands affected by a mining facility once commercial
mining operations have ceased.

Federal legislation in the U.S. and implementing regulations
adopted and administered by the Environmental Protection Agency, the Forest
Service, the BLM, the Fish and Wildlife Service, the Army Corps of Engineers and
other agenciesin particular, legislation such as the federal Clean Water Act,
the Clean Air Act, the National Environmental Policy Act, the Endangered Species
Act, the National Forest Management Act, the Wilderness Act, The Resource
Conservation and Recovery Act, the National Historic Preservation Act and the
Comprehensive Environmental Response, Compensation and Liability Acthave a
direct bearing on domestic mining operations. These federal initiatives are
often administered and enforced through state agencies operating under parallel
state statutes and regulations.

State legislation in New Mexico including the New Mexico Mining
Act and the regulations contained in the New Mexico Administrative Code, as they
apply to the mining industry, are administered by the New Mexico Environment
Department and the New Mexico Energy, Minerals and Natural Resource Department,
Mining and Minerals Division and will also have to be complied with. As stated
above, much of the state legislation compliments federal legislation and both
sets of statutes and regulations are often administered at the state level.

Competition

The beryllium market is currently centered in the United
States. According to the United States Department of the Interiors 2007
Minerals Yearbook, production in the United States accounted for approximately
85% of world production in 2007. We believe that an estimated 80% of the
reported world supply of beryllium is mined in Utah by Brush Wellman Inc., an
Ohio company wholly owned by Brush Engineered Materials Inc., which we believe
holds a monopoly on the beryllium market. In the event that we are successful in
identifying and developing one or more economical deposits of beryllium on our
property, we could face significant competition from Brush Wellman and other
larger, more established companies.

5

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Employees

We currently have one employee, namely our president and chief
executive officer. We subcontract the remainder of our services to a variety of
consultants, including environmental and permitting, accounting and legal firms.
In the event we are successful in obtaining drilling permits, we expect to
subcontract drilling services to an unrelated third party.

Facilities

We currently share office space at the home of our president.
We currently pay him $2,000 per month ($24,000 per annum) for the use of this
space, together with administrative services necessary to operate our executive
office. We expect this arrangement to be suitable for our needs for the
foreseeable future.

ITEM 1A. RISK FACTORS

This report, including Managements Discussion and Analysis of
Financial Condition and Results of Operation, contain forward-looking statements
and a description of our business operations which may be materially affected by
several risk factors, including those summarized below.

We have not received a permit to commence exploration
activities on the Warm Springs area of the New Mexico Beryllium Project, nor
have we received the exploration permits for the outlying hydrothermal areas,
and we may never obtain such permits.We must obtain a permit to conduct
exploration activities on the Warm Springs area of our property and outlying
hydrothermal areas recommended by the Technical Report. This process is complex
and time consuming and the issuance of the permit is subject to administrative
review, and, in the case of the Warm Springs area,   public notice and an opportunity for a hearing. The process has
consumed a number of months and may not be successful. A minimal impact permit
application for the Warm Springs area submitted by GWE in 2005 under an expedited review process was
denied by the MMD due to the potential impact of exploration activities on
endangered species, ground water and a cultural site in the vicinity. As a
result, we have submitted an application under a different process which entails
a more rigorous review and the opportunity for public participation.  At a public hearing
on the application on
December 1, 2009, we faced organized opposition from local residents and the
Sierra Club of Southern New Mexico. The NMDGF has also opposed the permit for
Warm Springs.  We have also submitted applications for
exploration permits on the outlying hydrothermal areas for which we have yet to
receive the permits. We may never receive a permit to explore the
Warm Springs area or the permits for the outlying hydrothermal areas of the New
Mexico Beryllium Project and we may be forced to consider alternate areas for
our proposed exploration subject to receipt of necessary permits and approvals
in those areas. Even if we are issued the exploration permits, we may never
receive additional permits for further exploration or to conduct mining
activities, even if economical mineralized material is identified.

We have no proven or probable reserves, meaning we may
not economically produce beryllium or other minerals from the New Mexico
Beryllium Project.In order to demonstrate the availability of proven or
probable reserves, it will first be necessary for us to continue exploration to
determine the availability of sufficient mineralized material. Exploration is
inherently risky, with few properties ultimately proving economically
successful. If our exploration efforts are successful, it will then be necessary
for us to engage an outside engineering firm to assess geological data and
develop an economic model demonstrating commercial feasibility of the property.
This feasibility study will require significant additional time and
investment.

Since we are a new business with no operating history,
investors have no basis to evaluate our ability to operate profitably.We were incorporated in 2007 and have had no revenue from operations
since our inception. Our activities to date have been limited to
organizational efforts, acquiring land positions, raising financing, completing
the Technical Report, studying our land position, and applying for exploration
permits. We face all of the risks commonly encountered by other new businesses,
including the lack of an established operating history, need for additional
capital and personnel, and intense competition.

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Our independent registered accountant has raised substantial doubt
about our ability to continue as a going concern in its report on our financial
statements for the year ended December 31, 2009.This doubt is based in
part on the recognition that we are an exploration-stage company, have no
established source of revenue, have an accumulated deficit of $6,115,782 at
December 31, 2009, and are dependent on raising capital from our shareholders or
other sources to continue in business. In the event that we are unable to raise
additional capital, develop one or more of our properties and generate revenue,
we may be forced to curtail our exploration activities, liquidate one or more of
our properties or cease operations altogether. In any of those events, your
investment in our company may decline.

We will require significant additional capital to fund
our business plan.We presently have a working capital deficit, no
producing properties and no cash flow from operations. We will be required to
expend significant amounts for drilling, geological and geochemical analysis,
assaying, additional permitting and bonding and, if warranted, feasibility
studies. We may not benefit from such investments if we are unable to identify
commercially exploitable mineralized material. If we are successful in
identifying reserves, we will require significant additional capital to extract
the reserves. That funding, in turn, depends upon a number of factors, including
the state of the national and worldwide economy, capital markets, and the price
of beryllium. We may not be successful in obtaining the required financing for
these and other purposes, in which case our ability to continue operating would
be adversely affected. Failure to obtain such additional financing would result
in delay or indefinite postponement of further exploration or if applicable,
development and the possible, partial or total loss of our interest in the New
Mexico Beryllium Project. The possible development or a possible joint venture
of our property will require additional financing and we may not be able to
obtain such financing on terms favorable to us or at all. We are unable at this
time to estimate with any reasonable degree of certainty the amount of capital
required in the future. However, we believe that the amount will be significant.
Also, any adverse developments in our exploration efforts may force us to sell
our stock at a discount to raise additional funds.

We have a history of losses and may incur losses in the
future.We have incurred losses since inception and may incur net losses
in the future. We incurred the following losses from operations during each of
the following periods:

- approximately $1.5 million for the year ended December 31, 2009;
- approximately $2.2 million for the year ended December 31, 2008; and
- approximately $0.8 million for the year ended December 31, 2007.

We had an accumulated deficit of approximately $6.1 million and
a shareholders deficit of approximately $250,000 as of December 31, 2009.

We expect to continue to incur losses unless and until such
time as one of our properties enters into commercial production and generates
sufficient revenues to fund continuing operations. The amount and timing of
future expenditures will depend on a number of factors, including the progress
of permitting and exploration activities, the timing of any future development,
if economical, the commercial viability of production and other factors. We may
never achieve profitability.

At the present time, we are totally dependent upon the
discovery of beryllium or other metals in commercially viable quantities from a single project,
raising the risk if the area proves unproductive.Since we have never produced beryllium or other metals from the
New Mexico Beryllium Project or any other property, and since we have no proven
or probable reserves, we may not be able to economically produce beryllium or
other metals under existing and future costs and expenses. If we are unable to
economically produce beryllium from the New Mexico Beryllium Project, we would
be forced to identify and invest substantial sums in one or more additional
properties, and we may be unable to obtain such properties on terms favorable to
us.

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The volatility of the price of beryllium could adversely
affect our future operations and our ability to explore and develop the New
Mexico Beryllium Project.The commercial feasibility of the New Mexico
Beryllium Project and our ability to raise funding to conduct exploration and
development is dependent on the price of beryllium and other metals. The price
of beryllium may also have a significant influence on the market price of our
common stock and the value of our assets. Our decision to put a mine into
production and to commit the funds necessary for that purpose must be made long
before the first revenue from production would be received. A decrease in the
price of beryllium may prevent the New Mexico Beryllium Project from being
explored, economically mined or result in the write-off of assets whose value is
impaired as a result of lower beryllium prices. We believe that an estimated 80%
of the reported world supply of beryllium is mined in Utah by Brush Wellman
Inc., a wholly owned subsidiary of Brush Wellman Engineered Materials Inc. with
its headquarters in Cleveland, Ohio, which we believe presently dominates the
world beryllium market. The current market price of beryllium is affected by
this monopoly and could significantly decrease upon the discovery of other large
proven commercially viable reserves and the entry of new participants into the
market. The exact world supply of beryllium is unknown. The majority of
beryllium mining outside of the United States is not publicly reported. There is
speculation that stockpiles of beryllium still exist in Russia and Kazakhstan.
There is also speculation that China may currently be mining beryllium. If
proven reserves or stockpiles of beryllium are discovered outside of the United
States, such a discovery could impact the market price of beryllium. The price
of beryllium may also be affected by factors such as inflation, fluctuation in
value of the United States Dollar and foreign currencies, global and regional
demand, and the political and economic conditions of beryllium producing
countries throughout the world. The volatility of mineral prices represents a
substantial risk, which no amount of planning or technical expertise can
completely eliminate.

The existing monopoly for mining of beryllium may create
barriers to entry which are difficult to overcome.If we are successful
in identifying one or more economical deposits of beryllium, and decide to
market this beryllium ourselves, it will be necessary for us to overcome
barriers created by the existing monopoly for this product. Since it is likely
that our initial production will be limited, the holder of the monopoly could
reduce its price, making it more difficult for us to operate at a profit. It
will also be necessary for us to identify purchasers willing to purchase our
product when little public information exists about the market for this product.
The existence of limited market may also make it more difficult for us to
identify individuals with the technical expertise and experience necessary to
mine and market the product. For all of these reasons, the discovery of an
economical deposit does not ensure that we can operate at a profit.

Legislation has been proposed that would significantly
affect the mining industry.Periodically, members of the US Congress
have introduced bills which would supplant or alter the provisions of the
General Mining Law of 1872, which governs unpatented mining claims. One such
amendment has become law and has imposed a moratorium on the patenting of mining
claims, which reduced the security of title provided by unpatented claims.
Another proposed amendment has sought to impose a federal 4% to 8% gross royalty
on production of minerals from public lands, impose additional claim maintenance
fees on unpatented mining claims, and declare certain lands as unsuitable for
mining. If such proposed legislation is enacted, it could substantially increase
the cost of holding unpatented mining claims by requiring payment of royalties,
and could significantly impair our ability to develop mineral resources on
unpatented mining claims. The enactment of any legislation imposing such
royalties or fees could adversely affect the potential development of mining claims and
could adversely affect our business.

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We may be subject to risks relating to the global
economy.Recent market events and conditions, including disruptions in
the international credit markets and other financial systems and the
deterioration of global economic conditions, could impede our access to capital
or increase the cost of capital. In 2007 and into 2008, the United States credit
markets began to experience serious disruption due to a deterioration in
residential property values, defaults and delinquencies in the residential
mortgage market and a decline in the credit quality of mortgage-backed
securities. These problems led to a slow-down in residential housing market
transactions, declining housing prices, delinquencies in non-mortgage consumer
credit and general decline in consumer confidence. These conditions worsened in
2008 and continued in 2009, causing a loss of confidence in the broader United
States and global credit and financial markets and resulting in the collapse of,
and government intervention in, major banks, financial institutions and insurers
and creating a climate of greater volatility, less liquidity, widening of credit
spreads, a lack of price transparency, increased credit losses and tighter
credit conditions. Notwithstanding various actions by the United States and
foreign governments, concerns about the general condition of the capital
markets, financial instruments, banks, investment banks, insurers and other
financial institutions caused the broader credit markets to further deteriorate
and stock markets to decline substantially. In addition, general economic
indicators deteriorated into 2009, including declining consumer sentiment, increased
unemployment and declining economic growth and uncertainty about corporate
earnings. As a result, in 2009, the demand for beryllium-based products such as
aerospace components, automotive electronics, computer and telecommunications
equipment, and medical and industrial x-ray equipment deteriorated.

These unprecedented disruptions in the credit and financial
markets have also had a significant material adverse impact on a number of
financial institutions and have limited access to capital and credit for many
companies. These disruptions could, among other things, make it more difficult
for us to obtain, or increase our cost of obtaining, capital and financing for
operations. Our access to additional capital may not be available on terms
acceptable to us or at all.

We are subject to extensive governmental regulations in
addition to permitting requirements which could require us to delay, suspend or
terminate our operations.The exploration, and possible future
development and production of the New Mexico Beryllium Project, are subject to
various federal and state laws governing prospecting, development, production,
labor standards and occupational health, mine safety, toxic substances, land
use, water use, taxes and others. For example, applicable federal legislation in
the United States would require us to immediately suspend operations, including
exploration activities, upon discovery of any remains, funerary objects, or
objects of ceremonial, historic or cultural importance to Native Americans. The
application of these laws may require us to delay, suspend or terminate our
operations. The enactment of additional laws and regulations, amendments to
current laws and regulations, and/or more stringent application of existing laws
or regulation could adversely impact our exploration timetable and business
plan.

The mining and production of beryllium are subject to
occupational health and safety legislation due to the hazardous nature of
air-borne beryllium and the health risks associated with exposure.The
U.S. Department of Health and Human Services and the International Agency for
Research on Cancer have reported that beryllium is a human carcinogen. Beryllium
exposure increases the risk of developing chronic beryllium disease and
significantly elevated risks of lung cancer. Exposure to beryllium dust through
skin contact increases the risk of skin disease. As a result of the health
risks, the U.S. Environmental Protection Agency and U.S. Occupational Safety and
Health Administration issue health and safety standards for exposure to
beryllium. Complying with these standards will require additional expenditure on
testing and the installation of safety equipment. Failure to comply with health
and safety standards could result in statutory penalties and civil
liability.

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Our exploration and development activities are subject to
environmental risks, which could expose us to significant liability and delay,
suspension or termination of our operations.The exploration, possible
future development and production phases of our business will be subject to
federal, state and local environmental regulation. These regulations mandate,
among other things, the maintenance of air and water quality standards and land
reclamation. They also set out limitations on the generation, transportation,
storage and disposal of solid and hazardous waste. Environmental legislation is
evolving in a manner which will require stricter standards and enforcement,
increased fines and penalties for non-compliance, more stringent environmental
assessments, and a heightened degree of responsibility for companies and their
officers, directors and employees. Future changes in environmental regulations,
if any, may adversely affect our operations. If we fail to comply with any of
the applicable environmental laws, regulations or permit requirements, we could
face regulatory or judicial sanctions. Penalties imposed by either the courts or
administrative bodies could delay or stop our operations or require a
considerable capital expenditure. There is a possibility that those opposed to
exploration and mining will attempt to interfere with our operations, whether by
legal process, regulatory process or otherwise.

We could be subject to environmental lawsuits.Neighboring landowners and other third parties could file claims based
on environmental statutes and common law for personal injury and property damage
allegedly caused by the release of hazardous substances or other waste material
into the environment on or around our properties. We may not be successful in
defending any claims that are brought against us. A successful claim against us
could have an adverse effect on our business prospects, financial condition and
results of operation.

We are subject to risks related to community action.All industries, including the mining industry, are subject to community
actions. In recent years, communities and non-governmental organizations have
become more vocal and active with respect to mining activities at or near their
communities. These parties may take actions such as road blockades, applications
for injunctions seeking work stoppage and lawsuits for damages. These actions
can relate not only to current activities but also in respect of decades old
mining activities by prior owners of subject mining properties.

If we lose our key executive, we may not be able to find
a suitable replacement on acceptable terms.Our success is dependent to a large degree on the efforts and
abilities of David Q. Tognoni, our president and chief executive officer. If Mr.
Tognoni were to die, become disabled or leave the Company, we would be forced to
identify and retain an individual to replace him. We may not find a suitable
individual to replace Mr. Tognoni or to add to our employee base if that becomes
necessary. We have no insurance on Mr. Tognoni at this time. Therefore, if the
services of Mr. Tognoni were to be lost, our plans and operations could be
adversely affected.

A portion of the New Mexico Beryllium Project is
comprised of a lease on privately owned lands.The Sullivan Lease
continues until January 2, 2024 and continues thereafter unless terminated by
either party based on a default by the other of any of the obligations of the
other under the lease. Upon the expiration of the lease, in the event that for
any reason we are unable to extend the lease or purchase the land from the
owner, we would be forced to forfeit the underlying minerals and our ability to
explore and develop the property would be adversely affected.

Title to mineral properties can be uncertain, and we are
at risk of loss of ownership of our property.Our ability to explore and potentially develop beryllium and
other valuable minerals depends on the validity of title to the New Mexico
Beryllium Project. In addition to the Sullivan Lease, the New Mexico Beryllium
Project includes state leases and unpatented mining claims. Unpatented mining
claims are unique property interests and are generally considered to be subject
to greater risk than other real property interests because the validity of
unpatented mining claims is often uncertain. Unpatented mining claims provide
only possessory title and their validity is often subject to contest by third
parties or the federal government. These uncertainties relate to such things as
the sufficiency of mineral discovery, proper posting and marking of boundaries, assessment work and possible
conflicts with other claims not determinable from descriptions of record. There
may be challenges to the title to our property which could prove both time
consuming and costly to defend. Additionally, if valuable mineral deposits are
discovered on our property, a successful challenge to our title could adversely
impact exploration, extraction, development, operations and the value of our
assets and future earnings and revenue potential. Our investigation of the
status of title to the New Mexico Beryllium Project should not be construed as a
guarantee of title. Title to the New Mexico Beryllium Project may be challenged
by a third party. Our interests may be subject to unregistered agreements or
transfers or may be affected by undetected defects.

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Any mineral production from the New Mexico Beryllium
Project is subject to royalty payments in favor of third parties, which may
reduce the revenue, if any, that we receive from the Project or reduce the value
of the Project if we attempt to sell it to a third party.David Tognoni,
our president and chief executive officer, is the owner of a 1% gross royalty on
the New Mexico Beryllium Project which he acquired as part consideration for his
service as an officer and employee of our company. Further, GWE and certain
others hold a 10% net profits royalty in the New Mexico Beryllium Project which
they received as part consideration for the transfer of the Acquired Property.
These royalties are payable indefinitely based on adjusted revenue generated
from the New Mexico Beryllium Project and any additional claims that may be
staked in an area of interest surrounding the New Mexico Beryllium Project, as
defined in the respective agreements. In addition, under the Sullivan Lease, we
are obligated to pay a 4% gross production royalty, with a $12,000 annual
minimum, from the sale or disposition of minerals taken from the Warm Springs
area. Finally, the leases with the State of New Mexico which cover a portion of
the Project require payment of a 2% royalty on production, subject to certain
offsets. If we are successful in identifying sufficient mineralization to
warrant placing the property into production, the obligation to pay royalties to
the holders of the royalties would reduce the revenue we receive and may reduce
the value of the New Mexico Beryllium Project if we endeavor to sell it to a
third party.

The nature of mineral exploration and production
activities involves a high degree of risk and the possibility of uninsured
losses.The business of exploring for minerals, including beryllium,
involves a high degree of risk. Few properties are ultimately developed into
producing mines. Whether a mineral deposit can be commercially viable depends
upon a number of factors, including the particular attributes of the deposit,
including size, grade and proximity to infrastructure, metal prices, which can
be highly variable, and government regulation, including environmental and
reclamation obligations. Uncertainties as to the metallurgical amenability of
any minerals discovered may not warrant the mining of these minerals on the
basis of available technology. Our operations are subject to all of the
operating hazards and risks normally incident to exploring for and developing
mineral properties, such as, but not limited to:

- encountering unusual or unexpected formations;
- environmental pollution;
- personal injury, flooding and landslides;
- variations in grades of minerals;
- labor disputes; and
- a decline in the price of beryllium.

We currently have no insurance to guard against any of these
risks. If we determine that capitalized costs associated with any of our mineral
interests are not likely to be recovered, we would incur a write-down on our
investment in such property interests. All of these factors may result in losses
in relation to amounts spent which are not recoverable.

We do not insure against all risks to which we may be
subject in our planned operations.The exploration phase of our business
will involve a significant amount of risk. We currently maintain no insurance on
any of our current or proposed operations. Even if we acquire insurance in the
future, such insurance may not cover all potential risks associated with
exploration activities. We may also not be able to maintain insurance to cover
risks at economically feasible premiums. Insurance coverage may not continue to
be available or may not be adequate to cover any resulting liability. Moreover,
the insurance against risks such as environmental pollution or other hazards as
a result of exploration is generally not available on acceptable terms to
companies in the mining industry. We might also become subject to liability for
environmental pollution or other hazards associated with mineral exploration and
production which may not be insured against, which may exceed the limits of our
insurance coverage, or which we may elect not to insure against because of
premium costs or other reasons. Losses from these events may cause us to incur
significant costs that could materially adversely affect our financial condition
and our ability to fund exploration and any development and production
activities. A significant loss could force us to reduce or terminate our
operations.

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Our directors and officers face potential conflicts of
interest in their capacities as such.David Tognoni, Edward Godin and
Carmelo Marrelli serve as officers and/or directors for us as well as other
mineral exploration and development companies. Conflicts of interests could
arise between these persons duties as officers and directors of our company and
their respective positions as officers and directors of such other entities.
These conflicts may arise from corporate opportunities that may be presented to
such individuals or because of the time they must devote to their position with
each company. In addition to these potential conflicts, these individuals have
in the past, and may in the future, enter into agreements with our company,
either as individuals or as officers or directors of other companies. For
example, David Tognoni is a manager of GWE, from which we purchased the Acquired
Property. We also entered into an employment agreement with Mr. Tognoni and
granted stock options to each of our officers and directors. None of these
agreements were negotiated at arms length.

Competition in the mining industry is intense, and we
have limited financial and personnel resources with which to compete.Competition in the mining industry for desirable properties, investment
capital, equipment and personnel is intense. Numerous companies headquartered in
the United States, Canada and elsewhere throughout the world compete for
properties on a global basis. We are currently an insignificant participant in
the beryllium mining industry due to our limited financial and personnel
resources. We may be unable to attract the necessary investment capital to fully
develop the New Mexico Beryllium Project, be unable to acquire other desirable
properties, be unable to attract and hire necessary personnel, or be unable to
purchase necessary equipment.

Colorado law and our Articles of Incorporation may
protect our directors from certain types of lawsuits at the expense of the
shareholders.The laws of the State of Colorado provide that directors
of a company shall not be liable to the company or shareholders of the company
for monetary damages for all but limited types of conduct. Our Articles of
Incorporation permit us to indemnify our directors and officers against all
damages incurred in connection with our business to the fullest extent provided
or allowed by law. The exculpation provisions may have the effect of preventing
shareholders from recovering damages against our directors caused by their
negligence, poor judgment or other circumstances. The indemnification provisions
may require us to use limited assets to defend our directors and officers
against claims, including claims arising out of their negligence, poor judgment
or other circumstances.

Our exploration activities may not be commercially
successful.Mineral exploration is highly speculative in nature,
involves many risks and is frequently non-productive. Unusual or unexpected
geologic formations, and the inability to obtain suitable or adequate machinery,
equipment or labour are risks involved in the conduct of exploration programs.
The success of mineral exploration and development is determined in part by the
following factors:

- the identification of potential mineralization based on analysis;
- the availability of exploration permits;
- the quality of our management and our geological and technical expertise;
  and
- the capital available for exploration.

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Substantial expenditures and time are required to establish
existing proven and probable reserves through drilling and analysis, to develop
metallurgical processes to extract metal, and to develop the mining and
processing facilities and infrastructure at any site chosen for mining. Whether
a mineral deposit will be commercially viable depends on a number of factors,
which include, without limitation, the particular attributes of the deposit,
such as size, grade and proximity to infrastructure; metal prices, which
fluctuate widely; and government regulations, including, without limitation,
regulations relating to prices, taxes, royalties, land tenure, land use,
importing and exporting of minerals and environmental protection.

We will be required to evaluate our internal controls
under Section 404 of the Sarbanes-Oxley Act of 2002, and any adverse results
from such evaluation could result in a loss of investor confidence in our
financial reports and have an adverse effect on the price of our shares of
common stock.Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002,
we will be required to furnish a report by management on our internal controls
over financial reporting. Such report will contain, among other matters, an
assessment of the effectiveness of our internal control over financial
reporting, including a statement as to whether or not our internal control over
financial reporting is effective. This assessment must include disclosure of any
material weaknesses in our internal control over financial reporting identified
by our management. Such report, beginning with our fiscal year ending on
December 31, 2010, must also contain a statement that our auditors have issued
an attestation report on our internal controls.

We are still compiling the system and processing documentation
and performing the evaluation needed to comply with Section 404, which is both
costly and challenging. We may not complete our evaluation, testing and any
required remediation in a timely fashion. During the evaluation and testing
process, if we identify one or more material weaknesses in our internal control
over financial reporting, we will be unable to assert that such internal control
is effective and we could lose investor confidence in the accuracy and
completeness of our financial reports, which would have a material adverse
effect on our stock price.

Gain recognized by non-U.S. shareholders on the sale or
other disposition of shares of our common stock may be subject to U.S. federal
income tax.We believe that we are currently a U.S. real property
holding corporation under section 897(c) of the Internal Revenue Code
(USRPHC) and there is a substantial likelihood that we will continue to be a
USRPHC. Generally, gain recognized by a non-U.S. holder on the sale or other
disposition of our common stock will be subject to US federal income tax on a
net income basis at normal graduated U.S. federal income tax rates if we are a
USRPHC at any time during the 5-year period ending on the date of the sale or
disposition of the common stock (or the non-US holders holding period for the
common stock if shorter). Under an exception to these USRPHC rules, if the
common stock is regularly traded on an established securities market, the
common stock will not be treated as a USRPHC. This exception is not available,
however, to a non-U.S. holder that held or was deemed to hold, directly or under
certain constructive ownership rules, more than 5% of the common stock at any
time during the 5-year period ending on the date of the sale or other
disposition (or the non-U.S. holders holding period of the common stock if
shorter). Our common stock may never be regularly traded on an established
securities market as recognized by the Internal Revenue Code.

Our stock price may be volatile and as a result you could
lose all or part of your investment.The market prices for the
securities of companies engaged in mineral exploration and development can be
volatile. The value of your investment could decline due to the impact of any of
the following factors upon the market price of our common stock:

- changes in the worldwide price for beryllium;
- disappointing results from our exploration or development efforts;
- failure to meet our operating budget or achieve profitability;
- decline in demand for our common stock;
- downward revisions in securities analysts estimates or changes in general
  market conditions;
- technological innovations by competitors or in competing technologies;
- investor perception of our industry or our prospects; and
- general economic trends

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In addition, stock markets have
experienced extreme price and volume fluctuations and the market prices of
securities have been highly volatile. These fluctuations are often unrelated to
operating performance and may adversely affect the market price of our common
stock. As a result, investors may be unable to resell their shares at a fair
price.

We have never paid dividends on our common stock and we
may never pay them in the future.We have never declared or paid cash
dividends on our common stock and do not anticipate doing so in the foreseeable
future. Our ability to pay dividends is dependent on our ability to successfully
develop one or more properties and generate revenue from operations. Further,
our initial earnings, if any, may be retained to finance our growth. Any future
dividends will be directly dependent upon any future earnings, our then-existing
financial requirements and other factors and are solely within the discretion of
our board of directors.

A large number of our shares will be eligible for future
sale and may depress the price of our common stock.In addition to the
shares issued in our initial public offering, a large amount of our common stock
is currently eligible for sale under Rule 144 of the United States Securities
Act of 1933 (the Securities Act). Under Rule 144, a shareholder owning
restricted stock who is not an affiliate of our Company is permitted to sell all
of the common stock owned by him or her following expiration of the shorter of:
(i) one year from the date of acquisition; or (ii) six months from the date of
acquisition, assuming we have been required to file reports with the SEC for at
least 90 days and have filed all reports required to be filed with the SEC up to
the time of the proposed sale. Affiliates of our Company are permitted to sell
securities owned by them in limited quantities at a similar time under Rule 144.
As of March 29, 2010, we also have outstanding options to purchase an aggregate
of 4,860,000 shares of common stock, of which 3,560,000 are exercisable at a
price below the public offering price of our common stock and have issued
compensation warrants for 575,000 shares of our common stock. The sale of common
stock in the future may depress the price of our common stock, may result in a
loss in your investment and may make it difficult for us to sell common stock in
the future.

Since no broker or dealer has committed to create or
maintain a market in our stock, our stock may never be quoted in the OTC
Bulletin Board, and purchasers of our common stock may have difficulty selling
their shares, should they desire to do so.It is our intention to seek
one or more broker-dealers to apply for quotation of our common stock in the OTC
Bulletin Board. However, we have no agreement with any broker-dealer at this
time, and we may not find one in the future. In addition, we believe that our
stock will be characterized as a micro-cap security and therefore subject to
increased scrutiny by the Financial Industry Regulatory Authority (FINRA). A
micro-cap security is generally a low priced security issued by a small company,
or the stock of companies with low capitalization. If we are unable to obtain
quotation of our common stock on the OTC Bulletin Board, trading in our stock
may be limited, and purchasers of our common stock may have difficulty selling
their shares, should they desire to do so.

Since our stock will not be listed on a stock exchange in the
United States, trading in our shares may be subject to rules governing penny
stocks, which will impair trading activity in our shares. It is likely that our
common stock will not initially be listed on a national stock exchange
registered with the Securities and Exchange Commission, or SEC, and may
therefore be subject to rules regulating broker dealer practices in connection
with transactions in penny stocks. Those disclosure rules applicable to penny stocks require a broker dealer, prior to a transaction in a
penny stock not otherwise exempt from the rules, to deliver a standardized
disclosure document required by the SEC. These rules also require a cooling off
period before the transaction can be finalized. These requirements may have the
effect of reducing the level of trading activity in any secondary market for our
common stock. Many brokers may be unwilling to engage in transactions in our
common stock because of the added disclosure requirements, thereby making it
more difficult for stockholders to dispose of their shares.

14

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Issuances of our common stock in the future could dilute
existing shareholders and adversely affect the market price of our common stock.We have the authority to issue up to 250,000,000 shares of common stock,
10,000,000 shares of preferred stock and to issue options and warrants to
purchase shares of our common stock without stockholder approval. These future
issuances could be at values substantially below the price at which our common
stock was sold in our initial public offering. In addition, we could issue large
blocks of our common stock to fend off unwanted tender offers or hostile
takeovers without further stockholder approval. Because trading in our common
stock is limited, the issuance of our stock may have a disproportionately large
impact on its price compared to larger companies.

Pursuant to pending Canadian tax proposals, the
determination of whether we are a FIE is made for each taxation year and may
depend on our property and our activities.Amendments under the
Income Tax Act(Canada) which we refer to as the Tax Act regarding the
taxation of investments in foreign investment entities (FIEs) have been
proposed by the Minister of Finance (Canada) to apply to taxation years
commencing after 2006 (the Proposed Amendments). In the March 4, 2010 Canadian
Federal Budget, the Canadian Minister of Finance announced revised proposals
intended to replace the Proposed Amendments. However, revised legislation
reflecting the March 4, 2010 budget proposals has not yet been released. If
legislation is enacted relating to FIEs, such legislation may result in Canadian
income tax consequences which may be adverse to a holder of common stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

New Mexico Beryllium Project

The New Mexico Beryllium Project consists of the Companys
interest in Socorro County and Sierra County, New Mexico described in this
report as the Warm Springs area and the outlying hydrothermal areas. The New
Mexico Beryllium Project covers an area of approximately 20,000 acres and is
comprised of a private lease, state leases and unpatented mining claims. The map
below shows the general location the Warm Springs area in New Mexico.

15

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Unpatented mining claims comprise the vast majority of the
project, covering 18,240 acres or roughly 96% of the total acreage of the New
Mexico Beryllium Project. Unpatented mining claims are governed by the General
Mining Law of 1872 (General Mining Law) as amended, 30 U.S.C. §§ 21-161
(various sections), which allows the location of mining claims on public domain
lands of the United States upon the discovery of a valuable mineral deposit and
proper compliance with claim location requirements. A valid mining claim
provides the holder with the right to conduct mining operations for the removal
of locatable minerals, subject to compliance with the General Mining Law and New
Mexico state law governing the staking and registration of mining claims, as
well as compliance with various federal, state, and local exploration,
operating, and environmental laws, regulations, and ordinances.

As the owner of the unpatented mining claims, we have the right
to conduct mining operations on the lands, subject to the prior procurement of
required exploration and operating permits and approvals, compliance with the
terms and conditions of the claims, and compliance with applicable federal,
state, and local laws, regulation and ordinances. Historically, the owner of an
unpatented mining claim could, upon strict compliance with legal requirements,
file a patent application to obtain full fee title to the surface and mineral
rights with the claim; however, continuing Congressional moratoriums have
precluded new mining claim patent applications since 1993.

As discussed below, our unpatented mining claims consist of
lode claims and association placer claims. Lode claims are mining claims located
on a classic vein, ledge, or other rock in place between definite walls. A lode
claim is located by metes and bounds. The maximum length of a lode claim is
1,500 feet by 600 feet. Association placer claims are mining claims located upon
sand or gravel. Association placer claims are located by legal subdivision and
can be located up to a maximum 160 contiguous acres.

The following disclosure more fully discusses our specific
mineral property interests comprising the New Mexico Beryllium Project and has
been derived from various agreements to which the Company is a party, together
with the Technical Report dated June 5, 2009 prepared by Fred Brown, CPG, Pr.
Sci. Nat., and Tracy Armstrong, P. Geo., of P&E Mining Consultants
Inc., each an independent qualified person within the meaning of National
Instrument 43-101Standards of Disclosure for Mineral Projectsof the
Canadian Securities Administrators (NI 43-101). NI 43-101 is designed to
implement standards of disclosure for mineral properties of companies subject to
the jurisdiction of the Canadian Securities Administrators. The Technical Report
is available for inspection and review during normal business hours at our
registered and records office and has been filed on SEDAR at www.sedar.com.

16

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Cautionary Note to U.S. Investors: National Instrument
43-101 is promulgated under Canadian laws and regulations and uses definitions
and standards that differ from those in the SECs Industry Guide 7 regarding
disclosure on mineral properties. Accordingly, information contained in reports
prepared pursuant to NI 43-101 containing descriptions of the Companys
mineralization may not be comparable to similar information that the Company can
disclose in the reports it files with the SEC pursuant to the requirements of
United States federal securities laws and the rules and regulations
thereunder.

Warm Springs Area

Property Description and Tenure.The Warm Springs area
consists of 680 acres located in Socorro County, New Mexico. The vast majority
of this area, 520 acres, is privately owned by the Sullivan family and leased to
us under the Sullivan Lease dated January 2, 2004. We became the lease holder
under the Sullivan Lease and certain New Mexico State mining leases and the
owner of various lode and association placer claims on October 1, 2007. On April
9, 2008, we executed an amendment to the Sullivan Lease in order to clarify
certain provisions of the lease relating to the property description, term, and
conduct of operations.

The Sullivan Lease is described as: All of Special Section
2, and access through the East 1⁄2 of
Special Section 4, Township 8 South, Range 7 West, save and except that portion
of the Real Estate conveyed previously to Commissioners of the Acequia de Canada
Alamosa of Sierra County, New Mexico.

The Sullivan Lease provides us with the ability to conduct
mining exploration and operations with respect to all minerals, including
beryllium, in the Warm Springs area of the New Mexico Beryllium Project. The
surface and water rights on the Warm Springs area are also owned by the Sullivan
family and the Sullivan Lease allows us water rights and surface access to the
leased property as necessary for mining and milling operations. In exchange, we
are required to pay a gross production royalty to the Sullivans equal to 4% of
the annual proceeds from the sale or disposition of minerals, metals and
materials obtained from the leased property, and from any claims or leases we
acquire within a one mile area of interest from the perimeter of the leased
property, in the minimum amount of $12,000 per year. The $12,000 minimum annual
gross production royalty payment is due on January 1st of each year for the
balance of the lease.

In addition to the royalty, we are also obligated to pay all
real property taxes assessed on the leased property, provide accountings to the
Sullivan family with respect to monies received from the sale or disposition of
ore from the leased property, purchase and maintain commercial general liability
insurance and state industrial insurance, conduct our operations in a
workmanlike manner, and protect the leased property from liens which result from
our activities on the leased property. If we fail to satisfy any of these
obligations under the Sullivan Lease, then we would be in breach of the lease,
and the Sullivan family could, after providing notice to us and an opportunity
to cure the defect, elect to terminate the Sullivan Lease. The Sullivan Lease
provides for a term of 20 years and continues thereafter unless terminated by
either party based on a default by the other of any of the obligations of the
other under the lease.

We hold our interest in the remaining 160 acres of the Warm
Springs area under an unpatented mining claim known as Bertrandite claim #45
which we acquired from GWE as part of the 133 unpatented mining claims included
in the Acquired Property. This is an association placer claim situated to the
south of the area covered by the Sullivan Lease. We acquired this
claim in October 2007 as part of our acquisition from GWE.

17

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Accessibility. The Warm Springs property is located
approximately 50 miles northwest of the community of Elephant Butte, New Mexico.

From Elephant Butte, travel is along the paved portion of state highway NM52 for
41 miles. The remaining nine miles are along the well-maintained unpaved portion
of state highway NM52 to the Warm Springs property entrance. Property access is
along seasonal four-wheel drive tracks.

Climate. The Warm Springs property is located in a
semi-arid, high-desert climate approximately twenty miles north of
Chloride/Winston, New Mexico. Chloride/Winston has an average annual temperature
range between 18° F in January and 55° F in July. Average annual precipitation
is 13 inches, and average annual snowfall is 11 inches.

Local Resources and Infrastructure. The Warm Springs
property is currently undeveloped except for seasonal dirt access roads.
However, the property is well situated with regard to surrounding
infrastructure, with a power line crossing highway NM52 within seven miles of
the property. Water in the area is typically sourced from local wells. New
Mexico is home to a developed mineral industry, producing coal, uranium, silver,
manganese, potash, salt, perlite, copper ore and tin concentrates. The nearby
town of Elephant Butte is a small residential community with a population of
approximately 1,300 serviced by a modern municipal airport. Albuquerque, a major
urban center, lies approximately 170 miles to the north-northeast of the Warm
Springs property, and the New Mexico Institute of Mining and Technology is
located in nearby Socorro, New Mexico.

Physiography. The Warm Springs property lies in the
foothills of the northern Sierra Cuchillo Mountains, just south of Monticello
Canyon and north of Iron Mountain. Maximum local elevation is approximately
6,600 feet, with a vertical relief of 400 feet. Intermittent seasonal stream
channels drain the property. Local vegetation is typical of semi-arid regions
and includes juniper, cedar and pinion.

History. The Warm Springs property lies on the
northern-most limit of the Church Rock mining district, which also encompasses
numerous beryllium and tungsten deposits at Iron Mountain. Beryllium
mineralization at Warm Springs was first reported by M. Howard Milligan in
November 1961.

Eighteen exploration drill holes were completed in the 1960s
as part of a USBM project investigating mineralization in the northern Cuchillo
Mountains. Drilling was centered on a bertrandite mineralized outcrop. Samples
from seven trenches were also taken. The overall drilling depth was limited by
the water table. Six drill holes penetrated the surface mineralization and
intersected additional mineralization at depth. The deposit was also examined by
the USBM with a portable beryllium detector, and additional samples were taken
from shallow trenches in the bertrandite mineralized outcrop.

Subsequent to the USBM project, a reexamination of the property
was completed by Hillard in 1969, who mapped a thick sequence of andesitic and
latitic flows. Later sampling of non-magnetic concentrates in stream sediments
yielded anomalous values of lead, molybdenum, zinc and copper.

No original source records of the sampling program or the USBM
investigation were available for the Technical Report, except for information
contained in Hillard (1969) and Meeves (1966). The location of the USBM drill
holes and trenches were not able to be verified in the field by the authors of
the Technical Report. The accuracy and validity of the historical results were
therefore not established by the authors of the Technical Report.

A total of fourteen exploratory RC drill holes for a total of
7,576 feet were completed in 2001 and 2002 in the general vicinity of the
bertrandite mineralized outcrop located by the USBM program. The Beryllium Group, LLC was in control of the project from 2001 to 2002. GWE
was in control of the project from February 2004 to October 1, 2007. BE has been
in control of the property since October 1, 2007.

18

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The initial six drill holes were completed and the remaining
eight drill holes were sealed with a concrete plug with the exception of BE20
and BE25, which were left as water wells for the property owner. All drilling
was done with a reverse circulation air-rig with six-inch down-the-hole hammer
and tri-cone bit as required. Drill hole collar locations were determined by Mr.
David Tognoni using a Magellan SporTrak Prohandheld GPS unit. No
drill-hole surveys were undertaken.

Regional Geology. The Warm Springs property lies within
the eastern edge of the Datil-Mogollon volcanic field of southern New Mexico.
The volcanic field consists of mafic to silicic extrusive units of Tertiary age
and Quaternary basalts. The volcanic field is cut along its eastern margin by
multiple north-striking normal faults which formed a series of eastward-tilted
fault blocks in the Sierra Cuchillo. The Datil-Mogollon volcanic field is
bordered on the east by the Rio Grande rift, where a series of rhyolitic
ash-flow tuffs have been exposed. Beneath the ash-flow tuffs are latite
conglomerates, mud-flow deposits and sandstones representing the alluvial apron
which surrounded the Datil-Mogollon field prior to its ignimbrite climax. The
base of the volcanic pile rests unconformably upon rocks ranging from late
Eocene to Precambrian in age. Much of the area lies on the northeast flank of a
major Laramide uplift from which the Mesozoic rocks were stripped by early
Tertiary erosion. Basal volcanic rocks resting upon late Paleozoic limestones,
quartzites, or shales on the uplift lap off the structure onto Eocene arkosic
sediments which overlie Cretaceous sandstones and shales. Locally, Precambrian
rocks generally consist of low-grade metasedimentary rocks, metavolcanic rocks,
and intrusive rocks ranging from large granitic plutons to gabbroic stocks and
diabase dikes.

Property Geology. Hillard (1969) identified several
lithologies in the Warm Springs property area. Arranged in approximate
stratigraphic order these are: gravel, dikes, flow-banded rhyolite, rhyolite,
massive rhyolite, rhyolite tuff, sedimentary rocks, andesitic and latite flows,
and latitic tuffs and coarse pyroclastics, as well as a quartz monzonite
intrusive plug. Andesitic and latite flows are the most widespread volcanic unit
in the area. The surficial geology is dominated by colluvium and Tertiary
volcanics. James (1978) further suggests that the local high hills are underlain
by a hypabyssal stock complex cut by a swarm of radial dykes. The area is highly
faulted, situated on the eastern edge of the graben between the Sierra Cuchillo
and the Black Range.

Deposit Types.Beryllium is a lithophile element (i.e.
an element that tends to concentrate in silicate materials such as igneous
rocks) concentrated in the residual phases of magmatic systems. Commercial
beryllium mineralization typically occurs as bertrandite (Be4Si2O7(OH)2) which
contains approximately 40% BeO, or helvite (Mn4Be3(SiO4)3S) containing
approximately 14% BeO. Nonpegmatic bertrandite has been reported at Mt. Wheeler,
Nevada; Lake George District, Colorado; Spor Mountain, Utah; and Aguachile,
Mexico, among others. The principal source of commercial production of beryllium
in the United States is the Spor Mountain deposit, Utah. Beryllium
mineralization at Warm Springs is typical of volcanic-exhalative deposits.

Mineralization.The Warm Springs property hosts
beryllium mineralization in the form of bertrandite associated with late-stage
faulting of volcanic rocks and intense hydrothermal alteration. Hillard (1969)
also reports the presence of alunite and montmorillinite. As reported by Hillard
(1969), the surface exposure of the bertrandite mineralization occurs in altered
rhyolite tuff along projected fault zones. The mineralized outcrop as identified
by the USBM sampling program demarcates a zone of higher-grade bertrandite
approximately 100 feet long and 30 feet wide, with additional historical
drilling demonstrating mineralization to a depth of 190 feet. The historical
USBM drill hole results indicate that mineralization is tightly confined to
discrete, narrow zones. Hillard (1969) also reports a zone of weaker beryllium
mineralization south of the main mineralized outcrop, which may be due to
irregularities in the local fault geometry.

19

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Griffitts and Alminas (1968) suggest that the bertrandite was
introduced into faulted volcanic rocks, and is unrelated to local base-metal
mineralization. The host rock for the mineralization is hydrothermally altered
rhyolite-tuff agglomerate, and Hillard (1969) reports that local beryllium ore
consists of an altered rhyolite tuff fault breccia with a montmorillonite
matrix. Coatings of bertrandite on the fault breccia and spheres of radiating
bertrandite crystals in the fine fault material indicate that beryllium
mineralization occurred after faulting.

Exploration.No significant exploration is known to have
been conducted on the Warm Springs property except for that described herein and
previously by Griffitts and Alminas (1968), Hillard (1969) and Meeves
(1966).

Interpretation and Conclusions. Mineralization at Warm
Springs is typical of volcanic-exhalative deposits. RC drilling on the property
has confirmed the presence of anomalous beryllium mineralization associated with
local faulting as previously reported by Meeves (1966), Griffitts and Alminas
(1968) and Hillard (1969).

Drill hole BE18A, located adjacent to the bertrandite
mineralized outcrop, intercepted a zone of potentially economic mineralization
over a distance of thirty feet at a depth of 160 feet, which combined with the
results reported by Meeves (1966) suggests that beryllium mineralization
associated with the mineralized bertrandite outcrop may continue at depth.

Outlying Hydrothermal Areas

Property Description and Tenure.The outlying
hydrothermal areas consist of three state mining leases and 817 unpatented
mining claims located in Socorro County and Sierra County, New Mexico. The
outlying hydrothermal areas lie to the south and east of the Warm Springs area
and total approximately 19,008 acres. We acquired the three state leases and 132
of the unpatented mining claims via our acquisition transaction with GWE. We
staked the additional 690 unpatented mining claims in May 2008, 5 of which have
subsequently been dropped.

The three state leases are comprised of State of New Mexico
Mineral Lease Numbers HG 0059, HG 0060, and HG 0061 (collectively, the State
Leases). The assignments from GWE to our Company were filed with, and approved
by, the New Mexico Commissioner of Public Lands on September 6, 2007.

The State Leases cover an area of approximately 928 acres
located in Socorro County, New Mexico as follows:

|Mineral Lease
      No. |  | Subdivision           |  |  | Section |  |  | Township |  |  | Range |  |  | Acres | 
|----------------------- |  | --------------------- |  |  | ------- |  |  | -------- |  |  | ----- |  |  | ----- | 
|HG 0059                 |  | NW4NW4, S2NW4, NW4SW4 |  |  | 15      |  |  | 9S       |  |  | 8W    |  |  | 160   | 
|HG 0060                 |  | ALL                   |  |  | 16      |  |  | 9S       |  |  | 8W    |  |  | 640   | 
|HG 0061                 |  | Lots 7,8,9            |  |  | 17      |  |  | 9S       |  |  | 8W    |  |  | 127.9 | 

Accessibility.The outlying hydrothermal areas are 42
miles Northwest of Truth or Consequences, NM and North Northwest 35 miles of
Truth or Consequences, NM. These areas can be accessed using state highway NM 52
& NM 142 respectively from the Truth or Consequences, New Mexico airport.
State highway NM 52 is a paved road and NM highway 142 is paved for the first 15
miles and the remainder is a graded gravel road.

The State Leases provide us with the ability to conduct
exploration and mining operations to remove and process beryllium and associated
minerals from the leased property, subject to the receipt of necessary permits. Each State Lease has a primary term of three years and
requires an annual rental payment of $1.00 per acre. The term of each State
Lease extends in perpetuity so long as minerals are produced or mined in paying
quantities. The term can also be extended in the absence of mineral production
for a secondary term of 2 years with an annual rent of $10.00 per acre, a
tertiary term of 5 years with an annual rent of $3.00 per acre, and a quaternary
term of 5 years with an annual rent of $10.00 in year 11 increasing by $10.00
per acre, per year to $50.00 per acre, per year in year 15. The State Leases
also require us to pay the State of New Mexico royalties in the amount of 2% of
the gross returns from minerals produced from the property less the actual and
reasonable transportation and smelting or reduction costs, up to 50% of the
gross returns.

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The 132 unpatented mining claims we acquired from GWE cover an
area of approximately 18,080 acres and consist of the following 20 lode claims
and 112 association placer claims:

|Claim                                                                   |  | Type               |  |  | County  |  |  | Acres  | 
|----------------------------------------------------------------------- |  | ------------------ |  |  | ------- |  |  | ------ | 
|Bert #1-12                                                              |  | Lode               |  |  | Socorro |  |  | 240    | 
|Special Clay #100-107                                                   |  | Lode               |  |  | Socorro |  |  | 160    | 
|Bertrandite #34, 35, 54                                                 |  | Association Placer |  |  | Sierra  |  |  | 480    | 
|Berts Clay #92, 93                                                      |  | Association Placer |  |  | Sierra  |  |  | 320    | 
|Bertrandite #9-12, 15, 18, 21,
    22, 25, 26, 29-31, 39, 41, 56-59, 64 |  | Association Placer |  |  | Socorro |  |  | 2,960  | 
|Berts Clay #1-11, 13-19, 21-31, 33-40, 42-91                            |  | Association Placer |  |  | Socorro |  |  | 13,920 | 

Some of these claims are located on property where both the
surface estate and mineral estate are owned by the Federal Bureau of Land
Management (the BLM), while other claims are located on property where the
surface estate and mineral estate are separately owned. In the latter case, the
surface estate has been transferred to private parties while ownership of the
mineral estate, which serves as the basis for our claims, has been retained by
the BLM. In either event, we believe we have the right to access the surface as
necessary to conduct our exploration and mining operations on all 132 of these
unpatented mining claims, subject to the receipt of necessary permits. However,
with respect to the claims which are located on property where the surface and
mineral estate are separately owned, we may elect to negotiate agreements with
the private surface owners in order to more clearly define our rights and
responsibilities concerning our exploration, mining, and reclamation activities.

In 2008, we staked the following additional 690 lode
claims:

|Claim                                                                               |  | Type |  |  | County         |  |  | Acres  | 
|----------------------------------------------------------------------------------- |  | ---- |  |  | -------------- |  |  | ------ | 
|BU #7-26, 39-58, 65-204, 207-689, 691-693,
      695-701, 703- 705,707-709, 711-716 |  | Lode |  |  | Socorro        |  |  | 13,680 | 
|BU #690, 694, 698, 702, 706, 710                                                    |  | Lode |  |  | Sierra/Socorro |  |  | 120    | 

In July 2009, we disclaimed an
interest in 5 of the lode claims, including BU #43, BU #111, BU #351, BU #482
and BU #484. The remaining 685 lode claims comprise approximately 13,700 acres,
overlying certain of the association placer claims forming part of the Acquired
Property. The BLM owns the surface and mineral estate with respect to these 685
lode claims. As part of our claims, we have the right to access the surface of
such property to the extent necessary to conduct our exploration and mining
operations on all 685 of these unpatented mining claims, subject to the receipt
of necessary permits.

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Maintenance Fees and Royalties

In order to maintain the unpatented claims on the Warm Springs
area and the outlying hydrothermal areas, we are required to pay an annual
maintenance fee of $125 to the BLM on or before August 31st of each calendar
year, which may be adjusted annually. We are also required to make various
filings with state and federal agencies. We are not required to pay royalty
payments to the BLM from mining production on any of the unpatented claims.

In addition to royalty payments that may become due to the
Sullivan family pursuant to the Sullivan Lease and the State of New Mexico
pursuant to State Leases, we are also required to pay a 10% net profits royalty
interest to various former owners of our properties and an additional 1% gross
profit royalty interest to David Q. Tognoni, our president and chief executive
officer. Should payments become due under these royalty interests, such payments
are calculated and payable on a quarterly basis.

The net profits royalty interests require us to pay 10% of our
net profits from mineral production from the Sullivan Lease, the State Leases,
and the 133 unpatented mining claims acquired from GWE as well as from all
mineral production from a three mile area of interest around the outside
boundary of the Sullivan Lease, the State Leases, and the 133 unpatented mining
claims acquired from GWE. The remaining 685 lode claims that we staked in 2008
are located within the three mile area of interest and therefore are subject to
the net profits royalty interests, as well as the gross profits royalty interest
discussed below. Net profits are determined by subtracting gross royalty
payments, marketing costs, distribution costs, operating costs, taxes, interest,
capital costs, and exploration costs from revenue generated from mineral
production.

The gross profits royalty interest requires us to pay 1% of our
gross profits from mineral production from the Sullivan Lease, the State Leases,
and the 133 unpatented mining claims acquired from GWE as well as from all
mineral production from a three mile area of interest around the outside
boundary of the Sullivan Lease, the State Leases, and the 133 unpatented mining
claims acquired from GWE. Gross profits are determined by subtracting marketing
costs, distribution costs, taxes, and royalty payments (excluding the 10% net
profit royalty interest granted to GWE and others) from revenue generated from
mineral production.

ITEM 3. LEGAL PROCEEDINGS

We are not currently subject to any legal proceedings, and to
the best of our knowledge, no such proceeding is threatened or contemplated, the
results of which would have a material impact on our properties, results of
operation, or financial condition. Nor, to the best of our knowledge, are any of
our officers or directors involved in any legal proceedings in which we are an
adverse party.

ITEM 4. RESERVED

PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND PURCHASES OF EQUITY SECURITIES

Market Information

There is currently no established public trading market for our
common stock in the United States. We intend to make an application for
quotation of our common stock on the OTC Bulletin Board. However, our common
stock is currently traded only in Canada on the TSX Venture Exchange.

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The table below sets forth the high and low sales prices for
our common stock on a quarterly basis as reported by TSX Venture Exchange from
October 29, 2009, the beginning of trading, to December 31, 2009.

TSXV (Cdn$)High
    
    
    LowYear Ended December 31, 2009First Quarter
    $
    -
    
    $
    -Second Quarter
    
    -
    
    
    -Third Quarter
    
    -
    
    
    -Fourth Quarter
    
    0.38
    
    
    0.25


As of March 29, 2010, there were approximately 51 record
holders of our common stock.

Penny Stock Rules

Due to the price of our common stock, as well as the fact that
our common stock is not listed on a national securities exchange registered with
the SEC, our stock is characterized as penny stocks under applicable
securities regulations. Our stock will therefore be subject to rules adopted by
the SEC regulating broker-dealer practices in connection with transactions in
penny stocks. The broker or dealer proposing to effect a transaction in a penny
stock must furnish his customer a document containing information prescribed by
the SEC and obtain from the customer an executed acknowledgment of receipt of
that document. The broker or dealer must also provide the customer with pricing
information regarding the security prior to the transaction and with the written
confirmation of the transaction. The broker or dealer must also disclose the
aggregate amount of any compensation received or receivable by him in connection
with such transaction prior to consummating the transaction and with the written
confirmation of the trade. The broker or dealer must also send an account
statement to each customer for which he has executed a transaction in a penny
stock each month in which such security is held for the customers account. The
existence of these rules may have an effect on the price of our stock, and the
willingness of certain brokers to effect transactions in our stock.

Transfer Agent

We have appointed Registrar and Transfer Company at 10 Commerce
Dr., Cranford, New Jersey 07016-3572, USA, telephone (908) 272-8511 and Equity
Transfer & Trust Company at 200 University Avenue, Suite 400, Toronto,
Ontario, Canada M5H 4H1, telephone (416) 361-0930 as the transfer agent for our
common stock.

Dividend Policy

We have never declared or paid dividends on our common stock.
Payment of future dividends, if any, will be at the discretion of our Board of
Directors after taking into account various factors, including the terms of any
credit arrangements, our financial condition, operating results, current and
anticipated cash needs and plans for expansion. At the present time, we are not
party to any agreement that would limit our ability to pay dividends.

Securities Authorized for Issuance Under Equity Compensation
Plans

Set out below is information as of December 31, 2009 with
respect to compensation plans (including individual compensation arrangements)
under which our equity securities are authorized for issuance. This information
relates to our Equity Incentive Plan.

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|Equity Compensation Plan
      Information                       | 
|---------------------------------------------------------------- | 
|                                                                 | 
|                                                                 | 
|                                                                 | 
|                                                                 | 
|                                                                 | 
|                                                                 | 
|                                                                 | 
|                                                                 | 
|                                                                 | 
|Plan
      category                                              | 
|Equity compensation plans approved by security holders           | 
|Equity compensation plans not approved by security
      holders | 
|Total                                                            | 

(1) The option exercise price set forth in the option grant for
options to purchase 3,560,000 shares of our common stock is denominated in
Canadian dollars rather than United States dollars. The option exercise price
for those options is Cdn$0.25 and have been converted to US dollars at the rate
of CDN 1 = USD .96 at Dec.31, 2009. The option exercise price set forth in the
option grant for options to purchase 400,000 shares of our common stock is
denominated in United States dollars. The option exercise price for those
options is US$0.35.

___________________________Use of Proceeds

The initial public offering of our common stock was effected
through a Registration Statement on Form S-1 (Reg. No. 333-160431) which was
declared effective by the SEC on September 29, 2009, as well as a final
prospectus filed with Canadian Securities Regulatory Authorities. Pursuant to
the Registration Statement, we registered a maximum aggregate dollar amount of
Cdn$5,000,000 of our common stock. We sold 5,750,000 shares of our common stock
for Cdn$0.30 per share for gross proceeds to the Company of Cdn$1,725,000 (which
includes the exercise of the over-allotment option). In November 2009, the
offering terminated and the remaining registered shares were subsequently
deregistered and are no longer available for sale.

We paid the underwriter a commission of Cdn$288,000 in
connection with the offering. We also incurred additional offering expenses of
approximately Cdn$370,100. After deducting the underwriters commission and
other offering expenses, we received net proceeds of approximately
Cdn$1,066,900. The underwriter of our initial public offering was Canaccord
Capital Corporation. No payments of underwriters commission or expenses or
other offering expenses were made directly or indirectly to (i) any of our
directors, officers or their associates, (ii) any person(s) owning 10% or more
of any class of our equity securities, or (iii) any of our affiliates.

Through December 31, 2009, we used the net proceeds from our
initial public offering as described in the following table:

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|                                                                           |   | Cdn$      | 
|-------------------------------------------------------------------------- | - | --------- | 
|Working capital                                                            | $ | 599,568   | 
|Corporate overhead                                                         |   | 26,633    | 
|Compensation and reimbursement expenses to
      directors and officers(1) |   | 10,590    | 
|Consulting expenses (permitting and geological)                            |   | 229,363   | 
|Professional services                                                      |   | 63,787    | 
|Property maintenance                                                       |   | 136,959   | 
|Net proceeds from
      initial public offering                            | $ | 1,066,900 | 

(1) No other net proceeds of the offering were paid directly or
indirectly to (i) any of our directors, officers or their associates; (ii) any
person(s) owning 10% or more of any class of our equity securities, or (iii) any
of our affiliates._______________

ITEM 6. SELECTED FINANCIAL DATA

Not required.

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION

Introduction

The following discussion updates our plan of operation as of
March 29, 2010 for the remainder of the year. It also analyzes our financial
condition at December 31, 2009 and compares it to our financial condition at
December 31, 2008. The discussion also summarizes the results of our operations
for the years ended December 31, 2009 and 2008, and compares each years results
to the results of the prior year. The discussion in this Managements
Discussion and Analysis of Financial Condition and Results of Operationshould be read in conjunction with our audited financial statements and the
notes thereto appearing in this report.

Overview

We are an exploration stage company engaged in the exploration
for beryllium. All of our properties are at an early stage of exploration and it
has not been determined whether any of the properties contain economic amounts
of mineralization. Our future performance is dependent on the results of our
future exploration efforts, and if warranted, development of our properties and
the state of the financial markets, as we will need to raise additional capital
to further our business plan.

On October 1, 2007, we purchased the Acquired Property from GWE
in exchange for the issuance of 10 million shares of our common stock and the
grant of a 20% net profit royalty interest in the Acquired Property to GWE and
certain other parties. In May 2009, the net profit royalty interest in the
Acquired Property was reduced to 10% in the aggregate in consideration for our
agreement to pursue our initial public offering. The total number of shares
issued to GWE as consideration for the Acquired Property represented
approximately 72% of our common stock after giving effect to the acquisition. As
a result, for financial statement reporting purposes, the acquisition of the
Acquired Property and related business operations have been reflected as a
reverse acquisition in accordance with applicable accounting principles and the
financial statements presented for comparative purposes represent the operations
of GWE that were acquired by us. The Acquired Property has been carried forward
at its historical carrying value before the combination.

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Plan of Operation

Our plan of operation is to embark on a two-year exploration
program aimed at evaluating the grade and tonnage of beryllium in the New Mexico
Beryllium Project. In late 2007, we commissioned a technical report from an
independent mining consulting firm to obtain an independent evaluation of the
New Mexico Beryllium Project. The report, dated June 5, 2009, was prepared by
Fred Brown, CPG, Pr. Sci. Nat. and Tracy Armstrong, P. Geo, of P&E Mining
Consultants, Inc. It was prepared pursuant to the standards of National
Instrument 43-101-Standards of Disclosure for Mineral Projectsof the
Canadian Securities Administrators, which we refer to as NI 43-101. We refer to
this technical report as the Technical Report.

We have not received a permit to commence exploration
activities on the Warm Springs area of the New Mexico Beryllium Project, nor
have we received the exploration permits for the outlying hydrothermal areas,
and we may never obtain such permits. We must obtain a permit to conduct
exploration activities on the Warm Springs area of our property and outlying
hydrothermal areas recommended by the Technical Report. Our primary focus since
acquiring the New Mexico Beryllium Property has been to obtain the necessary
permits to commence exploration, and the proceeds of our seed financing and a
portion of the proceeds of our initial public offering have been utilized in
part for that purpose.

To March 29, 2010, we have used
the  funds from our initial public offering completed in October 2009

for the purpose of funding our permitting efforts in an effort to execute the phased exploration program
recommended by the Technical Report. The initial phase of the program will
consist of reverse circulation drilling surrounding the bertrandite outcropping,
together with detailed geological mapping and trenching to delineate the
boundaries of the surface mineralization. We have estimated the costs of this
phase of the program to be $205,000. Assuming that the first phase confirms that
a second phase of follow-up diamond core drilling is warranted, our two-year
program contemplates the drilling of a total of 50 holes at an average depth of
800 feet for a total of 40,000 feet at Warm Springs at an estimated cost of
$1,120,000 and 23,000 feet of drilling in outlying hydrothermal areas at an
estimated cost of $1,142,800. We will require additional capital, which we
contemplate will come from additional sales of our common stock, as well as
additional permits, to commence the second phase of this program. If the Company
is unable to obtain the necessary permits for the Warm Springs area and the
outlying hydrothermal areas, the Company would consider its options at that time
and, in particular, whether to appeal a negative decision on the permits or
whether to invest the remaining proceeds from the initial public offering in the
purchase of one or more additional properties. We have no agreement to acquire
any other properties at present, nor have we identified any potential
properties.

Property Maintenance Costs.In addition to expenses
expected to be incurred in connection with our exploration activities, we will
be required to incur property maintenance costs. These costs are currently
estimated at $137,440 for each year and include the following items:

| | (i)  | Annual fees of $140 per claim per year to maintain
      federal mining claims; and                           
| | ---- | --------------------------------------------------------------------------------------------------------------
| |      |                                                                                                               
| | (ii) | Annual lease payments for state leases and the minimum
      annual royalty of $12,000 for the Sullivan Lease.

Corporate Overhead.Included in our plan of operation
are the expenses of overseeing our business and paying other general and
administrative expenses. These expenses primarily include salaries and other
compensation, the reporting costs associated with being a public company, rent
and travel. We currently estimate these expenses at $15,500 per month, based on
existing commitments and expectations, including the $3,000 per month commitment
to our chief executive officer under his employment agreement, as amended. We
expect these expenses will be paid from the proceeds of the initial public offering and future equity offerings, if necessary, until such
time, if ever, we are successful in putting our project into production or
selling our properties to a major mining company.

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Liquidity and Capital Resources

As of December 31, 2009, we had a deficit in working capital of
$371,064, consisting of current assets of $570,727 and current liabilities of
$941,791. Our deficit at December 31, 2009 represents a decrease in working
capital of $532,184 from December 31, 2008, and represents cash spent on our
business during the last 12 months, including consulting, professional and
permitting fees. We have continued to deplete our working capital subsequent to
year-end.

Substantially all of our current assets at December 31, 2009
consisted of cash, representing the remaining proceeds from our initial public
offering completed on October 26, 2009 and the exercise of the overallotment
option completed on November 13, 2009. Our current liabilities at December 31,
2009 consisted of accounts payable, accrued liabilities and non-cash stock
option and warrant liability. The stock option and warrant liability arises from
the fact that the stock options and warrants issued by us to certain parties are
denominated in a currency (Canadian dollars) other than our functional currency
(U.S. dollars) and are recorded as a liability pursuant to ASC 718 and 815. If
the stock option and warrant liability at December 31, 2009 of $596,500 is
excluded from the calculation of our working capital, our working capital at
that date would be $225,436.

Even with the proceeds of this offering, our longer term
ability to carry out our business plan is dependent on our ability to achieve
profitable operations or to obtain additional financing. Due to the fact that we
are an exploration stage company, have no established source of revenue and are
dependent on receipt of additional financing, our independent accountants have
raised substantial doubt about our ability to continue as a going concern. See
Item 1A.RISK FACTORS and Item 8. Financial
Statements.

We have financed all of our operations since inception through
the sale of equity, to this point entirely of common stock. In October 2009, we
completed our initial public offering of 5 million common shares for gross
proceeds of Cdn$1,500,000 (US $1,412,962). The shares were sold at a price of
Cdn $0.30 (US $0.28) each. Related issue costs, including the corporate finance
fee, totaled $602,958. In connection with the offering, we granted 500,000
compensation warrants to the underwriter, exercisable at Cdn$0.30 for a period
of two years, and paid a cash commission equal to 8% of the gross proceeds and a
corporate finance fee of Cdn$150,000.

On November 13, 2009, we issued an additional 750,000 common
shares from the exercise of the over-allotment option associated with the
initial public offering. The common shares were issued at a price of Cdn$0.30
($0.29 US) for gross proceeds of Cdn$225,000 ($214,123 US). Related issue costs
comprised of underwriters commission totaled $17,130. In addition, the Company
granted 75,000 compensation warrants to the underwriter, exercisable at Cdn$0.30
for a period of two years.

Since we have expended a significant portion of the proceeds of
our initial public offering in payment of issuance costs and continuing efforts
to obtain permits to undertake exploration at our properties, it will be
necessary for us to raise additional financing in the near future. Depending on
whether and when one or more of the permits are issued, we may require
additional capital in 2010. If and when the permits are issued, we will also
require significant cash for bonding of our reclamation obligations in
connection with proposed drilling activity. While we have no existing
arrangements to obtain such financing, we anticipate it will likely take the
form of additional equity financing. There is no assurance we will be successful
in obtaining this financing. In the event we are not successful in obtaining
such financing, we may be forced to curtail operations and liquidate some or all
of our assets.

During the year ended December 31, 2009, our cash increased by
$47,752 as a result of our operating and financing activities. Operating expenses totaled $1,478,711,
which were reduced by non-cash expenses such as stock-based compensation,
unrealized foreign exchange loss, amortization of equipment, and changes in
current assets and liabilities, resulting in $959,245 of net cash used in
operating activities. Cash provided by financing activities totaled $1,006,997
and represented the gross proceeds, net of costs, from the initial public
offering and the exercise of the over-allotment option. The $1,478,711 of
operating expenses represented our net loss for the year.

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As of December 31, 2008, we had working capital of $161,120,
consisting of current assets of $527,697 and current liabilities of $366,577.
Our current assets consisted primarily of cash and current liabilities included
accounts payable, accrued liabilities and non-cash stock option liability.

During the year ended December 31, 2008, our cash decreased by
$1,921,150 as a result of our operating and investment activities. Operating
expenses totaled $2,192,125, which was reduced by non-cash expenses such as
stock-based compensation, accretion of asset retirement obligations,
amortization of equipment, write off of deferral costs, and changes in assets
and liabilities, resulting in $1,810,750 of net cash used in operating
activities. Cash used in investing activities totaled $110,400 resulting solely
from the purchase of mineral rights. The $2,192,125 of operating expenses
represented our net loss for the year.

Off Balance Sheet Arrangements

As of December 31, 2009, we had no off-balance sheet
arrangements or obligations that are likely to have a material effect on our
financial condition, results of operation or business.

Tabular Disclosure of Contractual Obligations

The following table summarizes our obligations and commitments
as of December 31, 2009 to make future payments under certain contracts,
aggregated by category of obligation, for the specified time periods:

|                              |   | Payments due by period |     |   |              |  |   |                 | 
|----------------------------- | - | ---------------------- | --- | - | ------------ |  | - | --------------- | 
|                              |   |                        |     |   | Less than    |  |   |                 | 
|Contractual
      Obligations |   | Total                  |     |   | 1
      year |  |   | 1-3
      years | 
|                              |   |                        |     |   |              |  |   |                 | 
|Purchase Obligations          | $ | 72,000                 | (1) | $ | 36,000       |  | $ | 36,000          | 
|Asset Retirement              |   |                        |     |   |              |  |   |                 | 
|Obligations                   |   | 12,506                 | (2) |   |             |  |   |                | 
|Total                         | $ | 84,506                 |     | $ | 36,000       |  | $ | 36,000          | 

(1) Represents amounts due to David Tognoni, our President and
Chief Executive Officer, under his employment agreement with our Company, as
amended. Effective September 1, 2009, Mr. Tognoni agreed to reduce his base
salary to $36,000 per year and to forego the additional $90,000 previously
payable under his employment agreement which was intended to cover the cost of
office expense and associated overhead costs in an effort to help the Company
reduce its expenses.

(2) We are unable to predict when these obligations will
mature, since they depend on our exploration efforts in the
future.____________________

Results of Operations

Year ended December 31, 2009 and 2008.For the year
ended December 31, 2009, we realized a net loss of $1,478,711 (December 31,
2008: $2,192,125) or $0.05 per share (December 31, 2008: $0.08 per share), on no revenue. Since we are an exploration company, we do not
expect to receive revenue from operations until such time, if ever, we identify
sufficient mineralized material to justify placing our property into production.
During 2009, decreases in management and consulting fees, drilling costs, office
and general expenses, foreign exchange loss, fees, licenses and permits, travel
and financing costs were partially offset by increases in geological consulting
fees, professional fees, transfer agent and filing fees. Each of these items is
analyzed in more detail immediately below:

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- Management and consulting fees decreased $38,914 from 2008 to 2009,
  primarily due to the reduction of the Chief Executive Officers base salary
  during the latter part of the year;
- Drilling expenses for the year ended December 31, 2009, were $nil (year
  ended December 31, 2008 - $33,810). The decrease of $33,810 can be attributed
  to reclamation work required on the Sullivan Lease during the year ended
  December 31, 2008 that was not required for the year ended December 31, 2009;
- Office and general expenses decreased $52,550, primarily as a result of a
  reduction in compensation accepted by our chief executive officer in an effort
  to conserve working capital;
- Geological consulting fees for the year ended December 31, 2009 were
  $411,731 (year ended December 31, 2008 - $269,204). The increase of $142,527
  can be attributed to conducting necessary work on the property during the year
  ended December 31, 2009 compared to the year ended December 31, 2008;
- Professional fees for the year ended December 31, 2009, were $345,177 (year
  ended December 31, 2008 - $222,336). The increase of $122,841 can be
  attributed to accounting, legal and audit fees incurred during the year ended
  December 31, 2009;
- Our foreign exchange loss decreased $152,626 as a result of a weakening of
  the US dollar against the Canadian dollar;
- Fees, licenses and permits fees for the year ended December 31, 2009, were
  $119,194 (year ended December 31, 2008 - $248,995). The decrease of $129,801
  can be attributed to the timing of permit and license fees due during the year
  ended December 31, 2009 compared to the year ended December 31, 2008;
- Transfer agent and filing fees for the year ended December 31, 2009, was
  $56,193 (year ended December 31, 2008 - $nil). The increase of $56,193 can be
  attributed to the completion of the initial public offering during the year
  ended December 31, 2009;
- An increase of $7,031 in share based payments during the year ended
  December 31, 2009, compared to the same period in 2008, was mainly due to the
  vesting terms of the 400,000 stock options granted in November 2009 and the
  valuation of the stock option liability. The Company expenses the options over
  the vesting term which can create variances from one period to another. Users
  of the Companys financial statements should be cautious of share based
  payments since it can impact operating results significantly;
- Travel expenses decreased $61,833 from 2008 to 2009, as we endeavoured to
  conserve valuable working capital; and
- Financing costs of $571,335 incurred during 2008 as a result of our
  terminated public offering were not repeated in 2009, as we completed our
  initial public offering in that year.

29

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We expect to incur losses until such time, if ever, we identify
commercial amounts of mineralized material and successfully extract such
material for sale to third parties.

Please see Plan of Operation above for a description
of costs and expenses that we expect to incur during 2010.

Critical Accounting Policies

The following are the accounting policies that we believe are
most critical in the preparation of our financial statements:

Mineral Rights and Exploration Costs

Mineral rights include the cost of obtaining unpatented and
patented mining claims and the cost of acquisition of properties. Significant
payments related to the acquisition of land and mineral rights are capitalized
as tangible assets. If a mineable ore body is discovered, such costs are
amortized when production begins using the units-of-production method based on
proven and probable reserves. If no mineable ore body is discovered or such
rights are otherwise determined to have no value, such costs are expensed in the
period in which it is determined the property has no future economic value.

When mineral properties are acquired under option agreements
with future acquisition payments to be made at the sole discretion of the
Company, those future payments, whether in cash or shares, are recorded only
when the Company has made or is obliged to make the payment or issue the
shares.

We expense all costs related to the maintenance and development
of mineral interests prior to the establishment of proven and probable reserves.
As at December 31, 2009 and 2008, we had not established any proven or probable
reserves.

ShareBased Payments

We issue stock options to employees and consultants in
connection with various business activities. These are accounted for in
accordance with the provisions of ASC 718 Compensation  Stock Compensation
and ASC 505 Equity as well as other authoritative accounting pronouncements.
We are required to make estimates of the fair value of the related instruments
based on the Black-Scholes option pricing model and recognize expenses over the
period benefited, usually the vesting period.

Stock options which are indexed to a factor which is not a
market, performance or service condition, in addition to our share price, are
classified as liabilities and remeasured at each reporting date based on the
Black-Scholes option pricing model with a charge to operations, until the date
of settlement.

Asset Retirement Obligations

The fair values of asset retirement obligations are recorded as
liabilities on a discounted basis when incurred. The associated asset retirement
costs are capitalized as part of the carrying amount of the long-lived asset
unless the asset has been previously charged to operations, in which case the
amount is expensed. Over time, the liabilities will be accreted for the change
in their present value and the initial capitalized costs will be depleted and
amortized over the useful lives of the related assets.

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Impairment of Long-Lived Assets

In accordance with ASC 360 Property, Plant and Equipment,
long-lived assets to be held and used are analyzed for impairment whenever
events or changes in circumstances indicate that the related carrying amounts
may not be recoverable. We evaluate at each balance sheet date whether events
and circumstances have occurred that indicate possible impairment. If there are
indications of impairment, we use the future undiscounted cash flows of the
related asset or asset grouping over the remaining life in measuring whether the
assets are recoverable. In the event such cash flows are not expected to be
sufficient to recover the recorded asset values, the assets are written down to
their estimated fair value. Long-lived assets to be disposed of are reported at
the lower of their carrying amount or their fair value of asset less the cost to
sell.

Income Taxes

We use the asset and liability method of tax allocation to
account for income taxes. Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amount of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes and
are measured using enacted tax rates in effect for the year in which these
temporary differences are expected to be recovered or settled. The effect of
changes in income tax rates on deferred income tax assets and liabilities is
recognized in operations in the period that the changes are enacted. When the
future realization of deferred tax assets does not meet the test of being more
likely than not to occur, a valuation allowance in the amount of the potential
future benefit is taken.

Issue Costs

Direct costs associated with the issuance of our common stock,
including professional fees and selling expenses relating to broker-dealer
relationships, are reflected as a reduction of shareholders equity.

Foreign Currency Translation

Our functional currency is the U.S. dollar. Certain of our
monetary assets and liabilities denominated in Canadian dollars are remeasured
into U.S. dollars at exchange rates in effect at the balance sheet date. As at
December 31, 2009 and 2008, substantially all of our monetary assets and
liabilities denominated in Canadian dollars were comprised of cash and the stock
option and warrant liability. Non-monetary
assets and liabilities are remeasured at historical exchange rates, unless such
items are carried at market, in which case they are translated at the exchange
rates in effect on the balance sheet date. As at December 31, 2009 and 2008, we
did not have any non-monetary assets and liabilities denominated in Canadian
dollars. Revenues and expenses are remeasured at rates approximating the
exchange rates in effect at the time of the transaction. During the years ended
December 31, 2009 and 2008, substantially all expenses were transacted in U.S.
dollars.

Use of Estimates

The preparation of financial statements in conformity with
United States generally accepted accounting principles requires management to
make estimates and assumptions that affect certain 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 revenue and expenses
during the reporting period. Actual results could differ from those estimates.
Significant estimates include the valuation of share-based payments, mineral
rights, asset retirement obligations, stock option liability and deferred tax
assets and liabilities. These estimates are reviewed periodically, and, as
adjustments become necessary, they are reported in operations in the period in
which they become known.

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Fair Value Option for Financial Assets and Financial
Liabilities

Fair value estimates discussed herein are based upon certain
market assumptions and pertinent information available to management as of
December 31, 2009 and 2008. The respective carrying value of certain on-balance
sheet financial instruments approximated their fair values. These financial
instruments include cash, other receivables, stock option and warrant liability
and accounts payable. Fair values were assumed to approximate carrying values
for these financial instruments because they are short term in nature and their
carrying amounts approximate fair values or they are payable on demand.

Accounting Principles Recently Adopted

In June 2009, the FASB issued ASC Topic 105, Accounting
Standards Codification (ASC 105), which establishes the FASB Accounting
Standards Codification (Codification) as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in conformity with GAAP. Rules and
interpretive releases of the SEC under authority of federal securities laws are
also sources of authoritative GAAP for SEC registrants. ASC 105 is effective for
financial statements issued for interim and annual periods ending after
September 15, 2009. ASC 105 was adopted by us in the third quarter of 2009 and
did not have any material effect on our financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about
Derivative Instruments and Hedging Activities which was primarily codified as
ASC Topic 815 Derivatives and Hedging (ASC 815). ASC 815 requires
qualitative disclosures about objectives and strategies for using derivatives,
quantitative disclosures about fair value amounts of and gains and losses on
derivative instruments, and disclosures about credit risk related contingent
features in derivative agreements. ASC 815 was adopted by us as of January 1,
2009 and did not have an impact on our financial statements. However, we are
required to expand our disclosures relating to the use of and purpose for its
derivative instruments, which are discussed below.

Our risk management objectives are to ensure that business and
financial exposures to risk that have been identified and measured are minimized
using the most effective and efficient methods to reduce, transfer and, when
possible, eliminate such exposures. Operating decisions contemplate associated
risks and management strives to structure proposed transactions to avoid or
reduce risk whenever possible.

In April 2008, the FASB issued Emerging Issues Task Force
(EITF) 0705, Determining whether an Instrument (or Embedded Feature) Is
Indexed to an Entitys Own Stock which was primarily codified as ASC 815. ASC
815 provides guidance on determining what types of instruments or embedded
features in an instrument held by a reporting entity can be considered indexed
to its own stock. ASC 815 is effective for financial statements issued for
fiscal years beginning after December 15, 2008. The adoption of ASC 815 as of
January 1, 2009 had a material impact on our financial statements. This adoption
required us to treat the compensation warrants issued in connection with our
initial public offering as a liability upon their issuance. ASC 815 indicates
that warrants with exercise prices denominated in a different currency than an
entitys functional currency should not be classified as equity. As a result,
these compensation warrants have been treated as derivatives and recorded as
liabilities carried at their fair value, with period to period changes in the
fair value recorded as a gain or loss in the statement of operations. We adopted
the recommendations of ASC 815 on January 1, 2009 and treated the compensation
warrants as a liability upon their issuance.

In April 2009, the FASB issued ASC Topic 825, Financial
Instruments (ASC 825). ASC 825 requires interim disclosure regarding the fair
values of financial instruments. Additionally, ASC 825 requires disclosure of
the methods and significant assumptions used to estimate the fair value of
financial instruments on an interim basis as well as changes to the methods and
significant assumptions from prior periods. ASC 825 does not change the accounting treatment for
these financial instruments and was adopted by us in the second quarter of 2009.
The adoption of ASC 825 did not have any material effect on our financial
statements.

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In August 2009, the FASB issued Accounting Standards Update
(ASU) 200905, Fair Value Measurements and Disclosures (Topic 820) -
Measuring Liabilities at Fair Value, which clarifies that the quoted price for
an identical liability, when traded as an asset in an active market, is also a
Level 1 measurement for that liability when no adjustment to the quoted price is
required. In the absence of a Level 1 measurement, an entity must use one or
more of the following valuation techniques to estimate fair value (in a manner
consistent with the principles in FASB Accounting Standards Codification (ASC)
Topic 820), which can be classified into two categories: 1) a valuation
technique that uses a quoted price; and 2) another valuation technique based on
the amount an entity would pay to transfer the identical liability or based on
the amount an entity would receive to enter into an identical liability. The
adoption of this statement was adopted by us in the third quarter of 2009 and
did not have any material effect on our financial statements.

In September 2009, the FASB issued ASU No. 2009-08, Earnings
Per Share Amendments to Section 260-10-S99. This Codification Update represents
technical corrections to Topic 260-10-S99, Earnings per Share, based on EITF
Topic D-53, Computation of Earnings Per Share for a Period that Includes a
Redemption or an Induced Conversion of a Portion of a Class of Preferred Stock
and EITF Topic D-42, The Effect of the Calculation of Earnings per Share for
the Redemption or Induced Conversion of Preferred Stock. The adoption of this
statement was adopted by us in the third quarter of 2009 and did not have any
material effect on our financial statements.

Future Accounting Pronouncements

In January 2010, the FASB issued ASU 2010-05, Compensation -
Stock Compensation (Topic 718): Escrowed Share Arrangements and the Presumption
of Compensation, which reflects the Securities and Exchange Commissions views
on overcoming the presumption that escrowed share arrangement represent
compensation for certain shareholders. ASU 2010-05 did not contain an effective
date. We do not expect the impact of adopting ASU 2010-05 on our financial
position, results of operations and cash flows will be material.

In January 2010, the FASB issued ASU 2010-06, Fair Value
Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value
Measurements, which adds new requirements for disclosures about transfers into
and out of Levels 1 and 2 and separate disclosures about purchases, sales,
issuances and settlements relating to Level 3 measurements. ASU 2010-06 is
effective for the first reporting period (including interim periods) beginning
after December 15, 2010. We do not expect the impact of adopting ASU 2010-06 on
our financial position, results of operations and cash flows will be
material.

Forward-Looking Statements

This report contains or incorporates by reference
forward-looking statements, as that term is used in federal securities laws,
about our financial condition, results of operations and business. These
statements include, among others:

- statements concerning the benefits that we expect will result from our
  business activities and certain transactions that we contemplate or have
  completed, such as receipt of proceeds, increased revenues, decreased expenses
  and avoided expenses and expenditures; and
- statements of our expectations, beliefs, future plans and strategies,
  anticipated developments and other matters that are not historical facts.

33

---

These statements may be made expressly in this document or may
be incorporated by reference to other documents that we will file with the SEC
and on SEDAR. You can find many of these statements by looking for words such as
believes, expects, anticipates, estimates or similar expressions used in
this report or incorporated by reference in this report.

These forward-looking statements are subject to numerous
assumptions, risks and uncertainties that may cause our actual results to be
materially different from any future results expressed or implied in those
statements. Because the statements are subject to risks and uncertainties,
actual results may differ materially from those expressed or implied. We caution
you not to put undue reliance on these statements, which speak only as of the
date of this report. Further, the information contained in this document or
incorporated herein by reference is a statement of our present intention and is
based on present facts and assumptions, and may change at any time and without
notice, based on changes in such facts or assumptions.

Risk Factors Impacting Forward-Looking Statements

The important factors that could prevent us from achieving our
stated goals and objectives include, in addition to the risk factors identified
elsewhere in this report, the following:

- The success of our exploration program;
- Unexpected changes in business and economic conditions;
- Commodity price fluctuations;
- Technological changes in the mining industry;
- Any change in interest rates, currency exchange rates or inflation;
- The willingness and ability of third parties to honour their contractual
  commitments;
- Our ability to raise additional capital, as it may be affected by current
  conditions in the stock market and competition in the mining industry for risk
  capital;
- Our costs of exploration and production, if any;
- Environmental and other regulations, as the same presently exist and may
  hereafter be amended;
- Local and community impacts and issues; and
- Volatility of our stock price.

We undertake no responsibility or obligation to update publicly
these forward-looking statements, but may do so in the future in written or oral
statements at our discretion. Investors should take note of any future
statements made by or on our behalf.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
MARKET RISK

Not required.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

34

---

Index to Financial Statements

|Report of Independent
      Registered Accounting Firm                                                                                                        | 36
|------------------------------------------------------------------------------------------------------------------------------------------------------------- | --
|Balance Sheets at December 31, 2009 and 2008                                                                                                                  | 37
|Statements of Operations for
      the years ended December 31, 2009 and 2008 and for the period from
      inception (February 3, 2004) to December 31, 2009 | 38
|Statements of Shareholders (Deficiency)
      Equity for the period from inception (February 3, 2004) to December 31,
      2009                             | 39
|Statements of Cash Flows for
      the years ended December 31, 2009 and 2008 and for the period from
      inception (February 3, 2004) to December 31, 2009 | 42
|Notes to Financial Statements                                                                                                                                 | 44

35

---











REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

To the Shareholders and Directors ofBE Resources
Inc.(An Exploration Stage Entity)

We have audited the accompanying balance sheets of BE Resources
Inc. (an exploration stage entity) as of December 31, 2009 and 2008 and the
related statements of operations, shareholders (deficiency) equity and cash
flows for the years ended December 31, 2009 and 2008, and the cumulative period
from inception (February 3, 2004) through December 31, 2009. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Companys internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of BE Resources
Inc. as of December 31, 2009 and 2008 and the results of its operations and its
cash flows for each of the years ended December 31, 2009 and 2008 and the
cumulative period from inception (February 3, 2004) through December 31, 2009,
in conformity with generally accepted accounting principles in the United States
of America.

The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company is in the exploration stage, has no
established sources of revenue and is dependent on its ability to raise capital
from shareholders or other sources to sustain operations. These factors raise
substantial doubt about the Companys ability to continue as a going concern.
Managements plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

McGOVERN, HURLEY, CUNNINGHAM, LLP

/s/ McGovern, Hurley, Cunningham, LLP

Chartered AccountantsLicensed Public Accountants

TORONTO, Canada March 23, 2010

36

---

|BE Resources Inc.                                                         
|--------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)
|(An Exploration Stage Entity)                                             
|Balance Sheets
      - Presented in US Dollars                            

|                                                              |   | December 31, |   |   | December 31, |  
|------------------------------------------------------------- | - | ------------ | - | - | ------------ | -
|                                                              |   | 2009         |   |   | 2008         |  
|                                                              |   |              |   |   |              |  
|                                                              |   |              |   |   |              |  
|Assets                                                        |   |              |   |   |              |  
|Current assets                                                |   |              |   |   |              |  
|Cash                                                          | $ | 570,727      |   | $ | 522,975      |  
|Prepaid expenses, deposits and other receivables              |   | -            |   |   | 4,722        |  
|                                                              |   |              |   |   |              |  
|Total current assets                                          |   | 570,727      |   |   | 527,697      |  
|Mineral rights
      (note 3)                                 |   | 110,400      |   |   | 110,400      |  
|Reclamation bonds (note
      4)                              |   | 25,946       |   |   | 25,946       |  
|Equipment (note 5)                                            |   | 95           |   |   | 1,202        |  
|                                                              |   |              |   |   |              |  
|Total assets                                                  | $ | 707,168      |   | $ | 665,245      |  
|                                                              |   |              |   |   |              |  
|Liabilities                                                   |   |              |   |   |              |  
|Current liabilities                                           |   |              |   |   |              |  
|Accounts payable
      (note 8)                               | $ | 255,826      |   | $ | 28,371       |  
|Accrued liabilities (note
      8)                            |   | 89,465       |   |   | 121,506      |  
|Stock option and warrant
      liability (notes 7(b) and (c)) |   | 596,500      |   |   | 216,700      |  
|                                                              |   |              |   |   |              |  
|Total current
      liabilities                               |   | 941,791      |   |   | 366,577      |  
|Asset retirement obligation
      (note 4)                    |   | 12,506       |   |   | 12,506       |  
|Commitments and contingencies
      (note 6)                  |   |              |   |   |              |  
|                                                              |   |              |   |   |              |  
|Total liabilities                                             |   | 954,297      |   |   | 379,083      |  
|                                                              |   |              |   |   |              |  
|Shareholders (deficiency) equity                             |   |              |   |   |              |  
|Capital stock (note 7(a))                                     |   | 5,636,536    |   |   | 4,740,940    |  
|Additional
      paid-in capital (note 7(b))                  |   | 232,117      |   |   | 182,293      |  
|Deficit accumulated during the exploration stage              |   | (6,115,782   | ) |   | (4,637,071   | )
|                                                              |   |              |   |   |              |  
|Total
      shareholders (deficiency) equity                 |   | (247,129     | ) |   | 286,162      |  
|                                                              |   |              |   |   |              |  
|Total
      liabilities and shareholders (deficiency) equity | $ | 707,168      |   | $ | 665,245      |  

Approved on behalf of the Board:

|/s/ David Tognoni, Director | /s/ Edward Godin, Director
|--------------------------- | --------------------------

The accompanying notes are an integral part of these
financial statements.

37

---

|BE Resources Inc.                                                         
|--------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)
|(An Exploration Stage Entity)                                             
|Statements of
      Operations - Presented in US Dollars                  

|                                                    |   |            |   |   |            |   |   | Cumulative     |  
|--------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | -------------- | -
|                                                    |   |            |   |   |            |   |   | from inception |  
|                                                    |   |            |   |   |            |   |   | (February 3,   |  
|                                                    |   |            |   |   |            |   |   | 2004) to       |  
|                                                    |   |            |   |   |            |   |   | December 31,   |  
|Years ended
      December 31,                      |   | 2009       |   |   | 2008       |   |   | 2009           |  
|                                                    |   |            |   |   |            |   |   |                |  
|Operating expenses                                  |   |            |   |   |            |   |   |                |  
|Management and consulting
      fees (note 8)       | $ | 122,552    |   | $ | 161,466    |   | $ | 896,868        |  
|Drilling                                            |   | -          |   |   | 33,810     |   |   | 821,371        |  
|Geological consulting
      fees                    |   | 411,731    |   |   | 269,204    |   |   | 889,772        |  
|Office
      and general                            |   | 81,951     |   |   | 134,501    |   |   | 452,794        |  
|Professional fees                                   |   | 345,177    |   |   | 222,336    |   |   | 768,951        |  
|Foreign
      exchange loss                         |   | 26,564     |   |   | 179,190    |   |   | 304,156        |  
|Share-based payments
      (note 7(b))              |   | 281,424    |   |   | 274,393    |   |   | 715,717        |  
|Fees,
      licenses and permits                    |   | 119,194    |   |   | 248,995    |   |   | 454,858        |  
|Transfer agent and filing
      fees                |   | 56,193     |   |   | -          |   |   | 56,193         |  
|Lease
      expense                                 |   | 12,000     |   |   | 12,000     |   |   | 72,566         |  
|Interest and accretion
      expense                |   | -          |   |   | 1,137      |   |   | 5,475          |  
|Gain on
      disposition of equipment              |   | -          |   |   | -          |   |   | (602           | )
|Travel                                              |   | 20,818     |   |   | 82,651     |   |   | 103,469        |  
|Amortization of equipment                           |   | 1,107      |   |   | 1,107      |   |   | 9,292          |  
|Financing costs                                     |   | -          |   |   | 571,335    |   |   | 571,335        |  
|                                                    |   |            |   |   |            |   |   |                |  
|Total expenses                                      |   | 1,478,711  |   |   | 2,192,125  |   |   | 6,122,215      |  
|Less: other income                                  |   |            |   |   |            |   |   |                |  
|Dividend income                                     |   | -          |   |   | -          |   |   | (6,433         | )
|                                                    |   |            |   |   |            |   |   |                |  
|Net loss for
      the period                       | $ | (1,478,711 | ) | $ | (2,192,125 | ) | $ | (6,115,782     | )
|                                                    |   |            |   |   |            |   |   |                |  
|Net loss per share                                  |   |            |   |   |            |   |   |                |  
|Basic and diluted                                   | $ | (0.05      | ) | $ | (0.08      | ) |   |                |  
|                                                    |   |            |   |   |            |   |   |                |  
|Weighted average number of shares
      outstanding |   |            |   |   |            |   |   |                |  
|Basic and diluted                                   |   | 28,213,493 |   |   | 27,195,000 |   |   |                |  

The accompanying notes are an integral part of these
financial statements.

38

---

|BE Resources Inc.                                                              
|-------------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)     
|(An Exploration Stage Entity)                                                  
|Statements of
      Shareholders (Deficiency) Equity - Presented in US Dollars

|                                                                                                                           |   |            |  |  |               |  |   |            |   |   | Deficit     |   |   |            |  
|-------------------------------------------------------------------------------------------------------------------------- | - | ---------- |  |  | ------------- |  | - | ---------- | - | - | ----------- | - | - | ---------- | -
|                                                                                                                           |   |            |  |  |               |  |   |            |   |   | Accumulated |   |   |            |  
|                                                                                                                           |   | Additional |  |  | Capital Stock |  |   | During the |   |   |             |  
|                                                                                                                           |   | Paid-in    |  |  | Number of     |  |   |            |   |   | Exploration |   |   |            |  
|                                                                                                                           |   | Capital    |  |  | Shares        |  |   | Amount     |   |   | Stage       |   |   | Total      |  
|                                                                                                                           |   |            |  |  |               |  |   |            |   |   |             |   |   |            |  
|February 3, 2004, issued to the manager
          of GWE for interest in mining lease
          valued at $0.002 per share | $ | -          |  |  | 6,734,160     |  | $ | 11,000     |   | $ | -           |   | $ | 11,000     |  
|Fiscal 2004, issued for cash at $0.53 per share                                                                            |   | -          |  |  | 1,870,600     |  |   | 1,000,000  |   |   | -           |   |   | 1,000,000  |  
|Issue costs                                                                                                                |   | -          |  |  | -             |  |   | (10,545    | ) |   | -           |   |   | (10,545    | )
|Loss for the
      period                                                                                                  |   | -          |  |  | -             |  |   | -          |   |   | (417,520    | ) |   | (417,520   | )
|                                                                                                                           |   |            |  |  |               |  |   |            |   |   |             |   |   |            |  
|Balance, December 31, 2004                                                                                                 |   | -          |  |  | 8,604,760     |  |   | 1,000,455  |   |   | (417,520    | ) |   | 582,935    |  
|Fiscal 2005, issued for cash at $0.36 per
      share                                                                      |   | -          |  |  | 140,295       |  |   | 50,000     |   |   | -           |   |   | 50,000     |  
|Fiscal 2005, issued for cash at $0.80 per share                                                                            |   | -          |  |  | 374,120       |  |   | 300,000    |   |   | -           |   |   | 300,000    |  
|Fiscal 2005, issued for cash at $0.82 per
      share                                                                      |   | -          |  |  | 140,295       |  |   | 115,000    |   |   | -           |   |   | 115,000    |  
|Fiscal 2005, issued for cash at $1.07 per share                                                                            |   | -          |  |  | 93,530        |  |   | 100,000    |   |   | -           |   |   | 100,000    |  
|Issue costs                                                                                                                |   | -          |  |  | -             |  |   | (19,278    | ) |   | -           |   |   | (19,278    | )
|Loss for the
      period                                                                                                  |   | -          |  |  | -             |  |   | -          |   |   | (1,017,725  | ) |   | (1,017,725 | )
|                                                                                                                           |   |            |  |  |               |  |   |            |   |   |             |   |   |            |  
|Balance, December 31, 2005                                                                                                 |   | -          |  |  | 9,353,000     |  |   | 1,546,177  |   |   | (1,435,245  | ) |   | 110,932    |  
|May 7, 2006, issued for cash at $2.13 per
      share                                                                      |   | -          |  |  | 47,000        |  |   | 100,000    |   |   | -           |   |   | 100,000    |  
|December 2006, subscriptions receivable                                                                                    |   | -          |  |  | -             |  |   | (37,500    | ) |   | -           |   |   | (37,500    | )
|Issue costs                                                                                                                |   | -          |  |  | -             |  |   | (26,986    | ) |   | -           |   |   | (26,986    | )
|Contribution of capital from GWE to fund
          exploration operations                                                  |   | -          |  |  | -             |  |   | 240,000    |   |   | -           |   |   | 240,000    |  
|Loss for the period                                                                                                        |   | -          |  |  | -             |  |   | -          |   |   | (251,061    | ) |   | (251,061   | )
|                                                                                                                           |   |            |  |  |               |  |   |            |   |   |             |   |   |            |  
|Balance, December 31, 2006                                                                                                 | $ | -          |  |  | 9,400,000     |  | $ | 1,821,691  |   | $ | (1,686,306  | ) | $ | 135,385    |  

The accompanying notes are an integral part of these
financial statements.

39

---

|BE Resources Inc.                                                              
|-------------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)     
|(An Exploration Stage Entity)                                                  
|Statements of Shareholders (Deficiency) Equity -
      Presented in US Dollars
|(Continued)                                                                    

|                                                                                                                                                                                                             |   |            |  |  |               |  |   |            |   |   | Deficit     |   |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | - | ---------- |  |  | ------------- |  | - | ---------- | - | - | ----------- | - | - | ---------- | -
|                                                                                                                                                                                                             |   |            |  |  |               |  |   |            |   |   | Accumulated |   |   |            |  
|                                                                                                                                                                                                             |   | Additional |  |  | Capital Stock |  |   | During the |   |   |             |  
|                                                                                                                                                                                                             |   | Paid-in    |  |  | Number of     |  |   |            |   |   | Exploration |   |   |            |  
|                                                                                                                                                                                                             |   | Capital    |  |  | Shares        |  |   | Amount     |   |   | Stage       |   |   | Total      |  
|                                                                                                                                                                                                             |   |            |  |  |               |  |   |            |   |   |             |   |   |            |  
|Balance, December 31, 2006                                                                                                                                                                                   | $ | -          |  |  | 9,400,000     |  | $ | 1,821,691  |   | $ | (1,686,306  | ) | $ | 135,385    |  
|Receipt of subscriptions receivable                                                                                                                                                                          |   | -          |  |  | -             |  |   | 37,500     |   |   | -           |   |   | 37,500     |  
|Reverse merger adjustment                                                                                                                                                                                    |   | -          |  |  | 3,000,000     |  |   | (30,123    | ) |   | -           |   |   | (30,123    | )
|October 1, 2007, issued to buy out minority
          interest in mineral rights, valued at
          historical cost                                                                                        |   | -          |  |  | 600,000       |  |   | -          |   |   | -           |   |   | -          |  
|Contribution of capital from GWE to fund
          exploration operations                                                                                                                                    |   | -          |  |  | -             |  |   | 46,362     |   |   | -           |   |   | 46,362     |  
|October and November 2007, issued for
          cash at $0.21 (CDN $0.20) per share                                                                                                                          |   | -          |  |  | 13,895,000    |  |   | 2,923,434  |   |   | -           |   |   | 2,923,434  |  
|December 7, 2007, issued for service valued
          at $0.21 (CDN $0.20) per share based on
          the sales price of the October and
          November 2007 private placement                         |   | -          |  |  | 300,000       |  |   | 60,102     |   |   | -           |   |   | 60,102     |  
|Issue costs                                                                                                                                                                                                  |   | -          |  |  | -             |  |   | (118,026   | ) |   | -           |   |   | (118,026   | )
|Stock-based compensation, grant of
      1,360,000     stock options valued at $0.15 per stock
      option     based on the Black-Scholes option pricing
      model,     amortized over the vesting period |   | 59,700     |  |  | -             |  |   | -          |   |   | -           |   |   | 59,700     |  
|Loss for the
      period                                                                                                                                                                                    |   | -          |  |  | -             |  |   | -          |   |   | (758,640    | ) |   | (758,640   | )
|                                                                                                                                                                                                             |   |            |  |  |               |  |   |            |   |   |             |   |   |            |  
|Balance, December 31, 2007                                                                                                                                                                                   |   | 59,700     |  |  | 27,195,000    |  |   | 4,740,940  |   |   | (2,444,946  | ) |   | 2,355,694  |  
|Stock-based compensation, grant of
      1,360,000     stock options valued at $0.15 per stock
      option     based on the Black-Scholes option pricing
      model,     amortized over the vesting period |   | 122,593    |  |  | -             |  |   | -          |   |   | -           |   |   | 122,593    |  
|Loss for the
      period                                                                                                                                                                                    |   | -          |  |  | -             |  |   | -          |   |   | (2,192,125  | ) |   | (2,192,125 | )
|                                                                                                                                                                                                             |   |            |  |  |               |  |   |            |   |   |             |   |   |            |  
|Balance, December
      31, 2008                                                                                                                                                                             | $ | 182,293    |  |  | 27,195,000    |  | $ | 4,740,940  |   | $ | (4,637,071  | ) | $ | 286,162    |  

The accompanying notes are an integral part of these
financial statements.

40

---

|BE Resources Inc.                                                              
|-------------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)     
|(An Exploration Stage Entity)                                                  
|Statements of Shareholders (Deficiency) Equity -
      Presented in US Dollars
|(Continued)                                                                    

|                                                                                                                            |   |            |  |  |               |  |   |            |   |   | Deficit     |   |   |            |  
|--------------------------------------------------------------------------------------------------------------------------- | - | ---------- |  |  | ------------- |  | - | ---------- | - | - | ----------- | - | - | ---------- | -
|                                                                                                                            |   |            |  |  |               |  |   |            |   |   | Accumulated |   |   |            |  
|                                                                                                                            |   | Additional |  |  | Capital Stock |  |   | During the |   |   |             |  
|                                                                                                                            |   | Paid-in    |  |  | Number of     |  |   |            |   |   | Exploration |   |   |            |  
|                                                                                                                            |   | Capital    |  |  | Shares        |  |   | Amount     |   |   | Stage       |   |   | Total      |  
|                                                                                                                            |   |            |  |  |               |  |   |            |   |   |             |   |   |            |  
|Balance, December 31, 2008                                                                                                  | $ | 182,293    |  |  | 27,195,000    |  | $ | 4,740,940  |   | $ | (4,637,071  | ) | $ | 286,162    |  
|Common shares issued for cash (IPO) at
          $0.28 (CDN $0.30) per share (note 7(a)(i))                                 |   | -          |  |  | 5,000,000     |  |   | 1,412,962  |   |   | -           |   |   | 1,412,962  |  
|Additional shares issued for cash
      (over-allotment)     at $0.29 (CDN $0.30) per share
      (note 7(a)(ii))           |   | -          |  |  | 750,000       |  |   | 214,123    |   |   | -           |   |   | 214,123    |  
|Issue costs (notes 7(a)(i) and (ii))                                                                                        |   | -          |  |  | -             |  |   | (620,089   | ) |   | -           |   |   | (620,089   | )
|Issue of compensation warrants valued at
      $0.19     per warrant (note 7(c))                                            |   | -          |  |  |               |  |   | (111,400   | ) |   | -           |   |   | (111,400   | )
|Stock-based compensation (note 7(b)), grant
          of 1,360,000 stock options valued at $0.15
          per stock option |   | 14,324     |  |  | -             |  |   | -          |   |   | -           |   |   | 14,324     |  
|Stock-based compensation (note
      7(b)), grant     of 400,000 stock options valued at
      $0.24     per stock option   |   | 35,500     |  |  | -             |  |   | -          |   |   | -           |   |   | 35,500     |  
|Loss for the
      period                                                                                                   |   | -          |  |  | -             |  |   | -          |   |   | (1,478,711  | ) |   | (1,478,711 | )
|                                                                                                                            |   |            |  |  |               |  |   |            |   |   |             |   |   |            |  
|Balance,
      December 31, 2009                                                                                            | $ | 232,117    |  |  | 32,945,000    |  | $ | 5,636,536  |   | $ | (6,115,782  | ) | $ | (247,129   | )

The accompanying notes are an integral part of these
financial statements.

41

---

|BE Resources Inc.                                                         
|--------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)
|(An Exploration Stage Entity)                                             
|Statements of
      Cash Flows - Presented in US Dollars                  

|                                                                                                         |   |            |   |   |            |   |   | Cumulative     |  
|-------------------------------------------------------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | -------------- | -
|                                                                                                         |   |            |   |   |            |   |   | from inception |  
|                                                                                                         |   |            |   |   |            |   |   | (February 3,   |  
|                                                                                                         |   |            |   |   |            |   |   | 2004) to       |  
|                                                                                                         |   |            |   |   |            |   |   | December 31,   |  
|Year ended
      December 31,                                                                            |   | 2009       |   |   | 2008       |   |   | 2009           |  
|                                                                                                         |   |            |   |   |            |   |   |                |  
|Cash flow from operating activities                                                                      |   |            |   |   |            |   |   |                |  
|Net loss for the period                                                                                  | $ | (1,478,711 | ) | $ | (2,192,125 | ) | $ | (6,115,782     | )
|Adjustments to reconcile net loss to net
                    
      cash used in operating activities:   |   |            |   |   |            |   |   |                |  
|Stock-based compensation                                                                                 |   | 281,424    |   |   | 274,393    |   |   | 715,717        |  
|Unrealized foreign exchange loss (gain)                                                                  |   | 36,799     |   |   | (35,300    | ) |   | 1,499          |  
|Common shares issued for
      services                                                                  |   | -          |   |   | -          |   |   | 60,102         |  
|Common
      shares issued for interest
                   
      in exploration property                |   | -          |   |   | -          |   |   | 11,000         |  
|(Gain) on disposition of
      equipment                                                                 |   | -          |   |   | -          |   |   | (602           | )
|Accretion
      of asset retirement obligation                                                           |   | -          |   |   | 1,137      |   |   | 3,111          |  
|Amortization of equipment                                                                                |   | 1,107      |   |   | 1,107      |   |   | 9,292          |  
|Write off
      of prior years deferred costs                                                           |   | -          |   |   | 115,684    |   |   | 115,684        |  
|Increase in asset
      retirement obligation                                                            |   | -          |   |   | -          |   |   | 9,395          |  
|Changes
      in operating assets and liabilities:                                                       |   |            |   |   |            |   |   |                |  
|Decrease
      (increase) in prepaid expenses,
                    
      deposits and other receivables |   | 4,722      |   |   | 16,419     |   |   | -              |  
|(Increase) in reclamation bonds                                                                          |   | -          |   |   | -          |   |   | (25,946        | )
|Increase in
      accounts payable and accrued
                   
      liabilities                     |   | 195,414    |   |   | 7,935      |   |   | 276,989        |  
|                                                                                                         |   |            |   |   |            |   |   |                |  
|Net cash (used
      in) operating activities                                                            |   | (959,245   | ) |   | (1,810,750 | ) |   | (4,939,541     | )

The accompanying notes are an integral part of these
financial statements.

42

---

|BE Resources Inc.                                                         
|--------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)
|(An Exploration Stage Entity)                                             
|Statement of Cash Flows - Presented in US Dollars                         
|(continued)                                                               

|                                                                                                                     |       |           |  |   |            |   |   | Cumulative     |  
|-------------------------------------------------------------------------------------------------------------------- | ----- | --------- |  | - | ---------- | - | - | -------------- | -
|                                                                                                                     |       |           |  |   |            |   |   | from inception |  
|                                                                                                                     |       |           |  |   |            |   |   | (February 3,   |  
|                                                                                                                     |       |           |  |   |            |   |   | 2004) to       |  
|                                                                                                                     |       |           |  |   |            |   |   | December 31,   |  
|Year ended
      December 31,                                                                                        |       | 2009      |  |   | 2008       |   |   | 2009           |  
|                                                                                                                     |       |           |  |   |            |   |   |                |  
|Cash flow from investing activities                                                                                  |       |           |  |   |            |   |   |                |  
|Purchase of mineral
      rights                                                                                     | $     | -         |  | $ | (110,400   | ) | $ | (110,400       | )
|Purchase
      of equipment                                                                                          |       | -         |  |   | -          |   |   | (14,535        | )
|Proceeds from sale of equipment                                                                                      |       | -         |  |   | -          |   |   | 5,750          |  
|                                                                                                                     |       |           |  |   |            |   |   |                |  
|Net cash (used
      in) investing activities                                                                        |       | -         |  |   | (110,400   | ) |   | (119,185       | )
|                                                                                                                     |       |           |  |   |            |   |   |                |  
|Cash flow from financing activities                                                                                  |       |           |  |   |            |   |   |                |  
|Issue of
      common shares, net of costs                                                                           |       | 1,006,997 |  |   | -          |   |   | 5,430,596      |  
|Deferred transaction
      costs                                                                                     |       | -         |  |   | -          |   |   | (87,505        | )
|Cash
      provided by GWE to fund
                    
      exploration operations                                 |       | -         |  |   | -          |   |   | 286,362        |  
|                                                                                                                     |       |           |  |   |            |   |   |                |  
|Net cash provided by financing activities                                                                            |       | 1,006,997 |  |   | -          |   |   | 5,629,453      |  
|                                                                                                                     |       |           |  |   |            |   |   |                |  
|Increase (decrease) in cash                                                                                          |       | 47,752    |  |   | (1,921,150 | ) |   | 570,727        |  
|Cash, beginning
      of period                                                                                      |       | 522,975   |  |   | 2,444,125  |   |   | -              |  
|                                                                                                                     |       |           |  |   |            |   |   |                |  
|Cash, end of
      period                                                                                            | $     | 570,727   |  | $ | 522,975    |   | $ | 570,727        |  
|                                                                                                                     |       |           |  |   |            |   |   |                |  
|SUPPLEMENTARY INFORMATION                                                                                            |       |           |  |   |            |   |   |                |  
|Non-cash investing and financing activities                                                                          |       |           |  |   |            |   |   |                |  
|Common shares issued for interest in
            mining lease                                                        | **$** | -         |  | $ | -          |   | $ | 11,000         |  
|Compensation warrants issued for
            services (note 7(c))                                                    | $     | 111,400   |  | $ | -          |   | $ | 111,400        |  
|Common shares issued for services                                                                                    | $     | -         |  | $ | -          |   | $ | 60,102         |  
|Change in accrued deferred transaction
      costs                                                                   | $     | -         |  | $ | (38,179    | ) | $ | -              |  
|Net liabilities of BE Resources Inc. assumed
           in connection with the reverse merger
           transaction | $     | -         |  | $ | -          |   | $ | (30,123        | )

The accompanying notes are an integral part of these
financial statements

43

---

|BE Resources Inc.                                                         
|--------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)
|(An Exploration Stage Entity)                                             
|Notes to Financial Statements - Presented in US
      Dollars             
|December 31,
      2009 and 2008                                          

|1. | Nature of Business, Basis of Presentation and Going
      Concern
|-- | -----------------------------------------------------------------

BE Resources Inc. (the Company) was
incorporated on August 8, 2007 under the laws of the State of Colorado, U.S.A.
for the purpose of acquiring certain mineral interests and all operations of
Great Western Exploration, LLC (GWE), further exploring and if warranted,
developing those interests. This reverse merger transaction was accounted for as
a recapitalization and the financial statements presented for comparative
periods represent the New Mexico Beryllium operations of GWE that were acquired
by the Company.

The Company is engaged in the business
of the acquisition and development of mineral properties believed to be
prospective for minerals such as beryllium and other elements in the State of
New Mexico, United States. To date, the Company has not earned revenue and its
operations have been limited to general administrative operations, obtaining
initial capital and initial property staking and investigation, and is
considered an Exploration Stage Company in accordance with FASB ASC 915
Development Stage Entities.

The business of exploring for minerals
involves a high degree of risk and there can be no assurance that current
exploration programs will result in profitable mining operations. The Companys
continued existence is dependent upon the preservation of its interest in the
underlying properties, the discovery of economically recoverable reserves, the
achievement of profitable operations, or the ability of the Company to raise
alternative financing, if necessary, or alternatively upon the Companys ability
to dispose of its interests on an advantageous basis. Although the Company has
taken steps to verify title to the properties on which it is conducting
exploration and in which it has an interest, in accordance with industry
standards for the current stage of exploration of such properties, these
procedures do not guarantee the Companys title. Exploration activities are
also subject to various exploration permit applications which may or may not be
approved. Property title may be subject
to unregistered prior agreements and non-compliance with regulatory
requirements.

These financial statements have been
prepared on a going concern basis, which implies the Company will continue to
realize its assets and discharge its liabilities in the normal course of
business. The Company has an accumulated deficit of $6,115,782 as at December
31, 2009 and a net loss of $1,478,711 and net cash flows used in operating
activities of $959,245 for the year ended December 31, 2009. The continuation of
the Company as a going concern is dependent upon the continued financial support
of its shareholders, the ability of the Company to obtain necessary financing to
continue operations and to determine the existence, discovery and successful
exploitation of economically recoverable reserves in its resource properties,
confirmation of the Companys interests in the underlying properties, and the
attainment of profitable operations. The Company plans to obtain additional
equity financing to fund operations and while it has been successful in doing so
in the past, there can be no assurance it will be able to do so in the future.
These financial statements do not include any adjustments to the recoverability
and classification of recorded asset amounts and classification of liabilities
that might be necessary should the Company be unable to continue as a going
concern. These factors raise substantial doubt regarding the Companys ability
to continue as a going concern.

|2. | Summary of Significant Accounting Policies
|-- | ------------------------------------------

These financial statements have been
prepared in accordance with United States generally accepted accounting
principles and their basis of application is consistent with that of the
previous periods, except where disclosed below. Outlined below are those
policies considered particularly significant:

44

---

|BE Resources Inc.                                                         
|--------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)
|(An Exploration Stage Entity)                                             
|Notes to Financial Statements - Presented in US
      Dollars             
|December 31,
      2009 and 2008                                          

|2. | Summary of Significant Accounting Policies (continued)
|-- | ------------------------------------------------------

Equipment

Equipment is recorded at cost.
Amortization is provided principally on the straight-line method over the
estimated useful lives of the respective assets, estimated to be five years.
When items of property and equipment are sold or retired, the related cost and
accumulated amortization are removed from the accounts and any gain or loss is
included in the results of operations.

Mineral Rights and Exploration
Costs

Mineral rights include the cost of
obtaining unpatented and patented mining claims and the cost of acquisition of
properties. Significant payments related to the acquisition of land and mineral
rights are capitalized as tangible assets. If a mineable ore body is discovered,
such costs are amortized if production begins using the units-of-production
method based on proven and probable reserves. If no mineable ore body is
discovered or such rights are otherwise determined to have no value, such costs
are expensed in the period in which it is determined the property has no future
economic value.

When mineral properties are acquired
under option agreements with future acquisition payments to be made at the sole
discretion of the Company, those future payments, whether in cash or shares, are
recorded only when the Company has made or is obliged to make the payment or
issue the shares.

The Company expenses all costs related
to the maintenance and development of mineral interests prior to the
establishment of proven and probable reserves. As at December 31, 2009 and 2008,
the Company had not established any proven or probable reserves.

Share-Based Payments

The Company issues stock options to
employees and consultants in connection with various business activities. These
are accounted for in accordance with the provisions of ASC 718 Compensation 
Stock Compensation and ASC 505 Equity as well as other authoritative
accounting pronouncements. The Company is required to make estimates of the fair
value of the related instruments based on the Black- Scholes option pricing
model and recognize expenses over the period benefited, usually the vesting
period.

Stock options which are indexed to a
factor which is not a market, performance or service condition, in addition to
the Companys share price, are classified as liabilities and remeasured at each
reporting date based on the Black-Scholes option pricing model with a charge to
operations, until the date of settlement.

Asset Retirement Obligations

The fair values of asset retirement
obligations are recorded as liabilities on a discounted basis when incurred. The
associated asset retirement costs are capitalized as part of the carrying amount
of the long-lived asset unless the asset has been previously charged to
operations, in which case the amount is expensed. Over time, the liabilities
will be accreted for the change in their present value and the initial
capitalized costs will be depleted and amortized over the useful lives of the
related assets.

45

---

|BE Resources Inc.                                                         
|--------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)
|(An Exploration Stage Entity)                                             
|Notes to Financial Statements - Presented in US
      Dollars             
|December 31,
      2009 and 2008                                          

|2. | Summary of Significant Accounting Policies (continued)
|-- | ------------------------------------------------------

Impairment of Long-Lived
Assets

In accordance with ASC 360 Property,
Plant and Equipment, long-lived assets to be held and used are analyzed for
impairment whenever events or changes in circumstances indicate that the related
carrying amounts may not be recoverable. The Company evaluates at each balance
sheet date whether events and circumstances have occurred that indicate possible
impairment. If there are indications of impairment, the Company uses the future
undiscounted cash flows of the related asset or asset grouping over the
remaining life in measuring whether the assets are recoverable. In the event
such cash flows are not expected to be sufficient to recover the recorded asset
values, the assets are written down to their estimated fair value. Long-lived
assets to be disposed of are reported at the lower of their carrying amount or
their fair value, less the cost to sell.

Income Taxes

The Company uses the asset and
liability method of tax allocation to account for income taxes. Deferred income
taxes reflect the net tax effects of temporary differences between the carrying
amount of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes and are measured using enacted tax rates in
effect for the year in which these temporary differences are expected to be
recovered or settled. The effect of changes in income tax rates on deferred
income tax assets and liabilities is recognized in operations in the period that
the changes are enacted. When the future realization of deferred tax assets does
not meet the test of being more likely than not to occur, a valuation allowance
in the amount of the potential future benefit is taken. The Company believes
that there are no tax positions taken or expected to be taken that would
significantly increase or decrease unrecognized tax benefits within 12 months of
the reporting date.

Issue Costs

Direct costs associated with the
issuance of the Companys common stock, including professional fees and selling
expenses relating to broker-dealer relationships, are reflected as a reduction
of shareholders equity.

Loss Per Share

Basic loss per share is computed by
dividing the loss for the period by the weighted average number of common shares
outstanding during the period. The effect of potential issuances of common
shares would be anti dilutive, and accordingly basic and diluted loss per share
are the same. See Notes 7(b) and (c) for potentially dilutive securities as at
December 31, 2009 and 2008.

Foreign Currency Translation

The functional currency of the Company
is the U.S. dollar. Certain monetary assets and liabilities of the Company
denominated in Canadian dollars are remeasured into U.S. dollars at exchange
rates in effect at the balance sheet date. As at December 31, 2009 and 2008,
substantially all of the Companys Canadian dollar denominated monetary assets
and liabilities were comprised of cash and stock option and warrant liability. Non-monetary assets and liabilities are remeasured at historical exchange rates, unless such items are carried at
market, in which case they are translated at the exchange rates in effect on the
balance sheet date. As at December 31, 2009 and 2008, the Company did not have
any non-monetary assets and liabilities denominated in Canadian dollars.
Revenues and expenses are remeasured at rates approximating the exchange rates
in effect at the time of the transaction. During the years ended December 31,
2009 and 2008, substantially all expenses were transacted in U.S. dollars.

46

---

|BE Resources Inc.                                                         
|--------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)
|(An Exploration Stage Entity)                                             
|Notes to Financial Statements - Presented in US
      Dollars             
|December 31,
      2009 and 2008                                          

|2. | Summary of Significant Accounting Policies (continued)
|-- | ------------------------------------------------------

Use of Estimates

The preparation of financial statements
in conformity with United States generally accepted accounting principles
requires management to make estimates and assumptions that affect certain
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 revenue and expenses during the reporting period. Actual results could differ
from those estimates. Significant estimates include the valuation of share-based
payments, mineral rights, asset retirement obligations, stock option liability
and deferred tax assets and liabilities. These estimates are reviewed
periodically, and, as adjustments become necessary, they are reported in
operations in the period in which they become known.

Fair Value Option for Financial
Assets and Financial Liabilities

Fair value estimates discussed herein
are based upon certain market assumptions and pertinent information available to
management as of December 31, 2009 and 2008. The respective carrying value of
certain on-balance sheet financial instruments approximated their fair values.
These financial instruments include cash, other receivables, stock option and
warrant liability and accounts payable. Fair values were assumed to approximate
carrying values for these financial instruments because they are short term in
nature and their carrying amounts approximate fair values or they are payable on
demand.

Accounting Principles Recently
Adopted

In June 2009, the FASB issued ASC Topic
105, Accounting Standards Codification (ASC 105), which establishes the FASB
Accounting Standards Codification as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in conformity with GAAP. Rules and
interpretive releases of the SEC under authority of federal securities laws are
also sources of authoritative GAAP for SEC registrants. ASC 105 is effective for
financial statements issued for interim and annual periods ending after
September 15, 2009. ASC 105 was adopted by the Company in the third quarter of
2009 and did not have any material effect on the financial statements of the
Company.

In March 2008, the FASB issued SFAS No.
161, Disclosures about Derivative Instruments and Hedging Activities which was
primarily codified as ASC Topic 815 Derivatives and Hedging (ASC 815). ASC
815 requires qualitative disclosures about objectives and strategies for using
derivatives, quantitative disclosures about fair value amounts of and gains and
losses on derivative instruments, and disclosures about credit risk related
contingent features in derivative agreements. ASC 815 was adopted by the Company
as of January 1, 2009 and did not have an impact on the Companys financial
statements. However, the Company was required to expand its disclosures relating
to the use of and purpose for its derivative instruments, which are discussed
below:

The Companys risk management
objectives are to ensure that business and financial exposures to risk that have
been identified and measured are minimized using the most effective and
efficient methods to reduce, transfer and, when possible, eliminate such
exposures. Operating decisions contemplate associated risks and management
strives to structure proposed transactions to avoid or reduce risk whenever
possible.

47

---

|BE Resources Inc.                                                         
|--------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)
|(An Exploration Stage Entity)                                             
|Notes to Financial Statements - Presented in US
      Dollars             
|December 31,
      2009 and 2008                                          

|2. | Summary of Significant Accounting Policies (continued)
|-- | ------------------------------------------------------

In April 2008, the FASB issued Emerging
Issues Task Force (EITF) 07-05, Determining whether an Instrument (or
Embedded Feature) Is Indexed to an Entitys Own Stock which was primarily
codified as ASC 815. ASC 815 provides guidance on determining what types of
instruments or embedded features in an instrument held by a reporting entity can
be considered indexed to its own stock. ASC 815 is effective for financial
statements issued for fiscal years beginning after December 15, 2008. The
adoption of ASC 815 as of January 1, 2009 had a material impact on the Companys
financial statements. Refer to Note 7(c) for details.

In April 2009, the FASB issued ASC
Topic 825, Financial Instruments (ASC 825). ASC 825 requires interim
disclosure regarding the fair values of financial instruments. Additionally, ASC
825 requires disclosure of the methods and significant assumptions used to
estimate the fair value of financial instruments on an interim basis as well as
changes to the methods and significant assumptions from prior periods. ASC 825
does not change the accounting treatment for these financial instruments and was
adopted by the Company in the second quarter of 2009. The adoption of ASC 825
did not have any material effect on the financial statements of the Company.

In August 2009, the FASB issued
Accounting Standards Update (ASU) 200905, Fair Value Measurements and
Disclosures (Topic 820) - Measuring Liabilities at Fair Value, which clarifies
that the quoted price for an identical liability, when traded as an asset in an
active market, is also a Level 1 measurement for that liability when no
adjustment to the quoted price is required. In the absence of a Level 1
measurement, an entity must use one or more of the following valuation
techniques to estimate fair value (in a manner consistent with the principles in
FASB Accounting Standards Codification (ASC) Topic 820), which can be classified
into two categories: 1) a valuation technique that uses a quoted price; and 2)
another valuation technique based on the amount an entity would pay to transfer
the identical liability or based on the amount an entity would receive to enter
into an identical liability. The statement was adopted by the Company in the
third quarter of 2009 and did not have any material effect on the financial
statements of the Company.

The ASC guidance for fair value
measurements and disclosure establishes a fair value hierarchy that prioritizes
the inputs to valuation techniques used to measure fair value. The hierarchy
gives the highest priority to unadjusted quoted prices in active markets for
identical asset or liabilities (Level 1 measurements) and the lowest priority to
unobservable inputs (Level 3 measurements). The three levels of the fair value
hierarchy are described below.

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

Level 2Quoted prices in markets
that are not active, or inputs that are observable, either directly or
indirectly, for substantially the full term of the asset or liability;

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

The Companys equity-linked financial
instruments reflected as stock option and warrant liability on the balance sheet
(see Notes 7(b) and (c)) represent financial liabilities measured at fair value
by level within the fair value hierarchy. As required by
the guidance, 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 of the stock option and warrant liability which is not traded in an
active market, has been determined using the Black-Scholes model based on
assumptions that are supported by observable market conditions.

48

---

|BE Resources Inc.                                                         
|--------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)
|(An Exploration Stage Entity)                                             
|Notes to Financial Statements - Presented in US
      Dollars             
|December 31,
      2009 and 2008                                          

|2. | Summary of Significant Accounting Policies (continued)
|-- | ------------------------------------------------------

In September 2009, the FASB issued ASU
No. 200908, Earnings Per Share Amendments to Section 260-10-S99. This
Codification Update represents technical corrections to Topic 26010S99,
Earnings per Share, based on EITF Topic D53, Computation of Earnings Per
Share for a Period that Includes a Redemption or an Induced Conversion of a
Portion of a Class of Preferred Stock and EITF Topic D42, The Effect of the
Calculation of Earnings per Share for the Redemption or Induced Conversion of
Preferred Stock. The adoption of this statement was adopted by the Company in
the third quarter of 2009 and did not have any material effect on the financial
statements of the Company.

Future Accounting
Pronouncements

In January 2010, the FASB issued ASU
2010-05, Compensation  Stock Compensation (Topic 718): Escrowed Share
Arrangements and the Presumption of Compensation, which reflects the Securities
and Exchange Commissions views on overcoming the presumption that escrowed
share arrangement represent compensation for certain shareholders. ASU 2010-05
did not contain an effective date. The Company does not expect the impact of
adopting ASU 2010-05 on its financial position, results of operations and cash
flows to be material.

In January 2010, the FASB issued ASU
2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving
Disclosures about Fair Value Measurements, which adds new requirements for
disclosures about transfers into and out of Levels 1 and 2 and separate
disclosures about purchases, sales, issuances and settlements relating to Level
3 measurements. ASU 2010-06 is effective for the first reporting period
(including interim periods) beginning after December 15, 2010. The Company does
not expect the impact of adopting ASU 2010-06 on its financial position, results
of operations and cash flows to be material.

|3. | New
      Mexico Beryllium Project
|-- | ----------------------------------

On October 1, 2007, the Company
acquired GWEs interest in the New Mexico Beryllium Project (the Project),
related technical data, assets and operations from GWE in exchange for the
issuance of 10,000,000 common shares and a 20% net profit royalty interest in
the Project. Of that payment, 9,400,000 common shares and approximately 16% of
the net profit royalty interest were issued to GWE. The remaining 600,000 common
shares were issued to the former holders of a minority interest in the Project
and approximately 4% of the net profit royalty interest was issued to the same
former holders of a minority interest in the Project and an unrelated individual
at the direction of GWE. The net profit royalty interest provides for the
payment of royalties based on net revenue from any production from the Project
and the three mile area of interest from the outside boundary of each lease and
claim comprising the Project. The 20% net profits royalty interest is calculated
and payable on a quarterly basis. In May 2009, the Company entered into
agreements to reduce the 20% net profit royalty to 10%. The Project is also
subject to a gross profits royalty interest of 1% payable to an officer who is
also a director of the Company.

49

---

|BE Resources Inc.                                                         
|--------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)
|(An Exploration Stage Entity)                                             
|Notes to Financial Statements - Presented in US
      Dollars             
|December 31,
      2009 and 2008                                          

|3. | New
      Mexico Beryllium Project (continued)
|-- | ----------------------------------------------

The Project is comprised of one lease
from private landowners (the Sullivan Lease), three State leases (the State
Leases) and 133 unpatented mining claims (the Claims) located in Socorro
County and Sierra County, New Mexico. In addition, the Company staked an
additional 690 lode mining claims in Socorro County and Sierra County during the
year ended December 31, 2008 for cash consideration of $110,400. These lode
claims are located in the eastern part of the outlying hydrothermal area of the
Project. As the Project is in the exploration stage and has not been proved up,
the exploration costs related to the Project have not been carried on the
balance sheet as an asset.

The Company has faced opposition from the
New Mexico Department of Game and Fish, local residents and the Sierra club of
Southern New Mexico with respect to its application for a permit to conduct
exploration activities on the Warm Springs area of the New Mexico Beryllium
Project. The Company is waiting for a final decision from the New Mexico Energy,
Minerals and Natural Resource Department.

| | (a) | Sullivan Lease
| | --- | --------------

On January 2, 2004, a member who is
also a manager of GWE entered into a mining lease with unrelated parties (the
Lessors) for a term of 20 years expiring January 2, 2024 and for so long
thereafter as the lease is not terminated. On February 3, 2004, the mining lease
was assigned to GWE in exchange for 50 Class A member units of GWE valued at
$11,000. Scheduled minimum future lease payments of $12,000 are required every
January 1 for the duration of the lease agreement. The mining lease is subject
to a 4% gross production royalty from the sale or disposition of minerals,
metals and materials, payable to the Lessors.

| | (b) | State Leases                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | During the period ended December 31, 2004, GWE entered
      into multiple mining leases with the State of New Mexico with a primary
      term of three years at an annual rent of $1.00 per acre. If minerals are
      not produced or mined in paying quantities during the primary term, then
      each lease may continue through a subsequent term of two years at $10.00
      per acre, then five years at $3.00 per acre, and finally five years at
      $10.00 per acre. In this final term, there is also an advance royalty
      clause in addition to the annual rent. The Company is obligated to pay 2%
      of the gross returns, less transportation, smelting and reduction costs,
      such costs to a maximum of 50% of the gross returns. The Company has the
      option to cancel any of these leases with approval from the State of New
      Mexico.                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (c) | South West Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | Prior to the acquisition of the Project by the Company,
      GWE was the lessee of certain mining leases and the holder of certain
      mining claims in Socorro County and Sierra County, New Mexico. South West
      Exploration, LLC (South West) owned interests in Association Placer
      Mineral Location Notices and potentially other mineral locations and
      possible lease interests located primarily in the same counties. GWE had
      entered into an agreement to reserve for South West a 6% interest in any
      mineral deposits discovered and developed by GWE in exchange for transfer
      of these mining leases and mining claims to GWE. On July 3, 2007, the
      agreement with South West was amended to reduce the 6% interest to 4% (the
      South West Interest). A director of the Company is the manager, and
      together with his family members, hold or control approximately 26% of the
      outstanding membership interests of South West. An officer who is also a
      director of the Company holds a membership interest in South West of less
      than 1%.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | On October 1, 2007, GWE entered into a conversion
      agreement with South West on behalf of the Company. In exchange for
      transfer of the South West Interest to the Company, South West agreed to
      accept directly from the Company an aggregate of 400,000 common shares of
      the Company and a 0.68% net profit interest in the Project. In May 2009,
      the Company entered into agreements, which resulted in a reduction in the
      net profit interest payable to South West from 0.68% to
  0.34%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

50

---

|BE Resources Inc.                                                         
|--------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)
|(An Exploration Stage Entity)                                             
|Notes to Financial Statements - Presented in US
      Dollars             
|December 31,
      2009 and 2008                                          

|3. | New
      Mexico Beryllium Project (continued)
|-- | ----------------------------------------------

| | (d) | Bethany Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | On June 26, 2007, GWE entered into an agreement with
      Bethany Resources, LLC (Bethany), an Arizona limited liability company.
      Bethany owned interests in Association Placer Mineral Location Notices and
      potentially other mineral locations and possible lease interests located
      primarily in Socorro and Sierra Counties, New Mexico (the Bethany
      Interest). Pursuant to the agreement, GWE acquired a 100% interest in the
      Bethany Interest in exchange for granting Bethany a 2% interest in any
      mineral deposits discovered and developed by GWE (the Bethany Interest).
      A director of the Company is the manager, and together with his family
      members, hold or control 100% of the outstanding membership interests of
      Bethany.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | On October 1, 2007, GWE entered into a conversion
      agreement with Bethany on behalf of the Company. In exchange for the
      transfer of the Bethany Interest to the Company, Bethany agreed to accept
      directly from the Company an aggregate of 200,000 common shares of the
      Company and a 0.34% net profit interest in the Project. In May 2009, the
      Company entered into agreements, which resulted in a reduction in the net
      profit interest payable to South West from 0.34% to
0.17%                                                                                                                                                                                                                                                                               



|4. | Reclamation Bonds and Asset Retirement Obligation
|-- | -------------------------------------------------

Under the laws of the State of New
Mexico, the Company is required to maintain reclamation deposits, which cover
the cost to reclaim the ground disturbed. As at December 31, 2009, the Company
has two (December 31, 2008 - two) reclamation bonds. These bonds are held with
the United States Department of the Interior, Bureau of Land Management (BLM)
and the United States Department of Agriculture Forest Service (USDA) and are
required before any surface disturbing activity can commence. The bonds will be
released following satisfactory completion of reclamation of any disturbance
resulting from operations at the site.

The bond in the amount of $14,577 was accepted on May 6, 2005
and expired May 6, 2007. BLM Bond #111911 in the amount of $11,369 was accepted
on October 6, 2004 with an original expiration date of October 6, 2006. The
Company is in the process of renewing these bonds.

Asset retirement obligations relate to the reclamation work
required to be performed in connection with drilling activities performed on the
property. Exploration expenditures relating to the property are expensed as
incurred. Changes in asset retirement obligation during the years ended December
31, 2009 and 2008 are as follows:

51

---

|BE Resources Inc.                                                         
|--------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)
|(An Exploration Stage Entity)                                             
|Notes to Financial Statements - Presented in US
      Dollars             
|December 31, 2009 and 2008                                                

|4. | Reclamation Bonds and Asset Retirement Obligation
      (continued)
|-- | -------------------------------------------------------------------

| |                            |   | 2009   |  |   | 2008   | 
| | -------------------------- | - | ------ |  | - | ------ | 
| | Balance, beginning of year | $ | 12,506 |  | $ | 11,369 | 
| | Accretion expense          |   | -      |  |   | 1,137  | 
| | Balance, end of year       | $ | 12,506 |  | $ | 12,506 | 

|5. | Equipment
|-- | ---------

| | At December 31,
      2009 and 2008, equipment consisted of the following: |   |        |   |   |        |  
| | -------------------------------------------------------------------------- | - | ------ | - | - | ------ | -
| |                                                                            |   | 2009   |   |   | 2008   |  
| | Cost                                                                       | $ | 5,535  |   | $ | 5,535  |  
| | Less: Accumulated
      amortization                                       |   | (5,440 | ) |   | (4,333 | )
| |                                                                            | $ | 95     |   | $ | 1,202  |  

|6. | Commitments and Contingencies
|-- | -----------------------------

Environmental Considerations

The exploration for and development of
resource properties involves the extraction, production and transportation of
materials, which under certain conditions, can be hazardous or cause
environmental pollution problems. The Company is continually taking action it
believes appropriate to satisfy applicable federal, state and local
environmental regulations and does not currently anticipate that compliance with
federal, state and local environmental regulations will have a material adverse
effect upon capital expenditures, results of operations or the competitive
position of the Company in the mineral resource industry. However, due to the
significant public and governmental interest in environmental matters related to
those activities, the Company cannot predict the effects of possible future
legislation, rule changes, or governmental or private claims.

Employment Agreement

Pursuant to the employment agreement
described in Note 8(a), in the event of certain circumstances, the Company would
be obligated to pay the employee an amount equal to twelve times the employees
current monthly base salary of $3,000.

52

---

|BE Resources Inc.                                                         
|--------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)
|(An Exploration Stage Entity)                                             
|Notes to Financial Statements - Presented in US
      Dollars             
|December 31,
      2009 and 2008                                          

|6. | Commitments and Contingencies (continued)
|-- | -----------------------------------------

Property Maintenance Costs

See Note 3.  The Company will be
required to incur property maintenance costs.  These costs are currently
estimated at $137,440 for each year and include the following items:

| | (i)  | Annual fees of $140 per claim per year to maintain federal
      mining claims; and                         
| | ---- | ------------------------------------------------------------------------------------------------------------
| |      |                                                                                                             
| | (ii) | Annual lease payments for state leases and the minimum
    annual royalty of $12,000 for the Sullivan Lease.

|   |              
|-- | -------------
|7. | Capital Stock

| | (a) | Authorized                                                                  
| | --- | ----------------------------------------------------------------------------
| |     |                                                                             
| |     | The authorized capital stock of the Company
      consists of the following:

250,000,000 shares of voting common
stock, with no par value 10,000,000 shares of preferred stock, with no par
value

Issued capital stock

| | (i)   | On October 26, 2009, the Company closed an initial public
      offering of 5,000,000 common shares at a price of Cdn$0.30 (US $0.28) for
      gross proceeds of Cdn$1,500,000 (US $1,412,962). Related issue costs in
      cash, including the corporate finance fee, totaled $602,959.                                                                                                                                                                                         
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |       | The spouse of the Chief Financial Officer of the Company
      acquired 16,666 common shares pursuant to the initial public
    offering.                                                                                                                                                                                                                                                                                                                                          
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (ii)  | On November 13, 2009, the Company issued an additional
      750,000 common shares from the exercise of over-allotment option
      associated with the initial public offering described in Note 7(a)(i). The
      common shares were issued at a price of Cdn$0.30 ($0.29 US) for gross
      proceeds of Cdn$225,000 ($214,123 US). Related issue costs, comprised of
      underwriters commission, totaled $17,130.                                                         
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (iii) | Pursuant to an escrow agreement dated September 30, 2009,
      the Company had 12,425,000 shares held in escrow of which 1,242,500 were
      released on October 29, 2009, the date of listing of the Companys shares.
      As at December 31, 2009, the Company had 11,182,500 shares remaining in
      escrow which will be released in six month increments following October
      29, 2009 with all shares expected to be released from escrow by October
      29, 2012.



| | (b) | Stock
      options
| | --- | -------------------

The Companys stock option plan (the
Plan) provides for the grant of incentive and non-qualified stock options for
up to 5,379,000 common shares to employees, consultants, officers and directors
of the Company. All terms and conditions of the options are essentially the same
for consultants as well as internal employees and directors. Options are granted
for a term of up to five years from the date of grant. Stock options granted
generally vest 25% on the date of grant and 25% every six months thereafter over
a period of eighteen months.

A summary of changes in stock options
during the years ended December 31, 2009 and 2008 are as follows:

53

---

|BE Resources Inc.                                                         
|--------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)
|(An Exploration Stage Entity)                                             
|Notes to Financial Statements - Presented in US
      Dollars             
|December 31,
      2009 and 2008                                          

|7. | Capital Stock (continued)
|-- | -------------------------

| |                            |  |               |  |   | Weighted average |  |   | Weighted average | 
| | -------------------------- |  | ------------- |  | - | ---------------- |  | - | ---------------- | 
| |                            |  | Number of     |  |   | Exercise Price   |  |   | Exercise Price   | 
| |                            |  | Stock Options |  |   | US               |  |   | CDN              | 
| |                            |  |               |  |   |                  |  |   |                  | 
| | Balance, December 31, 2007 |  | 3,560,000     |  | $ | 0.25             |  | $ | 0.25             | 
| |                            |  |               |  |   |                  |  |   |                  | 
| | Balance, December 31, 2008 |  | 3,560,000     |  | $ | 0.24             |  | $ | 0.25             | 
| | Granted                    |  | 400,000       |  | $ | 0.35             |  | $ | 0.37             | 
| |                            |  |               |  |   |                  |  |   |                  | 
| | Balance, December 31, 2009 |  | 3,960,000     |  | $ | 0.25             |  | $ | 0.26             | 

As at December 31, 2009, the following
stock options were outstanding:

Options
    
    
    Options
    
    
    Exercise
    
    
    ExpirationDate of
      Grant
    
    Granted
    
    
    **Exercisable**
    
    
    Price
    
    
    DateDecember 7, 2007
    
    3,560,000
    
    
    3,560,000
    
    
    CDN$0.25 (US $0.24)
    
    
    December 7, 2012November 12, 2009
    
    400,000
    
    
    100,000
    
    
    US
      $0.35
    
    
    November 12, 2014


The fair value of the stock options
granted was estimated using the Black-Scholes option pricing model and is
amortized over the vesting period of the underlying options. This model requires
management to make estimates of the expected volatility of its common shares,
the expected term of the option, the expected future forfeiture rate, and future
interest rates. The risk free interest rate is based on the U.S. Treasury Bond
rate. The Company has not paid dividends and does not expect to pay dividends in
the foreseeable future. As historical volatility of the Companys common shares
is not available, expected volatility is based on the historical performance of
the common shares of other corporations with similar operations. The expected
term of the stock options was estimated to be the contractual term of the
options.

The weighted average grant date fair
value of options granted during the year ended December 31, 2009 was Cdn$0.25
($0.24 U.S.) per share. The assumptions used to calculate the fair value are as
follows: expected dividend yield of 0%; expected volatility of 111%; risk free
interest rate of 2.28%; and expected term of 5 years.

The Company has determined that
2,200,000 stock options granted during the year ended December 31, 2007 were
effectively indexed to the exchange rate between the Canadian dollar and the
U.S. dollar, the functional currency of the Company, in addition to the price of
its common stock. As a result, these stock options have been classified as
liabilities and are remeasured at the end of each reporting period until
settlement. As at December 31, 2009, the fair value of the liability of $487,700
(2008 - $216,700) was estimated based on the following assumptions: expected
dividend yield of 0% (2008 - 0%); expected volatility of 133% (2008 - 100%);
risk free interest rate of 1.7% (2008 - 1.3%); and expected life of 2.94 years
(2008 - 3.94 years).

54

---

|BE Resources Inc.                                                         
|--------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)
|(An Exploration Stage Entity)                                             
|Notes to Financial Statements - Presented in US
      Dollars             
|December 31,
      2009 and 2008                                          

|7. | Capital Stock (continued)
|-- | -------------------------

The intrinsic value of stock options
issued, outstanding and exercisable at December 31, 2009 and 2008 was $178,000.
Intrinsic value for stock options is calculated based on the difference between
the exercise prices of the underlying options and the quoted price of the
Companys common shares as of the reporting date.

| | **(c)** | Warrants
| | ------- | --------

As at December 31, 2009, the following
compensation warrants were outstanding:

Expiry Date
    Number of
    Exercise
    Fairwarrants
    Price
    ValueOctober 26, 2011
    500,000
    CDN$0.30 (US $0.29)
    $ 94,600November 13, 2011
    75,000
    CDN$0.30 (US $0.29)
    14,200


In connection with the initial public
offering and exercise of the over-allotment option described in Notes 7(b)(i)
and (ii), the Company granted 575,000 compensation warrants to the underwriter,
exercisable at Cdn$0.30 for a period of 2 years. The 575,000 compensation
warrants are denominated in Canadian dollars while the Companys functional and
reporting currency is the U.S. dollar. As a result, the fair value of the
compensation warrants fluctuates based on their current stock price, volatility,
the risk free interest rate, time remaining until expiry and changes in the
exchange rate between the U.S. and Canadian Dollar.

ASC 815 indicates that warrants with
exercise prices denominated in a different currency than an entitys functional
currency should not be classified as equity. As a result, these compensation
warrants have been treated as derivatives and recorded as liabilities carried at
their fair value, with period to period changes in the fair value recorded as a
gain or loss in the statement of operations. The Company adopted the
recommendations of ASC 815 on January 1, 2009 and treated the compensation
warrants as a liability upon their issuance.

As at December 31, 2009, the fair value
of the warrant liability of $108,800 was estimated using the Black-Scholes
option pricing model, based on the following assumptions: expected dividend
yield of 0%; expected volatility of 140%; risk free interest rate of 1.7%; and
expected term of 1.82 years (2008  nil).

This model requires management to make
estimates of the expected volatility of its common shares, the expected term of
the option and future interest rates. The risk free interest rate is based on
the U.S. Treasury Bond rate. The Company has not paid dividends and does not
expect to pay dividends in the foreseeable future. As historical volatility of
the Companys common shares is not available, expected volatility is based on
the historical performance of the common shares of other corporations with
similar operations. The expected term of the warrants is the contractual term of
the warrants.

55

---

|BE Resources Inc.                                                         
|--------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)
|(An Exploration Stage Entity)                                             
|Notes to Financial Statements - Presented in US
      Dollars             
|December 31, 2009 and 2008                                                

|8. | Related Party Transactions
|-- | --------------------------

| | (a) | Pursuant to an employment agreement dated December 1,
      2007 which was subsequently amended on September 1, 2009, the Company paid
      an officer who is also a director of the Company, a salary of $92,000
      (2008 - $120,000) and an expense allowance of $68,000 (2008 - $90,000) for
      the year ended December 31, 2009. Included in accounts payable and accrued
      liabilities as at December 31, 2009 was $9,395 (2008 - $5,434) owing to
      this individual for expense reimbursement. This amount is unsecured,
      non-interest bearing with no fixed terms of repayment.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (b) | During the year ended December 31, 2009, the Company
      incurred fees for accounting services rendered of $46,599 (2008 - $5,970)
      charged by a corporation controlled by an officer of the Company and
      consulting fees of $24,000 (2008 - $24,000) charged by this officer.
      Included in accounts payable and accrued liabilities as at December 31,
      2009 is $11,396 (2008 - $6,450) owing to this corporation and $45,000
      (2008 - $27,000) owing to this officer. These amounts are unsecured,
      non-interest bearing with no fixed terms of
repayment.              

The above transactions were in the
normal course of operations and were measured at the exchange amount, which is
the amount of consideration established and agreed to by the related
parties.

See also Note 3.

|9.  | Segment Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The Company has one operating segment, which is the
      exploration and development of exploration properties in the United
      States. As at December 31, 2009, geographic segmentation of the Companys
      assets is as follows: Canada - $551,297 (2008 - $480,134) and the United
      States - $155,871 (2008 - $185,111). Substantially all of the expenses are
      made in the United States.                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10. | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Credit Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Financial instruments that potentially subject the
      Company to concentrations of credit risk consist principally of cash
      deposits. Cash deposits with a major Canadian chartered bank are insured
      by the Canadian Deposit Insurance Corporation up to Cdn$100,000. Cash
      deposits with a major U.S. bank are insured by the Federal Deposit
      Insurance Corporation up to $250,000. As at December 31, 2009, the Company
      held Cdn$583,490                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | (2008 - Cdn$479,916) with the major Canadian chartered
      bank and $15,414 (2008 - $43,059) with the major U.S. bank.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Foreign Exchange Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Certain of the Companys expenses were incurred in
      Canadian currency and are therefore subject to gains or losses due to
      fluctuations in this currency. As at December 31, 2009, the Company held
      cash of $569,616 (US$544,268) denominated in Canadian dollars (2008 -
      Cdn$584,593; US$479,951); had accounts payable and accrued liabilities of
      $94,807 (US$90,588) denominated in Canadian dollars (2008  Cdn $Nil; US
      $Nil) and had a stock option and warrant liability of $624,300 (US $596,500)
      denominated in Canadian currency (2008 - Cdn$265,300;
  US$216,700).

56

---

|BE Resources Inc.                                                         
|--------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)
|(An Exploration Stage Entity)                                             
|Notes to Financial Statements - Presented in US
      Dollars             
|December 31, 2009 and 2008                                                

|10. | Financial Instruments (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Commodity Price Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The ability of the Company to develop its properties and
      the future profitability of the Company is directly related to the market
      price of certain minerals.                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Companys risk management objectives are to ensure
      that business and financial exposures to risk that have been identified
      and measured are minimized using the most effective and efficient methods
      to reduce, transfer and, when possible, eliminate such exposures.
      Operating decisions contemplate associated risks and management strives to
      structure proposed transactions to avoid or reduce risk whenever
      possible.

|11. | Deferred Taxes
|--- | --------------

| | a) | Provision for Income Taxes
| | -- | --------------------------

Major items causing the Companys
income tax rate to differ from the U.S. federal statutory rate of approximately
34% (2008  34%) are as follows.

| | Year ended
      December 31,                                      |   | 2009       |   |   | 2008       |  
| | ------------------------------------------------------------------ | - | ---------- | - | - | ---------- | -
| |                                                                    |   |            |   |   |            |  
| | Loss before income taxes                                           | $ | (1,478,711 | ) | $ | (2,192,125 | )
| |                                                                    |   |            |   |   |            |  
| | Expected income tax benefit based on
      statutory rate          | $ | (503,000   | ) | $ | (745,000   | )
| | Adjustments resulting from:                                        |   |            |   |   |            |  
| | Warrant liability                                                  |   | (37,000    | ) |   | -          |  
| | Non-deductible expenses                                            |   | -          |   |   | 1,000      |  
| | Stock-based compensation                                           |   | 16,000     |   |   | 41,000     |  
| | Change in
      valuation allowance                                |   | 524,000    |   |   | 703,000    |  
| |                                                                    |   |            |   |   |            |  
| | Income tax recovery reflected in the statement of
      operations | $ | -          |   | $ | -          |  

As at December 31, 2009, the Company
had approximately $4,444,000 of net operating loss carry forwards in the U.S.,
which may be used to reduce taxable income in future years and which expire
starting December 31, 2027. The Company also has exploration expenditures of
approximately $424,000 which may be used to reduce taxable income in future
years. As management of the Company cannot determine that it is more likely than
not that the Company will realize the benefit of the net deferred tax asset, a
valuation allowance equal to the net deferred tax asset was recorded at December
31, 2009.

57

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|BE Resources Inc.                                                         
|--------------------------------------------------------------------------
|(A Continuation of the Operations of Great Western
      Exploration, LLC)
|(An Exploration Stage Entity)                                             
|Notes to Financial Statements - Presented in US
      Dollars             
|December 31, 2009 and 2008                                                

|11. | Deferred Taxes (continued)
|--- | --------------------------

The Company may be subject to examination
by the Internal Revenue Service and the New Mexico Taxation and Revenue
Department for fiscal years 2007 through 2009.

The significant components of the
deferred tax assets at December 31, 2009 and 2008 were as follows:

| |                                                      |   | 2009       |   |   | 2008       |  
| | ---------------------------------------------------- | - | ---------- | - | - | ---------- | -
| |                                                      |   |            |   |   |            |  
| | Deferred income tax assets (liabilities)             |   |            |   |   |            |  
| | Non-capital losses                                   |   | 1,511,000  |   |   | 1,111,000  |  
| | Stock-based
      compensation and warrant liability |   | 203,000    |   |   | 74,000     |  
| | Exploration expenditures                             |   | 107,000    |   |   | 112,000    |  
| | Valuation allowance                                  |   | (1,821,000 | ) |   | (1,297,000 | )
| |                                                      |   |            |   |   |            |  
| |                                                      | $ | -          |   | $ | -          |  

|12. | Subsequent Events
|--- | -----------------

The Company has evaluated subsequent
events and provides disclosure as follows:

| | i) | On January 5, 2010, the Company granted 900,000 stock
      options to consultants. These stock options are exercisable at US$0.30 and
      expire on January 5, 2015.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

58

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

There have been no changes in our accountants during the last
two fiscal years, and we have not had any disagreements with our existing
accountants during that time.

ITEM 9A. CONTROLS AND PROCEDURES

(a) We maintain a system of
controls and procedures designed to ensure that information required to be
disclosed by us in reports that we file or submit under the Securities Exchange
Act of 1934, as amended, is recorded, processed, summarized and reported, within
time periods specified in the SECs rules and forms and to ensure that
information required to be disclosed by us in the reports that we file or submit
under the Securities Exchange Act of 1934, as amended, is accumulated and
communicated to our management, including our Chief Executive Officer and
Principal Financial Officer, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure. As of
December 31, 2009, under the supervision and with the participation of our Chief
Executive Officer and Principal Financial Officer, management has evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures. Based on that evaluation, the Chief Executive Officer and the
Principal Financial Officer concluded that our disclosure controls and
procedures were effective.

(b) This annual report does not
include a report of managements assessment regarding internal control over
financial reporting or an attestation report of the companys registered public
accounting firm due to a transition period established by rules of the
Securities and Exchange Commission for newly public companies.

(c) There has been no change in
our internal controls over financial reporting during the most recent fiscal
quarter that has materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE

Pursuant to General Instruction G of Form 10-K, the information
contained in this Item 10 is incorporated by reference to our Definitive Proxy
Statement for our 2010 Annual Meeting of Shareholders, expected to be filed with
the SEC on or before April 30, 2010.

ITEM 11. EXECUTIVE AND DIRECTOR COMPENSATION

The information contained in this Item 11 is incorporated by
reference to our Definitive Proxy Statement for our 2010 Annual Meeting of
Shareholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information contained in this Item 12 is incorporated by
reference to our Definitive Proxy Statement for our 2010 Annual Meeting of
Shareholders.

59

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE

The information contained in this Item 13 is incorporated by
reference to our Definitive Proxy Statement for our 2010 Annual Meeting of
Shareholders.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information contained in this Item 14 is incorporated by
reference to our Definitive Proxy Statement for our 2010 Annual Meeting of
Shareholders.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

The following Exhibits are filed or incorporated by reference as
part of this registration statement:

|Item No. | Description                                                                                                                                                                                                                                                                 
|-------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1      | Articles of Incorporation of the Company as filed with
      the Colorado Secretary of State on August 8, 2007 (incorporated by
      reference from our registration statement on Form S-1 filed on July 2,
      2009, Exhibit 3.1, File No. 333-160431).                 
|3.1.1    | Articles of Amendment to the Articles of Incorporation as
      filed with the Colorado Secretary of State on August 27, 2007
      (incorporated by reference from our registration statement on Form S-1
      filed on July 2, 2009, Exhibit 3.1.1, File No. 333-160431).
|3.1.2    | Articles of Amendment to the Articles of Incorporation as
      filed with the Colorado Secretary of State on July 3, 2008 (incorporated
      by reference from our registration statement on Form S-1 filed on July 2,
      2009, Exhibit 3.1.2, File No. 333-160431).   
|3.2      | Bylaws of the Company dated August 27, 2007 (incorporated
      by reference from our registration statement on Form S-1 filed on July 2,
      2009, Exhibit 3.2, File No. 333-160431).                                                                                    
|4        | Specimen stock certificate (incorporated by reference
      from our registration statement on Form S-1 filed on July 2, 2009, Exhibit
      4, File No. 333-160431).                                                                                                       
|10.1     | Agreement of Purchase and Sale between the Company and
      Great Western Exploration, LLC dated October 1, 2007 (incorporated by
      reference from our registration statement on Form S-1 filed on July 2,
      2009, Exhibit 10.1, File No. 333-160431).             
|10.2     | NPR Royalty Agreement between the Company and Great
      Western Exploration, LLC dated October 1, 2007 (incorporated by reference
      from our registration statement on Form S-1 filed on July 2, 2009, Exhibit
      10.2, File No. 333-160431).                      
|10.3     | NPR Royalty Agreement between the Company and South West
      Exploration, LLC dated October 1, 2007 (incorporated by reference from our
      registration statement on Form S-1 filed on July 2, 2009, Exhibit 10.3,
      File No. 333-160431).                         
|10.4     | NPR Royalty Agreement between the Company and Bethany
      Resources, LLC dated October 1, 2007. (incorporated by reference from our
      registration statement on Form S-1 filed on July 2, 2009, Exhibit 10.4,
      File No. 333-160431).                             

60

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|10.5  | NPR Royalty Agreement between the Company and Stewart
      Jackson dated October 1, 2007 (incorporated by reference from our
      registration statement on Form S-1 filed on July 2, 2009, Exhibit 10.5,
      File No. 333-160431).                                                                     
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.6  | Gross Royalty Agreement between the Company and David
      Tognoni dated October 1, 2007 (incorporated by reference from our
      registration statement on Form S-1 filed on July 2, 2009, Exhibit 10.6,
      File No. 333-160431).                                                                     
|10.7  | Employment Agreement between the Company and David
      Tognoni dated December 1, 2007. (incorporated by reference from our
      registration statement on Form S-1 filed on July 2, 2009, Exhibit 10.7,
      File No. 333-160431).                                                                      
|10.8  | Extension of Employment Agreement between the Company and
      David Tognoni effective January 1, 2009. (incorporated by reference from
      our registration statement on Form S-1 filed on July 2, 2009, Exhibit
      10.8, File No. 333-160431).                                                      
|10.9  | Form of Escrow Agreement between the Company, the
      Transfer Agent and Registrar and certain shareholders (incorporated by
      reference from our registration statement on Form S-1/A filed on August
      12, 2009, Exhibit 10.9, File No. 333-160431).                                            
|10.10 | Sullivan Lease between David Tognoni and Kenneth Alan
      Sullivan and Cherrill L. Sullivan dated January 2, 2004 (incorporated by
      reference from our registration statement on Form S-1 filed on July 2,
      2009, Exhibit 10.10, File No. 333-160431).                                          
|10.11 | Assignment of Sullivan Lease between David Q. Tognoni and
      Great Western Exploration, LLC dated February 3, 2004 (incorporated by
      reference from our registration statement on Form S-1 filed on July 2,
      2009, Exhibit 10.11, File No. 333-160431).                                        
|10.12 | Assignment of Sullivan Lease between the Company and
      Great Western Exploration, LLC dated October 1, 2007 (incorporated by
      reference from our registration statement on Form S-1 filed on July 2,
      2009, Exhibit 10.12, File No. 333-160431).                                              
|10.13 | Amendment of Sullivan Lease between the Company and
      Kenneth Alan Sullivan and Cherrill L. Sullivan dated April 9, 2008
      (incorporated by reference from our registration statement on Form S-1
      filed on July 2, 2009, Exhibit 10.13, File No. 333-160431).                                 
|10.14 | State of New Mexico Lease Number HG 0059 between New
      Mexico State Land Office and Great Western Exploration, LLC dated January
      3, 2005 (incorporated by reference from our registration statement on Form
      S-1 filed on July 2, 2009, Exhibit 10.14, File No. 333-160431).                 
|10.15 | Assignment of General Mining Lease New Mexico Lease
      Number HG 0059 between the Company and Great Western Exploration, LLC
      dated September 4, 2007 (incorporated by reference from our registration
      statement on Form S-1 filed on July 2, 2009, Exhibit 10.15, File No.
      333-160431).
|10.16 | State of New Mexico Lease Number HG 0060 between New
      Mexico State Land Office and Great Western Exploration, LLC dated January
      3, 2005                                                                                                                                                          
|10.17 | Assignment of General Mining Lease New Mexico Lease
      Number HG 0060 between the Company and Great Western Exploration, LLC
      dated September 4, 2007 (incorporated by reference from our registration
      statement on Form S-1 filed on July 2, 2009, Exhibit 10.17, File No.
      333-160431).
|10.18 | State of New Mexico Lease Number HG 0061 between New
      Mexico State Land Office and Great Western Exploration, LLC dated January
      3, 2005 (incorporated by reference from our registration statement on Form
      S-1 filed on July 2, 2009, Exhibit 10.18, File No.
  333-160431).               

61

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|10.19 | Assignment of General Mining Lease New Mexico Lease
      Number HG 0061 between the Company and Great Western Exploration, LLC
      dated September 4, 2007 (incorporated by reference from our registration
      statement on Form S-1 filed on July 2, 2009, Exhibit 10.19, File No.
      333-160431).
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.20 | BE Resources Inc. Stock Option Plan (incorporated by
      reference from our registration statement on Form S-1 filed on July 2,
      2009, Exhibit 10.20, File No. 333-160431).                                                                                                                          
|10.21 | Form of Stock Option Agreement (incorporated by reference
      from our registration statement on Form S-1 filed on July 2, 2009, Exhibit
      10.21, File No. 333-160431).                                                                                                                               
|10.22 | First Amendment to NPR Agreement between the Company and
      South West Exploration, dated May 27, 2009 (incorporated by reference from
      our registration statement on Form S-1 filed on July 2, 2009, Exhibit
      10.22, File No. 333-160431).                                                    
|10.23 | First Amendment to NPR Agreement between the Company and
      Bethany Resources, LLC, dated May 27, 2009 (incorporated by reference from
      our registration statement on Form S-1 filed on July 2, 2009, Exhibit
      10.23, File No. 333-160431).                                                    
|10.24 | First Amendment to NPR Agreement between the Company and
      Great Western Exploration, LLC, dated May 27, 2009 (incorporated by
      reference from our registration statement on Form S-1 filed on July 2,
      2009, Exhibit 10.24, File No. 333-160431).                                            
|10.25 | First Amendment to NPR Agreement between the Company and
      Stewart Jackson, dated May 30, 2009 (incorporated by reference from our
      registration statement on Form S-1 filed on July 2, 2009, Exhibit 10.25,
      File No. 333-160431).                                                           
|10.26 | Amendment to David Tognoni Employment Agreement,
      effective September 1, 2009 (incorporated by reference from our
      registration statement on Form S-1 filed on September 21, 2009, Exhibit
      10.26, File No. 333-160431).                                                                     
|*14   | Code of Ethics                                                                                                                                                                                                                                                                                              
|*31.1 | Certification pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002 for David Q. Tognoni                                                                                                                                                                                                          
|*31.2 | Certification pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002 for Carmelo Marrelli                                                                                                                                                                                                          
|*32   | Certification pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002 for David Q. Tognoni and Carmelo Marrelli                                                                                                                                                                                       

___________

* Filed with this report

62

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SIGNATURES

In accordance with Section 13 or
15(d) of the Exchange Act of 1934, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

|                      | BE
      RESOURCES INC.              
|--------------------- | -------------------------------------
|                      |                                      
|                      |                                      
|                      | /s/ David Q. Tognoni                 
|Dated: March 30, 2010 | David Q. Tognoni,                    
|                      | President and Chief Executive Officer

In accordance with the Exchange
Act, this Report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated.

|/s/ David Q. Tognoni |  | President, Chief Executive Officer, and Director                     | March 30, 2010
|-------------------- |  | -------------------------------------------------------------------- | --------------
|David Q. Tognoni     |  |                                                                      |               
|                    
|                     |  |                                                                      |               
|/s/ Carmelo Marrelli |  | Chief Financial Officer (Principal Financial and Accounting Officer) | March 30, 2010
|Carmelo Marrelli     |  |                                                                      |               
|                    
|                     |  |                                                                      |               
|/s/ Edward Godin     |  | Chairman of the Board of Directors                                   | March 30, 2010
|Edward Godin         |  |                                                                      |               
|                    
|                     |  |                                                                      |               
|/s/ Robert Lufkin    |  | Director                                                             | March 23, 2010
|Robert Lufkin        |  |                                                                      |               

63

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Exhibit Index

|Item No. | Description                                                                                                                                                                                                                                                                 
|-------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1      | Articles of Incorporation of the Company as filed with
      the Colorado Secretary of State on August 8, 2007 (incorporated by
      reference from our registration statement on Form S-1 filed on July 2,
      2009, Exhibit 3.1, File No. 333-160431).                 
|3.1.1    | Articles of Amendment to the Articles of Incorporation as
      filed with the Colorado Secretary of State on August 27, 2007
      (incorporated by reference from our registration statement on Form S-1
      filed on July 2, 2009, Exhibit 3.1.1, File No. 333-160431).
|3.1.2    | Articles of Amendment to the Articles of Incorporation as
      filed with the Colorado Secretary of State on July 3, 2008 (incorporated
      by reference from our registration statement on Form S-1 filed on July 2,
      2009, Exhibit 3.1.2, File No. 333-160431).   
|3.2      | Bylaws of the Company dated August 27, 2007 (incorporated
      by reference from our registration statement on Form S-1 filed on July 2,
      2009, Exhibit 3.2, File No. 333-160431).                                                                                    
|4        | Specimen stock certificate (incorporated by reference
      from our registration statement on Form S-1 filed on July 2, 2009, Exhibit
      4, File No. 333-160431).                                                                                                       
|10.1     | Agreement of Purchase and Sale between the Company and
      Great Western Exploration, LLC dated October 1, 2007 (incorporated by
      reference from our registration statement on Form S-1 filed on July 2,
      2009, Exhibit 10.1, File No. 333-160431).             
|10.2     | NPR Royalty Agreement between the Company and Great
      Western Exploration, LLC dated October 1, 2007 (incorporated by reference
      from our registration statement on Form S-1 filed on July 2, 2009, Exhibit
      10.2, File No. 333-160431).                      
|10.3     | NPR Royalty Agreement between the Company and South West
      Exploration, LLC dated October 1, 2007 (incorporated by reference from our
      registration statement on Form S-1 filed on July 2, 2009, Exhibit 10.3,
      File No. 333-160431).                         
|10.4     | NPR Royalty Agreement between the Company and Bethany
      Resources, LLC dated October 1, 2007. (incorporated by reference from our
      registration statement on Form S-1 filed on July 2, 2009, Exhibit 10.4,
      File No. 333-160431).                             
|10.5     | NPR Royalty Agreement between the Company and Stewart
      Jackson dated October 1, 2007 (incorporated by reference from our
      registration statement on Form S-1 filed on July 2, 2009, Exhibit 10.5,
      File No. 333-160431).                                     
|10.6     | Gross Royalty Agreement between the Company and David
      Tognoni dated October 1, 2007 (incorporated by reference from our
      registration statement on Form S-1 filed on July 2, 2009, Exhibit 10.6,
      File No. 333-160431).                                     
|10.7     | Employment Agreement between the Company and David
      Tognoni dated December 1, 2007. (incorporated by reference from our
      registration statement on Form S-1 filed on July 2, 2009, Exhibit 10.7,
      File No. 333-160431).                                      
|10.8     | Extension of Employment Agreement between the Company and
      David Tognoni effective January 1, 2009. (incorporated by reference from
      our registration statement on Form S-1 filed on July 2, 2009, Exhibit
      10.8, File No. 333-160431).                      
|10.9     | Form of Escrow Agreement between the Company, the
      Transfer Agent and Registrar and certain shareholders (incorporated by
      reference from our registration statement on Form S-1/A filed on August
      12, 2009, Exhibit 10.9, File No. 333-160431).            

64

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|10.10 | Sullivan Lease between David Tognoni and Kenneth Alan
      Sullivan and Cherrill L. Sullivan dated January 2, 2004 (incorporated by
      reference from our registration statement on Form S-1 filed on July 2,
      2009, Exhibit 10.10, File No. 333-160431).                                          
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.11 | Assignment of Sullivan Lease between David Q. Tognoni and
      Great Western Exploration, LLC dated February 3, 2004 (incorporated by
      reference from our registration statement on Form S-1 filed on July 2,
      2009, Exhibit 10.11, File No. 333-160431).                                        
|10.12 | Assignment of Sullivan Lease between the Company and
      Great Western Exploration, LLC dated October 1, 2007 (incorporated by
      reference from our registration statement on Form S-1 filed on July 2,
      2009, Exhibit 10.12, File No. 333-160431).                                              
|10.13 | Amendment of Sullivan Lease between the Company and
      Kenneth Alan Sullivan and Cherrill L. Sullivan dated April 9, 2008
      (incorporated by reference from our registration statement on Form S-1
      filed on July 2, 2009, Exhibit 10.13, File No. 333-160431).                                 
|10.14 | State of New Mexico Lease Number HG 0059 between New
      Mexico State Land Office and Great Western Exploration, LLC dated January
      3, 2005 (incorporated by reference from our registration statement on Form
      S-1 filed on July 2, 2009, Exhibit 10.14, File No. 333-160431).                 
|10.15 | Assignment of General Mining Lease New Mexico Lease
      Number HG 0059 between the Company and Great Western Exploration, LLC
      dated September 4, 2007 (incorporated by reference from our registration
      statement on Form S-1 filed on July 2, 2009, Exhibit 10.15, File No.
      333-160431).
|10.16 | State of New Mexico Lease Number HG 0060 between New
      Mexico State Land Office and Great Western Exploration, LLC dated January
      3, 2005                                                                                                                                                          
|10.17 | Assignment of General Mining Lease New Mexico Lease
      Number HG 0060 between the Company and Great Western Exploration, LLC
      dated September 4, 2007 (incorporated by reference from our registration
      statement on Form S-1 filed on July 2, 2009, Exhibit 10.17, File No.
      333-160431).
|10.18 | State of New Mexico Lease Number HG 0061 between New
      Mexico State Land Office and Great Western Exploration, LLC dated January
      3, 2005 (incorporated by reference from our registration statement on Form
      S-1 filed on July 2, 2009, Exhibit 10.18, File No. 333-160431).                 
|10.19 | Assignment of General Mining Lease New Mexico Lease
      Number HG 0061 between the Company and Great Western Exploration, LLC
      dated September 4, 2007 (incorporated by reference from our registration
      statement on Form S-1 filed on July 2, 2009, Exhibit 10.19, File No.
      333-160431).
|10.20 | BE Resources Inc. Stock Option Plan (incorporated by
      reference from our registration statement on Form S-1 filed on July 2,
      2009, Exhibit 10.20, File No. 333-160431).                                                                                                                          
|10.21 | Form of Stock Option Agreement (incorporated by reference
      from our registration statement on Form S-1 filed on July 2, 2009, Exhibit
      10.21, File No. 333-160431).                                                                                                                               
|10.22 | First Amendment to NPR Agreement between the Company and
      South West Exploration, dated May 27, 2009 (incorporated by reference from
      our registration statement on Form S-1 filed on July 2, 2009, Exhibit
      10.22, File No. 333-160431).                                                    
|10.23 | First Amendment to NPR Agreement between the Company and
      Bethany Resources, LLC, dated May 27, 2009 (incorporated by reference from
      our registration statement on Form S-1 filed on July 2, 2009, Exhibit
      10.23, File No. 333-160431).                                                    
|10.24 | First Amendment to NPR Agreement between the Company and
      Great Western Exploration, LLC, dated May 27, 2009 (incorporated by
      reference from our registration statement on Form S-1 filed on July 2,
      2009, Exhibit 10.24, File No. 333-160431).                                            

65

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|10.25 | First Amendment to NPR Agreement between the Company and
      Stewart Jackson, dated May 30, 2009 (incorporated by reference from our
      registration statement on Form S-1 filed on July 2, 2009, Exhibit 10.25,
      File No. 333-160431).
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.26 | Amendment to David Tognoni Employment Agreement,
      effective September 1, 2009 (incorporated by reference from our
      registration statement on Form S-1 filed on September 21, 2009, Exhibit
      10.26, File No. 333-160431).          
|*14   | Code of Ethics                                                                                                                                                                                                                                   
|*31.1 | Certification pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002 for David Q. Tognoni                                                                                                                                               
|*31.2 | Certification pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002 for Carmelo Marrelli                                                                                                                                               
|*32   | Certification pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002 for David Q. Tognoni and Carmelo Marrelli                                                                                                                            

___________

* Filed with this report

66

---