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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

Form 20F

___ Registration Statement pursuant to Section 12(b) or 12(g) of
the Securities Exchange Act of 1934

Or

XAnnual Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the fiscal year ended January 31, 2011

Or

____ Transition Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the transition period from __________________to
____________________

[ ] Shell Company Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Commission file number000-33299

DORATO RESOURCES
INC.(Exact name of Registrant as specified in its
charter)

British Columbia, Canada(Jurisdiction of
incorporation or organization)

#2300  1177 West Hastings Street Vancouver, British
Columbia, V6E 2K3(Address of principal executive offices)

Keith J. Henderson

#2300-1177 West Hastings Street, Vancouver, BC V6E 2K3,
Tel: 604-638-5817, Fax: 604-408-7499(Name, Telephone , E-Mail
and/or Facsimile number and Address of Company Contact Person)

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

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

Common Shares, no par value(Title of
Class)

Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the
Issuers classes of capital or common stock as of the close of the period
covered by the annual report.

|Title of Each Class         | Outstanding at January 31, 2011
|--------------------------- | -------------------------------
|Common Shares, no par value | 73,307,977                     

1

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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
]

If this report is an annual or transition report, indicate by
check mark if the registrant is not required to file reports pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934. Yes: [ ] No: [ x ]

Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 12 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes: [ x ]  No: [ ]

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 check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filer: [ ]
    Accelerated filer: [ ]
    Non-accelerated filer: [ x ]


Indicate by check mark which basis of accounting the registrant
has used to prepare the financial statements included in this filing:

|U.S. GAAP [ ] | International Financial Reporting Standards
      as issued [ ] | Other [ x ]
|------------- | --------------------------------------------------------------- | -----------
|              | By the International Accounting Standards
      Board           |            

If Other has been checked in response to previous question,
indicate by check mark which financial statement item the registrant has elected
to follow.[ x ] Item 17 [   ] Item 18

If this is an annual report, indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes: [ ] No: [ x ]

2

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TABLE OF CONTENTS

|                            |                                                                      |                                                               | PAGE
|--------------------------- | -------------------------------------------------------------------- | ------------------------------------------------------------- | ----
|                            |                                                                      |                                                               |     
|FORWARD-LOOKING INFORMATION | 7                                                                   
|PART I                      |                                                                      |                                                               | 8   
|ITEM 1.                     | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
      ADVISERS          | 8                                                            
|ITEM 2.                     | OFFER STATISTICS
      AND EXPECTED TIMETABLE                        | 8                                                            
|ITEM 3.                     | KEY INFORMATION                                                      | 8                                                            
|                            | 3.A                                                                  | Selected Financial Data                                       | 8   
|                            | 3.B                                                                  | Capitalization and Indebtedness                               | 10  
|                            | 3.C                                                                  | Reasons for the Offer and
      Use of Proceeds               | 10  
|                            | 3.D                                                                  | Risk Factors                                                  | 10  
|ITEM 4.                     | INFORMATION ON
      THE COMPANY                                     | 19                                                           
|                            | 4.A                                                                  | History and
      Development of the Company                  | 19  
|                            | 4.B                                                                  | Business Overview                                             | 20  
|                            | 4.C                                                                  | Organizational Structure                                      | 23  
|                            | 4.D                                                                  | Property, Plants and
      Equipment                          | 23  
|ITEM 5.                     | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                         | 42                                                           
|                            | 5.A                                                                  | Operating Results                                             | 42  
|                            | 5.B                                                                  | Liquidity
      and Capital Resources                         | 45  
|                            | 5.C                                                                  | Research and Development,
      Patents and Licences, etc     | 46  
|                            | 5.D                                                                  | Trend
      Information                                       | 46  
|                            | 5.E                                                                  | Off-Balance Sheet
      Arrangements                          | 46  
|                            | 5.F                                                                  | Tabular
      Disclosure of Contractual Obligations           | 47  
|ITEM 6.                     | DIRECTORS,
      SENIOR MANAGEMENT AND EMPLOYEES                     | 47                                                           
|                            | 6.A                                                                  | Directors
      and Senior Management                         | 47  
|                            | 6.B                                                                  | Compensation                                                  | 49  
|                            | 6.C                                                                  | Board
      Practices                                         | 52  
|                            | 6.D                                                                  | Employees                                                     | 53  
|                            | 6.E                                                                  | Share
      Ownership                                         | 53  
|ITEM 7.                     | MAJOR
      SHAREHOLDERS AND RELATED PARTY TRANSACTIONS              | 55                                                           
|                            | 7.A                                                                  | Major
      Shareholders                                      | 55  
|                            | 7.B                                                                  | Related Party Transactions                                    | 56  
|ITEM 8.                     | FINANCIAL INFORMATION                                                | 57                                                           
|                            | 8.A                                                                  | Consolidated Statements and
      Other Financial Information | 57  
|                            | 8.B                                                                  | Significant
      Changes                                     | 57  
|ITEM 9.                     | THE OFFER AND
      LISTING                                          | 58                                                           
|                            | 9.A                                                                  | Offer and
      Listing Details                               | 58  
|                            | 9.B                                                                  | Plan of Distribution                                          | 59  
|                            | 9.C                                                                  | Markets                                                       | 59  
|                            | 9.D                                                                  | Selling Shareholders                                          | 59  
|                            | 9.E                                                                  | Dilution                                                      | 59  
|                            | 9.F                                                                  | Expenses of the Issue                                         | 59  
|ITEM 10.                    | ADDITIONAL INFORMATION                                               | 59                                                           
|                            | 10.A                                                                 | Share Capital                                                 | 59  
|                            | 10.D                                                                 | Exchange
      Controls                                       | 61  
|                            | 10.E                                                                 | Taxation                                                      | 61  
|                            | 10.F                                                                 | Dividends
      and Paying Agents                             | 71  
|                            | 10.G                                                                 | Statement by Experts                                          | 71  
|                            | 10.H                                                                 | Documents on
      Display                                    | 72  
|                            | 10.I                                                                 | Subsidiary Information                                        | 72  
|ITEM 11.                    | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
      MARKET **RISK** | 72                                                           

3

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|ITEM
      12.  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY
      SECURITIES                           | 74 
|--------------- | -------------------------------------------------------------------------------------- | ---
|PART II         |                                                                                        | 74 
|ITEM
      13.  | DEFAULTS,
      DIVIDEND ARREARAGES AND DELINQUENCIES                                  | 74 
|ITEM 14.        | MATERIAL MODIFICATIONS TO
      THE RIGHTS OF SECURITY **HOLDERS AND USE OF PROCEEDS** | 74 
|ITEM
      15.  | CONTROLS
      AND PROCEDURES                                                          | 74 
|ITEM 16A.       | AUDIT COMMITTEE FINANCIAL
      EXPERT                                                 | 75 
|ITEM
      16B. | CODE OF
      ETHICS                                                                   | 75 
|ITEM 16C.       | PRINCIPAL ACCOUNTANT FEES
      AND SERVICES                                           | 75 
|ITEM 16D.       | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
      **COMMITTEES**                   | 76 
|ITEM 16E.       | PURCHASES OF EQUITY
      SECURITIES BY THE ISSUER AND **AFFILIATED PURCHASERS**       | 76 
|ITEM
      16F. | CHANGE IN
      REGISTRANTS CERTIFYING ACCOUNTANT                                     | 76 
|ITEM 16G.       | CORPORATE GOVERNANCE                                                                   | 76 
|PART
      III  |                                                                                        | 76 
|ITEM 17.        | FINANCIAL STATEMENTS                                                                   | 76 
|ITEM
      18.  | FINANCIAL STATEMENTS                                                                   | 106
|ITEM 19.        | EXHIBITS                                                                               | 106
|SIGNATURES      |                                                                                        | 107

4

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Glossary of Symbols

The following is a glossary of symbols that are used in this
annual report to describe our business.

Ag
    silverAs
    arsenicAu
    goldCu
    copperHg
    mercuryMo
    molybdenumPb
    leadSb
    antimonySn
    tinW
    tungstenZn
    zinc


Glossary of Terms

The following is a glossary of terms that are used in this
annual report to describe our business.

|Adit         | horizontal or nearly horizontal passage driven from the
      surface for the working or dewatering of a mine                                                                                                                                      
|------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|             |                                                                                                                                                                                                                                                    
|Alteration   | changes in the chemical or mineralogical composition of a
      rock, generally produced by weathering or hydro-thermal solutions                                                                                                                  
|             |                                                                                                                                                                                                                                                    
|Anomalous    | inconsistent with or deviating from what is usual, normal
      or expected                                                                                                                                                                        
|             |                                                                                                                                                                                                                                                    
|Anomaly      | the geographical area corresponding to anomalous
      geochemical or geophysical values                                                                                                                                                           
|             |                                                                                                                                                                                                                                                    
|Assay        | a chemical test performed on a sample of ores or minerals
      to determine the amount of valuable metals contained                                                                                                                               
|             |                                                                                                                                                                                                                                                    
|Batholith    | a granitic or granodioritic body made up of multiple
      intrusions of igneous rock                                                                                                                                                              
|             |                                                                                                                                                                                                                                                    
|Breccia      | a coarse-grained clastic rock, composed of angular broken
      rock fragments held together by a mineral cement or in a fine-grained
      matrix                                                                                                 
|             |                                                                                                                                                                                                                                                    
|Clastic      | consisting of fragments of minerals, rocks, or organic
      structures that have been moved individually from their places of origin                                                                                                              
|             |                                                                                                                                                                                                                                                    
|Cretaceous   | applied to the third and final period of the Mesozoic Era                                                                                                                                                                                          
|             |                                                                                                                                                                                                                                                    
|Epithermal   | said of a hydrothermal mineral deposit formed within
      about 1 km of the Earth's surface and in the temperature range of 50 to
      200 degrees C, occurring mainly as veins                                                                  
|             |                                                                                                                                                                                                                                                    
|g/t          | grams per tonne                                                                                                                                                                                                                                    
|             |                                                                                                                                                                                                                                                    
|Galena       | the natural mineral form of lead
      sulfide. It is the most important lead
      oremineral.                                                                                                                                                    
|             |                                                                                                                                                                                                                                                    
|Gangue       | the commercially worthless material that surrounds, or is
      closely mixed with, a wanted mineralin
      an ore deposit. The separation of mineral from gangue
    is known as mineral processing                                              
|             |                                                                                                                                                                                                                                                    
|Grade        | the concentration of an ore metal in a rock sample, given
      either as weight percent for base metals or in grams per tonne or ounces
      per short ton for precious metals                                                                   
|             |                                                                                                                                                                                                                                                    
|Hydrothermal | of or pertaining to hot water, to the action of hot
      water, or to the products of this action, such as a mineral deposit
      precipitated from a hot aqueous solution, with or without demonstrable
      association with igneous processes
|             |                                                                                                                                                                                                                                                    
|Intrusive    | of or pertaining to intrusion, both the processes and the
      rock so formed, including granite, granodiorite, and dacite                                                                                                                        

5

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|Limestone      | a sedimentary rock consisting chiefly (more
      than 50% by weight or by areal percentages under the microscope) of
      calcium carbonate, primarily in the form of the mineral calcite, and with
      or without magnesium carbonate
|-------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |                                                                                                                                                                                                                                           
|Mesozoic       | era of geologic time spanning 245 to 66 million
      years before the present                                                                                                                                                            
|               |                                                                                                                                                                                                                                           
|Metamorphic    | pertaining to the process of metamorphism or to
      its results                                                                                                                                                                         
|               |                                                                                                                                                                                                                                           
|Mineralization | minerals of value occurring in rocks                                                                                                                                                                                                      
|               |                                                                                                                                                                                                                                           
|Minerals       | a homogeneous naturally occurring chemical
      substance                                                                                                                                                                                
|               |                                                                                                                                                                                                                                           
|Porphyry       | a rock composed of prominent crystals                                                                                                                                                                                                     
|               |                                                                                                                                                                                                                                           
|Ppm            | parts per million                                                                                                                                                                                                                         
|               |                                                                                                                                                                                                                                           
|Pyrite         | a mineral composed of iron and sulfur                                                                                                                                                                                                     
|               |                                                                                                                                                                                                                                           
|Quartz         | any hard, gold or silver ore, as distinguished
      from gravel or earth                                                                                                                                                                 
|               |                                                                                                                                                                                                                                           
|Sampling       | the gathering of specimens of ore or wall rock
      for appraisal of an orebody                                                                                                                                                          
|               |                                                                                                                                                                                                                                           
|Rhodochrosite  | a manganese carbonate mineral with chemical
      composition MnCO3                                                                                                                                                                       
|               |                                                                                                                                                                                                                                           
|Sericite       | a white, fine-grained potassium mica occurring
      in small scales as an alteration product of various aluminosilicate
      minerals                                                                                                   
|               |                                                                                                                                                                                                                                           
|Shale          | a fine-grained detrital sedimentary rock,
      formed by the consolidation (esp. by compression) of clay, silt, or mud                                                                                                                   
|               |                                                                                                                                                                                                                                           
|Skarn          | metamorphic rocks surrounding an igneous
      intrusive where it comes in contact with a limestone or dolostone
      formation                                                                                                          
|               |                                                                                                                                                                                                                                           
|Sphalerite     | zinc sulphide mineral; the most common ore
      mineral of zinc                                                                                                                                                                          
|               |                                                                                                                                                                                                                                           
|Sulphide       | group of minerals consisting of metals combined
      with sulfur; common metallic ores                                                                                                                                                   
|               |                                                                                                                                                                                                                                           
|Vein           | a tabular or sheet like mineral deposit with
      identifiable walls, often filling a fracture or fissure                                                                                                                                
|               |                                                                                                                                                                                                                                           
|Volcanics      | a general collective term for extrusive igneous
      and pyroclastic material and rocks                                                                                                                                                  

6

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FORWARD-LOOKING INFORMATION

In this Annual Report on Form 20-F, references to the
Company, Dorato, we, our and us refer to Dorato Resources Inc. (unless
the context otherwise requires). This Annual Report contains forward-looking
statements and information relating to Dorato that are based on beliefs of our
management as well as assumptions made by and information currently available to
us. When used in this document, the words anticipate, believe, estimate,
expect, intend, plan, and project and similar expressions, as they
relate to Dorato or our management, are intended to identify forward-looking
statements. Forward-looking statements in this Annual Report include, but are
not limited to, statements with respect to the future financial or operating
performances of Dorato, its subsidiaries and their respective projects, the
timing and amount of estimated future operating and exploration expenditures,
costs and timing of the development of new deposits, costs and timing of future
exploration, requirements for additional capital, government regulation of
mining operations, environmental risks, reclamation and rehabilitation expenses,
title disputes or claims, limitations of insurance coverage and the timing and
possible outcome of any pending litigation and regulatory matters. Such
statements reflect our current views with respect to future events and are
subject to certain risks, uncertainties and assumptions. Many factors could
cause our actual results, performance or achievements to be materially different
from any future results, performance or achievements that may be expressed or
implied by such forward-looking statements, including, among others, changes in
general economic and business conditions, changes in currency exchange rates and
interest rates, the need for additional financing, fluctuations in mineral
prices, operational risks associated with mining and mineral processing,
including risks related to accidents, equipment breakdowns, labor disputes or
other unanticipated difficulties with or interruptions in operations which may
or may not be insured, changes in business strategy and various other factors,
both referenced and not referenced in this annual report. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described herein.
Except as required by law, we undertake no obligation to publicly update or
review any forward-looking statements or information whether as a result of new
information, future developments or otherwise.

Cautionary Note to U.S. Investors Concerning Reserve and
Resource Estimates

The terms mineral reserve, proven mineral
reserve and probable mineral reserve are Canadian mining terms as
defined in accordance with Canadian National Instrument 43-101  Standards of
Disclosure for Mineral Projects (NI 43-101) and the Canadian Institute
of Mining, Metallurgy and Petroleum (the CIM) -CIM Definition Standards
on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as
amended. These definitions differ from the definitions in the United States
Securities and Exchange Commission Industry Guide 7 (SEC Industry Guide
7) under the Securities Act of 1933, as amended. Under SEC Industry
Guide 7 standards, mineralization may not be classified as a reserve
unless the determination has been made that the mineralization could be
economically and legally produced or extracted at the time the reserve
determination is made. The United States Securities and Exchange Commission has
taken the position that mineral reserves for a mineral property may not be
designated unless: (i) competent professional engineers conduct a detailed
engineering and economic study, and the bankable or final
feasibility study demonstrates that a mineral deposit can be mined profitably at
a commercial rate; (ii) a historic three-year average commodity price is used in
any reserve or cash flow analysis used to designate reserves; and (iii) the
company has demonstrated that the mineral property will receive its governmental
permits, and the primary environmental document has been filed with the
appropriate governmental authorities.

In addition, the terms mineral resource, measured
mineral resource, indicated mineral resource and inferred
mineral resource are defined in and required to be disclosed by NI 43-101;
however, these terms are not defined terms under SEC Industry Guide 7 and are
normally not permitted to be used in reports and registration statements filed
with the United States Securities and Exchange Commission. Investors are
cautioned not to assume that any part or all of mineral deposits in these
categories will ever be converted into reserves or that they can be mined
economically or legally. Inferred mineral resources have a great amount
of uncertainty as to their existence, and great uncertainty as to their economic
and legal feasibility. It cannot be assumed that all, or any part, of an
inferred mineral resource will ever be upgraded to a higher category.

7

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Under Canadian rules, estimates of inferred mineral resources
may not form the basis of feasibility or pre-feasibility studies, except in rare
cases. Investors are cautioned not to assume that all or any part of an inferred
mineral resource exists or that it can be economically or legally mined.
Disclosure of contained ounces in a resource is permitted disclosure
under Canadian regulations; however, the United States Securities and Exchange
Commission normally only permits issuers to report mineralization that does not
constitute reserves by Securities and Exchange Commission standards as
in place tonnage and grade without reference to unit measures.

Accordingly, information contained in this Annual Report may
contain descriptions of the companys mineral deposits that may not be
comparable to similar information made public by U.S. companies subject to the
reporting and disclosure requirements under the United States federal securities
laws and the rules and regulations thereunder.

PART I

|ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
      ADVISERS
|------- | -----------------------------------------------------------

Not applicable.

|ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE
|------- | ---------------------------------------

Not applicable.

|ITEM 3. | KEY INFORMATION
|------- | ---------------

3.A        
Selected Financial Data

The summary consolidated financial information set forth below
should be read in conjunction with, and is qualified in its entirety by
reference to, our consolidated financial statements as of January 31, 2011 and
2010 and for the years ended January 31, 2011, 2010 and 2009, together with the
notes thereto, which appear elsewhere in this annual report. Our consolidated
financial statements as of and for the year ended January 31, 2011, 2010 and
2009 have been audited by Smythe Ratcliffe LLP, Chartered Accountants.

The financial data set forth in this Annual Report is expressed
in Canadian dollars (Cdn$ or CAD) unless otherwise noted as reported
in US dollars (US$ or USD). During our 2010 fiscal year, the Company
changed its reporting currency from the United States dollar to the Canadian
dollar. The Company believes this change is consistent with its change of
business to the resource sector completed on April 24, 2008 and its continuance
of jurisdiction from Wyoming, United States, to British Columbia, Canada,
completed August 21, 2006. The 2009 and 2008 fiscal years have been restated
accordingly as they have been presented for comparative purposes in this Annual
Report. The Company has omitted the presentation of selected financial data for
its 2007 fiscal year because such financial data cannot be restated in Canadian
dollars without unreasonable effort or expense. The Companys consolidated
financial information is presented in accordance with Canadian generally
accepted accounting principles (Canadian GAAP), which are different in some
respects from U.S. generally accepted accounting principles (U.S. GAAP).
Reference is made to Note 15 of the consolidated financial statements for a
discussion of the material differences between Canadian GAAP and U.S. GAAP - See
Item 17 Financial Statements.

8

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Fiscal Years
      Ended January 312011 Cdn $
    2010 Cdn $
    2009 Cdn $
    2008 Cdn $Revenue
    Nil
    Nil
    Nil
    NilLoss from operations
    (4,261,800)
    (3,373,452)
    (3,113,302)
    (327,228)Loss from continuing operations
    (3,996,832)
    (3,605,068)
    (2,646,137)
    (281,832)Net Loss
    (3,996,832)
    (3,605,068)
    (2,646,137)
    (281,832)Net Loss from operations per share
    (0.06)
    (0.07)
    (0.12)
    (0.06)Loss from continuing operations per
      share
    (0.06)
    (0.07)
    (0.11)
    (0.05)Diluted net loss per share
    (0.06)
    (0.07)
    (0.11)
    (0.05)


The weighted average outstanding shares used to calculate
income (loss) per share for the following fiscal periods are: 69,372,422 for the
year ended January 31, 2011; 49,819,536 for the year ended January 31, 2010;
24,859,595 for the year ended January 31, 2009; and 5,399,532 for the fiscal
year ended January 31, 2008.

To date, the Company has not generated any cash flow from its
activities to fund ongoing activities and cash commitments. The Company has
financed operations principally through the sale of equity securities. The
Company has sufficient working capital to meet current cash requirements for the
next eighteen months.

Balance Sheet Data:

Fiscal Years
      Ended January 312011 Cdn $
    2010 Cdn $
    2009 Cdn $
    2008 Cdn $Total Assets
    41,868,757
    40,384,823
    19,522,698
    6,395,149Total Liabilities
    542,783
    387,706
    421,976
    241,269Share capital
    53,339,099
    49,160,012
    27,430,598
    13,756,448Shareholders Equity (Deficit)
    41,325,974
    39,997,117
    19,100,722
    6,153,880


The above financial information is presented in accordance with
Canadian GAAP, which are different in some respects from U.S. GAAP, as noted
below:

Fiscal Years
      Ended January 312011 Cdn $
    2010 Cdn $
    2009 Cdn $
    2008 Cdn $Consolidated Balance SheetsTotal assets per Canadian GAAP
    41,868,757
    40,384,823
    19,522,698
    6,395,149Expenditures on mineral property interests
      expensed under U.S. GAAP
    (20,700,349)
    (10,959,085)
    (6,859,160)
    (474,198)Total assets per U.S. GAAP
    21,168,408
    29,425,738
    12,663,538
    5,920,951Total liabilities per Canadian GAAP and
      U.S. GAAP
    542,783
    387,706
    421,976
    241,269Total shareholders equity under Canadian
      GAAP
    41,325,974
    39,997,117
    19,100,722
    6,153,880Expenditures on mineral property interests
      expensed under U.S. GAAP
    (20,700,349)
    (10,959,085)
    (6,859,160)
    (474,198)Total shareholders equity per U.S. GAAP
    20,625,625
    29,038,032
    12,241,562
    5,679,682Total liabilities and shareholders equity
      per U.S. GAAP
    21,168,408
    29,425,738
    12,663,538
    5,920,951


9

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Fiscal Years
      Ended January 312011 Cdn $
    2010 Cdn $
    2009 Cdn $
    2008 Cdn $Consolidated Statement of OperationsNet Loss per Canadian GAAP
    (3,996,832)
    (3,605,068)
    (2,646,137)
    (281,832)Expenditures on mineral property interests
      expensed under U.S. GAAP
    (9,741,264)
    (4,099,925)
    (6,384,962)
    (474,198)Net loss per U.S. GAAP
    (13,738,096)
    (7,704,993)
    (9,031,099)
    (756,030)Net loss per share per U.S. GAAP
    (0.20)
    (0.15)
    (0.36)
    (0.14)


Exchange Rate Data

The Company maintains its accounts in Canadian dollars. The
audited financial statements are prepared in accordance with Canadian GAAP.

The following table sets forth, for the periods indicated,
certain exchange rates based on the noon buying rate in Canadian dollars as
reported by the Bank of Canada. On July 25, 2011, the exchange rate was USD 1.00
per CAD 0.95. The high and low exchange rates (CAD per USD 1.00) for each month
during the previous six months were as follows:

High
    LowJuly 2011
    0.9668
    0.9451June, 2011
    0.9861
    0.9643May, 2011
    0.9809
    0.9490April, 2011
    0.9691
    0.9486March, 2011
    0.9918
    0.9686February, 2011
    0.9955
    0.9739


The average, year end, high and low exchange rates (CAD per USD
1.00) for the five most recent financial years were as follows:

For Years Ended
      January 312011
    2010
    2009
    2008
    2007Average Rate during Year (1)
    1.0260
    1.1272
    1.0849
    1.0603
    1.1358Year End
    1.0022
    1.0693
    1.2265
    1.0038
    1.1770High
    1.0778
    1.2991
    1.2935
    1.1855
    1.1827Low
    0.9862
    1.0234
    0.9765
    0.9215
    1.0983


| | (1) | The average exchange rate is based on the average of the
      noon buying rates (CAD per USD 1.00) in Canadian dollars as reported by
      the Bank of Canada on the last day of each month during such
    periods.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. **B** | Capitalization and
  Indebtedness
|-------- | ---------------------------------

Not applicable.

|3. **C** | Reasons for the Offer and Use of
      Proceeds
|-------- | -----------------------------------------------

Not applicable.

|3. **D** | Risk Factors
|-------- | ------------

The Company, and thus the securities of the Company, should be
considered a speculative investment and investors should carefully consider all
of the information disclosed in this Annual Report prior to making an investment
in the Company. In addition to the other information presented in this Annual
Report, the following risk factors should be given special consideration when
evaluating an investment in any of the Company's securities.

10

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Our independent auditors have expressed doubts about our
ability to continue as a going concern.

The report of our independent auditors on our financial
statements for the year ended January 31, 2011 includes a note stating that our
ability to continue as a going concern is dependent upon our ability to generate
profitable operations in the future and/or to obtain the necessary financing to
meet our obligations and repay our liabilities arising from normal business
operations when they come due. The outcome of these matters cannot be predicted
with any certainty, at this time. We have historically satisfied our capital
needs primarily by issuing equity securities. If we are unable to continue to
fund our operations through the issuance of equity securities we would have to
cease operations.

Risks Associated with Exploration

The Company has no known reserves on its properties.

The Company has no mineral producing properties and has never
generated any revenue from its operations. The majority of exploration projects
do not result in the discovery of commercially mineable deposits of ore. Only
those mineral deposits that the Company can economically and legally extract or
produce, based on a comprehensive evaluation of cost, grade, recovery and other
factors, are considered resources or reserves. The Company has no known
bodies of commercial ore or economic deposits and has not defined or delineated
any proven or probable reserves or resources on any of its properties. The
Company may never discover any gold, silver or other minerals from mineralized
material in commercially exploitable quantities and any identified mineralized
deposit may never qualify as a commercially mineable (or viable) reserve. In
addition, the Company is in its early stages of exploration and substantial
additional work will be required in order to determine if any economic deposits
exist on the Companys properties. Substantial expenditures are required to
establish ore reserves through drilling and metallurgical and other testing
techniques. No assurance can be given that any level of recovery of the ore
reserves will be realized or that any identified mineral deposit will ever
qualify as a commercial mineable ore body which can be legally and economically
exploited.

The Company faces risks related to exploration and
development, if warranted, of its properties.

The level of profitability of the Company, if any, in future
years will depend to a great degree on gold and silver prices and whether any of
the Companys exploration stage properties can be brought into production. The
exploration for and development of mineral deposits involves significant risks.
It is impossible to ensure that the current and future exploration programs
and/or feasibility studies, if any, on the Companys existing mineral properties
will establish reserves. Whether an ore body will be commercially viable depends
on a number of factors, including, but not limited to: the particular attributes
of the deposit, such as size, grade and proximity to infrastructure; metal
prices, which cannot be predicted and which have been highly volatile in the
past; mining, processing and transportation costs; perceived levels of political
risk and the willingness of lenders and investors to provide project financing;
labour costs and possible labour strikes; and governmental regulations,
including, without limitation, regulations relating to prices, taxes, royalties,
land tenure, land use, importing and exporting materials, foreign exchange,
environmental protection, employment, worker safety, transportation, and
reclamation and closure obligations.

The Company is also subject to the risks normally encountered
in the mining industry, such as:

- unusual or unexpected geological formations;
- fires, floods, earthquakes, volcanic eruptions, and other natural
  disasters;
- power outages and water shortages;
- cave-ins, landslides, and other similar mining hazards;
- labour disruptions and labour disputes;
- inability to obtain suitable or adequate machinery, equipment, or labour;
- liability for pollution or other hazards; and

11

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- other known and unknown risks involved in the operation of mines and the
  conduct of exploration.

The development of mineral properties is affected by many
factors, including, but not limited to: the cost of operations, variations in
the grade of ore, fluctuations in metal markets, costs of extraction and
processing equipment, availability of equipment and labour, labour costs and
possible labour strikes, and government regulations, including without
limitation, regulations relating to taxes, royalties, allowable production,
importing and exporting of minerals, foreign exchange, employment, worker
safety, transportation, and environmental protection. Depending on the price of
minerals, the Company may determine that it is impractical to commence, or, if
commenced, continue, commercial production. Such a decision would negatively
affect the Companys profits and may affect the value of its equity.

The Company relies on a limited number of
properties.

The Companys only property of interest is currently the
Cordillera del Condor property located in Peru. As a result, unless the Company
acquires additional property interests, any adverse developments affecting this
property could have a material adverse effect upon our business and would
materially and adversely affect our potential mineral resource production,
profitability, financial performance and results of operations.

The Companys properties may be subject to unregistered
agreements, transfers or claims and title may be adversely affected by
undetected defects or aboriginal claims.

The Company has not conducted a legal survey of the boundaries
of any of its properties, and therefore, in accordance with the laws of the
jurisdictions in which these properties are situated, their existence and area
could be in doubt. The Company has obtained only limited formal title reports on
some of its properties and title to all of its properties may be in doubt. The
Companys properties may be subject to unregistered agreements, transfers or
claims and title may be adversely affected by such undetected defects. If title
is disputed, the Company may have to defend its ownership through the courts,
and the Company cannot guarantee that a favourable judgment will be obtained.
Any litigation could be extremely costly to the Company and could limit the
available capital for use in other exploration and development activities. The
Company may require additional financing to cover the costs of any litigation
necessary to establish title. In the event of an adverse judgment with respect
to any of its mineral properties, the Company could lose its property rights and
may be required to cease its exploration and development activities on that
property. Mining operations may also be affected by claims of native peoples,
any of which could have the effect of reducing or preventing the Company from
exploiting any possible mineral reserves on its properties.

Ownership, exploration and development of the Companys
properties are subject to government approvals and regulations.

All of the mineral property interests held by the Company are
located in Peru and held through option agreements that can only be exercised by
the Company upon receipt of a Supreme Decree from the Peruvian Government.
Peruvian law requires a Supreme Decree with respect to the Companys properties
because the Company is a foreign entity and its properties are located within 50
kilometres of the Peruvian national border. The Company has applied for, but not
been issued, the Supreme Decree, and there can be no guarantee that the Supreme
Decree will be issued.

The individuals and entities that granted the Company options
pursuant to the option agreements have obtained mining concessions with respect
to the properties covered by each option agreement. There can be no guarantee
that the individuals and entities that granted the Company options will be able
to maintain these mining concessions in good standing, nor is there any
guarantee that the Company will be able to obtain and maintain these mining
concessions.

Peruvian law also requires mining permits and licenses in order
to undertake exploration activities or commence construction or operation of
mine facilities on the Companys properties. An exploration permit is

12

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required when the proposed exploration may have a significant
impact on the environment, people or historical sites. The Company has required
and anticipates that it will continue to require exploration permits in order to
undertake exploration activities on its properties.

There can be no guarantee that the Company will be able to
obtain the Supreme Decree and all necessary permits and approvals from the
Peruvian Government or that such approvals, if obtained, will not later be
revoked or amended in a manner adverse to the Company. If the Company is unable
to obtain the Supreme Decree, it will not be able to exercise the options set
forth in its option agreements, and it will be prohibited from owning the
underlying properties. If the Company or its optioners are unable to obtain and
maintain other required approvals, permits and licenses, the Company may be
unable to undertake its intended exploration and development activities on such
properties. Any of these developments could have a material adverse effect on
the Company, and could require the Company to cease exploration and development
activities on all or a portion of its properties, or abandon or dispose of all
or a portion of its properties.

Mining operations are subject to a wide range of additional
government regulations including, but not limited to: restrictions on production
and production methods, price controls, tax increases, expropriation of
property, import and export control, employment laws, worker safety regulations,
environmental protection, protection of agricultural territory or changes in
conditions under which minerals may be marketed. Any failure to comply with such
regulations, adverse changes in such regulations or shifts in political
conditions could have a material adverse effect on the Company and its business,
or if significant enough, could make it impossible to continue to operate in the
country.

Mineral operations are subject to market forces outside of
the Companys control.

The marketability of minerals is affected by numerous factors
beyond the Companys control. These factors include, but are not limited to,
market fluctuations, government regulations relating to prices, taxes,
royalties, allowable production, import restrictions applicable to equipment and
supplies, export controls and supply and demand. One or more of these risk
elements could have an impact on costs of an operation and, if significant
enough, reduce the profitability of the operation and threaten its
continuation.

The mining industry is highly competitive.

The business of the acquisition, exploration, and development
of mineral properties is intensely competitive. The Company will be required to
compete, in the future, directly with other corporations that have better access
to potential mineral resources, more developed infrastructure, more available
capital, better access to necessary financing, and more knowledgeable and
available employees than the Company. The Company may encounter competition in
acquiring mineral properties, hiring mining professionals or obtaining mining
resources, such as manpower, drill rigs, and other mining equipment. Such
corporations could outbid the Company for potential projects or produce minerals
at lower costs. Increased competition could also affect the Companys ability to
attract necessary capital funding or acquire suitable producing properties or
prospects for mineral exploration in the future.

Mining and mineral exploration have substantial operational
risks which are uninsured or uninsurable risks.

Exploration, development and mining operations involve various
hazards, including environmental hazards, industrial accidents, metallurgical
and other processing problems, unusual or unexpected rock formations, structural
cave-ins or slides, flooding, fires, metal losses and periodic interruptions due
to inclement or hazardous weather conditions. These risks could result in damage
to or destruction of mineral properties, facilities or other property, personal
injury, environmental damage, delays in operations, increased cost of
operations, monetary losses and possible legal liability. The Company may not be
able to obtain insurance to cover these risks at economically feasible premiums
or at all. The Company may elect not to insure where premium costs are
disproportionate to its perception of the relevant risks. The payment of such
insurance premiums and of such liabilities would reduce the funds available for
exploration and production activities.

13

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The prices of precious and base minerals and metals
fluctuate widely and may not produce enough revenue to cover the
Companys costs.

Even if commercial quantities of mineral deposits are
discovered, there is no guarantee that a profitable market will exist for the
sale of the metals produced. The Companys long-term viability and profitability
depend, in large part, upon the market price of metals which have experienced
significant movement over short periods of time, and are affected by numerous
factors beyond the Companys control, including international economic and
political trends, expectations of inflation, currency exchange fluctuations,
interest rates and global or regional consumption patterns, speculative
activities and increased production due to improved mining and production
methods. The supply of and demand for metals are affected by various factors,
including political events, economic conditions and production costs in major
producing regions. There can be no assurance that the price of any minerals
produced from the Companys properties will be such that any such deposits can
be mined at a profit.

Surface Rights and Access

Although the Company acquires the rights to some or all of the
minerals in the ground subject to the tenures that it acquires, or has a right
to acquire, in most cases it does not thereby acquire any rights to, or
ownership of, the surface to the areas covered by its mineral tenures. In such
cases, applicable mining laws usually provide for rights of access to the
surface for the purpose of carrying on mining activities, however, the
enforcement of such rights can be costly and time consuming. In areas where
there are no existing surface rights holders, this does not usually cause a
problem, as there are no impediments to surface access. However, in areas where
there are local populations or land owners (as with many of the Companys
properties), it is necessary, as a practical matter, to negotiate surface
access. There can be no guarantee that, despite having the right at law to
access the surface and carry on mining activities, the Company will be able to
negotiate a satisfactory agreement with any such existing landowners/occupiers
for such access, and therefore it may be unable to carry out mining activities.
In addition, in circumstances where such access is denied, or no agreement can
be reached, the Company may need to rely on the assistance of local officials or
the courts in such jurisdiction. The Company has not yet been successful in
negotiating any formal surface access agreements.

Environmental Regulatory Requirements

In connection with its operations and properties, the Company
is subject to extensive and changing environmental legislation, regulation and
actions. The Company cannot predict what environmental legislation, regulation
or policy will be enacted or adopted in the future or how future laws and
regulations will be administered or interpreted. The recent trend in
environmental legislation and regulation, generally, is toward stricter
standards and this trend is likely to continue in the future. This recent trend
includes, without limitation, laws and regulations relating to air and water
quality, mine reclamation, waste handling and disposal, the protection of
certain species and the preservation of certain lands. These regulations may
require the acquisition of permits or other authorizations for certain
activities. These laws and regulations may also limit or prohibit activities on
certain lands. Compliance with more stringent laws and regulations, as well as
potentially more vigorous enforcement policies or stricter interpretation of
existing laws, may necessitate significant capital outlays, may materially
affect the Companys results of operations and business, or may cause material
changes or delays in the Companys intended activities.

The Companys operations may require additional analysis in the
future including environmental and social impact and other related studies.
Certain activities require the submission and approval of environmental impact
assessments. Environmental assessments of proposed projects carry a heightened
degree of responsibility for companies and its directors, officers, and
employees. There can be no assurance that the Company will be able to obtain or
maintain all necessary permits that may be required to continue its operation or
its exploration of its properties or, if feasible, to commence development,
construction or operation of mining facilities at such properties on terms which
enable operations to be conducted at economically justifiable costs.

14

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Other Regulatory Requirements

The Companys activities are subject to extensive regulations
governing various matters, including management and use of toxic substances and
explosives, management of natural resources, exploration, development of mines,
production and post-closure reclamation, exports, price controls, taxation,
regulations concerning business dealings with indigenous peoples, labour
standards on occupational health and safety, including mine safety, and historic
and cultural preservation.

Failure to comply with applicable laws and regulations may
result in civil or criminal fines or penalties, enforcement actions thereunder,
including orders issued by regulatory or judicial authorities causing operations
to cease or be curtailed, and may include corrective measures requiring capital
expenditures, installation of additional equipment, or remedial actions, any of
which could result in the Company incurring significant expenditures. The
Company may also be required to compensate those suffering loss or damage by
reason of a breach of such laws, regulations or permitting requirements. It is
also possible that future laws and regulations, or more stringent enforcement of
current laws and regulations by governmental authorities, could cause additional
expense, capital expenditures, restrictions on or suspension of the Companys
operations and delays in the exploration and development of its mineral
properties.

Financing Risks

The Company has a history of losses and no revenues.

The Company is a mineral exploration company without operations
and has historically incurred losses. To date, the Company has not recorded any
revenues from its operations nor has the Company commenced commercial production
on any of its properties. The Company does not expect to receive revenues from
operations in the foreseeable future, if at all. The Company expects to continue
to incur losses unless and until such time as properties enter into commercial
production and generate sufficient revenues to fund its continuing
operations.

Until such time, the Company will be dependent upon future
financing in order to meet its capital requirements and continue its plan of
operations. Although the Company has raised additional private placement
financing in prior fiscal years, these funds may not be sufficient to undertake
all planned acquisition, exploration, and development programs of the Company.
The Company cannot guarantee that it will obtain necessary financing. The
development of the Companys properties will require the commitment of
substantial resources to conduct the time-consuming exploration and development
of properties. The amounts and timing of expenditures will depend on the
progress of on-going exploration, assessment and development, the results of
consultants analyses and recommendations, the rate at which operating losses
are incurred, the execution of any joint venture agreements with strategic
partners, the Companys acquisition of additional properties and other factors,
many of which are beyond the Companys control. The Company may never generate
any revenues or achieve profitability.

The Company may require additional capital to meet its
capital requirements for future fiscal years.

The Company has raised additional private placement financing
in prior fiscal years, but may not have sufficient financial resources to
undertake all of its planned acquisition, exploration and development programs.
In the future, the Companys ability to continue its exploration, assessment,
and development activities depends in part on the Companys ability to commence
operations and generate revenues or to obtain financing through joint ventures,
debt financing, equity financing, production sharing arrangements or some
combination of these or other means. There can be no assurance that any such
arrangements will be concluded and the associated funding obtained. There can be
no assurance that the Company will commence operations and generate sufficient
revenues to meet its obligations as they become due or will obtain necessary
financing on acceptable terms, if at all. The failure of the Company to meet its
on-going obligations on a timely basis could result in the loss or substantial
dilution of the Companys interests (as

15

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existing or as proposed to be acquired) in its properties. In
addition, should the Company incur significant losses in future periods, it may
be unable to continue as a going concern, and realization of assets and
settlement of liabilities in other than the normal course of business may be at
amounts significantly different from those in the financial statements included
in this Annual Report.

Currency fluctuation may affect the Companys operations and
financial stability.

While engaged in the business of exploiting mineral properties,
the Companys operations outside Canada make it subject to foreign currency
fluctuation and such fluctuations may adversely affect the Companys financial
positions and results. Such fluctuations are outside the control of the Company
and may be largely unpredictable. Management may not take any steps to address
foreign currency fluctuations that will eliminate all adverse effects and,
accordingly, the Company may suffer losses due to adverse foreign currency
fluctuations.

Risks Relating to an Investment in the Securities of the
Company

The Company is dependent upon key management.

The success of the Companys operations will depend upon
numerous factors, many of which are beyond the Companys control, including (i)
the ability to design and carry out appropriate exploration programs on its
mineral properties; (ii) the ability to produce minerals from any mineral
deposits that may be located on its properties; (iii) the ability to attract and
retain additional key personnel in exploration, marketing, mine development and
finance; and (iv) the ability and the operating resources to develop and
maintain the properties held by the Company. These and other factors will
require the use of outside suppliers as well as the talents and efforts of the
Company and its consultants and employees. There can be no assurance of success
with any or all of these factors on which the Companys operations will depend,
or that the Company will be successful in finding and retaining the necessary
employees, personnel and/or consultants in order to be able to successfully
carry out such activities.

The Companys growth, if any, will require new personnel,
which it will be required to recruit, hire, train and retain.

The Company expects significant growth in the number of
employees required if it determines that a mine at any of its properties is
commercially feasible, it is able to raise sufficient funding and it elects to
develop the property. This growth will place substantial demands on the Company
and its management, and the Companys ability to assimilate new personnel will
be critical to its performance. The Company will be required to recruit
additional personnel and to train, motivate and manage employees. It will also
have to adopt and implement new systems in all aspects of its operations. This
will be particularly critical if the Company decides not to use contract miners
at any of its properties. There is no assurance that the Company will be able to
recruit the personnel required to execute its programs or to manage these
changes successfully.

The Company has limited experience with development stage
mining operations.

The Company has limited experience in placing resource
properties into production, and its ability to do so will be dependent upon
using the services of appropriately experienced personnel or entering into
agreements with other major resource companies that can provide such expertise.
There can be no assurance that the Company will have available the necessary
expertise when and if it places a property into production.

16

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Certain of the Companys directors and officers are also
directors and/or officers and/or shareholders of potential competitors of
the Company, giving rise to potential conflicts of interest.

Several of the Companys directors and officers are also
directors, officers or shareholders of other companies. Some of the directors
and officers of the Company are engaged and will continue to be engaged in the
search for additional business opportunities on behalf of other corporations,
and situations may arise where these directors and officers will be in direct
competition with the Company. Such associations may give rise to conflicts of
interest from time to time. Such a conflict poses the risk that the Company may
enter into a transaction on terms which could place the Company in a worse
position than if no conflict existed. Conflicts, if any, will be dealt with in
accordance with the relevant provisions of the Business Corporations Act
(British Columbia). The Board has resolved that any transaction either at the
Company level or of a subsidiary level, with entities having directors, officers
or significant shareholders in common, must be approved by disinterested Board
members. The Companys directors are required by law to act honestly and in good
faith with a view to the best interests of the Company and to disclose any
interest which they many have in any project or opportunity in respect of which
the Company is proposing to enter into a transaction.

Stock market price and volume volatility.

The market for the Companys common shares (Common Shares)
may be highly volatile for reasons both related to the performance of the
Company or events pertaining to the industry (i.e., mineral price
fluctuation/high production costs/accidents) as well as factors unrelated to the
Company or its industry. In particular, market demand for products incorporating
minerals in their manufacture fluctuates from one business cycle to the next,
resulting in change of demand for the mineral and an attendant change in the
price for the mineral. The Common Shares can be expected to be subject to
volatility in both price and volume arising from market expectations,
announcements and press releases regarding the Companys business, and changes
in estimates and evaluations by securities analysts or other events or factors.
In recent years the securities markets in the United States and Canada have
experienced a high level of price and volume volatility, and the market price of
securities of many companies, particularly small-capitalization companies such
as the Company, have experienced wide fluctuations that have not necessarily
been related to the operations, performances, underlying asset values, or
prospects of such companies. For these reasons, the price of the Common Shares
can also be expected to be subject to volatility resulting from purely market
forces over which the Company has no control. Further, despite the existence of
a market for trading the Common Shares in Canada and the United States,
stockholders of the Company may be unable to sell significant quantities of
Common Shares in the public trading markets without a significant reduction in
the price of the stock.

Dilution through the granting of options.

Because the success of the Company is highly dependent upon the
performance of its directors, officers and consultants, the Company has granted,
and will in the future grant, to some or all of its directors, officers and
consultants, options to purchase its Common Shares as non-cash incentives. Those
options may be granted at exercise prices below those for the Common Shares
prevailing in the public trading market at the time or may be granted at
exercise prices equal to market prices at times when the public market is
depressed. To the extent that significant numbers of such options may be granted
and exercised, the interests of the other stockholders of the Company may be
diluted.

The Company is likely a "passive foreign investment company"
which will likely have adverse U.S. federal income tax consequences for
U.S. shareholders.

U.S. investors in our Common Shares should be aware that the
Company believes it constituted a passive foreign investment company (PFIC)
during the tax year ended January 31, 2011, and may be a PFIC in the current and
future tax years. If the Company is a PFIC for any year during a U.S.
shareholders holding period, then such U.S. shareholder generally will be
required to treat any gain realized upon a disposition of Common Shares, or any
so-called excess distribution received on its Common Shares, as ordinary
income,

17

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and to pay an interest charge on a portion of such gain or
distributions, unless the shareholder makes a timely and effective "qualified
electing fund" election (QEF Election) or a "mark-to-market" election with
respect to the Common Shares. A U.S. shareholder who makes a QEF Election
generally must report on a current basis its share of the Company's net capital
gain and ordinary earnings for any year in which the Company is a PFIC, whether
or not the Company distributes any amounts to its shareholders. However, U.S.
shareholders should be aware that there can be no assurance that we will satisfy
record keeping requirements that apply to a qualified electing fund, or that we
will supply U.S. shareholders with information that such U.S. shareholders
require to report under the QEF Election rules, in the event that we are a PFIC
and a U.S. shareholder wishes to make a QEF Election. Thus, U.S. shareholders
may not be able to make a QEF Election with respect to their Common Shares. A
U.S. shareholder who makes the mark-to-market election generally must include as
ordinary income each year the excess of the fair market value of the Common
Shares over the taxpayers basis therein. This paragraph is qualified in its
entirety by the discussion below under the heading Certain United States
Federal Income Tax Considerations. Each U.S. shareholder should consult its own
tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S.
federal estate and gift, U.S. state and local, and foreign tax consequences of
the PFIC rules and the acquisition, ownership, and disposition of our Common
Shares.

Broker-Dealers may be discouraged from effecting
transactions in the Common Shares because they are considered Penny
Stocks and are subject to the Penny Stock Rules.

Rules 15g-1 through 15g-9 promulgated under the Securities
Exchange Act of 1934, as amended (the Exchange Act) impose sales practice and
disclosure requirements on certain broker-dealers who engage in certain
transactions involving a "penny stock". Subject to certain exceptions, a penny
stock generally includes any equity security that has a market price of less
than US$5.00 per share. The market price of the Common Shares over the year
ended January 31, 2011 and through July 25, 2011 was at all times below US$5.00
and the Common Shares are deemed penny stock for the purposes of the Exchange
Act. The additional sales practice and disclosure requirements imposed upon
broker-dealers may discourage broker-dealers from effecting transactions in the
Common Shares, which could severely limit the market liquidity of the Common
Shares and impede the sale of Common Shares in the secondary market.

Under the penny stock regulations, a broker-dealer selling
penny stock to anyone other than an established customer or accredited
investor (generally, an individual with net worth in excess of US$1,000,000 or
an annual income exceeding US$200,000, or US$300,000 together with his or her
spouse) must make a special suitability determination for the purchaser and must
receive the purchaser's written consent to the transaction prior to sale, unless
the broker-dealer or the transaction is otherwise exempt.

In addition, the penny stock regulations require the
broker-dealer to deliver, prior to any transaction involving a penny stock, a
disclosure schedule prepared by the Securities and Exchange Commission relating
to the penny stock market, unless the broker-dealer or the transaction is
otherwise exempt. A broker-dealer is also required to disclose commissions
payable to the broker-dealer and the registered representative and current
quotations for the securities. Finally, a broker-dealer is required to send
monthly statements disclosing recent price information with respect to the penny
stock held in a customer's account and information with respect to the limited
market in penny stocks.

The Company does not intend to pay cash dividends and there
is no assurance that it will ever declare cash dividends.

The Company intends to retain any future earnings to finance
its business and operations and any future growth. Therefore, the Company does
not anticipate paying any cash dividends in the foreseeable future.

18

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|ITEM 4. | INFORMATION ON THE COMPANY
|------- | --------------------------

|4. **A** | History and Development of the
  Company
|-------- | ----------------------------------------

The Company was incorporated under the laws of the Province of
British Columbia on May 26, 1981 under the name "Force Energy Ltd.". On
September 10, 1981, the Company changed its name to "Force Resources
Ltd.". On December 1, 1994, the Company subsequently changed its name to
"Force Technologies Inc." in connection with a consolidation of its share
capital on a five old shares for one new share basis. On October 1, 1997, the
Company changed its name to "Glassmaster Industries Inc." in connection
with a split of its share capital on a one old share for two new shares
basis.

Effective April 24, 1998, the Company continued its
jurisdiction of registration from British Columbia to the State of Wyoming by
filing a Certificate of Registration and Articles of Continuance in the office
of the Secretary of State of Wyoming.

On January 19, 2000, the Company changed its name to
"Interlink Systems Inc." in connection with a consolidation of its share
capital on a ten old shares for one new share basis. On August 14, 2000, the
Company changed its name to "iQuest Networks Inc." in connection with the
acquisition of its interest in iNoize.com Software Ltd. (a company involved in
the development of music transfer software). The Company also concurrently
effected a consolidation of its share capital on a one new share for two old
shares basis.

On October 28, 2003, the Company ceased operations as a company
involved in the development of music transfer software. Also effective October
28, 2003, the Companys shares were consolidated on the basis of one new share
for every four old shares, and the authorized share capital was subsequently
increased from 25,000,000 common shares to 100,000,000 common shares. In
connection with the share consolidation, the Company changed its name to
"Quest Ventures Inc.".

At a shareholders meeting held on June 22, 2004, the Companys
shareholders approved a change of our primary business focus to other business
opportunities, including the acquisition, exploration and development of natural
resources properties. At the Companys annual meeting held on July 19, 2005, the
Companys shareholders approved a consolidation of our shares and concurrent
name change. Effective April 24, 2006, the Companys shares were consolidated on
the basis of one new share for each two old shares and the Company also changed
its name to Dorato Resources Inc..

Effective August 21, 2006, the Company continued its
jurisdiction of incorporation into British Columbia from Wyoming. The Company is
governed by the Business Corporations Act (British Columbia) (BCBCA).

On October 18, 2007, the Company commenced its present business
of acquiring, exploring and developing natural resource properties by entering
into five agreements with several Peruvian nationals and a Peruvian company to
acquire options to earn a 100% interest in 70 mineral claims located in Peru and
to acquire certain mining concessions. On April 24, 2008, the TSX Venture
Exchange (the TSX.V) accepted for filing the documentation related to
these option contracts, and the Companys listing was transferred from the NEX
to the TSX.V effective April 25, 2008.

The Companys head office is located at #2300  1177 West
Hastings Street, Vancouver, British Columbia, Canada, the phone number is (604)
638-5817 and the fax number is (604) 408-7499. The Companys registered and
records office and address for service is #2600 - 595 Burrard Street, Vancouver,
British Columbia, Canada.

19

---

|4. **B** | Business Overview
|-------- | -----------------

The Company is a mineral exploration company engaged in the
acquisition, exploration and development of mineral properties. The Company
currently has rights to acquire interests in a number of mineral properties in
Peru. The Company is in the exploration stage as its properties have not yet
reached commercial production and none of its properties are beyond the
preliminary exploration stage. There are currently no identified mineral
resources or mineral reserves on any of the Companys mineral properties.

Option Agreements

On October 18, 2007 the Company entered into five agreements to
acquire options to earn a 100% interest in mineral claims located in Peru and to
acquire certain mining concessions. During the fiscal year ended January 31,
2009, the Company re-negotiated terms on three of the five option agreements.
Subsequent to the year ended January 31, 2009, the Company entered into three
new assignment/option agreements to earn a 100% interest in additional mineral
claims located in Peru. The mineral claims subject to these eight options
agreements (the Mineral Claims) comprise the Companys Cordillera del
Condor Copper - Gold Project. Peruvian government approval, including a Supreme
Decree, is required for the exercise of these option agreements, and the Company
is in the process of seeking such approval from the Peruvian government. Each of
these option agreements is described below:

|1. | Vicmarama Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | We have fulfilled the commercial terms of the option to
      earn 100% interest in the Vicmarama Property in consideration for 750,000
      common shares. 250,000 shares were issued on TSX.V approval and an
      additional 250,000 shares were issued on April 16, 2009 and the remaining
      250,000 shares were issued on November 17, 2009. We also agreed to pay
      US$250,000 as consideration for the Vicmarama Property and the final
      instalment of US$50,000 was paid on April 24, 2009. Although the
      obligations to exercise the option under this agreement have been met, the
      option has not yet been exercised. The exercise of the option is also
      subject to receipt of the Supreme Decree to be issued by the Peruvian
      Government. The claims are included in the Central Zone, North Zone and
      South Zone.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2. | Maravilla Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | We have fulfilled the commercial terms of the option to
      earn 100% interest in the Maravilla Property in consideration for
      1,500,000 common shares. This agreement was subsequently amended to
      1,250,000 shares, which have been issued. We also paid US$300,000 as
      consideration for the Maravilla Property. Although the obligations to
      exercise the option under this agreement have been met, the option has not
      yet been exercised. The exercise of the option is also subject to receipt
      of the Supreme Decree to be issued by the Peruvian Government. The claims
      are included in the Central Zone, North Zone and South Zone.                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3. | Lahaina 1 Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | We have fulfilled the commercial terms of the option to
      earn a 100% interest in the Lahaina 1 Property in consideration for
      3,400,000 common shares. We also paid US$270,000 as additional
      consideration for the property. Although the obligations to exercise the
      option under this agreement have been met, the option has not yet been
      exercised. The exercise of the option is also subject to receipt of the
      Supreme Decree to be issued by the Peruvian Government. The claims are
      included in the Central Zone and North Zone.                                                                                                                                                                                                                                                                                        

20

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|4. | Lahaina 2 Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | We have fulfilled the commercial terms of the option to
      earn 100% interest in the Lahaina 2 Property in consideration for
      1,500,000 common shares, of which 250,000 shares were issued upon TSX.V
      approval and an additional 500,000 shares were issued on April 16, 2009.
      The remaining 750,000 shares were issued on November 17, 2009. We also
      agreed to pay US$400,000 as additional consideration for the Lahaina 2
      Property, which has been paid in full. Although the obligations to
      exercise the option under this agreement have been met, the option has not
      yet been exercised. The exercise of the option is also subject to receipt
      of the Supreme Decree to be issued by the Peruvian Government. The claims
      are included in the North Zone and South Zone.                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|5. | Afrodita Properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Dorato Peru S.A.C., a wholly-owned subsidiary of Dorato
      Resources Inc., also entered into an agreement with all of the
      shareholders of Compania Minera Afrodita S.A.C. (Afrodita), a
      company registered in Lima, Peru which owns certain mining concessions in
      the area of the Mineral Claims. Under the terms of the agreement, we were
      granted the option to purchase all of the shares of Afrodita in return for
      the issuance of 3,000,000 shares and the payment of US$8,000,000 payable
      over 36 months. 3,000,000 shares were issued and US$2,000,000 was paid
      upon TSX.V approval. These concessions are all within the Central
    Zone.                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | In October 2008, the terms of the Afrodita option
      agreement were amended. Under the amended terms, the Company agreed to pay
      an additional US$1,000,000 (for a total cash consideration of
      US$3,000,000) and issue an additional 5,600,000 common shares (for total
      share consideration of 8,600,000 shares). An additional 4,700,000 shares
      were issued on January 2, 2009 and issuance of the final 900,000 shares
      was completed on April 16, 2009. Payments of US$250,000 were made on
      January 16, 2009, April 16, 2009 and June 15, 2009. The final payment of
      US$250,000 was made on October 14, 2009. Although the obligations to
      exercise the option under this agreement have been met, the option has not
      yet been exercised. The exercise of the option is also subject to receipt
      of the Supreme Decree to be issued by the Peruvian Government.                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|6. | David Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | On June 5, 2009, the Company entered into an
      assignment/option agreement to earn a 100% interest in the David Property.
      In order to earn a 100% interest we agreed to pay US$66,031 plus an
      additional consideration of US$5,000 on exercise of the option/assignment,
      which must occur upon the Peruvian Governments issuance of the Supreme
      Decree to the Company. The exercise of the option will be triggered by the
      Peruvian Governments issuance of the Supreme Decree to the Company. These
      claims are included in the South Zone.                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|7. | Marita Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | On June 11, 2010 the Company reported that it had signed
      an option agreement to acquire an additional land package (the Marita
      Property) in the Cordillera del Condor District of northwest Peru.
      Under the terms of the option agreement, the Company will earn a 100%
      interest in the Marita Property. In order to earn a 100% interest the
      Company must pay US$200,000 (paid) within 10 days of TSX.V approval
      (received on June 15, 2010), issue 50,000 common shares (issued) on the
      first anniversary, 200,000 common shares on the second anniversary and
      750,000 common shares on the third anniversary. The option will only be
      exercised following issuance of a Supreme Decree from the Peruvian
      Government. In accordance with TSX.V Policies, this option agreement
      qualified as an Expedited Transaction and received approval on June 15,
      2010. These claims are included in the Central
Zone.

21

---

|8. | Cangaza Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | On July 7, 2010 the Company reported that it had signed
      an option agreement to acquire an additional land package (the Cangaza
      Property) in the Cordillera del Condor District of northwest Peru.
      Under the terms of the option agreement, the Company can earn a 100%
      interest in the Cangaza Property. The material terms of the option
      agreement include cumulative cash payments of US$150,000 over a period of
      12 months and issuance of 1,050,000 common shares over a period of 18
      months as follows:

Cash Payments
    Common SharesJuly 13, 2010
    US$30,000 (paid)August 13, 2010
    
    200,000 (issued)On or before October 13, 2010
    US$40,000 (paid)On or before November 13, 2010
    
    200,000 (issued)On or before April 13, 2011
    US$40,000 (paid)
    200,000 (issued)On or before July 13, 2011
    US$40,000 (paid)On or before September 13, 2011
    
    200,000 (issued)On or before January 13, 2012
    
    250,000Total:
    US$150,000
    1,050,000


The claims are included in the North
Zone.

A summary of the cash payments and common share deliveries
required under all of the option agreements, together with those issuances or
payments not yet made, as of July 25, 2011, is set forth below:

Project
    Common Shares
      Required to be Issued
    Common Shares
      Yet to be Issued
    Cash Payments
      required to be made US$
    Cash Payments
      yet to be made US$Vicmarama Property
    750,000
    -
    250,000
    -Maravilla Property
    1,250,000
    -
    300,000
    -Lahaina 1 Property
    3,400,000
    -
    270,000
    -Lahaina 2 Property
    1,500,000
    -
    400,000
    -Afrodita Properties
    8,600,000
    -
    3,000,000
    -David Property
    -
    -
    71,031
    5,000Marita Property
    1,000,000
    950,000
    200,000
    -Cangaza Property
    1,050,000
    250,000
    150,000
    -Total:
    17,550,000
    1,200,000
    4,641,031
    5,000


Private Placements

The Company did not complete any financings during the year
ended January 31, 2011.

Royalty Agreement with Franco-Nevada

On July 18, 2008, the Company entered into a Royalty Option
Agreement with Franco-Nevada Corporation (Franco-Nevada). Pursuant to this
agreement, Dorato granted Franco-Nevada the option to purchase a perpetual
royalty on 100% of the gold and silver produced from a portion of the option
agreement land package covering approximately 417 square kilometres (the
"Option").The material terms of the Option are as
follows:

- The Option will expire the sooner of: (a) the expiration or termination of
  the concessions and surrounding land packages; or (b) sixty days following a
  decision to construct a mine;
- The Option may be exercised within sixty days following a decision to
  construct a mine by Dorato and/or its successor in interest together with a
  firm commitment to finance construction;

22

---

- The royalty rate shall be either 1% or 2% of the Net Smelter Return,
  dependent on the gold price at the time of the exercise of the Option; and
- The Option may be exercised at a purchase price equal to the Royalty Net
  Present Value which, for the purposes of the Royalty Option Agreement, shall
  mean the after tax net present value of the royalty revenue from the
  production of gold and silver using the royalty rate and a 7.5% discount rate
  applied to the base case model assumptions contained in a feasibility study
  used to make the decision to construct the mine.

Effects of Government Regulation

For a description of the material effects of government
regulation on the Companys business, see the disclosure contained under Item
5.A.

Current State of Operations

Cordilla del Condor is a grassroots exploration project,
meaning that there are no existing mine operations in the project area. Early
stage exploration begins with review of satellite imagery and existing regional
geology maps, followed by airborne geophysical surveys. Geophysical surveys are
rapid assessment tools that help generate targets for further exploration. At
Cordillera del Condor a helicopter is flown on lines spaced 400 meters apart.
The instruments on the helicopter measure the physical properties of the rocks
on the ground, including magnetic, electromagnetics and radiometrics. Once that
data has been reviewed, targets are defined for additional work on the ground.
This includes geological mapping and surface geochemical sampling of stream
sediments, soils and rocks. This sampling helps define areas for more detailed
sampling and mapping. Ultimately, drill targets are defined based on an
assessment of all data collected.

Advanced exploration is focused on initial drill-testing of
these targets. This phase may involve anything from 5 to 50 drillholes depending
on the type of mineral deposit encountered and the level of information required
to make a decision to move forward. The ultimate aim is to discover a mineral
deposit worthy of additional investigation.

Following advanced exploration, a project will move to resource
definition if warranted. Drilling continues to define the deposit and ultimately
an independent third party will calculate an initial resource. A project may go
through several phases of drilling and resource estimation before a decision is
made to move to more advanced studies.

Ultimately, a project would move through three phases of
advanced studies called Preliminary Economic Assessment (also called a scoping
study), Prefeasibility Study and a Feasibility Study. These studies may take
several years. Ultimately on receipt of a positive feasibility study, a company
is in a position to make a production decision  this is the final decision to
build a mine and begin development work.

|4. **C** | Organizational
Structure
|-------- | ------------------------

The Company has one wholly owned subsidiary, Dorato Peru
S.A.C., which was incorporated in Peru on April 25, 2007.

|4. **D** | Property, Plants and
  Equipment
|-------- | --------------------------------

National Instrument 43-101 Compliance

Except as otherwise indicated, Keith J. Henderson, P.Geo., the
Companys President & Chief Executive Officer and a Qualified Person as
defined by NI 43-101, has reviewed and is responsible for the technical
information contained in this Annual Report on Form 20-F. Further information
about the Companys mineral properties can be found in the technical reports
entitled Report (Revised) on the Cordillera del

23

---

Condor Property Departamento de Amazonas Peru dated January
28, 2008, prepared by G. D. Belik, P. Geo. A copy of this report is available on
SEDAR at www.sedar.com.

Mineral Properties

The Cordillera del Condor property is comprised of mineral
claims and mining concessions, comprising approximately 104,626 hectares,
located in northern Peru. The mineral rights extend along the easterly to
southerly-facing slopes of the Cordillera del Condor, a north-northeast trending
range the summit of which forms the border between Peru and Ecuador. The area is
sparsely populated and covered by tropical rain forest. The mean elevation of
the area is about 1,200 metres above sea level.



Title information is outlined in the following table.

MINING RIGHT
    CODE
    TITULAR
    DATE
    HECTARESLAHAINA 1
    010257406
    CARLOS ARMANDO BALLON BARRAZA
    2006-06-12
    803.34LAHAINA 2
    010257506
    CARLOS ARMANDO BALLON BARRAZA
    2006-06-12
    900.00LAHAINA 3
    010257606
    CARLOS ARMANDO BALLON BARRAZA
    2006-06-12
    900.00LAHAINA 4
    010257706
    CARLOS ARMANDO BALLON BARRAZA
    2006-06-12
    689.24LAHAINA 5
    010257806
    CARLOS ARMANDO BALLON BARRAZA
    2006-06-12
    800.00LAHAINA 6
    010257906
    CARLOS ARMANDO BALLON BARRAZA
    2006-06-12
    975.93LAHAINA 7
    010258006
    CARLOS ARMANDO BALLON BARRAZA
    2006-06-12
    1,000.00LAHAINA 8
    010258106
    CARLOS ARMANDO BALLON BARRAZA
    2006-06-12
    1,000.00LAHAINA 9
    010258206
    CARLOS ARMANDO BALLON BARRAZA
    2006-06-12
    1,000.00LAHAINA 10
    010258306
    CARLOS ARMANDO BALLON BARRAZA
    2006-06-12
    1,000.00


24

---

MINING RIGHT
    CODE
    TITULAR
    DATE
    HECTARESLAHAINA 11
    010258406
    CARLOS ARMANDO BALLON BARRAZA
    2006-06-12
    900.00LAHAINA 12
    010258506
    CARLOS ARMANDO BALLON BARRAZA
    2006-06-12
    800.00LAHAINA 13
    010258606
    CARLOS ARMANDO BALLON BARRAZA
    2006-06-12
    882.51LAHAINA 14
    010258706
    CARLOS ARMANDO BALLON BARRAZA
    2006-06-12
    1,000.00LAHAINA 15
    010258806
    CARLOS ARMANDO BALLON BARRAZA
    2006-06-12
    1,000.00LAHAINA 16
    010258906
    CARLOS ARMANDO BALLON BARRAZA
    2006-06-12
    1,000.00LAHAINA 17
    010259006
    CARLOS ARMANDO BALLON BARRAZA
    2006-06-12
    800.00LAHAINA 18
    010459106
    CARLOS ARMANDO BALLON BARRAZA
    2006-10-27
    907.78LAHAINA 19
    010459206
    CARLOS ARMANDO BALLON BARRAZA
    2006-10-27
    922.46LAHAINA 20
    010459306
    CARLOS ARMANDO BALLON BARRAZA
    2006-10-27
    1,000.00LAHAINA 21
    010459406
    CARLOS ARMANDO BALLON BARRAZA
    2006-10-27
    200.00LAHAINA 22
    010459506
    CARLOS ARMANDO BALLON BARRAZA
    2006-10-27
    956.68LAHAINA 23
    010459606
    CARLOS ARMANDO BALLON BARRAZA
    2006-10-27
    800.00LAHAINA 24
    010459706
    CARLOS ARMANDO BALLON BARRAZA
    2006-10-27
    947.89LAHAINA 25
    010459806
    CARLOS ARMANDO BALLON BARRAZA
    2006-10-27
    973.43LAHAINA 26
    010459906
    CARLOS ARMANDO BALLON BARRAZA
    2006-10-27
    1,000.00LAHAINA 27
    010460106
    CARLOS ARMANDO BALLON BARRAZA
    2006-10-27
    1,000.00LAHAINA 281
    010460006
    CARLOS ARMANDO BALLON BARRAZA
    2006-10-27
    951.44MARAVILLA 2
    010081007
    CARLOS ARMANDO BALLON BARRAZA
    2007-01-12
    1,000.00MARAVILLA 3
    010081107
    CARLOS ARMANDO BALLON BARRAZA
    2007-01-12
    1,000.00MARAVILLA 4
    010081207
    CARLOS ARMANDO BALLON BARRAZA
    2007-01-12
    1,000.00MARAVILLA 6
    010081407
    CARLOS ARMANDO BALLON BARRAZA
    2007-01-12
    1,000.00MARAVILLA 7
    010081507
    CARLOS ARMANDO BALLON BARRAZA
    2007-01-12
    800.00MARAVILLA 8
    010081607
    CARLOS ARMANDO BALLON BARRAZA
    2007-01-12
    700.00MARAVILLA 9
    010081707
    CARLOS ARMANDO BALLON BARRAZA
    2007-01-12
    700.00MARAVILLA 10
    010082007
    CARLOS ARMANDO BALLON BARRAZA
    2007-01-12
    1,000.00MARAVILLA 12
    010088007
    CARLOS ARMANDO BALLON BARRAZA
    2007-01-17
    932.08MARAVILLA 13
    010088107
    CARLOS ARMANDO BALLON BARRAZA
    2007-01-17
    1,000.00MARAVILLA 14
    010088207
    CARLOS ARMANDO BALLON BARRAZA
    2007-01-17
    873.48MARAVILLA 15
    010088307
    CARLOS ARMANDO BALLON BARRAZA
    2007-01-17
    907.60MARAVILLA 16
    010088407
    CARLOS ARMANDO BALLON BARRAZA
    2007-01-17
    94.85MARAVILLA 17
    010088507
    CARLOS ARMANDO BALLON BARRAZA
    2007-01-17
    1,000.00MARAVILLA 182
    010406207
    CARLOS ARMANDO BALLON BARRAZA
    2007-08-01
    1,000.00APU
    010211695
    COMPAÑIA MINERA AFRODITA S.A.C.
    1995-01-02
    8.75CAMPANA 1
    010056393
    COMPAÑIA MINERA AFRODITA S.A.C.
    1993-02-15
    1,000.00CAMPANA 2
    010056293
    COMPAÑIA MINERA AFRODITA S.A.C.
    1993-02-15
    900.00COMAINA 1
    010056193
    COMPAÑIA MINERA AFRODITA S.A.C.
    1993-02-15
    1,000.00COMAINA 2
    010056493
    COMPAÑIA MINERA AFRODITA S.A.C.
    1993-02-15
    1,000.00COMAINA 3
    010064993
    COMPAÑIA MINERA AFRODITA S.A.C.
    1993-03-30
    1,000.00HITO
    010064793
    COMPAÑIA MINERA AFRODITA S.A.C.3
    1993-03-30
    100.00VICMARAMA 1
    010456306
    CARLOS ARMANDO BALLÓN BARRAZA
    2006-10-27
    400.00VICMARAMA 2
    010455906
    CARLOS ARMANDO BALLÓN BARRAZA
    2006-10-27
    815.02VICMARAMA 3
    010455406
    CARLOS ARMANDO BALLÓN BARRAZA
    2006-10-27
    1,000.00VICMARAMA 4
    010455206
    CARLOS ARMANDO BALLÓN BARRAZA
    2006-10-27
    800.00VICMARAMA 5
    010455706
    CARLOS ARMANDO BALLÓN BARRAZA
    2006-10-27
    792.41VICMARAMA 6
    010455506
    CARLOS ARMANDO BALLÓN BARRAZA
    2006-10-27
    1,000.00PAMINA
    010173707
    CARLOS ARMANDO BALLÓN BARRAZA
    2007-03-08
    1,000.00VICMARAMA 8
    010456106
    CARLOS ARMANDO BALLÓN BARRAZA
    2006-10-27
    1,000.00VICMARAMA 9
    010455806
    CARLOS ARMANDO BALLÓN BARRAZA
    2006-10-27
    1,000.00VICMARAMA 10
    010454906
    CARLOS ARMANDO BALLÓN BARRAZA
    2006-10-27
    900.00VICMARAMA 13
    010455106
    CARLOS ARMANDO BALLÓN BARRAZA
    2006-10-27
    808.88VICMARAMA 14
    010456006
    CARLOS ARMANDO BALLÓN BARRAZA
    2006-10-27
    674.68


___________________1All the Lahaina Mining
Rights were part of an Option Transfer Agreement entered into by Carlos Ballón
and Dorato Perú S.A.C. on October, 11th2007. 2All
the Maravilla Mining Rights were part of an Option Transfer Agreement entered
into by Carlos Ballón and Dorato Perú S.A.C. on October, 11th2007.
3All the Compañía Minera Afrodita S.A.C. shares were part of an
Option Transfer Agreement entered with Dorato Perú S.A.C. on October, 18th2007.

25

---

MINING RIGHT
    CODE
    TITULAR
    DATE
    HECTARESVICMARAMA 15
    010456206
    CARLOS ARMANDO BALLÓN BARRAZA
    2006-10-27
    1,000.00VICMARAMA 16
    010455606
    CARLOS ARMANDO BALLÓN BARRAZA
    2006-10-27
    967.02VICMARAMA 174
    010460206
    CARLOS ARMANDO BALLÓN BARRAZA
    2006-10-27
    1,000.00MARAVILLA 19
    010023208
    CARLOS ARMANDO BALLON BARRAZA
    2008-01-15
    1,000.00MARAVILLA 20
    010023308
    CARLOS ARMANDO BALLON BARRAZA
    2008-01-15
    500.00MARAVILLA 21
    010023408
    CARLOS ARMANDO BALLON BARRAZA
    2008-01-15
    700.00MARAVILLA 22
    010023508
    CARLOS ARMANDO BALLON BARRAZA
    2008-01-15
    219.74DAVID B1
    010326408
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    1,000.00DAVID B2
    010326508
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    1,000.00DAVID B3
    010326608
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    1,000.00DAVID B4
    010326708
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    1,000.00DAVID B5
    010326908
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    1,000.00DAVID B6
    010326808
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    534.11DAVID B7
    010327008
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    1,000.00DAVID B8
    010327108
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    1,000.00DAVID B9
    010327208
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    1,000.00DAVID B10
    010327308
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    1,000.00DAVID B11
    010327408
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    1,000.00DAVID B12
    010327508
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    1,000.00DAVID B13
    010327608
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    1,000.00DAVID B14
    010327708
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    1,000.00DAVID B15
    010327808
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    556.46DAVID B16
    010327908
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    800.00DAVID B17
    010328008
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    1,000.00DAVID B18
    010328108
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    1,000.00DAVID B19
    010328208
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    1,000.00DAVID B20
    010328308
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    1,000.00DAVID B215
    010328408
    CARLOS ARMANDO BALLON BARRAZA
    2008-06-02
    700.00EESM 9
    010645407
    MICHELLE BERENDSON BERNINZON
    2007-12-11
    997.48EESM 10
    010645507
    MICHELLE BERENDSON BERNINZON
    2007-12-11
    873.94EESM 11
    010645607
    MICHELLE BERENDSON BERNINZON
    2007-12-11
    1,000.00EESM 12
    010645707
    MICHELLE BERENDSON BERNINZON
    2007-12-11
    1,000.00EESM 13
    010645807
    MICHELLE BERENDSON BERNINZON
    2007-12-11
    1,000.00EESM 14
    010645907
    MICHELLE BERENDSON BERNINZON
    2007-12-11
    926.45EEMS 15
    010646007
    MICHELLE BERENDSON BERNINZON
    2007-12-11
    1,000.00EESM 16
    010646107
    MICHELLE BERENDSON BERNINZON
    2007-12-11
    959.70EESM 17
    010646207
    MICHELLE BERENDSON BERNINZON
    2007-12-11
    768.97EESM 18
    010646307
    MICHELLE BERENDSON BERNINZON
    2007-12-11
    822.52EESM 21
    010000508
    MICHELLE BERENDSON BERNINZON
    2008-01-02
    254.50EESM 29
    010330608
    MICHELLE BERENDSON BERNINZON
    2008-06-03
    1,000.00EESM 30
    010330708
    MICHELLE BERENDSON BERNINZON
    2008-06-03
    1,000.00EESM 31
    010330808
    MICHELLE BERENDSON BERNINZON
    2008-06-03
    700.00EESM 37
    010364308
    MICHELLE BERENDSON BERNINZON
    2008-06-24
    1,000.00EESM 386
    010364208
    MICHELLE BERENDSON BERNINZON
    2008-06-24
    600.00Alto Cangaza 10
    010655408
    COMPAÑÍA MINERA CANGAZA S.A.C.
    2008-11-19
    1,000.00Alto Cangaza 11
    010655208
    COMPAÑÍA MINERA CANGAZA S.A.C
    2008-11-19
    1,000.00Alto Cangaza 12
    010655308
    COMPAÑÍA MINERA CANGAZA S.A.C
    2008-11-19
    900.00Alto Cangaza 13
    010655508
    COMPAÑÍA MINERA CANGAZA S.A.C
    2008-11-19
    600.00Alto Cangaza 14
    010655708
    COMPAÑÍA MINERA CANGAZA S.A.C
    2008-11-19
    1,000.00Alto Cangaza 15
    010655608
    COMPAÑÍA MINERA CANGAZA S.A.C
    2008-11-19
    1,000.00Rio Cangaza 1
    010656008
    COMPAÑÍA MINERA CANGAZA S.A.C
    2008-11-19
    500.00Rio Cangaza 2
    010656108
    COMPAÑÍA MINERA CANGAZA S.A.C
    2008-11-19
    1,000.00


_________________________________4The Vicmarama
and Pamina Mining Rights were part of an Option Transfer Agreement entered into
by Carlos Ballón and Dorato Perú S.A.C. on October, 11th2007.
5Maravilla 19, 20, 21, 22 and David Mining Rights were part of
an Option Transfer Agreement entered into by Carlos Ballón and Dorato Perú
S.A.C. on June 5, 2009.6The EESM Mining Rights were part of a
Mineral Option Transfer Agreement entered into by Michelle Berendson and Dorato
Resources Inc. on June, 9th2010.

26

---

MINING RIGHT
    CODE
    TITULAR
    DATE
    HECTARESRio Ayambis 1
    010656208
    COMPAÑÍA MINERA CANGAZA S.A.C
    2008-11-19
    1,000.00Rio Ayambis 2
    010656308
    COMPAÑÍA MINERA CANGAZA S.A.C
    2008-11-19
    500.00Rio Ayambis 3
    010656408
    COMPAÑÍA MINERA CANGAZA S.A.C
    2008-11-19
    500.00Rio Ayambis 4
    010656508
    COMPAÑÍA MINERA CANGAZA S.A.C
    2008-11-19
    800.00Rio Ayambis 5
    010656608
    COMPAÑÍA MINERA CANGAZA S.A.C
    2008-11-19
    327.004Rio Ayambis 6A
    010006909
    COMPAÑÍA MINERA CANGAZA S.A.C
    2009-01-13
    900.00Rio Naraime 1
    010655908
    COMPAÑÍA MINERA CANGAZA
      S.A.C7
    2008-11-19
    400.00DANI8
    010194409
    ELSA LORENA ZUAZO VILLARROEL
    2009-08-03
    1,000.00TOTAL
    104,626.344


Although there has been considerable mining and exploration
activity on the Ecuadorian side of the border in recent years and a number of
roads that service small towns and exploration camps come close to the border,
there is still virtually no infrastructure on the Peruvian side except for a few
small military outposts scattered through the region. Access is via helicopter
or on foot via the extensive road network in Ecuador.

Very little exploration has been carried out on the Peruvian
side of the border to date. With the changing of the mining law in 1992, Metales
Y Finanzas, S.A. (Metalfin), a predecessor of Compania Minera Afrodita
S.A.C., acquired a group of concessions adjacent to the Ecuador border and
shortly thereafter expanded their holdings to cover an area more than 150 km
long along the border region. Metalfin carried out minor preliminary
prospecting, mapping and geochemical sampling in the central part of the claim
block (northern part of the current Afrodita concessions) in 1993 and early
1994.

The regional geological setting of Ecuador and northern Peru is
shown in the figure below. This area is comprised of three main physiographic
regions: Costa on the west, the Sierra (central Andes) and Oriente on the east.
The Costa occurs west of the Andes along the coastal plains and is underlain by
young, locally derived sediments with inliers of older accreted volcanic
terrain. The Sierra includes two parallel mountain ranges; Cordillera Occidental
on the west, which is mostly underlain by Cretaceous marine volcanic rocks and
sediments cut by young intrusions and Cordillera Real on the east, underlain by
deformed metamorphic rocks. The Cordillera Occidental and Cordillera Real are
separated by a high plateau region underlain by Tertiary to Recent volcanic
rocks.

______________________________7All the Compañía
Minera Cangaza S.A.C. shares were part of an Option Transfer Agreement entered
with Dorato Perú S.A.C. on December, 28th2009. 8Dani
was part of an Option Transfer Agreement entered into by Lorena Zuazo and Dorato
Perú S.A.C. on December, 16th2009.

27

---



Rocks within the concession areas are grouped into the four
regional tectonostratigraphic units. These are metamorphosed Paleozoic
sedimentary rocks, Triassic to Jurassic continental to marine sedimentary rocks
of the early Mesozoic rift sequence, and Jurassic plutonic (Zamora batholith)
and volcanic (Misahualli volcanics) rocks, and Cretaceous sedimentary sequences.
Reconnaissance traverses along streams and tributaries supports this generalized
map and details are being added as work progresses. In the Taricori area, most
of the mineralized area is underlain by altered equigranular to porphyritic
rock. It is not clear from current work whether these rocks are part of a thick
volcanic sequence (Misahualli volcanics) or various phases of the Zamora
Batholith or both. Also present are an E-W swath of quartzite, shale and related
sedimentary rocks. To the south of this swath lies quartz-eye rhyolite. Gabbroic
to rhyolitic dikes cut all observed rock types. The structural features of the
Taricori area are complex. East-west faults with WNW and ENE splays and relays
are mineralized and display prominent gouge zones as well as tabular pods of
spectacular breccias. These faults appear to truncate most other features and
are therefore considered the youngest or at least have undergone the most recent
reactivation. The E-W envelope of faults and mineralization continues to the
west where vein mineralization at Dynasty Metal and Minerals Jerusalem deposit
is currently under evaluation.

Doratos concessions cover terrain which is prospective for
gold-bearing porphyry copper, high and low sulfidation Au-Ag epithermal and
Au-skarn type deposits.

AeroTEM data were collected in 2008, covering almost all of the
Taricori Block, but only 15% of the total Cordillera del Condor project area. A
total of 15 high priority airborne geophysical anomalies were identified in the
block. Anomalies are supported by visible gold in stream beds, stream sediment
samples and rock channel sample geochemistry where available.

Taricori Gold Zone

The Taricori Gold Zone drill program has been completed and no
further work is planned by the company. The project was advanced through
early-stage exploration to advanced exploration (initial drill-testing). The
drill program discovered high-grade, narrow vein-hosted gold mineralization.
However, the discovery was

28

---

considered to be of limited size and of limited potential
interest to major mining companies seeking an acquisition opportunity. For this
reason, the next step in the exploration process, resource definition, was not
pursued. The company is seeking a joint venture agreement with a junior or
mid-tier mining company, for whom the deposit could potentially be of
considerable interest.

Historically, informal miners from Ecuador excavated 2.6
kilometres of underground development (tunnels) to mine narrow, bonanza-grade
gold by hand. Mineralized vein channel samples within the Taricori Gold Zone,
taken from historic mine tunnels where the veins were being exploited, have
returned grades of up to 219.32g/t gold and 1,669 g/t silver. Results from 210
vein rock channel samples, returned a mean grade of 11.54 g/t gold and 130.46
g/t silver. The gold enriched wall-rock channel samples highlight the potential
for a bulk-tonnage target in addition to the high-grade, vein-hosted
mineralization. Wall-rock samples from underground have returned grades up to
6.95 g/t gold and 193 g/t silver. Results from 256 wall-rock channel samples
returned a mean grade of 1.36 g/t gold. These results presented include results
received from sampling in 2009. With mapping completed, a comprehensive 3D
geological model was constructed, leading to initial drill targeting on the
deposit.

Drilling successfully discovered mineralization at depth in the
dominant east-west structure, as well as encountering mineralized vein and
stockwork zones in the hanging wall and footwall of this structure. A total of
42 drillholes were completed for approximately 8466 metres of diamond
drilling.

Mineralization at Taricori consists of gold-bearing base metal
veins hosted predominantly by Middle Jurassic granodiorite (U-Pb dated at
164.7±2.2Ma) and Late Jurassic hypabyssal dacite intrusions and related breccia
(157.7±1.4Ma) . Minor but important gold mineralization occurs in siliciclastic
sedimentary rocks and felsic volcaniclastic rocks.

Gold at Taricori is present in isolated veins and in veinlets
that locally form vein-swarms in excess of 10 meters in thickness. Taricori
veins pinch and swell locally and are interpreted to infill brittle fractures
which pre- and post-date gold mineralization. Taricori veins are composed of
pyrite, sphalerite and galena. Locally they contain significant amounts of
carbonate gangue (calcite and rhodochrosite) with weakly developed cockade
banding and crystal growth indicative of open space filling. Quartz is typically
absent in gold bearing veins and is considered a minor gangue mineral.
Alteration associated with gold bearing veins consists of proximal pyrite +
sericite +/- illite and is gradational with distal chlorite +/- illite
alteration over a few metres.

Surface and underground geological mapping has identified three
mineralized vein orientations. A series of northeast-striking, moderately to
steeply southeast-dipping veins are concentrated in granodiorite of the Zamora
Batholith and have a periodicity of ~125-150 meters. A second set of
northwest-striking, steeply northwest-dipping veins are present and cross-cut
the dacite - granodiorite contact. The third set of veins dips moderately to
steeply towards the south and are spatially associated with the granodiorite-
dacite contact.

The best gold mineralization occurs at the intersection of east
and northeast striking quartz veins and vein-swarms. Assay data indicate that
Taricori gold veins are locally high grade (e.g. 1456.89 g/t gold, 1202 g/t
silver, 13.05 ppm lead, and 6.98 ppm zinc). High grade veins are recognizable by
their association with base metals and rhodochrosite.

29

---

Map of Taricori Drilling  Main Zone



Cross Section of Taricori System



30

---

SUMMARY OF SIGNIFICANT TARICORI DRILL RESULTS  WESTERN
MAIN ZONE

DRILLHOLE
    
    FROM
    TO
    WIDTH
    GOLD
    SILVERTAR 001
    Intersection 1
    78
    110.2
    32.2m
    1.03 g/t
    4.3 g/tincluding
    89
    96
    7.0m
    1.94 g/t
    3.6 g/tand
    103.52
    106.8
    3.28m
    2.29 g/t
    2.8 g/tTAR 002
    Intersection 1
    28.7
    36.7
    8.0m
    0.70 g/t
    3.0 g/tIntersection 2
    316
    328
    12.0m
    4.58 g/t
    2.1 g/tincluding
    316
    320
    4.0m
    12.81 g/t
    3.7 g/tTAR 003
    Intersection 1
    35
    49
    14.0m
    0.93 g/t
    6.6 g/tincluding
    35
    39
    4.0m
    2.22 g/t
    11.5 g/tIntersection 2
    81
    94
    13.0m
    1.36 g/t
    9.2 g/tincluding
    90
    92.2
    2.2m
    3.48 g/t
    35.3 g/tTAR 004
    Intersection 1
    38
    52
    14.0m
    0.92 g/t
    1.7 g/tIntersection 2
    79.3
    83.3
    4.0m
    1.61 g/t
    9.8 g/tIntersection 3
    148.45
    150
    1.55m
    1.81 g/t
    14.7 g/tTAR 005
    Intersection 1
    39
    45
    6m
    0.59 g/t
    8.2 g/tIntersection 2
    152.4
    156.45
    4.05m
    0.78 g/t
    13.9 g/tTAR 006
    Intersection 1
    24
    62.1
    38.1m
    0.51 g/t
    4.7 g/tIntersection 2
    69.95
    75
    5.05m
    0.73 g/t
    3.0 g/tIntersection 3
    126.77
    154
    27.23
    0.75 g/t
    10.4 g/tTAR 007
    Intersection 1
    42.8
    44.25
    1.45m
    4.59 g/t
    37.9 g/tIntersection 2
    45.2
    61.58
    16.38m
    1.89 g/t
    57.9 g/tincluding
    45.2
    48
    2.8m
    3.49 g/t
    126.3 g/tand
    50.25
    54.6
    4.35m
    3.12 g/t
    88.8 g/tTAR 008
    Intersection 1
    65
    67.75
    2.75m
    2.78 g/t
    47.9 g/tIntersection 2
    87.68
    96.37
    8.69m
    3.29 g/t
    61.0 g/tand
    93.97
    96.37
    2.40m
    8.42 g/t
    187.7 g/tTAR 009
    Intersection 1
    4.8
    8.5
    3.7m
    1.45 g/t
    3.7 g/tIntersection 2
    43.5
    49.5
    6.0m
    1.46 g/t
    6.9 g/tTAR 011
    Intersection 1
    0
    3
    3.0m
    4.95 g/t
    5.3 g/tIntersection 2
    23.56
    24.8
    2.54m
    4.14 g/t
    18.4 g/tIntersection 3
    32.86
    33.65
    0.79m
    8.34 g/t
    35.6 g/tTAR 012
    Intersection 1
    16
    34
    18.0m
    41.58 g/t
    46.9 g/tincluding
    20
    34
    14.0m
    53.37 g/t 602.98
    59.6 g/tand
    22
    23.22
    1.22m
    g/t
    574.94 g/tIntersection 2
    49.3
    72
    22.70m
    2.96 g/t
    16.2 g/tincluding
    64.96
    72
    7.04m
    7.4 g/t
    22.7 g/tand
    64.96
    65.91
    0.95m
    32.39 g/t
    88.7 g/tTAR 013
    Intersection 1
    13.45m
    52.36
    38.93m
    7.05 g/t
    48.4 g/tincluding
    27.37m
    50.14
    24.14m
    11.10 g/t
    67.6 g/tincluding
    32.74m
    40.11
    7.37m
    33.48 g/t
    151.9 g/tTAR 014
    Intersection 1
    13.10
    16.15
    3.05m
    4.37 g/t
    17.55 g/tIntersection 2
    19.71
    24.19
    4.48m
    1.02 g/t
    13.50 g/tIntersection 3
    34.68
    37.21
    2.53m
    2.60 g/t
    22.34 g/tTAR 015
    Intersection 1
    12.86
    23.10
    10.24m
    4.63 g/t
    12.93 g/tIntersection 2
    28.62
    30.65
    2.03m
    1.14 g/t
    16.85 g/tIntersection 3
    32.50
    36.47
    1.97m
    1.13 g/t
    11.40 g/tIntersection 4
    77.12
    78.85
    1.73m
    1.47 g/t
    33.18 g/t


31

---

DRILLHOLE
    FROM
    TO
    WIDTH
    GOLD
    SILVERIntersection 5
    123.15
    125.00
    1.85m
    1.81 g/t
    20.73 g/tIntersection 6
    151.10
    153.00
    1.90m
    2.01 g/t
    14.58 g/tTAR 016
    Intersection 1
    19.50
    28.27
    8.77m
    1.19 g/t
    23.27 g/tIntersection 2
    33.00
    37.84
    4.84m
    0.72 g/t
    20.53 g/tIntersection 3
    47.50
    49.17
    1.67m
    0.90 g/t
    9.52 g/tIntersection 4
    92.67
    99.00
    6.33m
    22.67 g/t
    65.71 g/tTAR 017
    Intersection 1
    12.86
    28.15
    15.29m
    2.51 g/t
    22.37 g/tincluding
    21.00
    28.15
    7.15m
    4.70 g/t
    20.75 g/tIntersection 2
    38.58
    39.85
    1.27m
    3.28 g/t
    24.80 g/tIntersection 3
    47.00
    51.49
    3.49m
    1.19 g/t
    15.20 g/tTAR 018
    Intersection 1
    11.10
    13.41
    2.31m
    1.10 g/t
    25.51 g/tIntersection 2
    34.50
    41.62
    7.12m
    2.90 g/t
    33.46 g/tincluding
    37.50
    40.82
    3.32m
    5.68 g/t
    54.68 g/tand
    39.46
    40.82
    1.36m
    12.67 g/t
    74.06 g/tIntersection 3
    93.20
    96.40
    3.20m
    3.01 g/t
    51.04 g/tTAR 019
    Intersection 1
    30.52
    41.37
    10.85m
    0.50 g/t
    13.54 g/tIntersection 2
    61.00
    63.00
    2.00m
    0.88 g/t
    10.08 g/tIntersection 3
    76.60
    78.27
    1.67m
    7.82 g/t
    131.41 g/tTAR 020
    Intersection 1
    100.95
    109.88
    8.93m
    10.84 g/t
    49.21 g/tincluding
    101.47
    106.80
    5.33m
    17.33 g/t
    66.39 g/tand
    101.79
    106.10
    4.31m
    21.06 g/t
    70.93 g/tTAR 021
    Intersection 1
    43.62
    46.70
    3.08m
    4.79 g/t
    23.3 g/tIntersection 2
    72.00
    87.90
    15.90m
    1.21 g/t
    47.2 g/tincluding
    74.64
    75.58
    0.94m
    3.82 g/t
    460.2 g/tand
    85.62
    87.90
    2.28m
    4.45 g/t
    44.9 g/tIntersection 3
    179.17
    181.38
    2.21m
    5.88 g/t
    43.1 g/tincluding
    180.58
    181.38
    0.80m
    16.1 g/t
    112.6 g/tTAR 022
    Intersection 1
    130.80
    131.60
    0.80m
    2.53 g/t
    69.6 g/tIntersection 2
    158.35
    163.00
    4.65m
    1.15 g/t
    13.8 g/tincluding
    158.35
    159.40
    1.05m
    3.16 g/t
    19.4 g/tTAR 023
    Intersection 1
    80.90
    83.70
    2.80m
    2.40 g/t
    150.3 g/tTAR 024
    No Significant MineralizationTAR 025
    Intersection 1
    122.74
    122.9
    0.16m
    0.70 g/t
    6.4 g/tIntersection 2
    127.00
    129.00
    2.00m
    0.76 g/t
    1.8 g/t


*using a cut-off of 0.25 g/t gold and
allowing up to 4m of dilution

SUMMARY OF SIGNIFICANT TARICORI DRILL RESULTS  EASTERN
MAIN ZONE

Hole
    From
    To
    Interval
    Au g/t*
    Ag g/t
    Zn %TAR-026
    92.38
    93
    0.62
    1.79
    14.90
    0.89136.05
    136.5
    0.45
    1.07
    22.30
    2.51150
    150.26
    0.26
    2.77
    45.40
    1.92150.6
    151.7
    1.1
    1.21
    7.00
    0.25TAR-027
    56
    56.13
    0.13
    1.23
    18.60
    3.22153.95
    154.3
    0.35
    1.19
    18.90
    1.38220.15
    220.85
    0.7
    0.84
    47.20
    0.31TAR-028
    57.64
    57.86
    0.22
    1.04
    17.80
    0.67TAR-029
    106.15
    107
    0.85
    1.84
    14.31
    1.27TAR-030
    111.25
    111.6
    0.35
    1.13
    92.00
    2.05


32

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Hole
    From
    To
    Interval
    **Au
    g/t***
    Ag g/t
    Zn %141.79
    143.04
    1.25
    0.84
    30.11
    2.19179.5
    180
    0.5
    10.49
    82.00
    6.48TAR-031
    7.45
    9.65
    2.2
    0.65
    16.20
    0.0616.86
    18.27
    1.41
    1.69
    43.60
    0.0752.23
    52.92
    0.69
    2.94
    7.12
    0.24175
    177
    2
    1.73
    1.90
    0.07196.55
    198.88
    2.33
    8.38
    51.33
    5.99TAR-032
    8.45
    9
    0.55
    5.71
    703.00
    0.0227
    28.34
    1.34
    0.67
    4.70
    0.0130.5
    30.63
    0.13
    15.06
    53.00
    2.35102
    104
    2
    0.54
    1.10
    0.04TAR-032
    133.23
    133.57
    0.34
    1.68
    59.20
    1.91134.33
    138.37
    4.04
    26.11
    114.20
    5.81INCL.
    135.08
    138.37
    3.29
    31.19
    4.25
    0.05146.1
    146.4
    0.3
    0.61
    10.00
    1.19TAR-033
    7.75
    8.22
    0.47
    0.57
    6.90
    0.03TAR-034
    22.88
    25.5
    2.62
    1.51
    37.79
    0.17TAR-035
    66.49
    66.74
    0.25
    0.92
    58.40
    3.4087.46
    89
    1.54
    0.88
    60.34
    0.2696.86
    97.84
    0.98
    1.75
    15.29
    0.34142.93
    142.93
    142.93
    142.93
    142.93
    142.93144.07
    144.07
    144.07
    144.07
    144.07
    144.07227
    227.85
    0.85
    1.05
    59.00
    2.79TAR-036
    78.95
    78.95
    78.95
    78.95
    78.95
    78.95267.3
    268.6
    1.3
    0.821
    5.5
    0.3549270.2
    270.6
    0.4
    0.938
    23.5
    1.75


*cut-off to >0.5 g/t with no internal
dilution included.

Lucero Skarn and Porphyry

The Lucero discovery, located in the Taricori Block, was
defined initially by coincident magnetic and electromagnetic geophysical
anomalies and anomalous silt geochemistry. Follow-up rock sampling and trenching
(48.9 metres grading 3.97 g/t gold and 0.25% copper) defined a mineralized zone
1,000 by 750 metres in size. Lucero is a 100% grass-roots discovery and was not
previously exposed by informal miners. On completion of early-stage exploration,
Minera Afrodita moved to advanced exploration, completing 25 drill holes
totalling 5,975 metres. Like at Taricori, the discovery was considered to be of
limited size and of limited potential interest to major mining companies seeking
an acquisition opportunity. For this reason, the next step in the exploration
process, resource definition, was not pursued. The company is seeking a joint
venture agreement with a junior or mid-tier mining company, for whom the
discovery could potentially be of considerable interest.

Lucero has three types of mineralization, all of which are
interpreted to be porphyry-related:

Skarn Mineralization -Semi-massive and massive pyrite, pyrrhotite, chalcopyrite and magnetite, has
formed within interbedded limestone-arenite and is the uppermost, near-surface
layer at Lucero. Skarn mineralization covers 900 x 400 metres, with better
grades focused within a 500 x 200 metre area. Best mineralization intersected to
date is 60 metres grading 0.88 g/t gold and 0.53% copper, and 10.3 metres
grading 1.38 g/t gold and 0.58% copper (NR11-01). Highlights are given in Table
1:

33

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Table 1 - Significant Intersections  Lucero Au-Cu
Skarn

From
    To
    Width
    Au ppm
    Cu %
    Ag ppmLUC-06 250/-50
    17.00
    48.50
    31.5
    0.62
    0.32
    5.77including
    17.00
    19.30
    2.30
    0.82
    0.2144
    1.96and
    19.30
    22.71
    3.41
    0.34
    0.1010
    0.75and
    22.71
    33.00
    10.29
    1.38
    0.5854
    3.65and
    33.00
    48.50
    15.50
    0.15
    0.2167
    8.86LUC-08285/-50
    0.00
    60.00
    60.00
    0.81
    0.5320
    6.49including
    20.65
    39.45
    18.80
    1.62
    0.6197
    1.88and
    31.00
    35.19
    4.19
    2.34
    0.3868
    0.92and
    38.30
    39.45
    1.15
    5.52
    4.6071
    14.13and
    39.45
    60.00
    20.55
    0.56
    0.8400
    11.44and
    77.60
    97.96
    20.36
    0.27
    0.1206
    1.84LUC-09285/-75
    14.74
    16.50
    1.76
    2.72
    0.1323
    22.9018.30
    38.46
    20.16
    0.78
    0.2938
    1.96including
    28.50
    32.45
    3.95
    2.11
    0.7260
    4.17and
    35.27
    35.62
    0.35
    6.82
    0.7960
    2.4077.19
    84.00
    6.81
    0.36
    0.2137
    3.96LUC-11015/-50
    34.77
    57.78
    23.01
    0.672
    0.1841
    6.1including
    34.77
    46.5
    11.73
    0.703
    0.2253
    2.36and
    52.8
    57.78
    4.98
    1.325
    0.2787
    22.176.25
    89.10
    12.85
    0.535
    0.2019
    1.0LUC-12100/-85
    51.92
    55.40
    3.48
    2.13
    0.001
    2.44154.4
    172.6
    20.2
    0.451
    0.2682
    2.5193.5
    207.8
    14.3
    0.489
    0.0699
    0.8LUC-13105/-50
    63.18
    120.15
    56.97
    0.309
    0.2020
    6.0and
    169.65
    183.21
    13.56
    0.230
    0.1842
    2.7LUC-21195/-70
    0
    28.00
    28.00
    1.26
    0.8895
    7.3LUC-23195/-70
    0
    14.75
    14.75
    0.805
    0.4049
    3.9


The surface skarn mineralization has been subjected to
post-mineral erosion, such that the skarn thickness varies from 10 meters to 150
meters depending on topography. In the area where the best gold mineralization
occurs, skarn-hosted mineralization has been eroded, preserving approximately
20-30 metres of mineralization. Our conceptual estimate of mineralized material
based on the work done to date indicates Lucero is too small to warrant proving
up this geologic estimate to the Inferred category with additional drilling.
Therefore, no further exploration is planned.

Sediment-Hosted Mineralization -Calcareous arenite
underlies the main skarn horizon and contains disseminated and fine stockwork
chalcopyrite-pyrite extending through the sequence and into the underlying
granodiorite. This mineralization looked to be best north of the skarn zone, but
drilling there failed to intersect significant grades.

Porphyry Copper-Gold Mineralization -Disseminated
chalcopyrite hosted in strong potassic alteration, typical of porphyry
copper-gold systems, extends below the arenite into the underlying Zamora
granodiorite. High ratios of chalcopyrite to pyrite in drill core below the
skarn indicate a

34

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porphyry system approximately one kilometre in diameter. Soil
sample anomalies also define a porphyry target, with a northwest trend to the
gold. However, deep drilling to 500 metres depth failed to intersect significant
copper grades in very weakly disseminated chalcopyrite. The presence of sparse
disseminated pyrrhotite indicates a reduced (as opposed to oxidized) system,
which rarely have economic mineralization.

Map of Lucero Drill Results



35

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Lucero Cross Section 1200E



Cobrecon Cu-Au Porphyry

Cobrecon comprises three separate target areas. All areas have
undergone early-stage exploration (geophysics, geochemistry, mapping, drill
target generation). The northernmost target (Cobrecon) is currently undergoing
advanced exploration and is being drill-tested. The other targets (Cobrecon Sur
and Cobrecon Este) are almost complete in terms of early stage exploration and
advanced drill-testing is expected to begin later in 2011.

AngloGold completed work in this area in 2004-05, under an
option agreement with Minera Afrodita. They explored the northern portion of the
Cobrecon area, which they called Conguime. Their silt sampling outlined a broad
geochemical anomaly, which Doratos silt sampling later corroborated.

The Cobrecon Cu-Au porphyry target contains multiple anomalies
over several kilometres and is the current drill target, with the initial, Phase
I drilling completed on the northern anomaly. Zonation of the soil geochemical
anomaly suggests three porphyry systems are present. Two of these, Cobrecon and
Cobrecon Sur, are now well-defined at surface by ridge and crest soil sampling,
while the latest discovery, Cobrecon Este, is still open to the east, pending
soil results, but appears to be the same size as the other two anomalies based
on the EM anomaly.

The Cobrecon and Cobrecon Sur anomalies are interpreted as two
large porphyry copper-gold-molybdenum systems, each 1 X 3 km in size, and with
northwest trends as seen in the porphyry deposits in Ecuador. Soil samples
clearly outline two sub-parallel porphyry centres one kilometre apart.
Widespread copper sulphides and oxides, and molybdenite, have been sampled at
surface and assay up to 0.6% Cu and 0.5 g/t Au. Further detailed rock sampling,
as well as additional soil sampling, is underway to better define the centres of
the systems.

36

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Drilling with two rigs got underway at the northern anomaly,
Cobrecon, in mid-April 2011, with 3215 metres completed in ten holes.
Significant assay results are shown in Table 2; results are pending for the last
four holes of the program. The first four holes were drilled in oppositely
directed pairs from two platforms in order to better determine the centre of the
mineralization. The west-directed holes (CBC-03 and CBC-04) collared in
mineralization but drilled out of it to the west and at depth  this suggests
that holes CBC-01 to -04 are located close to the west edge of the porphyry
system. East-directed holes (CBC-01 and CBC-02) intersected mineralization from
near-surface to end of hole (ending in mineralization), suggesting that the
porphyry system remains open to the east and at depth.

Holes CBC-05 and CBC-06 were drilled in the southeast area of
the anomaly near some of the stronger surface sample results. Both holes were
collared on, and drilled outward from, the centre of an early, mineralized,
northwest trending dacite porphyry dike. This dacite is closely associated with
mineralization, together with the breccia which post-dates it, and which hosts
some of the best grades intersected to date. Hole CBC-06 intersected the
highest-grade and most consistent mineralization to date, hosted within breccia,
cross-cutting the dacite.

Hole CBC-05 intersected significant low-grade copper
mineralization over 185 metres within the dacite. Mineralization within both
holes occurs as chalcopyrite, which is finely disseminated within the dacite and
coarsely disseminated within the matrix of the breccia. The better grades are
associated with intense quartz stockwork and quartz-sericite alteration in the
dacite, and potassic alteration within the breccia. Neither hole drilled out of
the zone of quartz stockwork (hole CBC-05 ended in low-grade mineralization),
and there is potential for more mineralization to the west.

37

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Cobrecon Geophysical and Geochemical Anomalies



38

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Cobrecon  Northern AnomalyDrilling



Significant Intersections  Cobrecon Northern
Anomaly

Hole
    From (m)
    **To (m)**
    Interval
    Copper%
    Moly (ppm)
    Gold g/t
    Silver g/tCBC-01
    0
    20.5
    20.5
    0.1018
    10.9
    0.033
    2.820.5
    121
    100.5
    0.1626
    16.5
    0.027
    0.6163.11
    183.7
    20.59
    0.1819
    4.7
    0.037
    0.5240
    405.47
    165.47
    0.1181
    20.5
    0.017
    0.4CBC-02
    5.74
    234
    228.26
    0.1607
    15.7
    0.041
    0.7including
    5.74
    108.25
    102.51
    0.1212
    13.5
    0.039
    0.9108.25
    234
    125.75
    0.1930
    17.5
    0.043
    0.7234
    264
    30
    0.1425
    12.3
    0.017
    0.4346
    430
    84
    0.1196
    15.6
    0.032
    0.4CBC-03
    10.3
    94
    83.7
    0.1558
    27.0
    0.039
    0.6CBC-04
    0
    61.65
    61.65
    0.1236
    12.7
    0.062
    0.8CBC-05
    85.5
    270.5
    185.0
    0.1154
    16.3
    0.023
    0.5and
    344
    361.5
    36.15
    0.1259
    25.6
    0.078
    0.6CBC-06
    8.92
    122.0
    113.08
    0.1786
    12.0
    0.135
    1.0including
    21.7
    85.5
    63.8
    0.2454
    16.9
    0.196
    1.2


39

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Regional Work  Project Pipeline

In addition to ongoing drill testing of advanced targets,
regional target evaluation is ongoing. Only approximately 20% of the total land
position has been evaluated and ongoing target generation is primarily driven by
airborne geophysical surveying.

During the latter part of 2010 and early 2011, airborne
geophysical surveys were carried out over approximately 90% of the land
position. The Lucero discovery (described above) can be attributed to
geophysical interpretation. The target was first identified remotely as
coincident electromagnetic and magnetic anomalies. Ground follow-up quickly
identified mineralized outcrop at surface and from there the target was fully
evaluated and ultimately drill tested. This positive outcome from the first
geophysical target test in the belt is extremely positive for other potential
discoveries associated with geophysical anomalies.

A total of 18 priority targets have been identified as a result
of the geophysical surveying. Following drill testing at Taricori and Lucero,
testing of the Cobrecon drill targets has begun and is ongoing. All other
targets are currently within early-stage exploration having had geophysical work
completed at a minimum and in some cases having had surface geochemical sampling
completed. In due course, the intention is to complete early stage exploration
on all targets and select the best targets for advanced exploration. Targets
will be discussed in future once they are considered suitable for advanced
exploration.

40

---

Regional Target Map  Cordillera del Condor



Planned Work

Regional work continues to advance additional targets for drill
testing. Detailed review of the data has outlined 18 geophysical targets (as
described in News Release of Dec 6, 2010), including the Lucero (T1) and
Cobrecon (T4) targets. These new anomalies are being investigated on the ground
with detailed silt and reconnaissance rock sampling and mapping. The targets are
then re-prioritized based on the geochemical and geological results. More
targets are likely to emerge as the geophysical data is further processed and
reinterpreted as the anomalies are ground-proofed.

QA/QC

Quality control and quality assurance is implemented in the
field and results are monitored regularly throughout the sampling programs.
Blind certified reference material, certified coarse blank material,
quarter-core duplicates and preparation duplicates are inserted at regular
intervals (1/20) into the sample sequence. On-site personnel rigorously collect
and track samples which are then security sealed and trucked by a third party
shipper to the ACME affiliate preparation laboratory in Cuenca, Ecuador. Here
the samples weights are recorded and the samples are cross-referenced with the
sampling list.

41

---

After coarse crushing and pulverizing >80% passing 200#, a
250g split is forwarded to ACME Analytical Laboratories (ACME) in Vancouver,
BC, Canada for analysis. ACME's quality system complies with the requirements
for the international standards ISO 9001:2000 and ISO 17025:1999. Samples are
analysed for gold by fire assay (30g) and forty additional elements by four-acid
digestion with an ICP-MS finish. Any sample over 10 g/t gold are re-analysed by
gravimetric fire assay (30g) for gold and silver. Any sample returning over 1%
copper, lead or zinc are re-analysed by the base metal assay method with an
ICP-OES finish. Analytical accuracy and precision are also regularly monitored
by the laboratory through the analysis of reagent blanks, reference material and
replicate samples. In addition, representative blind duplicate samples are
routinely forwarded to an ISO-compliant third party laboratory for additional
quality control.

|ITEM 5. | OPERATING AND FINANCIAL REVIEW AND
      PROSPECTS
|------- | --------------------------------------------------

The Company is in the business of acquiring, exploring and
evaluating interests in mineral properties. The Companys current property
interests are held for the purposes of exploration for precious and base
metals.

|5. **A** | Operating Results
|-------- | -----------------

Year ended January 31, 2011 compared to year ended January
31, 2010

We incurred a net loss of $3,996,832 for the year ended January
31, 2011, compared to a net loss of $3,605,068 in the same period of the prior
year. Besides stock-based compensation of $1,397,881 (2010 -$1,521,621), the
increase in net loss was offset by foreign exchange gain (loss) of $259,129
(2010 ($271,058)) resulting from changes in the value of Peruvian currency in
relation to the Canadian dollar.Other significant comparative changes
which increase net loss are as follows:

Consulting fees of $2,002,486 during the current period
compared to $1,994,054 in the same period of the prior year. Excluding the
stock-based compensation of $1,061,516 (2010 - $1,352,156), the increase of
$299,072 in consulting fees was affected by a change in the method of accounting
for personnel and other administrative costs at our Peruvian subsidiary,
including an increase in the number of personnel including directors.

Investor relations expenses of $861,887 during the current
period compared to $438,886 recorded in the same period of the prior year, as
the Company engaged additional investor relations personnel as part of a
concerted effort to provide all available information about the projects to
shareholders and the investment community. This category also includes $289,966
(2010 - $149,231) of stock-based compensation charges.

Office and miscellaneous expenses of $343,194 during the
current period compared to $316,983 in the same period of the prior year. This
category includes $9,604 (2010 - $Nil) of stock-based compensation charges. The
slight increase is due a change in the method of accounting for personnel and
other administrative costs at our Peruvian subsidiary.

Professional fees of $476,101 (2010 - $305,426) increased due
to higher legal costs associated with mineral property acquisitions, increased
financial reporting and audit costs, and other regulatory matters. This category
also included stock-based compensation expenses of $36,795 (2010 - $20,234).

Property investigation expense of $37,750 was incurred in the
current period compared to $169,520 recorded in the same period of the prior
year. The decrease was due to the Company undertaking ground follow up and early
stage reconnaissance field work in the prior period to further investigate
potential property acquisitions, of which none materialized in property
acquisitions.

Regulatory fees of $108,731 (2010 - $25,680) increased due to
the fees associated with listing the Companys common stock on OTCQX
International in the United States.

42

---

Travel expenses of $270,628 were incurred in the current period
compared to $90,591 in the same period of prior year. The increase in the
current period was due to increased travel to Peru commensurate with the
increase in exploration activity.

Wages and benefits of $139,341 were incurred in the current
period compared to $11,547 in the same period of prior year. The increase in the
current period was due to an increase in personnel required for our Peruvian
mineral projects, including the hiring of a new V.P. Exploration.

Year ended January 31, 2010 compared to year ended January
31, 2009

We incurred a net loss of $3,605,068 for the year ended January
31, 2010, compared to a net loss of $2,646,137 in the year ended January 31,
2009. Besides stock-based compensation of $1,521,621 (2009 -$1,879,484), the
change in the net loss was due mainly to a foreign exchange gain (loss) of
($271,058) (2009 -$358,533) resulting from changes in the value of Peruvian
currency in relation to the Canadian dollar, and lower interest income of
$39,442 (2009 - $124,003) due to reduced interest rates and lower average cash
balances. Other significant comparative changes are as follows:

Office and miscellaneous expense of $316,983 was incurred in
fiscal 2010 compared to $216,087 recorded in fiscal 2009. The increase was due
to higher costs for insurance, computer software, donations and rent at our head
office. The Company did not have its existing office structure for a significant
portion of fiscal 2009. This category also includes $nil (2009  $14,805) of
stock-based compensation charges.

Investor relations expenses of $438,886 during fiscal 2010
compared to $307,943 recorded in fiscal 2009, as the Company commenced a
concerted effort to provide all available information about the Companys
Cordillera del Condor Copper - Gold Project to shareholders and the investment
community. This category also includes $149,231 (2009 - $143,221) of stock-based
compensation charges.

Consulting fees of $1,994,054 during fiscal 2010 compared to
$2,217,769 in fiscal 2009. Excluding stock-based compensation of $1,352,156
(2009 - $1,686,514), the increase of $110,643 in consulting fees was due to
increased number of personnel required for our Peruvian mineral project.

Property investigation expense of $169,520 was incurred in
fiscal 2010 compared to $nil recorded in fiscal 2009. The increase was due to
the Company undertaking ground follow up and early stage reconnaissance field
work to further investigate a potential property acquisition.

Professional fees of $305,426 (2009 - $209,251) increased due
to higher legal costs associated with mineral property acquisitions and
corporate matters and increased accounting services. This category also includes
$20,233 (2009 - $34,944) of stock-based compensation charges.

Doratos mineral rights in Peru are currently subject to
regulations that may be subject to change, and may become subject to new
regulations, which could impose significant costs and burdens.

Exploration activities in Peru depend on mining concessions for
exploration and ultimately for exploitation works, obtained from the Geologic,
Mining and Metallurgic Institute (Instituto Geológico Minero Metalúrgico), or
the INGEMMET. In addition, operations in Peru depend on obtaining other
administrative rights, such as provisional permits, from the Ministry of Energy
and Mines, or the MEM, and for exploration rights on the area of a claim. In
Peru, ownership of a mining concession by a foreign entity within 50 kilometres
of the national border is subject to issuance of a Supreme Decree from the
Peruvian Government. All of the Companys option properties are within 50
kilometres of the Peruvian national border. Thus, the Company must obtain a
Supreme Decree from the Peruvian Government in respect of all of the mining
concessions comprising the Companys properties. In addition, the terms of the
option agreements through which the Company holds its property interests require
issuance of a Supreme Decree before the options can be exercised. The Company
has applied for, but not been issued, the Supreme Decree.

43

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Under Perus current regulatory regime, mining concessions for
the exploration and exploitation of minerals have an indefinite term, subject to
compliance by the titleholder with the obligations set forth by the General
Mining Act (Ley General de Minería), or the LGM. Compliance with such
obligations is required to maintain the mining concessions in good standing.
Among such obligations are the payment of an Annual Concession Fee (equivalent
to U.S.$3 per hectare) and compliance with a minimum annual production target.
Failure to pay the Annual Concession Fee for any two consecutive or
non-consecutive years may result in the cancellation of the relevant mining
concession.

If the INGEMMET or the MEM revoke or cancel any of Doratos
option concessions, Doratos financial condition and results of exploration
activities could be adversely affected.

On June 24, 2004, the Peruvian Congress approved the Mining
Royalty Law, which established a mining royalty that owners of mining
concessions must pay to the Peruvian government for the exploitation of metallic
and non-metallic resources. This royalty is calculated on a sliding scale with
rates ranging from 1% to 3% over the value of mineral concentrates based on
international market prices. As provided by the Mining Royalty Law, effective
since January 26, 2007, the Peruvian Tax Authority is responsible for the
collection of mining royalties.

There can be no assurance that the Peruvian government will not
impose additional mining royalties or payments in the future or that they will
not have an adverse effect on future operations. Dorato has no mining operations
on the property.

Details of Regulatory and Supervisory Entities

In general terms, the principal regulator of mining activities
in Peru is the Ministry of Energy and Mines, or the MEM, through its General
Bureau of Mining (Dirección General de Minería), or DGM, and its General Bureau
of Mining and Environmental Affairs (Dirección General de Asuntos Ambientales
Mineros), or DGAAM. Other regulatory institutions are the Geological, Mining and
Metallurgical Institute (Instituto Geológico Minero Metalúrgico), or the
INGEMMET; the Supervisory Body of Investment in Energy and Mining (Organismo
Supervisor de la Inversión en Energía Minería), or the OSINERGMIN; and the
Assessment and Environment Supervising Agency (Organismo de Evaluación y
Fiscalización Ambiental), or the OEFA, which was created in 2008 and entered
into operation in 2010.

The DGM is the senior body of the MEM overseeing the mining
industry. It reports directly to the Office of the Vice-Minister of Mining and
is responsible for, among other things, the promotion of mining activities, the
granting of beneficiation, ore transportation and general working concessions,
the proposal of welfare, health and safety regulations.

The DGAAM has the following duties, among others: (i) propose
policy and legal provisions for environmental conservation and protection in the
mining sector; (ii) approve technical standards for the appropriate application
of regulations on environmental conservation and protection to apply to
activities of the mining sector; and (iii) assess environmental and social
impacts derived from activities of the mining sector, establishing the
preventive and corrective measures necessary to control such impacts.

The INGEMMET has the following duties, among others: (i)
process mining claims, grant titles to mining concessions and act on
applications relating to mining rights pursuant to law; (ii) keep the National
Mining Land Register (Catastro Minero); administer and distribute the Annual
Concession Fee, or ACF, and collect any penalties for failure to meet minimum
annual production targets; and (iii) cancel mining claims or mining concessions
pursuant to applicable laws.

The OSINERGMIN supervises and inspects mining activities as
regards matters of mine safety and health. Until July 2010, OSINERGMIN also
oversaw the environmental compliance of mining activities.

44

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Since July 2010, all supervising, inspecting and sanctioning
duties regarding environmental matters have been undertaken by the Organization
for Environmental Assessment (Organismo de Evaluación Ambiental), or the OEFA.
The OEFA is also responsible for proposing to the Ministry of Environment the
scale of penalties applicable to each type of infringement pursuant to the
Environmental Act.

Details of Concessions

In accordance with the LGM, mining activities (except
surveying, prospecting and trading) must be performed exclusively under the
concession system. A concession confers upon its holder the exclusive right to
develop a specific exploration activity within a defined area.

Mining concessions confer the right to explore and exploit the
mineralization granted which is within a solid of undefined depth, limited by
vertical planes corresponding to the sides of a square, rectangle or closed
polygon, the vertices of which refer to Universal Transversal Mercator, or UTM,
coordinates. A mining concession is a real property interest independent and
separate from surface land located within the UTM coordinates of the concession.
It is granted by the INGEMMET. Once the claimed area is subject to a mining
concession, the titleholder must register its title with the Public Mining
Registry (Registro de Derechos Mineros) administered by the National
Superintendent of Public Registers (Superintendencia Nacional de Registros
Públicos) where all the agreements, resolutions and acts thereto must also be
registered.

Holders of mining concessions or pending claims for mining
concessions must comply with several obligations, including payment of the ACF,
which is equivalent to U.S.$3.00 per hectare per year. Default in payment of the
ACF for two consecutive or non-consecutive years may result in cancellation of
the relevant concession or claim.

Environmental

During the 1990s, a modern environmental practice that conforms
to the international environmental standards was established and made generally
applicable to most of the mining industry. In 1990, the Environmental Code was
enacted, which established for the first time a legal and institutional system
to preserve the environment. In 1993, the Environmental Protection Regulations
for Mining and Metallurgical Activities were enacted. On October 15, 2005, the
Environmental Act completely repealed and replaced the Environmental Code.

As of July 2010, OEFA, rather than OSINERGMIN, is responsible
for performing periodic Environmental Audits to supervise compliance with the
commitments undertaken in the respective EIAs and/or PAMA.

|5. **B** | Liquidity and Capital
  Resources
|-------- | ---------------------------------

The Company has no revenue generating operations from which it
can internally generate funds. To date, the Companys on-going operations have
been predominantly financed by the sale of its equity securities by way of
private placements and the subsequent exercise of share purchase warrants and
broker options issued in connection with such private placements. However, the
exercise of warrants/options is dependent primarily on the market price and
overall market liquidity of the Companys securities at or near the expiry date
of such warrants/options (over which the Company has no control) and therefore
there can be no guarantee that any existing warrants/options will be exercised.
In addition, the Company can raise funds through the sale of interests in its
mineral properties, although current market conditions have substantially
reduced the number of potential buyers/acquirors of any such interest(s). This
situation is unlikely to change until such time as the Company can develop a
bankable feasibility study on one of its projects. When acquiring an interest in
mineral properties through purchase or option the Company will sometimes issue
common shares to the vendor or optionee of the property as partial or full
consideration for the property interest in order to conserve its cash (the
majority of the Companys outstanding option agreements require the issuance of
common shares of the Company, as opposed to cash payments, to the vendors
thereof).

45

---

At the present time, the Company does not contemplate that it
will be necessary to institute any additional specific cost saving measures or
reductions in staff or consultants, or drop any additional properties, in
response to current conditions in the equity or credit markets. The Company is
conserving its working capital to the extent possible while still focussing on
the development of its Peruvian mineral properties.

The Company expects that it will operate at a loss for the
foreseeable future, however it should not require additional financing to fund
its planned exploration of its current mineral properties and to continue its
operations (including general and administrative expenses) for its 2011 fiscal
year. There is significant uncertainty that the Company will be able to continue
to secure additional financing in the current equity markets. The quantity of
funds to be raised and the terms of any proposed equity financing that may be
undertaken will be negotiated by management as opportunities to raise funds
arise. In January, 2010, the Company closed a bought deal private placement and
a non-brokered private placement for a total of 14,732,850 units at a price of
$1.05 per unit for total proceeds of $15,469,493. These funds have been and will
be used to pay property payments for the Mineral Claims and to carry out Phase
II of the exploration program of up to $5,000,000, and for general and
administrative expenses.

The Company had cash and cash equivalents of $6,904,719 as of
January 31, 2011, compared to $15,868,072 at January 31, 2010, and working
capital of $6,461,170 as of January 31, 2011, compared to working capital of
$15,572,151 as of January 31, 2010. The decrease in cash and cash equivalents on
hand and working capital was the result of shares issued for cash of $2,850,343,
net of costs, less cash used (principally in exploration activities) of
$9,412,456 and in operating activities totaling $2,326,220.

The Company has not entered into any long-term lease
commitments nor is the Company subject to any mineral property commitments other
than those outlined under Note 6 in the Companys consolidated financial
statements for the year ended January 31, 2011.

The Company has no exposure to any asset-backed commercial
paper. Other than cash held by its subsidiary for their immediate operating
needs in Peru, all of the Companys cash and cash equivalent reserves are on
deposit with a major Canadian chartered bank or invested in Government of Canada
Treasury Bills or Bankers Acceptances issued by major Canadian chartered banks.
The Company does not believe that the credit, liquidity or market risks with
respect thereto have increased as a result of the current market conditions.
However, in order to achieve greater security for the preservation of its
capital, the Company has, of necessity, been required to accept lower rates of
interest which has also lowered its potential interest income.

|5. **C** | Research and Development, Patents and Licences,
      etc.
|-------- | ----------------------------------------------------------

Not applicable.

|5. **D** | Trend Information
|-------- | -----------------

None, except as disclosed elsewhere in this report.

|5. **E** | Off-Balance Sheet
  Arrangements
|-------- | --------------------------------

We do not have any material off balance sheet arrangements that
have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources.

46

---

|5. **F** | Tabular Disclosure of Contractual
      Obligations
|-------- | ---------------------------------------------------

The following table summarizes our contractual obligations as
of January 31, 2011:

|                            | Payments due by
      period
|--------------------------- | ----------------------------
|                            | Total                       
|Operating Lease Obligations | Nil                         
|Total                       | Nil                         

|ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND
      EMPLOYEES
|------- | ------------------------------------------------

|6. **A** | Directors and Senior
  Management
|-------- | ---------------------------------

The following table sets out the directors and executive
officers of the Company and all positions and offices held with the Company.

Name
    Position
    Age
    Date of First Election
      or AppointmentKeith J. Henderson
    Director, President & CEO
    40
    December 1, 2008Anton J. Drescher (1)
    Director
    54
    December 1998Mark D. Cruise (1)
    Director
    40
    July 30, 2008Gordon Neal(1)
    Director
    56
    November 9, 2009Carlos Ballon
    Director
    51
    July 20, 2010Anna Ladd
    Chief Financial Officer
    41
    July 12, 2011Marla K. Ritchie
    Corporate Secretary
    48
    July 30, 2008


|(1) | Member of Audit Committee
|--- | -------------------------

Keith J. Henderson(Director, President and CEO)  Mr.
Henderson has been involved in mineral exploration since 1995. Having worked in
Europe, Africa and the Americas, he has extensive expertise in a variety of
deposit types and commodities including gold, zinc, nickel, copper and coal. Mr.
Henderson began his exploration career with the CSA Group in 1995, initially
spending three years in Tanzania where he managed a large gold exploration
program. He also worked extensively in Ireland on regional zinc exploration and
in southern Africa on a range of exploration and development projects between
1998 and 2001. In 2001, Mr. Henderson was employed by the Exploration Division
of Anglo American plc, managing regional zinc exploration programs in Ireland
and Canada, including a successful near-mine zinc exploration program at the
Lisheen Mine (Ireland) and initiating joint venture negotiations for exploration
rights. In 2005, Mr. Henderson was transferred to Anglo American Exploration in
Vancouver, British Columbia, adding value on a variety of North American nickel
and copper projects. In 2006 he was seconded to Anglo Coal's newly incorporated
Canadian subsidiary, managing all aspects of project start-up together with an
extensive exploration and resource definition program. In 2007, Mr. Henderson
was appointed Vice-President Exploration for Cardero Resource Corp. And in 2008,
he was appointed President and Chief Executive Officer of Dorato Resources Inc.
Mr. Henderson was educated in Ireland, graduating in 1993 from Queens University
Belfast with B.Sc. (Hons.) Geology and subsequently in 1995 from University
College Dublin with M.Sc. Petroleum Geology. Mr. Henderson is currently an
officer of Cardero Resource Corp., a Toronto Stock Exchange listed company and a
director of Indico Resources Ltd. and TSX Venture Exchange listed company.

Anton (Tony) J. Drescher(Director)  Mr. Drescher has
served as director since December 1998 and President and Chief Executive Officer
of the Company from December 2004 to December 2008. Mr. Drescher has provided
administrative and consulting services in his capacity as President and a
director of Harbour Pacific Capital Corp. since 1998 and Westpoint Management
Consultants Ltd. of Vancouver, British Columbia, Canada since 1978. Mr. Drescher
also currently serves as a director and/or officer of the following listed
companies: International Tower Hill Mines Ltd., Trevali Mining Corporation and
Corvus Gold Inc., all Toronto Stock Exchange listed companies and, USA Video
Interactive Corp., a TSX Venture Exchange listed

47

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company. Mr. Drescher is also President and a director of
Ravencrest Resources Inc., a Canadian Stock Exchange (CNSX) listed company. Mr.
Drescher obtained a Diploma in Financial Management from the British Columbia
Institute of Technology in June 1974. He also obtained his Certified Management
Accountant's designation in October 1981.

Dr. Mark Cruise(Director)  Dr. Cruise is a base metal
and project generation specialist with in excess of 15-years of global
exploration management experience from grass-roots exploration through resource
definition to production in Europe and the Americas. He completed his industry
sponsored Ph.D. at Trinity College Dublin in 2000 on the Irish orefield. A
professional geologist, Dr. Cruise spent eight years (1996 2004) employed by
Anglo American plc in grassroots and mine site settings prior to joining the
junior market in November 2004. Dr. Cruise also serves as Director, President
& CEO of Trevali Mining Corporation. a Toronto Stock Exchange listed company
and is an officer of Cardero Resource Corp., a public company also listed on the
Toronto Stock Exchange.

Gordon Neal(Director)  Mr. Neal is currently the Vice
President Corporate Development at MAG Silver Corp. and is also on the advisory
board of West Timmins Mining. Mr. Neal has twenty-five years experience in
advising public companies and providing corporate finance services. Most notably
he founded Neal McInerney Investor Relations in 1991 which raised more than $4
billion in debt and equity financings and became the second largest full service
Investor Relations firm in Canada.

Carlos Ballon(Director)  Mr. Ballon is a graduate of
Colorado School of Mines and a very experienced mining engineer who managed the
Santander Mine in Peru from 1985 to 1993. More recently he was VP South America
for Corriente Resources Ltd. and a director of Thiess South America (Australia's
largest contract miner) where he managed major engineering works at Tintaya and
Yanacocha in Peru.

Anna Ladd(Chief Financial Officer) - A Certified
Management Accountant, Ms. Ladd received a Bachelor of Commerce degree from the
University of British Columbia in 1991 and a Masters of Arts in Economics from
Queen's University in 1993. Anna has over 15 years of experience in financing
and financial controls in relation to the mining industry from mine controller
up to and including responsibility for multiple large scale open pit and
underground base and precious metal production units. Anna has served as Vice
President Finance and Chief Financial Officer for a number of TSX listed junior
mining and development companies including Crowflight Minerals, Kria Resources,
Sulliden Gold Corporation, in addition to several mid-size to senior gold and
base metal producers including Grande Cache Coal's operations, Kinross Gold
Corporation's Fort Knox, Round Mountain and Kettle River operations and Vale
Inco's Thompson and Sudbury base metal operations.

Marla K. Ritchie(Corporate Secretary) Ms.
Ritchie brings over 22 years experience in public markets working as a Corporate
Administrator and Corporate Secretary for companies specializing in resource
based exploration. Ms. Ritchie became the Companys Corporate Secretary in July
2008. Between 1992 and 2003, she was a Secretary and the Office Administrator
for Ascot Resources Ltd, Brett Resources Inc, Golden Band Resources Inc, Hyder
Gold Inc., Leicester Diamond Mines Ltd., Loki Gold Corporation, Oliver Gold
Corporation and Solomon Resources Limited, all public junior natural resource
exploration companies. Ms. Ritchie is currently the Corporate Secretary for the
following public companies: Cardero Resource Corp., Corvus Gold Inc.,
International Tower Hill Mines Ltd. and Wealth Minerals Ltd.

Conflicts of Interest

There are no existing or potential conflicts of interest among
the Companys directors, officers or promoters as a result of their outside
business interests with the exception that certain directors, officers and
promoters serve as directors, officers and promoters of other companies, and,
therefore, it is possible that a conflict may arise between their duties as a
director, officer or promoter of the Company and their duties as a director or
officer of such other companies.

48

---

The Companys directors and officers are aware of the existence
of laws governing accountability of directors and officers for corporate
opportunity and requiring disclosures by directors of conflicts of interest and
we will rely upon such laws in respect of any directors' and officers' conflicts
of interest or in respect of any breaches of duty by any of our directors or
officers. All such conflicts will be disclosed by such directors or officers in
accordance with applicable corporate law, and they will govern themselves in
respect thereof to the best of their ability in accordance with the obligations
imposed upon them by law.

All of the Companys directors are also directors, officers or
shareholders of other companies that are engaged in the business of acquiring,
developing and exploiting natural resource properties including properties in
countries where we are conducting our operations. Such associations may give
rise to conflicts of interest from time to time. Such a conflict poses the risk
that we may enter into a transaction on terms which place us in a worse position
than if no conflict existed. Our directors are required by law to act honestly
and in good faith with a view to our best interests and to disclose any interest
which they may have in any project or opportunity of the company. However, each
director has a similar obligation to other companies for which such director
serves as an officer or director.

The following table identifies, as of July 25, 2011, the name
of each officer and director and any company (i) which employs such officer or
director, (ii) for which such officer or director currently serves as an officer
or director, or (iii) which is affiliated with such officer or director:

|Name of
      Director | Name of Company                                                                                                            | Description of
      Business                                             | Position                                            
|---------------------- | -------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | ----------------------------------------------------
|Keith J. Henderson     | Cardero Resource Corp. Indico Resources Limited                                                                            | Natural resource Natural resource                                         | VP-Exploration Director                             
|Anton J. Drescher      | USA Video Interactive Corp. International Tower Hill
      Mines Ltd. Trevali Mining Corporation Ravencrest Resources Inc. | Video-on-Demand Natural resource Natural resource
      Natural resource  | CFO, Sec & Dir Director
      Dir. Pres & Dir.      
|Mark D. Cruise         | Cardero Resource Corp. Trevali Mining Corporation                                                                          | Natural resource Natural resource                                         | VPBusiness Dev. CEO, Pres.
      & Dir.            
|Gordon Neal            | Americas Petrogas Inc. Balmoral Resources Limited
      Mag Silver Corp. Rockgate Capital Inc.                             | Natural resource Natural resource Natural resource
      Natural resource | Director Director VP 
      Corporate Dev. Director
|Carlos Ballon          | N/A                                                                                                                        | N/A                                                                       | N/A                                                 
|Anna Ladd              | Trevali Mining Corporation                                                                                                 | Natural Resource                                                          | CFO                                                 
|Marla K. Ritchie       | Cardero Resource Corp. Corvus Gold Inc.
      International Tower Hill Mines Ltd. Wealth Minerals Ltd.                     | Natural resource Natural resource Natural resource
      Natural resource | Secretary Secretary
      Secretary Secretary       

|6. **B** | Compensation
|-------- | ------------

Executive Compensation

For the fiscal year ending January 31, 2011, the Company paid
an aggregate of $520,814 in cash compensation to the directors and senior
management as a group.

Under applicable Canadian securities laws, the Company is
required to disclose the compensation paid to its CEO, CFO and each of the three
most highly compensated executive officers, or individuals acting in a similar
capacity, as of the end of the Companys most recently completed financial year,
whose total compensation exceeded Cdn $150,000. In the case of the Company, only
the compensation of the individuals serving as Chief Executive Officer and Chief
Financial Officer as of the end of the Companys most recently completed
financial year is required to be disclosed (collectively, the CEO and CFO, are
referred to as the Named Executive Officers or NEOs). The following table
sets out the compensation paid to the Named Executive Officers for the fiscal
years ended January 31, 2011, January 31, 2010 and January 31, 2009.

49

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Name and principal
      position
    Fiscal Year
      Ended
    Salary (Cdn$)
    Share- based
      awards (Cdn$)
    Option- based
      awards (Cdn$)
    Non-equity incentive
      plan compensation (Cdn$)
    Pension value
      (Cdn$)
    All other
      compensation (Cdn$)
    Total compensation
      (Cdn$)Annual incentive
      plans
    Long-term incentive
      plans(5)Keith Henderson President and Chief
      Executive Officer(1)
    2011 2010 2009
    237,540(2)194,600(2)24,000
    Nil Nil Nil
    166,573 156,012 93,355
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    404,113 350,612 117,355Michael Kinley Chief Financial
      Officer(4)
    2011 2010 2009
    60,000 (3)60,000
      (3)Nil
    Nil Nil Nil
    81,332 85,250 73,089
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil 30,000
    141,332 145,250 103,089


|(1) | Keith Henderson was appointed President and Chief
      Executive Officer of the Company on December 1, 2008.                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                               
|(2) | Consulting fees paid to Acuitas Consulting Ltd
      (Acuitas), a consulting company owned by Keith J. Henderson. Acuitas
      provides management services to the Company comprising all duties and
      responsibilities performed by Mr. Henderson as President and Chief
      Executive Officer of the Company.                                      
|    |                                                                                                                                                                                                                                                                                                                                                               
|(3) | Consulting fees paid to Winslow Associates Management
      & Communications Inc.(Winslow), a consulting company owned by
      Michael W. Kinley. Winslow provides services to the Company on a
      month-to-month contract basis comprised of all duties and responsibilities
      performed by Mr. Kinley as Chief Financial Officer of the
  Company.
|    |                                                                                                                                                                                                                                                                                                                                                               
|(4) | Michael Kinley was appointed Chief Financial Officer of
      the Company on July 30, 2008, and resigned as Chief Financial Officer of
      the Company on July 12, 2011.                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                               
|(5) | "LTIP" or "long term incentive plan" means any plan that
      provides compensation intended to motivate performance to occur over a
      period greater than one fiscal year, but does not include option or
      share-based awards. The Company does not have any such
  plans.                                                                         

During the fiscal year ended January 31, 2011, the following
incentive stock options were granted to the Named Executive Officers:

NEO Name
    Securities Under
      Options Granted (#)
    % of Total Options
      Granted in Financial Year(1)
    Exercise or Base
      Price (CAD/Security)
    Market Value of Securities
      Underlying Options on the Date of Grant
      (CAD/Security)(2)
    Expiration DateKeith Henderson
    250,000
    7%
    $1.20
    $1.15
    January 25, 2013Michael Kinley
    100,000 50,000
    4%
    $0.85 $1.20
    $0.85 $1.15
    May 27, 2012 January 25, 2013


|(1) | Percentage of all of the Companys options granted during
      the last fiscal year.             
|--- | --------------------------------------------------------------------------------------------------
|(2) | Value calculated using the closing price of Common Shares
      on the TSX.V on the date of grant.

The following table sets forth details of all exercises of
stock options during the fiscal year ended January 31, 2011 by the NEOs and the
financial year-end value of unexercised options on an aggregated basis:

50

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NEO Name
    Securities Acquired
      on Exercise (#)
    Aggregate Value
      Realized (CAD $)(1)
    Unexercised Options at
      Financial Year-End (#) Exercisable/
      Unexercisable
    Value of Unexercised
      In-the-Money Options at Financial
      Year-End (CAD $)(2)
      Exercisable/ UnexercisableKeith Henderson
    Nil
    Nil
    650,000/Nil
    204,000/NilMichael Kinley
    Nil
    Nil
    330,000/Nil
    78,600/Nil


|(1) | Value calculated using the closing price of Common Shares
      on the TSX.V on the date of exercise, less the exercise price per
      share.                                                                                              
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Value calculated using the closing price of Common Shares
      on the TSX.V on January 31, 2011, being the last trading day of the
      Companys shares for the fiscal year, of $1.11 per share, less the
      exercise price per share.

The Company does not provide retirement benefits for directors
or senior management.

Director Compensation

Except as noted below, the Company had no arrangements,
standard or otherwise, pursuant to which directors were compensated by the
Company for their services in their capacity as directors, or for committee
participation, involvement in special assignments or for services as a
consultant or expert during the fiscal year ended January 31, 2011.

Except as noted below, none of the Companys current directors
who are not also executive officers have received any manner of compensation for
services provided in their capacity as directors, consultants or experts during
the Companys most recently completed financial year.

Effective December 1, 2008, the Board approved the payment of
an annual retainer and meeting fees to the directors who are not also executive
officers of the Company, in recognition of the fact that service as a director
in an active resource exploration company such as the Company requires a
significant commitment of time and effort, as well as the assumption of
increasing liability. Directors who are not executive officers and do not
receive any consulting fees from the Company, receive a monthly retainer fee of
$2,000 ($24,000 per annum), plus an additional fee of $500 per Board or Board
committee meeting attended in person or by conference telephone. There is no
additional compensation paid with respect to committee membership. In addition,
the Company reimburses directors for their out-of-pocket costs incurred in
attending board meetings. During the fiscal year ended January 31, 2011, the
persons serving as our directors who were not also executive officers received
the following directors fees:

Name
    Fees earned (Cdn$)Augusto Baertl(1)
    $20,000Mark Cruise
    $24,000Anton Drescher
    $24,000Gordon Neal
    $24,000Carlos Ballon(2)
    $107,274


(1)
    Augusto Baertl resigned as a director of the Company on
      October 6, 2010.(2)
    Carlos Ballon was appointed as a director of the Company
      on July 20, 2010. He receives a monthly consulting fee of US$15,000 for
      services provided to the Company.


Directors who are not also executive officers are also eligible
to receive incentive stock options. The following table sets out the incentive
stock options granted during the financial year ended January 31, 2011 to the
directors of the Company who were not executive officers:

51

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Name
    Securities Under
      Option (#)
    Exercise Price
      (CAD/Security)
    Market Value of Securities
      Underlying Options on Date of
      Grant(1) (CAD/Security)
    Expiration DateAugusto Baertl(2)
    25,000
    $0.85
    $0.85
    May 27, 2012Mark Cruise
    212,500 50,000
    $0.85 $1.20
    $0.85 $1.15
    May 27, 2012 January 25, 2013Anton Drescher
    125,000 50,000
    $0.85 $1.20
    $0.85 $1.15
    May 27, 2012 January 25, 2013Gordon Neal
    125,000 50,000
    $0.85 $1.20
    $0.85 $1.15
    May 27, 2012 January 25, 2013Carlos Ballon (3)
    92,500
    $0.85
    $0.85
    May 27, 2012200,000
    $1.20
    $1.15
    January 25, 2013


|(1) | Value calculated using the closing price of Common Shares
      on the TSX.V on the date of grant.
|--- | --------------------------------------------------------------------------------------------------
|(2) | August Baertl resigned as a director of the Company on
      October 6, 2010.                     
|(3) | Carlos Ballon was appointed as a director of the Company
      on July 20, 2010.                  

|6. **C** | Board Practices
|-------- | ---------------

The Board is elected at each annual general meeting of the
shareholders. Each director elected will hold office until the next annual
meeting or until his successor is duly elected or appointed, unless his office
is earlier vacated in accordance with the BCBCA. See Item 6.A  Directors and
Senior Management - for dates directors were first elected to the Board. No
director has a service contract with the Company or any of its subsidiaries
providing for benefits upon termination of employment.

Audit Committee

The following directors are on the Audit Committee:

| | Anton J. Drescher
| | -----------------
| | Mark D. Cruise   
| | Gordon Neal      

At the first meeting following each annual general meeting, the
directors must elect an audit committee to hold office until the next annual
general meeting consisting of no fewer than three directors, of whom a majority
must not be officers or employees or a control person, of the Company or of
any affiliate or associate of the Company. A control person means any person
that holds or is one of a combination of persons that holds a sufficient number
of securities of the Company so as to affect materially the control of the
Company or that holds 20% or more of the voting securities of the Company.

The primary duties and responsibilities of the Audit Committee
are to:

- Serve as an independent and objective party to monitor the financial
  reporting process and the system of internal controls of Dorato.
- Monitor the independence and performance of the auditor of Dorato (the
  Auditor) and the internal audit function of Dorato.
- Provide an open avenue of communication among the Auditor, financial and
  senior management and the Board of Directors.

Before a financial statement that is to be submitted to an
annual general meeting is considered by the directors, it must be submitted to
the Audit Committee for review, and the report of the Audit Committee on the
financial statements must be submitted to the directors thereafter.

52

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The Company has no compensation or remuneration committee.

|6. **D** | Employees
|-------- | ---------

As at January 31, 2011 we had three employees, of which three
were located in Vancouver BC. None of our employees is covered by any labour
union. The Company retains consultants to perform administrative and financial
accounting/bookkeeping services.

|6. **E** | Share Ownership
|-------- | ---------------

The following table sets out the beneficial ownership of
Company common shares by the Companys directors and NEOs listed in Item 6.B as
of July 25, 2011.

Name
    Common Shares Beneficially
      Owned(1)
    Percentage of Class(2)Keith J. Henderson (3)
    744,881
    1.0%Anton J. Drescher (4)
    1,485,221
    1.9%Mark D. Cruise (5)
    528,000
    0.7%Gordon Neal (6)
    545,000
    0.7%Carlos Ballon(7)
    7,668,759
    10.0%Michael W. Kinley(8)
    316,000
    0.4%Anna Ladd
    Nil
    n/aAll Executive Officers and Directorsas a Group(10)
    11,287,861
    14.7%


|(1) | Includes common shares issuable pursuant to stock options
      and common share purchase warrants that are exercisable on, or within 60
      days after, July 25, 2011.                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(2) | Percentages are based on 76,389,985 common shares
      outstanding as of July 25, 2011. Common shares subject to stock options
      and common share purchase warrants that are exercisable on, or within 60
      days after, July 25, 2011 are deemed outstanding for computing the
      percentage of the person holding such stock options and common share
      purchase warrants but are not deemed outstanding for computing the
      percentage of any other person.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(3) | Includes 250,000 common shares issuable pursuant to stock
      options and 10,441 common shares issuable pursuant to common share
      purchase warrants that are exercisable on, or within 60 days after, July
      25, 2011.                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(4) | Includes 390,000 common shares issuable pursuant to stock
      options and 50,000 common shares issuable pursuant to common share
      purchase warrants that are exercisable on, or within 60 days after, July
      25, 2011.                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(5) | Includes 287,500 common shares issuable pursuant to stock
      options and 12,500 common shares issuable pursuant to common share
      purchase warrants that are exercisable on, or within 60 days after, July
      25, 2011.                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(6) | Includes 450,000 common shares issuable pursuant to stock
      options that are exercisable on, or within 60 days after, July 25,
      2011.                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(7) | Includes 792,500 common shares issuable pursuant to stock
      options that are exercisable on, or within 60 days after, July 25,
      2011.                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(8) | Includes 230,000 common shares issuable pursuant to stock
      options that are exercisable on, or within 60 days after, July 25,
      2011.                                                                                                                                                                                                                                                                                                                                   

Incentive Stock Option Plan

At the annual general meeting held on July 30, 2008, the
shareholders approved the 2008 Stock Option Plan of the Company (the
Plan).

The purpose of the Plan is to recognize contributions made by
directors, officers, consultants and employees of the Company and to provide for
an incentive for their continuing relationship with the Company.

53

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Pursuant to the policies of the TSX.V, we must seek shareholder
approval for the Plan at each annual meeting as the Plan is considered a
Rolling Plan. The Plan was ratified by shareholders at the annual meeting held
July 12, 2011.

The material terms of the Plan are as follows:

|1. | Options may be granted to directors, officers, employees
      and consultants of, and to the employees of companies providing management
      services to, the Company and its affiliates.                                                                                                                                                                                                                                                                       
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2. | The aggregate number of shares which may be issued
      pursuant to options granted under the Plan, unless otherwise approved by
      shareholders, may not exceed that number which is equal to 10% of the
      Common Shares issued and outstanding at the time of the grant.                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3. | The number of Common Shares subject to each option will
      be determined by the Board, or a duly appointed committee of the Board,
      provided that the aggregate number of shares reserved for issuance
      pursuant to options granted to:                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (f)                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3. | The exercise price of an option may not be set at less
      than the minimum price permitted by the TSX.V (currently the closing price
      of the Common Shares on the TSX.V on the day prior to an option grant less
      the maximum discount permitted by the TSX.V).                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4. | Options may be exercisable for a period of up to five
      years from the date of grant.                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|5. | The options are non-assignable and non-transferable. The
      options can only be exercised by the optionee as long as the optionee
      remains an eligible optionee pursuant to the Plan or within a period of
      not more than 90 days after ceasing to be an eligible optionee (30 days in
      the case of a person engaged in investor relations activities) or, if the
      optionee dies, within one year from the date of the optionees
    death.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|6. | Options granted to consultants engaged to perform
      investor relations activities must be subject to a vesting requirement,
      whereby such options will vest over a period of not less than 12 months,
      with a maximum of 25% vesting in any 3 month
period.                                                                                                                                                                                          

54

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|7. | On the occurrence of a takeover bid, issuer bid or going
      private transaction, the Board will have the right to accelerate the date
      on which any option becomes exercisable.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of July 25, 2011 there were 5,700,000 stock options
outstanding; however, the Company may in the future grant options to eligible
participants in accordance with the Plan. Based on the outstanding Common
Shares, as at July 25, 2011, options with respect to an additional 1,938,999
Common Shares are available for grant under the Plan.

The stock options held by our NEOs and directors listed in Item
6.B as of July 25, 2011 are as follows:

Name
    Securities Under Options
      Granted (#)
    Exercise or Base Price
      (CAD/Security)
    Expiration DateKeith Henderson
    250,000
    $1.20
    January 25, 2013Augusto Baertl
    125,000 25,000
    $1.09 $0.85
    January 29, 2012 May 27, 2012Michael Kinley
    80,000 100,000 50,000
    $1.09 $0.85 $1.20
    January 29, 2012 May 27, 2012 January
      25, 2013Anton Drescher
    90,000 125,000 125,000 50,000
    $0.45 $1.09 $0.85 $1.20
    October 30, 2011 January 29, 2012 May
      27, 2012 January 25, 2013Mark Cruise
    25,000 212,500 50,000
    $1.09 $0.85 $1.20
    January 29, 2012 May 27, 2012 January
      25, 2013Gordon Neal
    250,000 125,000 25,000 50,000
    $0.45 $1.09 $0.85 $1.20
    October 30, 2011 January 29, 2012 May
      27, 2012 January 25, 2013Carlos Ballon
    500,000 92,500 200,000
    $1,09 $0.85 $1.20
    January 29, 2012 May 27, 2012 January
      25, 2013


|ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY
      TRANSACTIONS
|------- | -------------------------------------------------------

|7. **A** | Major Shareholders
|-------- | ------------------

As at July 25, 2011, to the knowledge of management, the
following shareholders are the only persons who beneficially own 5% or more of
the issued and outstanding Common Shares:

Identity of Person or Group
    No. of Shares
      Beneficially Owned(1)
    Percent of Class(2)Carlos Ballon (3)
    7,668,759
    10.0%Sprott Asset Management LP (5)
    5,906,800
    7.7%


| | (1) | Includes common shares issuable pursuant to stock options
      and common share purchase warrants that are exercisable on, or within 60
      days after, July 25, 2011.                                                                                                                                                                                                                                                                                                        
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (2) | Percentages are based on 76,389,985 common shares
      outstanding as of July 25, 2011. Common shares subject to stock options
      and common share purchase warrants that are exercisable on, or within 60
      days after, July 25, 2011 are deemed outstanding for computing the
      percentage of the person holding such stock options and common share
      purchase warrants but are not deemed outstanding for computing the
      percentage of any other person.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (3) | Includes 792,500 common shares issuable pursuant to stock
      options that are exercisable on, or within 60 days after, July 25,
      2011.                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (4) | Based on amended Schedule 13G filed with the Securities
      and Exchange Commission on January 24, 2011.                                                                                                                                                                                                                                                                                                                                                                       

55

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None of the shareholders disclosed above have any voting rights
with respect to their respective Common Shares that are different from any other
holder of Common Shares. All of the Common Shares, both issued and unissued, are
shares of the same class and rank equally as to dividends, voting powers and
participation of powers. Accordingly, there are no special voting powers held by
the Companys major shareholders.

As of July 25, 2011, there were 76,139,985 Common Shares issued
and outstanding. The Companys shareholder list as provided by Computershare
Investor Services, Inc., the Companys registrar and transfer agent, indicates
that the Company had 55 registered shareholders owning Common Shares, of which
34 of these registered shareholders, holding approximately 11,098,850 (14.58%)
Common Shares, are residents of the United States, 12 of these registered
shareholders, holding approximately 64,482,135 (84.69%) Common Shares, are
residents of Canada, and 9 of these registered shareholders, holding
approximately 559,000 (0.73%) Common Shares, are residents of jurisdictions
other than the United States and Canada.

Control by Foreign Government or Other
Persons

To the best of our knowledge, the Company is not directly or
indirectly owned or controlled by another corporation, any foreign government,
or any other natural or legal person, severally or jointly.

Change of Control

As of the date of this Annual Report, there are no arrangements
known to us which may at a subsequent date result in a change of control.

|7. **B** | Related Party
Transactions
|-------- | --------------------------

Except as noted below, there have been no transactions or loans
since February 1, 2010 which are material to the Company or a related party, or
are unusual in their nature or conditions, and have been entered into, or are
proposed to be entered into, between the Company and (a) enterprises that
directly or indirectly through one or more intermediaries, control or are
controlled by, or are under common control with, the Company; (b) associates;
(c) individuals owning, directly or indirectly, an interest in the voting power
of the Company that gives them significant influence over the Company, and close
members of any such individuals family; (d) key management personnel, that is,
those persons having authority and responsibility for planning, directing and
controlling the activities of the Company, including directors and senior
management of the Company and close members of such individuals families; and
(e) enterprises in which a substantial interest in the voting power is owned,
directly or indirectly, by any person described in (c) or (d) or over which such
a person is able to exercise significant influence. This includes enterprises
owned by directors or major shareholders of the Company and enterprises that
have a member of key management in common with the Company. Close members of an
individuals family are those that may be expected to influence, or be
influenced by, that person in their dealings with the Company. An associate is
an unconsolidated enterprise in which the Company has a significant influence or
which has significant influence over the Company. Significant influence over an
enterprise is the power to participate in the financial and operating policy
decisions of the enterprise but is less than control over those policies.
Shareholders beneficially owning a 10% interest in the voting power of the
Company are presumed to have a significant influence on the company.

|1. | Pursuant to an oral agreement, effective as and from
      December 1, 2008, the Company has retained Acuitas Consulting Ltd. Inc.
      (Acuitas), a company controlled by Keith Henderson, the President and
      Chief Executive Officer and a director of the Company, to provide
      management services to the Company comprised of all duties and
      responsibilities performed by Mr. Henderson as President and Chief
      Executive Officer of the Company, at a fee of $12,000 per month. This fee
      was increased to $16,600 effective March 1, 2009. The arrangement is
      without a fixed term, and is terminable by either party on 30 days notice.
      During the financial year ended January 31, 2011, the Company paid Acuitas
      an aggregate of $237,540 (2010 - $194,600, 2009 -
  $24,000).
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

56

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|2. | Pursuant to an oral agreement, effective as and from
      August 1, 2008, the Company retained Winslow Associates Management &
      Communications Inc. (Winslow), a company controlled by Michael W.
      Kinley, the Chief Financial Officer of the Company from July 30, 2008 to
      July 12, 2011, to provide financial services to the Company comprised of
      all duties and responsibilities performed by Mr. Kinley as Chief Financial
      Officer of the Company, at a fee of $5,000 per month. The arrangement was
      without a fixed term, and terminable by either party on 30 days notice.
      The arrangement terminated effective August 1, 2011.During the
      financial year ended January 31, 2011, the Company paid Winslow an
      aggregate of $60,000 (2010 - $30,000, 2009 - $30,000).
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|3. | Pursuant to an oral agreement, effective as and from July
      12, 2011, the Company retained Anna Ladd, the Chief Financial Officer of
      the Company from July 12, 2011, to provide financial services to the
      Company comprised of all duties and responsibilities performed by Ms. Ladd
      as Chief Financial Officer of the Company, at a fee of $2,500 per month.
      The arrangement was without a fixed term, and terminable by either party
      on 30 days notice.                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|3. | Pursuant to an oral agreement, effective as of and from
      October 1, 2008, the Company leases office space and receives
      administrative services from Cardero Resource Corp., a company with
      certain directors or officers (Mark Cruise, Keith Henderson and Marla
      Ritchie) in common with the Company. Under the lease, the Company is
      obligated to pay $2,488.84 per month in rent (plus utilities). The term of
      the lease is from October 1, 2008 to October 1, 2012 and is terminable by
      either party with 30 days notice.                                                                                                                                                                                                                                                            

|7. **C** | Interests of Experts and
  Counsel
|-------- | ----------------------------------

Not applicable.

|ITEM 8. | FINANCIAL INFORMATION
|------- | ---------------------

|8. **A** | Consolidated Statements and Other Financial
      Information
|-------- | -------------------------------------------------------------

See the Companys audited consolidated financial statements as
of January 31, 2011 and 2010 and for the fiscal years ended January 31, 2011,
2010 and 2009, together with the notes thereto, attached to this annual
report.

The Company is not aware of any current or pending material
legal or arbitration proceeding to which we are or are likely to be a party or
of which any of our properties are or are likely to be the subject.

The Company is not aware of any material proceeding in which
any director, senior manager or affiliate is either a party adverse to us or our
subsidiaries or has a material interest adverse to us.

The Company has not declared or paid any cash dividends on our
capital stock. The Company does not currently expect to pay cash dividends in
the foreseeable future.

|8. **B** | Significant Changes
|-------- | -------------------

There have been no significant changes since the date of our
annual financial statements, other than as discussed in this Annual Report.

57

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|ITEM 9. | THE OFFER AND LISTING
|------- | ---------------------

|9. **A** | Offer and Listing
Details
|-------- | -------------------------

The following table discloses the annual high and low sales
prices in Canadian dollars for our common shares for the five (5) most recent
financial years as traded on the TSX Venture Exchange (TSX.V) after April 24,
2008 and the NEX board (NEX) prior thereto:

Year
    High
    Low2011
    $1.63
    $0.532010
    $1.35
    $0.532009
    $2.37
    $0.192008
    $2.40
    $0.672007
    $0.99
    $0.30


The following table discloses the high and low sales prices in
Canadian dollars for our common shares for each quarterly period within the two
most recent fiscal years and any subsequent quarterly period as traded on the
TSX.V:

Quarter Ended
    High
    LowApril 30, 2011
    $1.19
    $0.34January 31, 2011
    $1.63
    $0.93October 31, 2010
    $1.58
    $0.62July 31, 2010
    $0.96
    $0.55April 30, 2010
    $1.27
    $0.53January 31, 2010
    $1.35
    $0.50October 31, 2009
    $0.68
    $0.35July 31, 2009
    $0.55
    $0.42April 30, 2009
    $0.81
    $0.47


The following table discloses the monthly high and low sales
prices in Canadian dollars for our common shares for the most recent six months
as traded on the TSX.V:

Month
    High
    LowJune 2011
    $0.35
    $0.18May 2011
    $0.45
    $0.30April 2011
    $0.70
    $0.34March 2011
    $1.05
    $0.63February 2011
    $1.19
    $0.96January 2011
    $1.59
    $1.01


The following table discloses the high and low sales prices in
US dollars for our common shares for each quarterly period within the two most
recent fiscal years and any subsequent quarterly period as traded on the OTCQX
International since the listing of our common shares on the OTCQX International
on March 2, 2010:

58

---

Quarter Ended
    High
    LowApril 30, 2011
    US$1.20
    US$0.37January 31, 2011
    US$1.60
    US$1.01October 30, 2010
    US$1.50
    US$0.60July 31, 2010
    US$0.94
    US$0.56April 30, 2010
    US$1.24
    US$0.54January 31, 2010
    US$1.29
    US$0.99


The following table discloses the monthly high and low sales
prices in US dollars for our common shares for the most recent six months as
traded on the OTCQX International:

Month
    High
    LowJune 2011
    US$0.37
    US$0.19May 2011
    US$0.47
    US$0.33April 2011
    US$0.74
    US$0.37March 201
    US$1.08
    US$0.63February 2011
    US$1.05
    US$0.99January 2011
    US$1.60
    US$1.13


|9. **B** | Plan of Distribution
|-------- | --------------------

Not applicable.

|9. **C** | Markets
|-------- | -------

The Companys common shares are listed on the TSX.V, under the
trading symbol DRI. There are currently no restrictions on the
transferability of these shares under Canadian securities laws. We are also
quoted on OTCQX International under the trading symbol DRIFF and the
Berlin Stock Exchange Unofficial Regulated Market and the Frankfurt Stock
Exchange under the symbol DO5.

|9. **D** | Selling Shareholders
|-------- | --------------------

Not applicable.

|9. **E** | Dilution
|-------- | --------

Not applicable.

|9. **F** | Expenses of the Issue
|-------- | ---------------------

Not applicable.

|ITEM 10. | ADDITIONAL INFORMATION
|-------- | ----------------------

|10. **A** | Share Capital
|--------- | -------------

Not applicable.

59

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|10. **B** | Memorandum and Articles of
  Association
|--------- | ----------------------------------------

Effective August 21, 2006, we continued our jurisdiction of
incorporation into British Columbia from Wyoming. Our new form of Articles, as
approved by our shareholders at our annual meeting held on August 9, 2006
(adjourned from July 17, 2006), were adopted on the date of continuation.

Under the Business Corporations Act(British Columbia)
we are permitted to conduct any lawful business that we are not restricted from
conducting by our Articles, which does not contain any restriction on the
business we may conduct.

A director who, in any way, directly or indirectly, is
interested in a proposed contract or transaction with us must disclose in
writing the nature and extent of the director's interest at a meeting of
directors and abstain from voting on approval of the matter. Our Articles permit
an interested director to be counted in the quorum and the Business
Corporations Act(British Columbia) provides that a director of a company is
not deemed to be interested in a proposed contract or transaction merely because
the proposed contract or transaction relates, among other things, to an
indemnity, liability insurance or the remuneration of a director in that
capacity. Hence, directors can vote compensation to themselves or any of their
members. The board of directors has the power to borrow, issue debt obligations
and to charge our assets on the terms and conditions they consider appropriate,
provided only that such power is exercised bona fide and in our best interests.
There is no mandatory retirement age for directors. A director is not required
to have any share qualification.

The Company has only one class of common shares, without any
special rights or restrictions. The dividend entitlement of a shareholder of
record is fixed at the time of declaration by the board of directors. A vested
dividend entitlement does not lapse, but unclaimed dividends are subject to a
statutory six year contract debts limitation. Each common share is entitled to
one vote on the election of each director. There are no cumulative voting
rights, in consequence of which a simple majority of votes at the annual meeting
can elect all of our directors. Each common share carries with it the right to
share equally with every other common share in dividends declared and in any
distribution of our surplus assets after payment to creditors on any winding up,
liquidation or dissolution. There are no sinking fund provisions. All common
shares must be fully paid prior to issue and are thereafter subject to no
further capital calls by us. There exists no discriminatory provision affecting
any existing or prospective holder of common shares as a result of such
shareholder owning a substantial number of shares.

Under the Business Corporations Act(British Columbia),
the rights of shareholders may be changed only by the shareholders passing a
special resolution approved by 2/3 of the votes cast at a special meeting of
shareholders, the notice of which is accompanied by an information circular
describing the proposed action and its effect on the shareholders.

The Board of Directors must call an annual general meeting once
in each calendar year and not later than 15 months after the last such meeting.
The Board may call an extraordinary general meeting at any time. Notice of such
meetings must be accompanied by an information circular describing the proposed
business to be dealt with and making disclosures as prescribed by statute. A
shareholder or shareholders having in the aggregate 5% of our issued shares may
requisition a meeting and the Board is required to hold such meeting within four
months of such requisition. Admission to such meetings is open to registered
shareholders and their duly appointed proxies. Others may be admitted subject to
the pleasure of the meeting.

The Companys Notice of Articles and Articles contain no
limitations on the rights of non-resident or foreign shareholders to hold or
exercise rights on our shares. Except for the Investment Canada Act,
which requires certain transactions to be approved by the Minister of Industry
and/or the Minister of Canadian Heritage as being of net benefit to Canada
before they may proceed, there is no limitation at law upon the right of a
nonresident to hold shares in a Canadian company.

60

---

There are no provisions in our Notice of Articles and Articles
that would have an effect of delaying, deferring or preventing a change in
control and that would operate only with respect to a merger, acquisition or
corporate restructuring involving us or any of our subsidiaries.

There is no provision in our Notice of Articles and Articles
setting a threshold or requiring or governing disclosure of shareholder
ownership above any level. Securities Acts, regulations and the policies and
rules thereunder in the Provinces of Alberta and British Columbia and in the
United States, where we are a reporting company, require any person holding or
having beneficial ownership or control or direction of more than 10% of our
issued shares to file insider and other reports disclosing such share holdings.

|10. **C** | Material Contracts
|--------- | ------------------

Each of the following material contracts to which the Company
has been a party for the two years immediately preceding the publication of this
annual report is listed as an exhibit to this annual report and is summarized
elsewhere herein:

|1. | Option Agreement with Carlos Ballon Barraza, a director
      and major shareholder of our Company, dated October 18, 2007 whereby we
      were granted the option to earn a 100% interest in the Vicmarama
      Property.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                             
|2. | Option Agreement with Carlos Ballon Barraza, a director
      and major shareholder of our Company, dated October 18, 2007 whereby we
      were granted the option to earn a 100% interest in the Maravilla
      Property.
|   |                                                                                                                                                                                                                             
|3. | Option Agreement with Carlos Ballon Barraza, a director
      and major shareholder of our Company, dated October 18, 2007 whereby we
      were granted the option to earn a 100% interest in the Lahaina 2
      Property.
|   |                                                                                                                                                                                                                             
|4. | Option Agreement with Carlos Ballon Barraza, a director
      and major shareholder of our Company, dated October 18, 2007 whereby we
      were granted the option to earn a 100% interest in the Lahaina 1
      Property.
|   |                                                                                                                                                                                                                             
|5. | Royalty Agreement between the Company and Franco-Nevada
      Corporation dated August 18, 2008, as amended March 20, 2009.                                                                                                 
|   |                                                                                                                                                                                                                             
|6. | First Amendment to the Royalty Agreement between the
      Company and Franco-Nevada Corporation dated March 30,
  2009.                                                                                                    

|10. **D** | Exchange Controls
|--------- | -----------------

There are no governmental laws, decrees or regulations in
Canada relating to restrictions on the export or import of capital, or affecting
the remittance of interest, dividends or other payments to non-resident holders
of our common stock. See Taxation below.

|10. **E** | Taxation
|--------- | --------

Material Canadian Federal Income Tax
Considerations

The following is a summary of the material anticipated tax
consequences of an investment by an investor not resident or deemed resident in
Canada, under Canadian tax laws and any applicable bilateral income treaty. This
summary does not apply to an investor that carries on, or is deemed to carry on,
an insurance business in Canada or elsewhere or an authorized foreign bank as
defined in the Income Tax Act(Canada).

61

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The discussion of Canadian federal income considerations is not
exhaustive of all possible Canadian federal income tax considerations and does
not take into account provincial, territorial or foreign tax considerations. It
is not intended to be, nor should it be construed to be, legal or tax advice to
any particular holder of common shares. Prospective purchasers of our common
shares, including non-resident insurers carrying on business in Canada, are
advised to consult with their advisors about the income tax consequences to them
of an acquisition of common shares. The discussion of Canadian federal income
considerations assumes that holders of common shares hold their common shares as
capital property, deal at arm's length and are not affiliated with us, are not
"financial institutions" as defined in the Income Tax Act, an
interest in which would be a "tax shelter investment"as defined in the
Income TaxAct, and do not use or hold their common shares in, or in the
course of, carrying on a business in Canada and has not acquired them in one or
more transactions considered to be an adventure in the nature of trade. The
discussion of Canadian federal income considerations is based on the current
provisions of the Income Tax Actand the regulations under the Income
Tax Act, all proposed amendments to the Income Tax Actand the
Income Tax Actregulations announced by the Minister of Finance (Canada)
as at the date hereof, the current administrative and assessing policies of the
Canada Revenue Agency, and the current provisions of the Canada-U.S. Income Tax
Convention (1980). It has been assumed that any proposed amendments to the
Income Tax Act and the Income Tax Actregulations will be enacted
in substantially their present form.

The anticipated tax consequences may change, and any change may
be retroactively effective. If so, this summary may be affected. Further, any
variation or difference from the facts or representations recited here, for any
reason, might affect the following discussion, perhaps in an adverse manner, and
make this summary inapplicable.

Dividends on our Common
Shares

Under the Income Tax Act, amounts paid or credited on
account or in lieu of payment of, or in satisfaction of, dividends, including
stock dividends, to holders of our common shares that are resident in a country
other than Canada will be reduced by withholding tax of 25% of the amount of the
dividend. The rate of withholding tax may be reduced in accordance with the
terms of a bilateral income tax treaty between Canada and the country in which a
holder of common shares is resident.

Under the Canada-U.S. Income Tax Convention, when the recipient
of a dividend on the common shares is the beneficial owner of the dividend, does
not have a "permanent establishment" in Canada, and is considered to be a
resident of the United States and a "qualifying person" under the Canada-U.S.
Income Tax Convention, the rate of Canadian withholding tax on the dividends
will generally be reduced to 15% of the gross amount of the dividends or, if the
recipient is a corporation which owns at least 10% of our voting stock, to 5% of
the gross amount of the dividends. Dividends paid or credited to a holder that
is a United States tax-exempt organization, as described in Article XXI of the
Canada-U.S. Income Tax Convention, will not have to pay the Canadian withholding
tax.

Disposition of Common Shares

A holder of common shares will not be required to pay tax for a
capital gain on the disposition of a common share unless the common share is
"taxable Canadian property" of the holder as defined by the Income Tax
Act, and no relief is afforded under the Canada-U.S. Income Tax Convention.
A common share will generally not be taxable Canadian property to a holder
provided that the common share is listed on a designated stock exchange within
the meaning of the Income Tax Act(which includes the TSX.V) and at any
particular time during the 60-month period that ends at that time (i) the
holder, or persons with whom the holder did not deal at arm's length (within the
meaning of the Income Tax Act), or any combination of these parties, did
not own 25% or more of the issued shares of any of our classes or series of
shares at any time within five years immediately preceding the date of
disposition, and (ii) not more than 50% of the fair market value of the shares
was derived directly or indirectly from one or any conmbination of real or
immovable property situated in Canada, Canadian resource properties, timber
resource properties (each as defined in the Income Tax Actand options
in respect of or interests in, or for civil law rights in any such properties.
Where a common

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share is taxable Canadian property to a U.S. resident holder
who is a "qualifying" person for purposes of the Canada-U.S. Income Tax
Convention it will generally exempt such holder from tax on the disposition of
the common share provided its value is not, at the time of the disposition,
derived principally from real property situated in Canada. This relief under the
Canada-U.S. Income Tax Convention may not be available to a U.S. resident holder
who had a "permanent establishment" available in Canada during the 12
months immediately preceding the disposition of the common share where the
common share constitutes business property and where any gain on the disposition
of the share is attributable to such permanent establishment.

Under the Income Tax Act, the disposition of a common
share by a holder may occur in a number of circumstances including on a sale or
gift of the share or upon the death of the holder. There are no Canadian federal
estate or gift taxes on the purchase or ownership of the common shares.

Repurchase of Common Shares

If we repurchase our common shares from a holder of our common
shares (other than a purchase of common shares on the open market in a manner in
which shares would be purchased by any member of the public in the open market),
the amount paid by us that exceeds the "paid-up capital" of the shares
purchased will be deemed by the Income Tax Actto be a dividend paid by
us to the holder of our common shares. The paid-up capital of our common shares
may be less than the holder's cost of its common shares. The tax treatment of
any dividend received by a holder of our common shares has been described above
under "Dividends on our Common Shares."

A holder of our common shares will also be considered to have
disposed of its common shares purchased by us for proceeds of disposition equal
to the amount received or receivable by the holder on the purchase, less the
amount of any dividend as described above. As a result, the holder of our common
shares will generally realize a capital gain (or capital loss) equal to the
amount by which the proceeds of disposition, net of any costs of disposition and
adjusted for any deemed dividends, exceed (or are exceeded by) the adjusted cost
base of these shares. The tax treatment of any capital gain or capital loss has
been described above under "Disposition of Common Shares."

CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS

The following is a general summary of certain U.S. federal
income tax considerations applicable to a U.S. Holder (as defined below) arising
from and relating to the acquisition, ownership, and disposition of Common
Shares.

This summary is for general information purposes only and does
not purport to be a complete analysis or listing of all potential U.S. federal
income tax considerations that may apply to a U.S. Holder arising from and
relating to the acquisition, ownership, and disposition of Common Shares. In
addition, this summary does not take into account the individual facts and
circumstances of any particular U.S. Holder that may affect the U.S. federal
income tax consequences to such U.S. Holder, including specific tax consequences
to a U.S. Holder under an applicable tax treaty. Accordingly, this summary is
not intended to be, and should not be construed as, legal or U.S. federal income
tax advice with respect to any U.S. Holder. Each U.S. Holder should consult its
own tax advisor regarding the U.S. federal, U.S. federal alternative minimum,
U.S. federal estate and gift, U.S. state and local, and foreign tax consequences
relating to the acquisition, ownership and disposition of Common Shares.

No legal opinion from U.S. legal counsel or ruling from the
Internal Revenue Service (the IRS) has been requested, or will be obtained,
regarding the U.S. federal income tax consequences of the acquisition,
ownership, and disposition of Common Shares. This summary is not binding on the
IRS, and the IRS is not precluded from taking a position that is different from,
and contrary to, the positions taken in this summary. In addition, because the
authorities on which this summary is based are subject to various
interpretations, the IRS and the U.S. courts could disagree with one or more of
the positions taken in this summary.

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Scope of this Summary

Authorities

This summary is based on the Internal Revenue Code of 1986, as
amended (the Code), Treasury Regulations (whether final, temporary, or
proposed), published rulings of the IRS, published administrative positions of
the IRS, the Convention Between Canada and the United States of America with
Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended
(the Canada-U.S. Tax Convention), and U.S. court decisions that are applicable
and, in each case, as in effect and available, as of the date of this document.
Any of the authorities on which this summary is based could be changed in a
material and adverse manner at any time, and any such change could be applied on
a retroactive or prospective basis which could affect the U.S. federal income
tax considerations described in this summary. This summary does not discuss the
potential effects, whether adverse or beneficial, of any proposed legislation
that, if enacted, could be applied on a retroactive or prospective basis.

U.S. Holders

For purposes of this summary, the term "U.S. Holder" means a
beneficial owner of Common Shares that is for U.S. federal income tax
purposes:

- an individual who is a citizen or resident of the U.S.;
- a corporation (or other entity taxable as a corporation for U.S. federal
  income tax purposes) organized under the laws of the U.S., any state thereof
  or the District of Columbia;
- an estate whose income is subject to U.S. federal income taxation
  regardless of its source; or
- a trust that (a) is subject to the primary supervision of a court within
  the U.S. and the control of one or more U.S. persons for all substantial
  decisions or (b) has a valid election in effect under applicable Treasury
  Regulations to be treated as a U.S. person.

Non-U.S. Holders

For purposes of this summary, a non-U.S. Holder is a
beneficial owner of Common Shares that is not a U.S. Holder. This summary does
not address the U.S. federal income tax consequences to non-U.S. Holders arising
from and relating to the acquisition, ownership, and disposition of Common
Shares. Accordingly, a non-U.S. Holder should consult its own tax advisor
regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal
estate and gift, U.S. state and local, and foreign tax consequences (including
the potential application of and operation of any income tax treaties) relating
to the acquisition, ownership, and disposition of Common Shares.

U.S. Holders Subject to Special U.S. Federal Income Tax
Rules Not Addressed

This summary does not address the U.S. federal income tax
considerations applicable to U.S. Holders that are subject to special provisions
under the Code, including the following U.S. Holders: (a) U.S. Holders that are
tax-exempt organizations, qualified retirement plans, individual retirement
accounts, or other tax-deferred accounts; (b) U.S. Holders that are financial
institutions, underwriters, insurance companies, real estate investment trusts,
or regulated investment companies; (c) U.S. Holders that are broker-dealers,
dealers, or traders in securities or currencies that elect to apply a
mark-to-market accounting method; (d) U.S. Holders that have a functional
currency other than the U.S. dollar; (e) U.S. Holders that own Common Shares as
part of a straddle, hedging transaction, conversion transaction, constructive
sale, or other arrangement involving more than one position; (f) U.S. Holders
that acquired Common Shares in connection with the exercise of employee stock
options or otherwise as compensation for services; (g) U.S. Holders that hold
Common Shares other than as a capital asset within the meaning of Section 1221
of the Code (generally, property held

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for investment purposes); (h) partnerships and other
pass-through entities (and investors in such partnerships and entities); or (i)
U.S. Holders that own or have owned (directly, indirectly, or by attribution)
10% or more of the total combined voting power of the outstanding shares of the
Company. This summary also does not address the U.S. federal income tax
considerations applicable to U.S. Holders who are: (a) U.S. expatriates or
former long-term residents of the U.S.; (b) persons that have been, are, or will
be a resident or deemed to be a resident in Canada for purposes of the Income
Tax Act; (c) persons that use or hold, will use or hold, or that are or will be
deemed to use or hold Common Shares in connection with carrying on a business in
Canada; (d) persons whose Common Shares constitute taxable Canadian property
under the Income Tax Act; or (e) persons that have a permanent establishment in
Canada for the purposes of the Canada-U.S. Tax Convention. U.S. Holders that are
subject to special provisions under the Code, including U.S. Holders described
immediately above, should consult their own tax advisor regarding the U.S.
federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S.
state and local, and foreign tax consequences relating to the acquisition,
ownership and disposition of Common Shares.

If an entity that is classified as a partnership (or
pass-through entity) for U.S. federal income tax purposes holds Common Shares,
the U.S. federal income tax consequences to such partnership and the partners of
such partnership generally will depend on the activities of the partnership and
the status of such partners (or owners). This summary does not address the tax
consequences to any such partner. Partners of entities that are classified as
partnerships for U.S. federal income tax purposes should consult their own tax
advisor regarding the U.S. federal income tax consequences arising from and
relating to the acquisition, ownership, and disposition of Common Shares.

Tax Consequences Not Addressed

This summary does not address the U.S. federal, U.S. federal
alternative minimum, U.S. federal estate and gift, U.S. state and local, and
foreign tax consequences to U.S. Holders of the acquisition, ownership, and
disposition of Common Shares. Each U.S. Holder should consult its own tax
advisor regarding the U.S. federal alternative minimum, U.S. federal estate and
gift, U.S. state and local, and foreign tax consequences of the acquisition,
ownership, and disposition of Common Shares.

Tax Status of the Company

On August 21, 2006, the Company continued from its
incorporation in the State of Wyoming to being a British Columbia, Canada
corporation. Section 7874 of the Code was enacted in 2004 to address
transactions whereby U.S. corporations migrate to a foreign jurisdiction to
avoid U.S. federal income tax. Section 7874(b) provides generally that a
corporation that migrates from the U.S. will nonetheless be considered a U.S.
corporation and remain subject to U.S. tax on its worldwide income unless the
migrating entity has substantial business activities in the foreign country to
which it is migrating when compared to its total business activities. The
Company has taken the position that at the time of its continuance to Canada, it
had substantial business activities in Canada when compared to its total
business activities, and that Section 7874(b) of the Code does not apply to
cause the Company to be treated as a U.S. corporation and be subject to U.S.
income tax on its worldwide income. The position taken by the Company may be
challenged by U.S. tax authorities with the result that the Company may be
treated as a U.S. corporation and remain subject to U.S. federal income tax on
its worldwide income. In addition to U.S. income taxes, were Section 7874(b) of
the Code to apply to the Company, the Company could be subject to penalties for
failure to file U.S. tax returns, late fees, and interest on past due taxes. The
remainder of this summary assumes that Section 7874(b) of the Code does not
apply to the Company.

Passive Foreign Investment Company Rules

If the Company were to constitute a passive foreign investment
company under the meaning of Section 1297 of the Code (a PFIC, as defined
below) for any year during a U.S. Holders holding period, then certain
different and potentially adverse rules will affect the U.S. federal income tax
consequences to a U.S. Holder resulting from the acquisition, ownership and
disposition of Common Shares. In addition, in any year

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in which the Company constitutes a PFIC, such holder would be
required to file an annual report with the IRS containing such information as
Treasury Regulations and/or other IRS guidelines may require. Recent IRS
guidance suspends this annual requirement pending the release of new forms;
filings will eventually be required with respect to any year in which the
obligation was suspended.

PFIC Status of the Company

The Company generally will be a PFIC if, for a tax year, (a)
75% or more of the gross income of the Company for such tax year is passive
income (the income test) or (b) 50% or more of the value of the Companys
assets either produce passive income or are held for the production of passive
income, based on the quarterly average of the fair market value of such assets
(the asset test). Gross income generally includes all sales revenues less
the cost of goods sold, and passive income generally includes, for example,
dividends, interest, certain rents and royalties, certain gains from the sale of
stock and securities, and certain gains from commodities transactions.

Active business gains arising from the sale of commodities
generally are excluded from passive income if substantially all of a foreign
corporations commodities are stock in trade of such foreign corporation or
other property of a kind which would properly be included in inventory of such
foreign corporation, or property held by such foreign corporation primarily for
sale to customers in the ordinary course of business, if such gains constitute
more than 85% of the corporations total receipts and certain other requirements
are satisfied.

For purposes of the PFIC income test and asset test described
above, if the Company owns, directly or indirectly, 25% or more of the total
value of the outstanding shares of another corporation, the Company will be
treated as if it (a) held a proportionate share of the assets of such other
corporation and (b) received directly a proportionate share of the income of
such other corporation. In addition, for purposes of the PFIC income test and
asset test described above, passive income does not include any interest,
dividends, rents, or royalties that are received or accrued by the Company from
a related person (as defined in Section 954(d)(3) of the Code), to the extent
such items are properly allocable to the income of such related person that is
not passive income.

In addition, under certain attribution rules, if the Company is
a PFIC, U.S. Holders will be deemed to own their proportionate share of the
stock of any subsidiary of the Company which is also a PFIC (a Subsidiary
PFIC), and will be subject to U.S. federal income tax on their proportionate
share of (a) a distribution on the stock of a Subsidiary PFIC and (b) a
disposition or deemed disposition of the stock of a Subsidiary PFIC, both as if
such U.S. Holders directly held the stock of such Subsidiary PFIC.

The Company believes that it constituted a PFIC during the tax
year ended January 31, 2011, and may be a PFIC in the current and future tax
years. The determination of whether any corporation was, or will be, a PFIC for
a tax year depends, in part, on the application of complex U.S. federal income
tax rules, which are subject to differing interpretations. In addition, whether
any corporation will be a PFIC for any tax year depends on the assets and income
of such corporation over the course of each such tax year and, as a result,
cannot be predicted with certainty as of the date of this document. Accordingly,
there can be no assurance that the IRS will not challenge any determination made
by the Company (or a Subsidiary PFIC) concerning its PFIC status or that the
Company (and each Subsidiary PFIC) was not, or will not be, a PFIC for any tax
year. Each U.S. Holder should consult its own tax advisor regarding the PFIC
status of the Company and each Subsidiary PFIC.

Default PFIC Rules Under Section 1291 of the Code

If the Company is a PFIC, the U.S. federal income tax
consequences to a U.S. Holder of the acquisition, ownership, and disposition of
Common Shares will depend on whether such U.S. Holder makes an election to treat
the Company and each Subsidiary PFIC as a qualified electing fund or QEF
under Section 1295 of the Code (a QEF Election) or a mark-to-market election
under Section 1296 of the Code (a Mark-to-

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Market Election). A U.S. Holder that does not make either a
QEF Election or a Mark-to-Market Election will be referred to in this summary as
a Non-Electing U.S. Holder.

A Non-Electing U.S. Holder will be subject to the rules of
Section 1291 of the Code with respect to (a) any gain recognized on the sale or
other taxable disposition of Common Shares and (b) any excess distribution
received on the Common Shares. A distribution generally will be an excess
distribution to the extent that such distribution (together with all other
distributions received in the current tax year) exceeds 125% of the average
distributions received during the three preceding tax years (or during a U.S.
Holders holding period for the Common Shares, if shorter).

Under Section 1291 of the Code, any gain recognized on the sale
or other taxable disposition of Common Shares, and any excess distribution
received on Common Shares, must be ratably allocated to each day in a
Non-Electing U.S. Holders holding period for the respective Common Shares. The
amount of any such gain or excess distribution allocated to the tax year of
disposition or distribution of the excess distribution and to years before the
entity became a PFIC, if any, would be taxed as ordinary income. The amounts
allocated to any other tax year would be subject to U.S. federal income tax at
the highest tax applicable to ordinary income in each such year, and an interest
charge would be imposed on the tax liability for each such year, calculated as
if such tax liability had been due in each such year. A Non-Electing U.S. Holder
that is not a corporation must treat any such interest paid as personal
interest, which is not deductible.

If the Company is a PFIC for any tax year during which a
Non-Electing U.S. Holder holds Common Shares, the Company will continue to be
treated as a PFIC with respect to such Non-Electing U.S. Holder, regardless of
whether the Company ceases to be a PFIC in one or more subsequent tax years. A
Non-Electing U.S. Holder may terminate this deemed PFIC status by electing to
recognize gain (which will be taxed under the rules of Section 1291 of the Code
discussed above) as if such Common Shares were sold on the last day of the last
tax year for which the Company was a PFIC.

QEF Election

A U.S. Holder that makes a QEF Election for the first tax year
in which its holding period of its Common Shares begins, generally, will not be
subject to the rules of Section 1291 of the Code discussed above with respect to
its Common Shares. However, a U.S. Holder that makes a QEF Election will be
subject to U.S. federal income tax on such U.S. Holders pro rata share of (a)
the net capital gain of the Company, which will be taxed as long-term capital
gain to such U.S. Holder, and (b) the ordinary earnings of the Company, which
will be taxed as ordinary income to such U.S. Holder. Generally, net capital
gain is the excess of (a) net long-term capital gain over (b) net short-term
capital loss, and ordinary earnings are the excess of (a) earnings and
profits over (b) net capital gain. A U.S. Holder that makes a QEF Election will
be subject to U.S. federal income tax on such amounts for each tax year in which
the Company is a PFIC, regardless of whether such amounts are actually
distributed to such U.S. Holder by the Company. However, for any tax year in
which the Company is a PFIC and has no net income or gain, U.S. Holders that
have made a QEF Election would not have any income inclusions as a result of the
QEF Election. If a U.S. Holder that made a QEF Election has an income inclusion,
such a U.S. Holder may, subject to certain limitations, elect to defer payment
of current U.S. federal income tax on such amounts, subject to an interest
charge. If such U.S. Holder is not a corporation, any such interest paid will be
treated as personal interest, which is not deductible.

A U.S. Holder that makes a QEF Election generally (a) may
receive a tax-free distribution from the Company to the extent that such
distribution represents earnings and profits of the Company that were
previously included in income by the U.S. Holder because of such QEF Election
and (b) will adjust such U.S. Holders tax basis in the Common Shares to reflect
the amount included in income or allowed as a tax-free distribution because of
such QEF Election. In addition, a U.S. Holder that makes a QEF Election
generally will recognize capital gain or loss on the sale or other taxable
disposition of Common Shares.

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The procedure for making a QEF Election, and the U.S. federal
income tax consequences of making a QEF Election, will depend on whether such
QEF Election is timely. A QEF Election will be treated as timely if such QEF
Election is made for the first year in the U.S. Holders holding period for the
Common Shares in which the Company was a PFIC. A U.S. Holder may make a timely
QEF Election by filing the appropriate QEF Election documents at the time such
U.S. Holder files a U.S. federal income tax return for such year.

A QEF Election will apply to the tax year for which such QEF
Election is made and to all subsequent tax years, unless such QEF Election is
invalidated or terminated or the IRS consents to revocation of such QEF
Election. If a U.S. Holder makes a QEF Election and, in a subsequent tax year,
the Company ceases to be a PFIC, the QEF Election will remain in effect
(although it will not be applicable) during those tax years in which the Company
is not a PFIC. Accordingly, if the Company becomes a PFIC in another subsequent
tax year, the QEF Election will be effective and the U.S. Holder will be subject
to the QEF rules described above during any subsequent tax year in which the
Company qualifies as a PFIC.

U.S. Holders should be aware that there can be no assurances
that the Company will satisfy the record keeping requirements that apply to a
QEF, or that the Company will supply U.S. Holders with information that such
U.S. Holders require to report under the QEF rules, in the event that the
Company is a PFIC and a U.S. Holder wishes to make a QEF Election. Thus, U.S.
Holders may not be able to make a QEF Election with respect to their Common
Shares. Each U.S. Holder should consult its own tax advisor regarding the
availability of, and procedure for making, a QEF Election.

Mark-to-Market Election

A U.S. Holder may make a Mark-to-Market Election only if the
Common Shares are marketable stock. The Common Shares generally will be
marketable stock if the Common Shares are regularly traded on (a) a national
securities exchange that is registered with the Securities and Exchange
Commission, (b) the national market system established pursuant to section 11A
of the Securities and Exchange Act of 1934, or (c) a foreign securities exchange
that is regulated or supervised by a governmental authority of the country in
which the market is located, provided that (i) such foreign exchange has trading
volume, listing, financial disclosure, and other requirements and the laws of
the country in which such foreign exchange is located, together with the rules
of such foreign exchange, ensure that such requirements are actually enforced
and (ii) the rules of such foreign exchange ensure active trading of listed
stocks. If such stock is traded on such a qualified exchange or other market,
such stock generally will be regularly traded for any calendar year during
which such stock is traded, other than in de minimis quantities, on at least 15
days during each calendar quarter.

A U.S. Holder that makes a Mark-to-Market Election with respect
to its Common Shares generally will not be subject to the rules of Section 1291
of the Code discussed above with respect to such Common Shares. However, if a
U.S. Holder does not make a Mark-to-Market Election beginning in the first tax
year of such U.S. Holders holding period for the Common Shares or such U.S.
Holder has not made a timely QEF Election, the rules of Section 1291 of the Code
discussed above will apply to certain dispositions of, and distributions on, the
Common Shares.

A U.S. Holder that makes a Mark-to-Market Election will include
in ordinary income, for each tax year in which the Company is a PFIC, an amount
equal to the excess, if any, of (a) the fair market value of the Common Shares,
as of the close of such tax year over (b) such U.S. Holders tax basis in such
Common Shares. A U.S. Holder that makes a Mark-to-Market Election will be
allowed a deduction in an amount equal to the excess, if any, of (a) such U.S.
Holders adjusted tax basis in the Common Shares, over (b) the fair market value
of such Common Shares (but only to the extent of the net amount of previously
included income as a result of the Mark-to-Market Election for prior tax
years).

A U.S. Holder that makes a Mark-to-Market Election generally
also will adjust such U.S. Holders tax basis in the Common Shares to reflect
the amount included in gross income or allowed as a deduction because of such
Mark-to-Market Election. In addition, upon a sale or other taxable disposition
of Common Shares, a

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U.S. Holder that makes a Mark-to-Market Election will recognize
ordinary income or ordinary loss (not to exceed the excess, if any, of (a) the
amount included in ordinary income because of such Mark-to-Market Election for
prior tax years over (b) the amount allowed as a deduction because of such
Mark-to-Market Election for prior tax years).

A Mark-to-Market Election applies to the tax year in which such
Mark-to-Market Election is made and to each subsequent tax year, unless the
Common Shares cease to be marketable stock or the IRS consents to revocation
of such election. Each U.S. Holder should consult its own tax advisor regarding
the availability of, and procedure for making, a Mark-to-Market Election.

Although a U.S. Holder may be eligible to make a Mark-to-Market
Election with respect to the Common Shares, no such election may be made with
respect to the stock of any Subsidiary PFIC that a U.S. Holder is treated as
owning, because such stock is not marketable. Hence, the Mark-to-Market Election
will not be effective to eliminate the interest charge described above with
respect to deemed dispositions of Subsidiary PFIC stock or distributions from a
Subsidiary PFIC.

Other PFIC Rules

Under Section 1291(f) of the Code, the IRS has issued proposed
Treasury Regulations that, subject to certain exceptions, would cause a U.S.
Holder that had not made a timely QEF Election to recognize gain (but not loss)
upon certain transfers of Common Shares that would otherwise be tax-deferred
(e.g., gifts and exchanges pursuant to corporate reorganizations). However, the
specific U.S. federal income tax consequences to a U.S. Holder may vary based on
the manner in which Common Shares are transferred.

Certain additional adverse rules will apply with respect to a
U.S. Holder if the Company is a PFIC, regardless of whether such U.S. Holder
makes a QEF Election. For example under Section 1298(b)(6) of the Code, a U.S.
Holder that uses Common Shares as security for a loan will, except as may be
provided in Treasury Regulations, be treated as having made a taxable
disposition of such Common Shares.

Special rules also apply to the amount of foreign tax credit
that a U.S. Holder may claim on a distribution from a PFIC. Subject to such
special rules, foreign taxes paid with respect to any distribution in respect of
stock in a PFIC are generally eligible for the foreign tax credit. The rules
relating to distributions by a PFIC and their eligibility for the foreign tax
credit are complicated, and a U.S. Holder should consult with their own tax
advisor regarding the availability of the foreign tax credit with respect to
distributions by a PFIC.

The PFIC rules are complex, and each U.S. Holder should consult
its own tax advisor regarding the PFIC rules and how the PFIC rules may affect
the U.S. federal income tax consequences of the acquisition, ownership, and
disposition of Common Shares.

U.S. Federal Income Tax Consequences of the Acquisition,
Ownership, and Disposition of Common Shares

The following discussion is subject to the rules described
above under the heading Passive Foreign Investment Company Rules.

Distributions on Common Shares

Subject to the PFIC rules discussed above, a U.S. Holder that
receives a distribution, including a constructive distribution, with respect to
a Common Share will be required to include the amount of such distribution in
gross income as a dividend (without reduction for any Canadian income tax
withheld from such distribution) to the extent of the current or accumulated
earnings and profits of the Company, as computed for U.S. federal income tax
purposes. A dividend generally will be taxed to a U.S. Holder at ordinary income
tax rates. To the extent that a distribution exceeds the current and accumulated
earnings and profits of the Company, such distribution will be treated first
as a tax-free return of capital to the extent of a U.S. Holder's

69

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tax basis in the Common Shares and thereafter as gain from the
sale or exchange of such Common Shares. (See Sale or Other Taxable Disposition
of Common Shares below). However, the Company may not maintain the calculations
of earnings and profits in accordance with U.S. federal income tax principles,
and each U.S. Holder should therefore assume that any distribution by the
Company with respect to the Common Shares will constitute ordinary dividend
income. Dividends received on Common Shares generally will not be eligible for
the dividends received deduction. In addition, the Company does not anticipate
that its distributions will be eligible for the preferential tax rates
applicable to long-term capital gains. The dividend rules are complex, and each
U.S. Holder should consult its own tax advisor regarding the application of such
rules.

Sale or Other Taxable Disposition of Common Shares

Subject to the PFIC rules discussed above, upon the sale or
other taxable disposition of Common Shares, a U.S. Holder generally will
recognize capital gain or loss in an amount equal to the difference between the
amount of cash plus the fair market value of any property received and such U.S.
Holder's tax basis in such Common Shares sold or otherwise disposed of. Subject
to the PFIC rules discussed above, gain or loss recognized on such sale or other
disposition generally will be long-term capital gain or loss if, at the time of
the sale or other disposition, the Common Shares have been held for more than
one year.

Preferential tax rates apply to long-term capital gain of a
U.S. Holder that is an individual, estate, or trust. There are currently no
preferential tax rates for long-term capital gain of a U.S. Holder that is a
corporation. Deductions for capital losses are subject to significant
limitations under the Code.

Additional Tax on Passive Income

Certain U.S. Holders who are individuals, estates or trusts
will be required to pay up to an additional 3.8% tax on, among other things,
dividends and capital gains for tax years beginning after December 31, 2012.
U.S. Holders should consult their own tax advisors regarding the effect, if any,
of this tax on their ownership and disposition of Common Shares.

Additional Considerations

Receipt of Foreign Currency

The amount of any distribution paid to a U.S. Holder in foreign
currency, or on the sale, exchange or other taxable disposition of Common
Shares, generally will be equal to the U.S. dollar value of such foreign
currency based on the exchange rate applicable on the date of receipt
(regardless of whether such foreign currency is converted into U.S. dollars at
that time). If the foreign currency received is not converted into U.S. dollars
on the date of receipt, a U.S. Holder will have a basis in the foreign currency
equal to its U.S. dollar value on the date of receipt. Any U.S. Holder who
receives payment in foreign currency and engages in a subsequent conversion or
other disposition of the foreign currency may have a foreign currency exchange
gain or loss that would be treated as ordinary income or loss, and generally
will be U.S. source income or loss for foreign tax credit purposes. Each U.S.
Holder should consult its own U.S. tax advisor regarding the U.S. federal income
tax consequences of receiving, owning, and disposing of foreign currency.

Foreign Tax Credit

Subject to the PFIC rules discussed above, a U.S. Holder that
pays (whether directly or through withholding) Canadian income tax with respect
to dividends paid on the Common Shares generally will be entitled, at the
election of such U.S. Holder, to receive either a deduction or a credit for such
Canadian income tax paid. Generally, a credit will reduce a U.S. Holders U.S.
federal income tax liability on a dollar-for-dollar basis, whereas a deduction
will reduce a U.S. Holders income subject to U.S. federal income tax. This
election is made on a year-by-year basis and applies to all foreign taxes paid
(whether directly or through withholding) by a U.S. Holder during a year.

70

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Complex limitations apply to the foreign tax credit, including
the general limitation that the credit cannot exceed the proportionate share of
a U.S. Holders U.S. federal income tax liability that such U.S. Holders
foreign source taxable income bears to such U.S. Holders worldwide taxable
income. In applying this limitation, a U.S. Holders various items of income and
deduction must be classified, under complex rules, as either foreign source or
U.S. source. Generally, dividends paid by a foreign corporation should be
treated as foreign source for this purpose, and gains recognized on the sale of
stock of a foreign corporation by a U.S. Holder should be treated as U.S. source
for this purpose, except as otherwise provided in an applicable income tax
treaty, and if an election is properly made under the Code. However, the amount
of a distribution with respect to the Common Shares that is treated as a
dividend may be lower for U.S. federal income tax purposes than it is for
Canadian federal income tax purposes, resulting in a reduced foreign tax credit
allowance to a U.S. Holder. In addition, this limitation is calculated
separately with respect to specific categories of income. The foreign tax credit
rules are complex, and each U.S. Holder should consult its own U.S. tax advisor
regarding the foreign tax credit rules.

Backup Withholding and Information Reporting

Under U.S. federal income tax law and Treasury Regulations,
certain categories of U.S. Holders must file information returns with respect to
their investment in, or involvement in, a foreign corporation. For example, new
U.S. return disclosure obligations (and related penalties) are imposed on U.S.
Holders that hold certain specified foreign financial assets in excess of
US$50,000. The definition of specified foreign financial assets includes not
only financial accounts maintained in foreign financial institutions, but also,
unless held in accounts maintained by a financial institution, any stock or
security issued by a non-U.S. person, any financial instrument or contract held
for investment that has an issuer or counterparty other than a U.S. person and
any interest in a foreign entity. U.S. Holders may be subject to these reporting
requirements unless their Common Shares are held in an account at a domestic
financial institution. Penalties for failure to file certain of these
information returns are substantial. U.S. Holders should consult with their own
tax advisors regarding the requirements of filing information returns.

Payments made within the U.S. or by a U.S. payor or U.S.
middleman, of dividends on, and proceeds arising from the sale or other taxable
disposition of, Common Shares generally may be subject to information reporting
and backup withholding tax, at the rate of 28% (and increasing to 31% for
payments made after December 31, 2012), if a U.S. Holder (a) fails to furnish
such U.S. Holders correct U.S. taxpayer identification number (generally on
Form W-9), (b) furnishes an incorrect U.S. taxpayer identification number, (c)
is notified by the IRS that such U.S. Holder has previously failed to properly
report items subject to backup withholding tax, or (d) fails to certify, under
penalty of perjury, that such U.S. Holder has furnished its correct U.S.
taxpayer identification number and that the IRS has not notified such U.S.
Holder that it is subject to backup withholding tax. However, certain exempt
persons, such as corporations, generally are excluded from these information
reporting and backup withholding rules. Any amounts withheld under the U.S.
backup withholding tax rules will be allowed as a credit against a U.S. Holders
U.S. federal income tax liability, if any, or will be refunded, if such U.S.
Holder furnishes required information to the IRS in a timely manner. Each U.S.
Holder should consult its own tax advisor regarding the information reporting
and backup withholding rules.

|10. **F** | Dividends and Paying
Agents
|--------- | ---------------------------

Not applicable.

|10. **G** | Statement by Experts
|--------- | --------------------

Not applicable.

71

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|10. **H** | Documents on Display
|--------- | --------------------

Material contracts and publicly available corporate records may
be viewed at our head office located at Suite 2300  1177 West Hastings Street,
Vancouver, British Columbia, V6E 2K3.

The Companys reports and other information, including this
annual report and the exhibits thereto, as filed with the Securities and
Exchange Commission in accordance with the Exchange Act, may be inspected and
copied at the public reference facilities maintained by the Securities and
Exchange Commission at Judiciary Plaza, 100 F Street NE, Washington, D.C. 20549.
Copies of such material may also be obtained from the Public Reference Section
of the Securities and Exchange Commission at 100 F Street NE, Washington, D.C.
20549, at prescribed rates. Information may be obtained regarding the Washington
D.C. Public Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330 or by contacting the Securities and Exchange Commission over the
Internet at its website at http://www.sec.gov.

|10. **I** | Subsidiary Information
|--------- | ----------------------

Not applicable.

|ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES
      ABOUT MARKET RISK
|-------- | ----------------------------------------------------------------

The Company manages its capital structure and makes adjustments
to it, based on the funds available to the Company, in order to support future
business opportunities. The Company defines its capital as shareholders equity.
The Board does not establish quantitative return on capital criteria for
management, but rather relies on the expertise of the Companys management to
sustain future development of the business.

The Company currently has no source of revenues; as such the
Company is dependent upon external financings or the sale of assets (or an
interest therein) to fund activities. In order to carry future projects and pay
for administrative costs, the Company will spend its existing working capital
and raise additional funds as needed. Management reviews its capital management
approach on an ongoing basis and believes that this approach, given the relative
size of the Company, is reasonable. There were no changes in the Companys
approach to capital management during the year ended January 31, 2011. The
Company is not subject to externally imposed capital requirements.

The Company classifies its cash and cash equivalents as
held-for-trading; accounts receivable as loans and receivables; accounts payable
and accrued liabilities and due to related parties as other financial
liabilities.

The carrying values of cash and cash equivalents, accounts
receivable, and accounts payable and accrued liabilities approximate their fair
values due to the expected maturity of these consolidated financial instruments.
The fair values of amounts due to related parties have not been disclosed as
their fair values cannot be reliably measured since the parties are not at arms
length.

The Companys risk exposure and the impact on the Companys
financial instruments are summarized below:

(a) Credit risk

In respect to accounts receivable, the Company is not exposed
to significant credit risk as the majority are due from governmental
agencies.

Concentration of credit risk exists with respect to the
Companys cash as all amounts are held at a single major Canadian financial
institution and a major Peruvian financial institution. The Companys
concentration of credit risk and maximum exposure thereto in Canada follows.
Similar risk in Peru is considered not significant.

72

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| |                                                |   |           |  |   |            | 
| | ---------------------------------------------- | - | --------- |  | - | ---------- | 
| | Cash and Equivalents                           |   | 2011      |  |   | 2010       | 
| | Held at a major Canadian financial institution | $ | 6,879,002 |  | $ | 15,911,974 | 
| | Peruvian financial institution                 |   | 25,717    |  |   | -          | 
| |                                                | $ | 6,904,719 |  | $ | 15,911,974 | 

|    | The credit risk associated with cash and cash equivalents
      is minimized substantially by ensuring that these financial assets are
      placed with major Canadian and Peruvian financial institutions with strong
      investment-grade ratings by a primary ratings agency.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(b) | Liquidity risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Liquidity risk is the risk that the Company will
      encounter difficulty in satisfying financial obligations as they fall due.
      The Companys approach to managing liquidity risk is to provide reasonable
      assurance that it will have sufficient funds to meet liabilities when due.
      The Company manages its liquidity risk by forecasting cash flows required
      by operations and anticipated investing and financing activities. The
      Company normally maintains sufficient cash to meet the Companys business
      requirements and at January 31, 2011, the cash balance of $6,904,719 will
      likely be sufficient to meet the needs for the coming year. Liabilities as
      at January 31, 2011 are as follows:

| |                              |   |         |  |   |        |  |   |         |  |   |         | 
| | ---------------------------- | - | ------- |  | - | ------ |  | - | ------- |  | - | ------- | 
| |                              |   | 0 to 3  |  |   | 3 to 6 |  |   | 6 to 12 |  |   |         | 
| |                              |   | months  |  |   | months |  |   | months  |  |   | Total   | 
| | Accounts payable and accrued |   |         |  |   |        |  |   |         |  |   |         | 
| | liabilities                  | $ | 334,300 |  | $ | -      |  | $ | -       |  | $ | 334,300 | 
| | Due to related parties       |   | 208,483 |  |   | -      |  |   | -       |  |   | 208,483 | 
| |                              | $ | 542,783 |  | $ | -      |  | $ | -       |  | $ | 542,783 | 

|(c) | Market risk                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                            
|    | Market risk is the risk that the fair value or future
      cash flows of a financial instrument will fluctuate because of changes in
      market prices. Market risk comprises three types of risk: interest rate
      risk, foreign currency risk and other price risk.
|    |                                                                                                                                                                                                                                                                            
|    | i.                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                            
|    | ii.                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                            

73

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| | iii. | Other price risk                                                                                                                                                                                                                                                                                
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                 
| |      | Other price risk is the risk that the fair or future cash
      flows of a financial instrument will fluctuate because of changes in
      market prices, other than those arising from interest rate risk or foreign
      currency risk. The Company is not exposed to any other price
  risk.

The Companys operations are not yet exposed to risks
associated with commodity prices, interest rates and credit. Commodity price
risk is defined as the potential loss that the Company may incur as a result of
changes in the fair value of gold, silver, iron, copper or other metals that may
be produced by the Company. Industry wide risks can, however, affect the
Companys general ability to finance exploration, and development of exploitable
resources; however, such effects are not predictable or quantifiable.

|ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN
      EQUITY SECURITIES
|-------- | ------------------------------------------------------------

Not applicable.

PART II

|ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND
      DELINQUENCIES
|-------- | -----------------------------------------------------

Not applicable.

|ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF
      SECURITY HOLDERS AND **USE OF PROCEEDS**
|-------- | --------------------------------------------------------------------------------------

Material Modifications to the Rights of Security
Holders

There have been no material modifications to the rights of
security holders since the adoption of new Articles in 2006.

Use of Proceeds

Not applicable.

|ITEM 15. | CONTROLS AND PROCEDURES
|-------- | -----------------------

Evaluation of disclosure controls and
procedures

Under the supervision and with the participation of the
Companys management, including its Chief Executive Officer and Chief Financial
Officer, the Company evaluated the effectiveness of the design and operation of
its disclosure controls and procedures (as defined in Rule 13a-15(e) or
15d-15(e) under the Exchange Act). Based upon that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that, as of the end of
the period covered by this report, the Companys disclosure controls and
procedures were adequately designed and are effective to ensure that information
required to be disclosed by the Company in the reports it files or submits under
the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in applicable rules and forms.

In addition, the Companys Chief Executive Officer and Chief
Financial Officer have determined that the disclosure controls and procedures
are effective to ensure that information required to be disclosed in the reports
that are filed under the Exchange Act is accumulated and communicated to
management, including the Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure.

74

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Managements annual report on internal control over
financial reporting

The Company's management is responsible for establishing and
maintaining adequate internal control over financial reporting as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Companys management
has employed a framework consistent with Exchange Act Rule 13a-15(c), to
evaluate the Companys internal control over financial reporting described
below. The Companys internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation and fair presentation of financial statements for
external purposes in accordance with generally accepted accounting
principles.

Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

Management conducted an evaluation of the design and operation
of the Companys internal control over financial reporting as of January 31,
2011 based on the criteria set forth in Internal Control  Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
This evaluation included review of the documentation of controls, evaluation of
the design effectiveness of controls, testing of the operating effectiveness of
controls and a conclusion on this evaluation. Based on this evaluation,
management has concluded that the Companys internal control over financial
reporting was effective as of January 31, 2011.

Changes in Internal Control over Financial
reporting

During the period covered by this Annual Report, no changes
occurred in the Companys internal control over financial reporting that have
materially affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting.

|ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT
|--------- | --------------------------------

The Board has determined that Anton Drescher is an audit
committee financial expert (as defined in Item 16A of Form 20-F). Mr. Drescher
is not independent under the independence standards of NYSE Amex applicable to
audit committee members because he is the former President and Chief Executive
Officer of the Company.

|ITEM 16B. | CODE OF ETHICS
|--------- | --------------

The Company adopted a Code of Ethics effective April 2004. Any
person may obtain without charge, upon written request, a copy of such Code of
Ethics by contacting our Corporate Secretary at #2300-1177 West Hastings Street,
Vancouver, British Columbia, V6E 2K3

|ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND
      SERVICES
|--------- | --------------------------------------------

The following table presents fees for the professional audit
services rendered by Smythe Ratcliffe LLP, Chartered Accountants for the fiscal
years ended January 31, 2011 and 2010.

Year ended January 31
    
    2011
    
    
    2010Audit fees
    $
    62,800
    
    $
    51,816Audit-related fees
    
    -
    
    
    -Tax fees(1)
    
    3,500
    
    
    3,500All other fees(2)
    
    16,500
    
    
    7,000Total
    $
    79,650
    
    $
    62,316


75

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| | (1) | Tax fees relate to the preparation of corporate income
      tax returns.                                                                                                                                                             
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                       
| | (2) | All other fees consist primarily of the aggregate fees
      billed for professional services rendered by Smythe Ratcliffe LLP,
      Chartered Accountants, related to reviews of our unaudited quarterly
      financial statements.

Pre-approval policies and procedures

The Audit Committee nominates and engages the independent
auditors to audit the financial statements, and approves all audit, audit
related services, tax services and other services provided by independent
auditors. Any services provided by the independent auditors that are not
specifically included within the scope of the audit must be pre-approved by the
Audit Committee prior to any engagement. All such services provided by the
independent auditors during the last two fiscal years were pre-approved in this
manner. The Audit Committee is permitted to approve certain fees for
audit-related services, tax services and other services pursuant to a de minimus
exception before the completion of the engagement.

|ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR
      AUDIT COMMITTEES
|--------- | ----------------------------------------------------------------

Not applicable.

|ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE
      ISSUER AND AFFILIATED **PURCHASERS**
|--------- | --------------------------------------------------------------------------------

Not applicable.

|ITEM 16F. | CHANGE IN REGISTRANTS CERTIFYING
      ACCOUNTANT
|--------- | --------------------------------------------------

Not applicable.

|ITEM 16G. | CORPORATE GOVERNANCE
|--------- | --------------------

Not applicable.

PART III

|ITEM 17. | FINANCIAL STATEMENTS
|-------- | --------------------

We are filing with this annual report the following:

- Auditors Report dated July 25, 2011.
- Consolidated Balance Sheets at January 31, 2011 and January 31, 2010.
- Consolidated Statements of Operations and Deficit for the years ended
  January 31, 2011, January 31, 2010 and January 31, 2009.
- Consolidated Statement of Shareholders Equity at January 31, 2011 and
  2010.
- Consolidated Statements of Cash Flows for the years ended January 31,
  2011, January 31, 2010 and January 31, 2009.
- Notes to the Consolidated Financial Statements for the years ended January
  31, 2011, January 31, 2010 and January 31, 2009.

76

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CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

January 31, 2011 and 2010

---

DORATO RESOURCES INC.

January 31, 2011 and 2010

|INDEX                                               | Page  
|--------------------------------------------------- | ------
|                                                    |       
|Audited Consolidated Financial
      Statements     |       
|Managements Responsibility for Financial Reporting |       
|Independent Auditors Report                        |       
|Consolidated Balance Sheets                         | 1     
|Consolidated Statements of Operations               | 2     
|Consolidated Statement of Shareholders Equity      | 3     
|Consolidated Statements of Cash Flows               | 4     
|Notes to the Consolidated Financial Statements      | 5  26

---

MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING

The accompanying consolidated financial statements of Dorato
Resources Inc. (the Company) have been prepared by management in accordance
with Canadian generally accepted accounting principles and are the
responsibility of the management of the Company. The financial information
contained elsewhere in this report has been reviewed to ensure consistency with
the consolidated financial statements.

Management maintains systems of internal control designed to
provide reasonable assurance that the assets are safeguarded, all transactions
are authorized and duly recorded, and financial records are properly maintained
to facilitate preparation of consolidated financial statements in a timely
manner. The Board of Directors is responsible for ensuring that management
fulfills its responsibilities for financial reporting, and is ultimately
responsible for reviewing and approving the consolidated financial statements.
The Board carries out this responsibility principally through its Audit
Committee.

The Audit Committee of the Board of Directors has reviewed the
consolidated financial statements with management and the external auditors.
Smythe Ratcliffe LLP, an independent firm of chartered accountants, appointed as
external auditors by the shareholders, have audited the consolidated financial
statements and their report is included herein.

|Keith
      Henderson (signed) |  | Anna Ladd (signed)   
|-------------------------------- |  | -----------------------
|Keith Henderson                  |  | Anna Ladd              
|Chief Executive Officer          |  | Chief Financial Officer
|                                 |  |                        
|Vancouver, British Columbia      |  |                        
|July 25, 2011                    |  |                        

---

INDEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS OF DORATO RESOURCES INC.

We have audited the consolidated balance sheets of Dorato
Resources Inc. as at January 31, 2011 and 2010 and the consolidated statements
of operations, shareholders equity and cash flows for the years ended January
31, 2011, 2010 and 2009, and a summary of significant accounting policies and
other explanatory information.

Managements Responsibility for the Consolidated
Financial StatementsManagement is responsible for the preparation
and fair presentation of these consolidated financial statements in accordance
with Canadian generally accepted accounting principles, and for such internal
control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement,
whether due to fraud or error.

Auditors ResponsibilityOur responsibility is
to express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with Canadian generally accepted
auditing standards and the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material
misstatement.

An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditors judgment, including
the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entitys
preparation and fair presentation of the consolidated financial statements in
order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
entitys internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the
consolidated financial statements.

We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, these consolidated
financial statements present fairly, in all material respects, the financial
position of Dorato Resources Inc. as at January 31, 2011 and 2010 and the
results of its operations and its cash flows for the years ended January 31,
2011, 2010 and 2009 in accordance with Canadian generally accepted accounting
principles.

Other MatterWe have reported separately on
the consolidated financial statements of Dorato Resources Inc. as at January 31,
2011 and 2010 and the consolidated statements of operations, shareholders
equity and cash flows for the years then ended, and a summary of significant
accounting policies and other explanatory information in accordance with
Canadian generally accepted accounting principles. Our report dated May 27, 2011
expressed an unqualified opinion on those financial statements.

Smythe Ratcliffe LLP (signed)

Chartered Accountants

Vancouver, British ColumbiaMay 27, 2011, except as to notes
13(d), 13 (e) and 15
           which are as of
July 25, 2011.

---

|DORATO RESOURCES INC.          
|-------------------------------
|CONSOLIDATED BALANCE SHEETS    
|AT JANUARY 31                  
|(Expressed in Canadian Dollars)

|                                                   |   |             |   |   |             |  
|-------------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                                   |   | 2011        |   |   | 2010        |  
|                                                   |   |             |   |   | (note 3)    |  
|ASSETS                                             |   |             |   |   |             |  
|                                                   |   |             |   |   |             |  
|Current                                            |   |             |   |   |             |  
|Cash and cash equivalents                          | $ | 6,904,719   |   | $ | 15,868,072  |  
|Accounts receivable                                |   | 70,821      |   |   | 75,941      |  
|Prepaid expenses (note 9)                          |   | 28,413      |   |   | 15,844      |  
|                                                   |   |             |   |   |             |  
|                                                   |   | 7,003,953   |   |   | 15,959,857  |  
|                                                   |   |             |   |   |             |  
|Property and equipment(note 5)                     |   | 62,391      |   |   | 72,424      |  
|Exploration advances                               |   | 111,579     |   |   | 108,890     |  
|Mineral
      property interests(notes 6, 8 and 9) |   | 34,690,834  |   |   | 24,243,652  |  
|                                                   |   |             |   |   |             |  
|                                                   | $ | 41,868,757  |   | $ | 40,384,823  |  
|                                                   |   |             |   |   |             |  
|LIABILITIES AND SHAREHOLDERS EQUITY               |   |             |   |   |             |  
|                                                   |   |             |   |   |             |  
|Current                                            |   |             |   |   |             |  
|Accounts payable and
      accrued liabilities     | $ | 334,300     |   | $ | 345,398     |  
|Due to related parties (note 9)                    |   | 208,483     |   |   | 42,308      |  
|                                                   |   |             |   |   |             |  
|                                                   |   | 542,783     |   |   | 387,706     |  
|                                                   |   |             |   |   |             |  
|Shareholders equity                               |   |             |   |   |             |  
|Capital stock (note 7)                             |   | 53,339,099  |   |   | 49,160,012  |  
|Contributed surplus                                |   | 5,837,480   |   |   | 4,690,878   |  
|Deficit                                            |   | (17,850,605 | ) |   | (13,853,773 | )
|                                                   |   |             |   |   |             |  
|                                                   |   | 41,325,974  |   |   | 39,997,117  |  
|                                                   |   |             |   |   |             |  
|                                                   | $ | 41,868,757  |   | $ | 40,384,823  |  

Nature and continuance of operations(note 1)
Subsequent events(note 13)

On behalf of the Board:

|Keith
      Henderson (signed) | Director | Anton Drescher(signed) | Director
|-------------------------------- | -------- | ------------------------ | --------
|Mr. Keith Henderson              |          | Mr. Anton Drescher       |         

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

1

---

|DORATO RESOURCES INC.                
|-------------------------------------
|CONSOLIDATED STATEMENTS OF OPERATIONS
|YEARS ENDED JANUARY 31               
|(Expressed in Canadian Dollars)      

|                                                           |   |            |   |   |            |   |   |            |  
|---------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
|                                                           |   | 2011       |   |   | 2010       |   |   | 2009       |  
|                                                           |   |            |   |   | (note 3)   |   |   | (note 3)   |  
|Expenses                                                   |   |            |   |   |            |   |   |            |  
|Amortization                                               | $ | 21,682     |   | $ | 20,765     |   | $ | 6,349      |  
|Consulting fees (notes 8 and 9)                            |   | 2,002,486  |   |   | 1,994,054  |   |   | 2,217,769  |  
|Investor relations (notes 8 and 9)                         |   | 861,887    |   |   | 438,886    |   |   | 307,943    |  
|Office and miscellaneous (notes 8 and 9)                   |   | 343,194    |   |   | 316,983    |   |   | 216,087    |  
|Professional fees (note 8)                                 |   | 476,101    |   |   | 305,426    |   |   | 209,251    |  
|Property investigations (note 9)                           |   | 37,750     |   |   | 169,520    |   |   | -          |  
|Regulatory (note 9)                                        |   | 108,731    |   |   | 25,680     |   |   | 51,847     |  
|Travel and promotion (note 9)                              |   | 270,628    |   |   | 90,591     |   |   | 96,280     |  
|Wages and benefits                                         |   | 139,341    |   |   | 11,547     |   |   | 7,776      |  
|                                                           |   | (4,261,800 | ) |   | (3,373,452 | ) |   | (3,113,302 | )
|                                                           |   |            |   |   |            |   |   |            |  
|Other items                                                |   |            |   |   |            |   |   |            |  
|Gain (loss) on foreign exchange                            |   | 259,129    |   |   | (271,058   | ) |   | 358,533    |  
|Interest income                                            |   | 5,839      |   |   | 39,442     |   |   | 124,003    |  
|Loss on disposal
      of equipment                        |   | -          |   |   | -          |   |   | (15,371    | )
|                                                           |   | 264,968    |   |   | (231,616   | ) |   | 467,165    |  
|                                                           |   |            |   |   |            |   |   |            |  
|Net loss and comprehensive loss for the year               | $ | (3,996,832 | ) | $ | (3,605,068 | ) | $ | (2,646,137 | )
|                                                           |   |            |   |   |            |   |   |            |  
|Basic and diluted loss per share                           | $ | (0.06      | ) | $ | (0.07      | ) | $ | (0.11      | )
|                                                           |   |            |   |   |            |   |   |            |  
|Weighted average number of common shares
      outstanding |   | 69,372,422 |   |   | 49,819,536 |   |   | 24,859,595 |  

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

2

---

|DORATO RESOURCES INC.                          
|-----------------------------------------------
|CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
|(Expressed in Canadian Dollars)                

|                                                                         |  |            |  |   |                |   |   |             |   |   |             |   |   |            |  
|------------------------------------------------------------------------ |  | ---------- |  | - | -------------- | - | - | ----------- | - | - | ----------- | - | - | ---------- | -
|                                                                         |  | Number of  |  |   | Common         |   |   |             |   |   |             |   |   |            |  
|                                                                         |  | common     |  |   | shares issued  |   |   | Contributed |   |   |             |   |   |            |  
|                                                                         |  | shares     |  |   | and fully paid |   |   | surplus     |   |   | Deficit     |   |   | Total      |  
|                                                                         |  |            |  |   |                |   |   |             |   |   |             |   |   |            |  
|Balance, January 31, 2008                                                |  | 6,818,187  |  | $ | 8,407,000      |   | $ | -           |   | $ | (7,602,568  | ) | $ | 804,432    |  
|Issuance of shares for cash:                                             |  |            |  |   |                |   |   |             |   |   |             |   |   |            |  
|Private placements                                                       |  | 18,500,000 |  |   | 12,750,000     |   |   | -           |   |   | -           |   |   | 12,750,000 |  
|Share issuance costs                                                     |  | -          |  |   | (36,402        | ) |   | -           |   |   | -           |   |   | (36,402    | )
|Shares issued for mineral                                                |  |            |  |   |                |   |   |             |   |   |             |   |   |            |  
|property interests                                                       |  | 12,850,000 |  |   | 6,310,000      |   |   | -           |   |   | -           |   |   | 6,310,000  |  
|Stock-based compensation                                                 |  | -          |  |   | -              |   |   | 1,918,829   |   |   | -           |   |   | 1,918,829  |  
|Net loss for the
      year                                              |  | -          |  |   | -              |   |   | -           |   |   | (2,646,137  | ) |   | (2,646,137 | )
|                                                                         |  |            |  |   |                |   |   |             |   |   |             |   |   |            |  
|Balance, January 31, 2009                                                |  | 38,168,187 |  |   | 27,430,598     |   |   | 1,918,829   |   |   | (10,248,705 | ) |   | 19,100,722 |  
|Issuance of shares for cash:                                             |  |            |  |   |                |   |   |             |   |   |             |   |   |            |  
|Private placements                                                       |  | 26,732,850 |  |   | 21,469,493     |   |   | -           |   |   | -           |   |   | 21,469,493 |  
|Exercise of stock options                                                |  | 62,500     |  |   | 18,750         |   |   | -           |   |   | -           |   |   | 18,750     |  
|Exercise of warrants                                                     |  | 675,000    |  |   | 438,750        |   |   | -           |   |   | -           |   |   | 438,750    |  
|Share issuance costs                                                     |  | -          |  |   | (2,204,748     | ) |   | 1,103,532   |   |   | -           |   |   | (1,101,216 | )
|Shares issued for agents commission                                     |  | 100,000    |  |   | 50,000         |   |   | -           |   |   | -           |   |   | 50,000     |  
|Shares issued for mineral property
      interests                       |  | 2,650,000  |  |   | 1,945,500      |   |   | -           |   |   | -           |   |   | 1,945,500  |  
|Stock-based compensation                                                 |  | -          |  |   | -              |   |   | 1,680,186   |   |   | -           |   |   | 1,680,186  |  
|Reallocation from contributed surplus on
      exercise of stock options |  | -          |  |   | 11,669         |   |   | (11,669     | ) |   | -           |   |   | -          |  
|Net loss for the
      year                                              |  | -          |  |   | -              |   |   | -           |   |   | (3,605,068  | ) |   | (3,605,068 | )
|                                                                         |  |            |  |   |                |   |   |             |   |   |             |   |   |            |  
|Balance, January 31, 2010                                                |  | 68,388,537 |  |   | 49,160,012     |   |   | 4,690,878   |   |   | (13,853,773 | ) |   | 39,997,117 |  
|Issuance of shares for cash:                                             |  |            |  |   |                |   |   |             |   |   |             |   |   |            |  
|Exercise of stock options                                                |  | 2,191,940  |  |   | 1,356,912      |   |   | -           |   |   | -           |   |   | 1,356,912  |  
|Exercise of warrants                                                     |  | 2,327,500  |  |   | 1,572,875      |   |   | -           |   |   | -           |   |   | 1,572,875  |  
|Share issuance costs                                                     |  | -          |  |   | (79,444        | ) |   | -           |   |   | -           |   |   | (79,444    | )
|Shares issued for mineral property
      interests                       |  | 400,000    |  |   | 432,000        |   |   | -           |   |   | -           |   |   | 432,000    |  
|Stock-based compensation                                                 |  | -          |  |   | -              |   |   | 2,043,346   |   |   | -           |   |   | 2,043,346  |  
|Reallocation from contributed surplus on
      exercise of stock options |  | -          |  |   | 371,543        |   |   | (371,543    | ) |   | -           |   |   | -          |  
|Reallocation from contributed surplus on exercise of
      warrants      |  | -          |  |   | 525,201        |   |   | (525,201    | ) |   | -           |   |   | -          |  
|Net loss for the year                                                    |  | -          |  |   | -              |   |   | -           |   |   | (3,996,832  | ) |   | (3,996,832 | )
|                                                                         |  |            |  |   |                |   |   |             |   |   |             |   |   |            |  
|Balance, January 31, 2011                                                |  | 73,307,977 |  | $ | 53,339,099     |   | $ | 5,837,480   |   | $ | (17,850,605 | ) | $ | 41,325,974 |  

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

3

---

|**DORATO RESOURCES INC.**            
|-------------------------------------
|CONSOLIDATED STATEMENTS OF CASH FLOWS
|YEARS ENDED JANUARY 31               
|(Expressed in
      Canadian Dollars)

|                                                          |   |            |   |   |            |   |   |             |  
|--------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ----------- | -
|                                                          |   | 2011       |   |   | 2010       |   |   | 2009        |  
|                                                          |   |            |   |   | (note 3)   |   |   | (note 3)    |  
|Operating activities                                      |   |            |   |   |            |   |   |             |  
|Net loss for the year                                     | $ | (3,996,832 | ) | $ | (3,605,068 | ) | $ | (2,646,137  | )
|Add items not affecting cash                              |   |            |   |   |            |   |   |             |  
|Amortization                                              |   | 21,682     |   |   | 20,765     |   |   | 6,349       |  
|Stock-based
      compensation                            |   | 1,397,881  |   |   | 1,521,621  |   |   | 1,879,484   |  
|Loss on disposal of equipment                             |   | -          |   |   | -          |   |   | 15,371      |  
|Loss on foreign
      exchange                            |   | 75,020     |   |   | 195,105    |   |   | (37,436     | )
|Changes in non-cash items                                 |   |            |   |   |            |   |   |             |  
|Accounts
      receivable                                 |   | 5,120      |   |   | 20,329     |   |   | (59,086     | )
|Prepaid expenses                                          |   | (12,569    | ) |   | 113,194    |   |   | (127,014    | )
|Accounts payable
      and accrued liabilities            |   | 17,303     |   |   | 205,218    |   |   | 37,715      |  
|Due to related parties                                    |   | 166,175    |   |   | (144,998   | ) |   | 187,306     |  
|Cash used in operating activities                         |   | (2,326,220 | ) |   | (1,673,834 | ) |   | (743,448    | )
|                                                          |   |            |   |   |            |   |   |             |  
|Investing activities                                      |   |            |   |   |            |   |   |             |  
|Exploration advances                                      |   | (2,689     | ) |   | (94,392    | ) |   | (14,498     | )
|Mineral property interests                                |   | (9,398,118 | ) |   | (5,035,775 | ) |   | (10,430,534 | )
|Advances to related party                                 |   | -          |   |   | 856,486    |   |   | (991,905    | )
|Purchase of equipment                                     |   | (11,649    | ) |   | (14,174    | ) |   | (84,276     | )
|Cash used in
      investing activities                   |   | (9,412,456 | ) |   | (4,287,855 | ) |   | (11,521,213 | )
|                                                          |   |            |   |   |            |   |   |             |  
|Financing activities                                      |   |            |   |   |            |   |   |             |  
|Issuance of capital stock                                 |   | 2,929,787  |   |   | 21,926,993 |   |   | 7,400,552   |  
|Share
      issuance costs                                |   | (79,444    | ) |   | (1,051,216 | ) |   | (36,402     | )
|Cash provided by financing activities                     |   | 2,850,343  |   |   | 20,875,777 |   |   | 7,364,150   |  
|                                                          |   |            |   |   |            |   |   |             |  
|Effect of cash on foreign exchange                        |   | (75,020    | ) |   | (59,686    | ) |   | 48,898      |  
|                                                          |   |            |   |   |            |   |   |             |  
|Increase (decrease) in cash and cash
      equivalents    |   | (8,963,353 | ) |   | 14,854,402 |   |   | (4,851,613  | )
|Cash and cash
      equivalents, beginning of year        |   | 15,868,072 |   |   | 1,013,670  |   |   | 5,865,283   |  
|                                                          |   |            |   |   |            |   |   |             |  
|Cash and cash
      equivalents, end of year              | $ | 6,904,719  |   | $ | 15,868,072 |   | $ | 1,013,670   |  
|                                                          |   |            |   |   |            |   |   |             |  
|Supplemental cash flow information                        |   |            |   |   |            |   |   |             |  
|Interest received                                         | $ | -          |   | $ | 39,442     |   | $ | 124,003     |  
|Interest paid                                             | $ | -          |   | $ | -          |   | $ | -           |  
|Income taxes paid                                         | $ | -          |   | $ | -          |   | $ | -           |  
|Non-cash transactions                                     |   |            |   |   |            |   |   |             |  
|Shares issued to
      acquire mineral property interests | $ | 432,000    |   | $ | 1,945,500  |   | $ | 6,310,000   |  
|Shares issued as agents commission                       | $ | -          |   | $ | 50,000     |   | $ | -           |  
|Accounts payable
      included in mineral property       |   |            |   |   |            |   |   |             |  
|expenditures                                              | $ | 36,082     |   | $ | 64,483     |   | $ | 159,652     |  

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

4

---

|1. | NATURE AND CONTINUANCE OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Dorato Resources Inc. (the "Company") is incorporated
      under the laws of British Columbia, Canada. The Company is engaged in the
      exploration and development of mineral properties, having received
      approval from the TSX Venture Exchange on April 24, 2008 to complete its
      change of business previously announced on November 19, 2007. The Company
      is an exploration stage company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | These consolidated financial statements have been
      prepared on the basis of accounting principles applicable to a going
      concern, which assumes that the Company will be able to continue in
      operation for the foreseeable future, and will be able to realize its
      assets and discharge its liabilities and commitments in the normal course
      of business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Certain adverse conditions cast doubt on the validity of
      this assumption. The Company has incurred significant operating losses of
      $3,996,832 (2010 - $3,605,068; 2009 - $2,646,137), has working capital of
      $6,461,170 (2010  $15,572,151), has a deficit of $17,850,605 (2010 -
      $13,853,773), has limited resources, no source of operating cash flow and
      no assurances that sufficient funding will continue to be available to
      conduct further exploration and development of its mineral property
      interests.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company does not generate sufficient cash flow from
      operations to adequately fund its activities and has therefore relied
      principally upon the issuance of securities for financing. Future capital
      requirements will depend on many factors including the Company's ability
      to execute its business plan. The Company intends to continue relying upon
      the issuance of securities to finance its future activities but there can
      be no assurance that such financing will be available on a timely basis
      under terms acceptable to the Company, particularly in view of current
      market conditions. Although these consolidated financial statements do not
      include any adjustments that may result from the inability to secure
      future financing, such a situation would have a material adverse effect on
      the Companys recoverability of assets, classification of assets and
      liabilities, and results of operations should the Company be unable to
      continue as a going concern.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The business of mining and exploration involves a high
      degree of risk and there can be no assurance that current exploration
      programs will result in profitable mining operations. The Company has no
      source of revenue, and has significant cash requirements to meet its
      administrative overhead and maintain its mineral property interests. The
      recoverability of amounts shown for mineral properties is dependent on
      several factors. These include the discovery of economically recoverable
      reserves, the ability of the Company to obtain the necessary financing to
      complete the development of these properties, and future profitable
      production or proceeds from disposition of mineral properties. The
      carrying values of the Companys mineral property interests do not reflect
      current or future values.                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2. | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company prepares its consolidated financial
      statements in accordance with Canadian generally accepted accounting
      principles (GAAP).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Basis of consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | These consolidated financial statements include the
      accounts of the Company and its wholly-owned integrated subsidiary, Dorato
      Peru S.A.C., which was incorporated under the laws of Peru in 2007. All
      significant intercompany balances and transactions were eliminated upon
      consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

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

5

---

|2. | SIGNIFICANT ACCOUNTING POLICIES(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Use of estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The preparation of financial statements in accordance
      with Canadian GAAP requires management to make estimates and assumptions
      that affect the reported amounts of assets and liabilities and disclosure
      of contingent assets and liabilities at the date of the financial
      statements, and the reported amounts of revenues and expenses during the
      year. Significant areas requiring the use of estimates include the
      accruals of liabilities, impairment and recoverability of mineral property
      interests, amounts of reclamation and environmental obligations,
      assumptions used to determine the fair value of stock-based compensation
      and determination of the valuation allowance for future income tax assets.
      While management believes the estimates to be reasonable, actual results
      could differ from those estimates and could impact future results of
      operations and cash flows.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Foreign currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The functional currency of the Company is the Canadian
      dollar. Amounts recorded in foreign currency are translated into Canadian
      dollars as follows (note 3):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | i.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | ii.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | iii.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Cash and cash equivalents consists of cash on deposit at
      major financial institutions in Canada and Peru and highly liquid
      investments that are cashable into known amounts of cash on demand, and
      which are subject to insignificant credit and interest rate
risk.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Amortization of property and equipment is recorded on a
      declining-balance basis at the following annual
rates:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

Computer equipment -
    25% - 30%Office equipment -
    10% - 25%Leasehold improvements -
    straight-line over the lease
      term


Additions during the year are amortized
at one-half the annual rates.

Mineral property interests and
deferred exploration costs

The Company records its interests in
mineral properties and deferred exploration costs initially at cost. All costs
relating to the acquisition and exploration of these interests are capitalized
on the basis of specific claim blocks or areas of geological interest until the
properties to which they relate are placed into production, sold or management
has determined there to be an impairment. These costs will be amortized on the
basis of units produced in relation to the proven reserves available on the
related property upon commencement of production. Proceeds from mineral property
interests sold will be credited against the cost of the property.

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

6

---

|2. | SIGNIFICANT ACCOUNTING POLICIES(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Mineral property interests and deferred exploration
      costs(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The recorded cost of mineral exploration interests is
      based on cash paid, the value of share considerations, and exploration and
      development costs incurred. The recorded amount does not reflect present
      or future values as this will be dependent on the development program, the
      nature of the mineral deposit, commodity prices, adequate funding and the
      ability of the Company to bring its projects into production, or realize
      proceeds from disposition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | All deferred property expenditures are reviewed
      quarterly, on a property-by-property basis, to consider whether there are
      any conditions that may indicate impairment. When the carrying value of a
      property interest exceeds its net recoverable amount that may be estimated
      by quantifiable evidence of an economic geological resource or reserve,
      joint venture expenditure commitments or the Companys assessment of its
      ability to sell the interest for an amount exceeding the deferred costs,
      provision is made for the impairment in value. From time to time the
      Company may acquire or dispose of a mineral property interest pursuant to
      the terms of an option agreement. As the options are exercisable entirely
      at the discretion of the optionee, the amounts payable or receivable are
      not recorded. Option payments are recorded as property costs or recoveries
      when the payments are made or received.     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Asset retirement obligations (ARO)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company recognizes an estimate of the liability
      associated with an ARO in the consolidated financial statements at the
      time the liability is incurred. The estimated fair value of the ARO is
      recorded as a long-term liability, with a corresponding increase in the
      carrying amount of the related asset. The capitalized amount will be
      depleted on a straight-line basis over the estimated life of the asset.
      The liability amount is increased each reporting period due to the passage
      of time and the amount of accretion is charged to earnings in the year.
      The ARO can also increase or decrease due to changes in the estimates of
      timing of cash flows or changes in the original estimated undiscounted
      cost. Actual costs incurred upon settlement of the ARO are charged against
      the ARO to the extent of the liability recorded.                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Revenue recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Interest income is recorded as earned at the effective
      rate of interest over the term to maturity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company accounts for stock-based compensation using a
      fair value based method with respect to all stock- based payments to
      directors, employees and non-employees. For directors and employees, the
      fair value of the options is measured at the date of grant. For
      non-employees, the fair value of the options is measured on the earlier of
      the date at which the counterparty performance is complete or the date the
      performance commitment is reached, or the date at which the equity
      instruments are granted if they are fully vested and non-forfeitable. For
      directors, employees and non-employees, the fair value of the options is
      accrued and charged either to operations or mineral property interests,
      with the offset credit to contributed surplus, over the vesting period. If
      and when the stock options are exercised, the applicable amounts from
      contributed surplus are transferred to capital stock.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Basic and diluted loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Basic loss per share is calculated using the weighted
      average number of common shares outstanding during the year. The Company
      uses the treasury stock method to compute the dilutive effect of options,
      warrants and similar instruments. Under this method, the dilutive effect
      on earnings per share is calculated presuming the exercise of outstanding
      options, warrants and similar instruments. It assumes that the proceeds of
      such exercise would be used to repurchase common shares at the average
      market price during the year. However, the calculation of diluted loss per
      share excludes the effects of various conversions and exercise of options
      and warrants that would be anti-dilutive. Shares held in escrow, other
      than where their release is subject to the passage of time, are not
      included in the calculation of the weighted average number of common
      shares outstanding.                            

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

7

---

|2. | SIGNIFICANT ACCOUNTING POLICIES(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Company follows the asset and liability method of
      accounting for income taxes. Under this method, future tax assets and
      liabilities are recognized for the future tax consequences attributable to
      differences between the financial statement carrying amounts of existing
      assets and liabilities and their respective tax basis, and losses carried
      forward. Future tax assets and liabilities are measured using enacted or
      substantively enacted tax rates expected to apply when the asset is
      realized or the liability settled. The effect on future tax assets and
      liabilities of a change in tax rates is recognized in income in the year
      that enactment or substantive enactment occurs. To the extent that the
      Company does not consider it to be more likely than not that a future
      income tax asset will be recovered, it provides a valuation allowance
      against the excess.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Proceeds received on the issuance of units, consisting of
      common shares and warrants, are allocated first to common shares based on
      the market trading price of the common shares at the time the units are
      priced or issued, and any excess is allocated to warrants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Non-monetary transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | All non-monetary transactions are measured at the fair
      value of the asset surrendered or the asset received, whichever is more
      reliable, unless the transaction lacks commercial substance or the fair
      value cannot be reliably established. The commercial substance requirement
      is met when the future cash flows are expected to change significantly as
      a result of the transaction. When the fair value of a non-monetary
      transaction cannot be reliably measured, it is recorded at the carrying
      amount (after reduction, when appropriate, for impairment) of the asset
      given up adjusted by the fair value of any monetary consideration received
      or given. When the asset received or the consideration given up is shares
      in an actively traded market, the value of those shares will be considered
      fair value.                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Financial instruments and comprehensive
    income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | All financial instruments are classified as one of the
      following: held-to-maturity, loans and receivables, held- for-trading,
      available-for-sale or other financial liabilities. Financial assets and
      liabilities held-for-trading are measured at fair value with gains and
      losses recognized in net income. Financial assets held-to-maturity, loans
      and receivables, and other financial liabilities are measured at amortized
      cost using the effective interest method. Available-for-sale instruments
      are measured at fair value with unrealized gains and losses recognized in
      other comprehensive income (loss) and reported in shareholders equity.
      Any financial instrument may be designated as held-for-trading upon
      initial recognition.                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Transaction costs that are directly attributable to the
      acquisition or issue of financial instruments that are classified as other
      than held-for-trading, which are expensed as incurred, are included in the
      initial carrying value of such instruments and amortized using the
      effective interest method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Comprehensive income or loss is defined as the change in
      equity from transactions and other events from sources other than the
      Companys shareholders. Other comprehensive income or loss refers to items
      recognized in comprehensive income or loss that are excluded from
      operations calculated in accordance with Canadian GAAP. The Company has no
      items of other comprehensive income in any period presented. Therefore,
      net loss as presented in the Companys Consolidated Statements of
      Operations equals comprehensive loss.                                                                                                                                                                                                                                                                                                                                                                                     

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

8

---

|2. | SIGNIFICANT ACCOUNTING POLICIES(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Future accounting changes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | International Financial Reporting Standards
      (IFRS)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In 2008, the Canadian Accounting Standards Board ("AcSB")
      confirmed that the transition to IFRS from Canadian GAAP will be effective
      for fiscal years beginning on or after January 1, 2011 for publicly
      accountable enterprises. The Company will therefore be required to present
      IFRS financial statements for its April 30, 2011 interim consolidated
      financial statements. The effective date will require the restatement for
      comparative purposes of amounts reported by the Company for the interim
      periods and for the year ended January 31, 2011.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Business Combinations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In January 2009, the CICA issued Handbook Section 1582,
      Business Combinations, Section 1601, Consolidated Financial
      Statements, and Section 1602, Non-Controlling Interests. These sections
      replace the former Section 1581, Business Combinations, and Section
      1600, Consolidated Financial Statements, and establish a new section for
      accounting for a non-controlling interest in a subsidiary.                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Sections 1582 and 1602 will require net assets,
      non-controlling interests and goodwill acquired in a business combination
      to be recorded at fair value and non-controlling interests will be
      reported as a component of equity. In addition, the definition of a
      business is expanded and is described as an integrated set of activities
      and assets that are capable of being managed to provide a return to
      investors or economic benefits to owners. Acquisition costs are not part
      of the consideration and are to be expensed when incurred.           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Section 1601, Consolidated Financial Statements,
      establishes the standards for preparing consolidated financial
      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Section 1602, Non-Controlling Interests establishes the
      standards for the accounting for non-controlling interests of a subsidiary
      in the preparation of consolidated financial statements subsequent to a
      business combination. This standard is equivalent to the IFRS on
      consolidated and separate financial statements.                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | These new sections apply to interim and annual
      consolidated financial statements relating to fiscal years beginning on or
      after February 1, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|3. | CHANGE IN REPORTING CURRENCY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Effective May 1, 2009, the Company changed its reporting
      currency from the United States dollars to the Canadian dollar. The
      Company believes this change is consistent with its change of business to
      the resource sector completed on April 24, 2008 and its continuance of
      jurisdiction from Wyoming, United States, to British Columbia, Canada,
      completed August 21, 2006.                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Accordingly, the Company has restated the consolidated
      financial statements for all periods presented for comparative purposes as
      if they had been reported in Canadian dollars.                                                                                                                                                                                                                                                                                                                                                                                                          

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

9

---

|4. | RISK MANAGEMENT AND FINANCIAL
INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Company classifies its cash and cash equivalents as
      held-for-trading; accounts receivable as loans and receivables; accounts
      payable and accrued liabilities and due to related parties as other
      financial liabilities.                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The carrying values of cash and cash equivalents,
      accounts receivable, and accounts payable and accrued liabilities
      approximate their fair values due to the expected maturity of these
      consolidated financial instruments. The fair values of amounts due to
      related parties have not been disclosed as their fair values cannot be
      reliably measured since the parties are not at arms length.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Companys risk exposure and the impact on the
      Companys financial instruments are summarized below:                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                

| |                                                      |   |           |  |   |            | 
| | ---------------------------------------------------- | - | --------- |  | - | ---------- | 
| | Cash and
      equivalents                           |   | 2011      |  |   | 2010       | 
| |                                                      |   |           |  |   |            | 
| | Held at a major Canadian financial
      institution | $ | 6,879,002 |  | $ | 15,911,974 | 
| | Peruvian financial
      institution                 |   | 25,717    |  |   | -          | 
| |                                                      | $ | 6,904,719 |  | $ | 15,911,974 | 

| |    | The credit risk associated with cash and cash equivalents
      is minimized substantially by ensuring that these financial assets are
      placed with major Canadian and Peruvian financial institutions with strong
      investment- grade ratings by a primary ratings agency.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | b) | Liquidity risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Liquidity risk is the risk that the Company will
      encounter difficulty in satisfying financial obligations as they fall due.
      The Companys approach to managing liquidity risk is to provide reasonable
      assurance that it will have sufficient funds to meet liabilities when due.
      The Company manages its liquidity risk by forecasting cash flows required
      by operations and anticipated investing and financing activities. The
      Company normally maintains sufficient cash and cash equivalents to meet
      the Companys business requirements and at January 31, 2011, the cash and
      cash equivalents balance of $6,904,719 will likely be sufficient to meet
      the needs for the coming year. Liabilities as at January 31, 2011 are as
      follows:

| |                                          |   |         |  |   |        |  |   |         |  |   |         | 
| | ---------------------------------------- | - | ------- |  | - | ------ |  | - | ------- |  | - | ------- | 
| |                                          |   | 0 to 3  |  |   | 3 to 6 |  |   | 6 to 12 |  |   |         | 
| |                                          |   | months  |  |   | months |  |   | months  |  |   | Total   | 
| |                                          |   |         |  |   |        |  |   |         |  |   |         | 
| | Accounts payable and accrued liabilities | $ | 334,300 |  | $ | -      |  | $ | -       |  | $ | 334,300 | 
| | Due to related
      parties             |   | 208,483 |  |   | -      |  |   | -       |  |   | 208,483 | 
| |                                          | $ | 542,783 |  | $ | -      |  | $ | -       |  | $ | 542,783 | 



| | c) | Market risk                                                                                                                                                                                                                                                                  
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                              
| |    | Market risk is the risk that the fair value or future
      cash flows of a financial instrument will fluctuate because of changes in
      market prices. Market risk comprises three types of risk: interest rate
      risk, foreign currency risk and other price
  risk.

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

10

---

|4. | RISK MANAGEMENT AND FINANCIAL INSTRUMENTS(contd...)
|-- | ----------------------------------------------------

| | c) | Market risk(contd)
| | -- | --------------------

| | i.   | Interest rate risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |      | The Companys cash and cash equivalents consists of cash
      and cash equivalents held in bank accounts that earn interest at variable
      interest rates. Future cash flows from interest income on cash and cash
      equivalents will be affected by interest rate fluctuations. Due to the
      short-term nature of these financial instruments, fluctuations in market
      rates do not have a significant impact on estimated fair values.                                                                                                                                                                                            
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |      | The Company manages interest rate risk by maintaining an
      investment policy that focuses primarily on preservation of capital and
      liquidity. The interest income earned on cash is minimal; therefore, the
      Company is not subject to interest rate risk.                                                                                                                                                                                                                                                                                                                                                                            
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ii.  | Foreign currency risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |      | The Company is exposed to foreign currency risk as
      certain monetary financial instruments are denominated in Peruvian soles
      and the Company conducts business activities outside of Canada. The
      Company has not entered into any foreign currency contracts to mitigate
      this risk, as it believes this risk is minimized by the amount of cash
      held in this foreign jurisdiction. The Companys sensitivity analysis
      suggests that a consistent 10 basis point change in the rate of exchange
      (i.e., from 1.00:1.00 to 1.10:1.00) would change foreign exchange gain or
      loss by approximately $7,744.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | iii. | Other price risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |      | Other price risk is the risk that the fair value or
      future cash flows of a financial instrument will fluctuate because of
      changes in market prices, other than those arising from interest rate risk
      or foreign currency risk. The Company is not exposed to any other price
      risk.                                                                                                                                                                                                                                                                                                                                           

|5. | PROPERTY AND EQUIPMENT
|-- | ----------------------

| |                        |   |         |  |   |              |  |   |          |  |   |        |  |   |              |  |   |          | 
| | ---------------------- | - | ------- |  | - | ------------ |  | - | -------- |  | - | ------ |  | - | ------------ |  | - | -------- | 
| |                        |   | 2011    |  |   | 2010         | 
| |                        |   |         |  |   | Accumulated  |  |   | Net Book |  |   |        |  |   | Accumulated  |  |   | Net Book | 
| |                        |   | Cost    |  |   | Amortization |  |   | Value    |  |   | Cost   |  |   | Amortization |  |   | Value    | 
| |                        |   |         |  |   |              |  |   |          |  |   |        |  |   |              |  |   |          | 
| | Computer equipment     | $ | 35,293  |  | $ | 15,378       |  | $ | 19,915   |  | $ | 23,644 |  | $ | 8,192        |  | $ | 15,452   | 
| | Office equipment       |   | 57,744  |  |   | 22,580       |  |   | 35,164   |  |   | 57,744 |  |   | 12,262       |  |   | 45,482   | 
| | Leasehold improvements |   | 17,061  |  |   | 9,749        |  |   | 7,312    |  |   | 17,061 |  |   | 5,571        |  |   | 11,490   | 
| |                        | $ | 110,098 |  | $ | 47,707       |  | $ | 62,391   |  | $ | 98,449 |  | $ | 26,025       |  | $ | 72,424   | 

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

11

---

|6. | MINERAL PROPERTY
INTERESTS
|-- | --------------------------

| |                                       |   |              |  |   |            |  |   |            |  |   |            | 
| | ------------------------------------- | - | ------------ |  | - | ---------- |  | - | ---------- |  | - | ---------- | 
| |                                       |   | Central Zone |  |   | North Zone |  |   | South Zone |  |   | Total      | 
| |                                       |   |              |  |   |            |  |   |            |  |   |            | 
| | Balance, January 31, 2009 (note 3)    | $ | 15,132,470   |  | $ | 1,266,194  |  | $ | 799,638    |  | $ | 17,198,302 | 
| |                                       |   |              |  |   |            |  |   |            |  |   |            | 
| | Acquisition costs:                    |   |              |  |   |            |  |   |            |  |   |            | 
| | Cash payments                         |   | 877,746      |  |   | 19,009     |  |   | 103,170    |  |   | 999,925    | 
| | Common shares issued                  |   | 680,874      |  |   | 366,500    |  |   | 898,126    |  |   | 1,945,500  | 
| | Deferred exploration costs:           |   |              |  |   |            |  |   |            |  |   |            | 
| | Incurred during the year:             |   |              |  |   |            |  |   |            |  |   |            | 
| | Field expenses                        |   | 1,018,661    |  |   | -          |  |   | -          |  |   | 1,018,661  | 
| | Data acquisition
      and analysis   |   | 1,194,376    |  |   | -          |  |   | -          |  |   | 1,194,376  | 
| | Peruvian value added tax              |   | 174,122      |  |   | -          |  |   | -          |  |   | 174,122    | 
| | Land maintenance
      and tenure     |   | 351,252      |  |   | -          |  |   | -          |  |   | 351,252    | 
| | Personnel                             |   | 711,570      |  |   | -          |  |   | -          |  |   | 711,570    | 
| | Public relations                      |   | 158,745      |  |   | -          |  |   | -          |  |   | 158,745    | 
| | Survey and mapping                    |   | 61,380       |  |   | -          |  |   | -          |  |   | 61,380     | 
| | Travel                                |   | 429,819      |  |   | -          |  |   | -          |  |   | 429,819    | 
| | Total expenditures
      for the year |   | 5,658,545    |  |   | 385,509    |  |   | 1,001,296  |  |   | 7,045,350  | 
| |                                       |   |              |  |   |            |  |   |            |  |   |            | 
| | Balance, January
      31, 2010       |   | 20,791,015   |  |   | 1,651,703  |  |   | 1,800,934  |  |   | 24,243,652 | 
| |                                       |   |              |  |   |            |  |   |            |  |   |            | 
| | Acquisition costs:                    |   |              |  |   |            |  |   |            |  |   |            | 
| | Cash payments                         |   | 201,892      |  |   | 72,027     |  |   | -          |  |   | 273,919    | 
| | Common shares issued                  |   | -            |  |   | 432,000    |  |   | -          |  |   | 432,000    | 
| | Deferred exploration costs:           |   |              |  |   |            |  |   |            |  |   |            | 
| | Incurred during the year:             |   |              |  |   |            |  |   |            |  |   |            | 
| | Field expenses                        |   | 1,628,007    |  |   | -          |  |   | -          |  |   | 1,628,007  | 
| | Data acquisition and analysis         |   | 1,886,675    |  |   | -          |  |   | -          |  |   | 1,886,675  | 
| | Peruvian value
      added tax        |   | 159,600      |  |   | -          |  |   | -          |  |   | 159,600    | 
| | Land maintenance and tenure           |   | 130,216      |  |   | 52,229     |  |   | 58,100     |  |   | 240,545    | 
| | Personnel                             |   | 3,042,195    |  |   | -          |  |   | -          |  |   | 3,042,195  | 
| | Public relations                      |   | 390,198      |  |   | -          |  |   | -          |  |   | 390,198    | 
| | Survey and
      mapping              |   | 249,251      |  |   | 231,550    |  |   | 307,044    |  |   | 787,845    | 
| | Travel                                |   | 1,606,198    |  |   | -          |  |   | -          |  |   | 1,606,198  | 
| | Total expenditures for the year       |   | 9,294,232    |  |   | 787,806    |  |   | 365,144    |  |   | 10,447,182 | 
| |                                       |   |              |  |   |            |  |   |            |  |   |            | 
| | Balance, January 31, 2011             | $ | 30,085,247   |  | $ | 2,439,509  |  | $ | 2,166,078  |  | $ | 34,690,834 | 
| | Represented by:                       |   |              |  |   |            |  |   |            |  |   |            | 
| | Acquisition costs                     | $ | 10,033,821   |  | $ | 2,155,730  |  | $ | 1,800,934  |  | $ | 13,990,485 | 
| | Exploration costs                     |   | 20,051,426   |  |   | 283,779    |  |   | 365,144    |  |   | 20,700,349 | 
| |                                       |   |              |  |   |            |  |   |            |  |   |            | 
| | Balance,
      January 31, 2011       | $ | 30,085,247   |  | $ | 2,439,509  |  | $ | 2,166,078  |  | $ | 34,690,834 | 

The Companys exploration activities
currently focus on three distinct geological areas shown above (Central Zone,
North Zone and South Zone) comprised of various mineral claims blocks acquired
through the under-noted option agreements. These individual option agreements
can relate to mineral claims included in more than one geological area and are
identified below.

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

12

---

|6. | MINERAL PROPERTY INTERESTS(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Property Acquisitions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | During the year ended January 31, 2008, the Company
      entered into five option agreements (Vicmarama Property, Maravilla
      Property, Lahaina 1 Property, Lahaina 2 Property and Afrodita Property) to
      earn a 100% interest in certain mineral mining concessions located in Peru
      (the Mineral Claims), and for which Canadian regulatory approval was
      received on April 24, 2008. Although the commercial terms of all the
      undernoted option agreements have now been completed, none of the options
      have been exercised. During the years ended January 31, 2011 and 2010, the
      Company entered into additional option agreements (David Property, Marita
      Property and Cangaza Property) and for which Canadian regulatory approval
      was also received. Peruvian Government approval (Supreme Decree) is
      required for the exercise of the undernoted option agreements, and is in
      the process of being obtained.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | v)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | vi)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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

13

---

|6. | MINERAL PROPERTY INTERESTS(contd)
|-- | -----------------------------------
|   |                                    
|   | Property Acquisitions(contd)     
|   |                                    
|   | vii)                               
|   |                                    
|   |                                    
|   |                                    
|   | viii)                              
|   |                                    
|   |                                    

| |                                           |  |               |  |  |               | 
| | ----------------------------------------- |  | ------------- |  |  | ------------- | 
| |                                           |  | Cash Payments |  |  | Common shares | 
| |                                           |  |               |  |  |               | 
| | July 13, 2010                             |  | US$           |  |  | 30,000        | 
| | August 13, 2010                           |  |               |  |  |               | 
| | On or before October 13, 2010             |  | US$           |  |  | 40,000        | 
| | On or before November 13, 2010            |  |               |  |  |               | 
| | On or before April 13, 2011 (note 13)     |  | US$           |  |  | 40,000        | 
| | On or before July 13, 2011 (note 13)      |  | US$           |  |  | 40,000        | 
| | On or before September 13, 2011 (note 13) |  |               |  |  |               | 
| | On
      or before January 13, 2012       |  |               |  |  |               | 
| |                                           |  | US$           |  |  | 150,000       | 

The claims are included in the North
Zone.

Royalty Option Agreement

On July 18, 2008, the Company entered
into a Royalty Option Agreement with Franco-Nevada Corporation
(Franco-Nevada). The Company agreed to grant Franco-Nevada the option to
purchase a perpetual royalty on 100% of the gold and silver produced from its
Taricori and surrounding land packages (Central Zone) covering approximately 152
square kilometers. During the year ended January 31, 2010, the Company amended
the royalty agreement with Franco-Nevada to expand the size of the mineral
property interests to which the Franco-Nevada royalty will apply to 417 square
kilometers. The material terms of the Royalty Option Agreement are as
follows:

- The Option will expire the sooner of : (a) the
  expiration or termination of the concessions and surrounding land packages or
  (b) sixty days following a decision to construct a mine;
- The Option may be exercised within sixty days
  following a decision to construct a mine by the Company and/or its successor
  in interest together with a firm commitment to finance construction;
- The royalty rate shall be either a 1% or 2% of the
  Net Smelter Return, dependent on the gold price at the time of the exercise of
  the Option; and
- The Option may be exercised at a purchase price
  equal to the Royalty Net Present Value which, for the purpose of the Royalty
  Option Agreement, shall mean the after tax net present value of the royalty
  revenue from the production of gold and silver using the royalty rate and a
  7.5% discount rate applied to the base case model assumptions contained in a
  feasibility study used to make the decision to construct the mine.

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

14

---

|6. | MINERAL PROPERTY INTERESTS(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Acquisitions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The acquisition of title to mineral properties is a
      detailed and time-consuming process. The Company has taken steps, in
      accordance with industry standards, to verify title to mineral properties
      in which it has an interest. Although the Company has taken every
      reasonable precaution to ensure that legal title to its properties is
      properly recorded in the name of the Company, there can be no assurance
      that such title will ultimately be secured.                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Environmental expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The operations of the Company may in the future be
      affected from time to time in varying degrees by changes in environmental
      regulations, including those for future removal and site restoration
      costs. Both the likelihood of new regulations and their overall effect
      upon the Company vary greatly and are not predictable. The Companys
      policy is to meet or, if possible, surpass standards set by relevant
      legislation by application of technically proven and economically feasible
      measures. The Company is not aware of any AROs as of January 31, 2011 and
      2010.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|7. | CAPITAL STOCK AND CONTRIBUTED SURPLUS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Authorized                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | An unlimited number of common shares without par
      value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Share issuances                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | During the year ended January 31, 2011, the
    Company:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| | i)   | Issued 2,191,940 common shares pursuant to the exercise
      of stock options for total proceeds of $1,356,912 and transferred related
      contributed surplus of $371,543.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                               
| | ii)  | Issued 2,327,500 common shares pursuant to the exercise
      of warrants for total proceeds of $1,572,875 and transferred related
      contributed surplus of $525,201.     
| |      |                                                                                                                                                                               
| | iii) | Issued 200,000 common shares valued at $0.84 per share
      and 200,000 common shares valued at $1.32 for mineral properties for a
      total of $432,000 (note 6(viii)).   

During the year ended January 31, 2010,
the Company:

| | i)   | Issued 62,500 common shares pursuant to the exercise of
      stock options for total proceeds of $18,750 and transferred related
      contributed surplus of $11,669.                                                                                
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                        
| | ii)  | Issued 675,000 common shares pursuant to the exercise of
      warrants for total proceeds of $438,750.                                                                                                                                                
| |      |                                                                                                                                                                                                                                                        
| | iii) | Issued 2,650,000 common shares for mineral properties,
      1,650,000 shares valued at $0.67 per share for a total of $1,105,500 and
      1,000,000 common shares valued at $0.84 per share for a total of $840,000
      (note 6 (i), (iv) and (v)).

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

15

---

|7. | CAPITAL STOCK AND CONTRIBUTED SURPLUS(contd)
|-- | ----------------------------------------------

Share issuances(contd)

| | iv) | Closed a private placement through the issuance of
      12,000,000 units at a price of $0.50 per unit for gross proceeds of
      $6,000,000. Each unit is comprised of one common share of the Company and
      one- half of one common share purchase warrant, each warrant entitling the
      holder to purchase one common share of the Company at a price of $0.65 per
      share until March 31, 2011. If the volume weighted average closing price
      of the Companys common shares on the TSXV exceeds $2.00 for a period of
      20 consecutive trading days after July 31, 2009, the Company may provide,
      in writing, notice to each of the holders of such Warrants, within 30 days
      of such occurrence, that the Warrants will expire on the 30th day
      following such notice. In connection with the Offering, the Agent received
      a cash commission equal to 7% of the total gross proceeds raised in the
      Offering and an aggregate of 1,200,000 agents warrants, each of which is
      exercisable to purchase one common share of the Company at $0.70 per share
      until March 31, 2011. In addition, the Agent received a corporate finance
      fee of 100,000 units, each unit having the same terms as the placement
      units above.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | v)  | Closed a bought deal private placement of 9,971,850 units
      at $1.05 per unit for total gross proceeds of $10,470,443. Each unit is
      comprised of one common share of the Company and one-half of one common
      share purchase warrant, each whole warrant entitling the holder to
      purchase one common share of the Company at a price of $1.65 until July
      26, 2011. In connection with this offering, the underwriters received a
      cash commission equal to 4.5% of the total gross proceeds raised and an
      aggregate of 947,325 compensation options, each compensation option unit
      having the same terms as the placement units above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | vi) | Closed a non-brokered private placement of 4,761,000
      units at $1.05 per unit for gross proceeds of $4,999,050. Each unit is
      comprised of one common share of the Company and one-half of one common
      share purchase warrant, each whole warrant entitling the holder to
      purchase one common share of the Company at a price of $1.65 until July
      29, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

|8. | STOCK OPTIONS AND WARRANTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Stock options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company has a stock option plan (the Plan) in place
      under which it is authorized to grant options to executive officers,
      directors, employees and consultants enabling them to acquire up to 10% of
      the issued and outstanding common shares of the Company. Under the Plan,
      the exercise price of each option equals the approximate market price of
      the Company's stock as calculated on the date of grant. The options can be
      granted for a maximum term of five years and periods of vesting are
      determined by the Board of Directors.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | On May 27, 2010, the Company granted 1,900,000 stock
      options to directors, officers and consultants of the Company. The options
      vested at the grant date except for the options granted to consultants
      providing investor relations services, which have a vesting period of 12
      months. All the options are exercisable at a price of $0.85 per share for
      a period of two years.                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | On November 3, 2010, the Company granted 150,000 stock
      options to an employee of the Company. The options vested at the grant
      date. All the options are exercisable at a price of $1.35 per share for a
      period of two years.                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | On January 25, 2011, the Company granted 1,500,000 stock
      options to directors, officers. employees and consultants of the Company.
      The options vested at the grant date except for the options granted to
      consultants providing investor relations services, which have a vesting
      period of 12 months. All the options are exercisable at a price of $1.20
      per share for a period of two years.                                                                                                                                                             

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

16

---

|8. | STOCK OPTIONS AND WARRANTS(contd)
|-- | -----------------------------------

Stock options(contd)

A summary of the status of the stock
option plan as of January 31, 2011, and changes during the year ended on those
dates is presented below:

| |                                        |  |            |   |   |                |  |  |           |  
| | -------------------------------------- |  | ---------- | - | - | -------------- |  |  | --------- | -
| |                                        |  | 2011       |   |   | 2010           | 
| |                                        |  |            |   |   | Weighted       |  |  |           |  
| |                                        |  | Number of  |   |   | Average        |  |  | Number of |  
| |                                        |  | Options    |   |   | Exercise Price |  |  | Options   |  
| |                                        |  |            |   |   |                |  |  |           |  
| | Options outstanding, beginning of year |  | 7,644,825  |   | $ | 0.87           |  |  | 3,600,000 |  
| | Granted                                |  | 3,550,000  |   | $ | 1.02           |  |  | 5,097,325 |  
| | Exercised                              |  | (2,191,940 | ) | $ | 0.62           |  |  | (62,500   | )
| | Cancelled/Expired                      |  | (1,790,000 | ) | $ | 1.37           |  |  | (990,000  | )
| | Options outstanding, end of year       |  | 7,212,885  |   | $ | 0.89           |  |  | 7,644,825 |  

The weighted average remaining life of
options outstanding at January 31, 2011 was 1.09 years.

Stock options outstanding are as
follows:

| |                                 |   |          |  |  |           | 
| | ------------------------------- | - | -------- |  |  | --------- | 
| |                                 |   | 2011     |  |  | 2010      | 
| |                                 |   | Exercise |  |  | Number of | 
| | Expiry Date                     |   | Price    |  |  | Options   | 
| |                                 |   |          |  |  |           | 
| | May 23, 2010                    | $ | 1.40     |  |  | -         | 
| | January 7, 2011                 | $ | 0.30     |  |  | -         | 
| | April 9, 2011 (Note 13(b))      | $ | 0.60     |  |  | 1,500,000 | 
| | June 10, 2011                   | $ | 0.60     |  |  | -         | 
| | August 31, 2011                 | $ | 0.50     |  |  | 70,000    | 
| | October 30, 2011                | $ | 0.45     |  |  | 575,000   | 
| | January 29, 2012                | $ | 1.09     |  |  | 1,375,000 | 
| | May 27, 2012                    | $ | 0.85     |  |  | 1,825,000 | 
| | November 3, 2012                | $ | 1.35     |  |  | 150,000   | 
| | January 25, 2013                | $ | 1.20     |  |  | 1,500,000 | 
| |                                 |   |          |  |  | 6,995,000 | 
| |                                 |   |          |  |  |           | 
| | July 26, 2011 (Agents options) | $ | 1.05     |  |  | 217,885   | 
| |                                 |   |          |  |  | 7,212,885 | 

Stock-based compensation

During the year ended January 31, 2011,
the Company granted 3,550,000 (2010  5,097,325; 2009  3,600,000) stock options
with a fair value of $2,043,346 (2010 - $1,680,186; 2009 - $1,918,829), or $0.58
(2010 - $0.41; 2009 - $0.53) per option, calculated using the Black-Scholes
option pricing model. Stock-based compensation charges for the year ended
January 31, 2011 totalled $2,043,346 (2010 - $1,680,186; 2009 - $1,918,829), of
which $1,061,516 (2010 - $1,352,156; 2009 - $1,686,514) was allocated to
consulting fees, $289,966 (2010 -$149,231; 2009 - $143,221) was allocated to
investor relations, $36,795 (2010 - $20,234; 2009 - $34,944) to professional
fees, $9,604 (2010 - $nil; 2009 - $14,805) to offices and miscellaneous expenses
and $645,465 (2010 - $158,565; 2009 - $39,345) was allocated to mineral property
interests.

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

17

---

|8. | STOCK OPTIONS AND WARRANTS(contd)
|-- | -----------------------------------

Stock-based compensation(contd)

The following weighted average
assumptions were used for the Black-Scholes option pricing model
calculations:

| |                                   |  |         |  |  |         |  |  |         | 
| | --------------------------------- |  | ------- |  |  | ------- |  |  | ------- | 
| |                                   |  | 2011    |  |  | 2010    |  |  | 2009    | 
| |                                   |  |         |  |  |         |  |  |         | 
| | Risk-free interest rate           |  | 1.72%   |  |  | 1.30%   |  |  | 2.48%   | 
| | Expected life of options/warrants |  | 2 years |  |  | 2 years |  |  | 2 years | 
| | Annualized volatility             |  | 111.75% |  |  | 116.57% |  |  | 104.83% | 
| | Dividend rate                     |  | 0.00%   |  |  | 0.00%   |  |  | 0.00%   | 

Warrants

| |                                |  |            |   |   |                | 
| | ------------------------------ |  | ---------- | - | - | -------------- | 
| |                                |  | 2011       |   |   | 2010           | 
| |                                |  |            |   |   | Weighted       | 
| |                                |  | Number of  |   |   | Average        | 
| |                                |  | Warrants   |   |   | Exercise Price | 
| |                                |  |            |   |   |                | 
| | Balance, beginning of the year |  | 14,415,089 |   | $ | 1.20           | 
| | Issued                         |  | -          |   | $ | -              | 
| | Exercised                      |  | (2,327,500 | ) | $ | 0.68           | 
| |                                |  |            |   |   |                | 
| | Balance, end of the year       |  | 12,087,589 |   | $ | 1.30           | 

The weighted average remaining
contractual life of warrants outstanding at January 31, 2011 was 0.37 year.

At January 31, 2011, warrants were
outstanding as follows:

| |                             |  |            |  |   |                |  |  |            |  |   |                | 
| | --------------------------- |  | ---------- |  | - | -------------- |  |  | ---------- |  | - | -------------- | 
| |                             |  | 2011       |  |   | 2010           | 
| |                             |  | Number of  |  |   |                |  |  | Number of  |  |   |                | 
| | Expiry Date                 |  | Warrants   |  |   | Exercise Price |  |  | Warrants   |  |   | Exercise Price | 
| |                             |  |            |  |   |                |  |  |            |  |   |                | 
| | March 31, 2011 (Note 13(c)) |  | 4,247,500  |  | $ | 0.65           |  |  | 5,375,000  |  | $ | 0.65           | 
| | March 31, 2011              |  | -          |  | $ | -              |  |  | 1,200,000  |  | $ | 0.70           | 
| | July 26, 2011               |  | 5,459,588  |  | $ | 1.65           |  |  | 5,459,588  |  | $ | 1.65           | 
| | July 29, 2011               |  | 2,380,501  |  | $ | 1.65           |  |  | 2,380,501  |  | $ | 1.65           | 
| |                             |  | 12,087,589 |  |   |                |  |  | 14,415,089 |  |   |                | 

|9. | RELATED PARTY TRANSACTIONS                                                                                             
|-- | -----------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                        
|   | During the year ended January 31, 2011, the Company
      entered into the following transactions with related parties:
|   |                                                                                                                        
|   | a)                                                                                                                     
|   |                                                                                                                        
|   | b)                                                                                                                     
|   |                                                                                                                        
|   | c)                                                                                                                     

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

18

---

|9.  | RELATED PARTY TRANSACTIONS(contd)                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                 
|    | d)                                                                                                                                                              
|    |                                                                                                                                                                 
|    |                                                                                                                                                                 
|    |                                                                                                                                                                 
|10. | INCOME TAXES                                                                                                                                                    
|    |                                                                                                                                                                 
|    | A reconciliation of income taxes at Canadian statutory
      rates (2011  28.33%; 2010  29.88%; 2009  30.92%) is as follows for
      years ended January 31:

| |                                            |   |            |   |   |            |   |   |            |  
| | ------------------------------------------ | - | ---------- | - | - | ---------- | - | - | ---------- | -
| |                                            |   | 2011       |   |   | 2010       |   |   | 2009       |  
| |                                            |   |            |   |   |            |   |   | (note 3)   |  
| | Net loss for the year                      | $ | (3,996,832 | ) | $ | (3,605,068 | ) | $ | (2,646,137 | )
| |                                            |   |            |   |   |            |   |   |            |  
| | Expected income tax recovery               | $ | (1,132,322 | ) | $ | (1,077,659 | ) | $ | (818,189   | )
| | Permanent differences                      |   | 2,209      |   |   | 2,173      |   |   | 886        |  
| | Stock-based compensation                   |   | 396,020    |   |   | 454,660    |   |   | 582,097    |  
| | Other temporary differences                |   | 135,853    |   |   | (196,887   | ) |   | (71,204    | )
| | Effect of rate reduction                   |   | (12,478    | ) |   | 101,431    |   |   | 45,411     |  
| | Effect of tax rate in other jurisdiction   |   | 74,219     |   |   | -          |   |   | -          |  
| | Unrecognized benefit of non-capital losses |   | 536,499    |   |   | 716,282    |   |   | 260,999    |  
| |                                            | $ | -          |   | $ | -          |   | $ | -          |  

The significant components of the
Companys future income tax assets are as follows:

| |                              |   |            |   |   |          |  
| | ---------------------------- | - | ---------- | - | - | -------- | -
| |                              |   | 2011       |   |   | 2010     |  
| |                              |   |            |   |   |          |  
| | Non-capital losses           | $ | 1,652,667  |   | $ | 870,867  |  
| | Mineral property interests   |   | (512,983   | ) |   | (303,738 | )
| | Share issue costs            |   | 177,211    |   |   | 215,703  |  
| | Property and
      equipment |   | 1,771      |   |   | (665     | )
| |                              |   | 1,318,666  |   |   | 782,167  |  
| | Valuation
      allowance    |   | (1,318,666 | ) |   | (782,167 | )
| |                              | $ | -          |   | $ | -        |  

The Company has available for deduction
against future taxable income in Canada and Peru non-capital losses of
approximately $6,381,000. These losses, if not utilized, will expire through to
2031. Subject to certain restrictions, the Company has exploration and
development expenditures of approximately $33,847,000 available to reduce future
income taxes.

Future tax benefits that may arise as a
result of these non-capital losses and finance costs have been offset by a
valuation allowance and have not been recognized in these consolidated financial
statements.

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

19

---

|11. | SEGMENTED INFORMATION
|--- | ---------------------

The business of the Company is the
acquisition, exploration and development of mineral properties.

Geographic information is as
follows:

| |                            |   |           |  |   |            |  |   |            |  |   |            |  |   |            |   |   |            | 
| | -------------------------- | - | --------- |  | - | ---------- |  | - | ---------- |  | - | ---------- |  | - | ---------- | - | - | ---------- | 
| |                            |   |           |  |   | 2011       |  |   |            |  |   |            |  |   | 2010       |   |   |            | 
| |                            |   | Canada    |  |   | Peru       |  |   | Total      |  |   | Canada     |  |   | Peru       |   |   | Total      | 
| |                            |   |           |  |   |            |  |   |            |  |   |            |  |   |            |   |   |            | 
| | Cash (indebtedness)        | $ | 6,879,002 |  | $ | 25,717     |  | $ | 6,904,719  |  | $ | 15,911,974 |  | $ | (43,902    | ) | $ | 15,868,072 | 
| | Mineral property interests |   | -         |  |   | 34,690,834 |  |   | 34,690,834 |  |   | -          |  |   | 24,243,652 |   |   | 24,243,652 | 
| | Other assets               |   | 231,799   |  |   | 41,405     |  |   | 273,204    |  |   | 99,914     |  |   | 173,185    |   |   | 273,099    | 
| | Total assets               | $ | 7,110,801 |  | $ | 34,757,956 |  | $ | 41,868,757 |  | $ | 16,011,888 |  | $ | 24,372,935 |   | $ | 40,384,823 | 

|12. | CAPITAL MANAGEMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The Company manages its capital structure, being its
      share capital, and makes adjustments to it, based on the funds available
      to the Company, in order to support future business opportunities. The
      Board of Directors does not establish quantitative return on capital
      criteria for management, but rather relies on the expertise of the
      Companys management to sustain future development of the
  business.                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The Company currently has no source of revenues; as such
      the Company is dependent upon external financings to fund activities. In
      order to carry future projects and pay for administrative costs, the
      Company will spend its existing working capital and raise additional funds
      as needed. Management reviews its capital management approach on an
      ongoing basis and believes that this approach, given the relative size of
      the Company, is reasonable.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | There were no changes in the Companys approach to
      capital management during the year ended January 31, 2011. The Company is
      not subject to externally imposed capital requirements.                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|13. | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Subsequent to January 31, 2011:                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|14. | COMPARATIVE FIGURES                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Certain of the figures for 2010 and 2009 have been
      reclassified to conform to the presentation adopted for the current
      year.                                                                                                                                                                                                                                                                                                                                                       

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

20

---

|15. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
      GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
|--- | ---------------------------------------------------------------------------------------------
|    |                                                                                              
|    | a)                                                                                           
|    |                                                                                              
|    |                                                                                              
|    |                                                                                              
|    |                                                                                              
|    |                                                                                              
|    |                                                                                              
|    |                                                                                              
|    |                                                                                              
|    |                                                                                              
|    |                                                                                              
|    |                                                                                              
|    |                                                                                              
|    |                                                                                              
|    |                                                                                              

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

21

---

|15. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
      GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(contd)
|--- | -------------------------------------------------------------------------------------------------------

| | a) | Differences in accounting principles
  (contd)
| | -- | ------------------------------------------------

| | i) | Reconciliation of total assets, liabilities and
      shareholders equity
| | -- | --------------------------------------------------------------------------

| |                                                                         |   |             |   |   |             |  
| | ----------------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
| |                                                                         |   | 2011        |   |   | 2010        |  
| | Total assets per Canadian GAAP                                          | $ | 41,868,757  |   | $ | 40,384,823  |  
| | Expenditures on
      mineral property interests expensed under US GAAP |   | (20,700,349 | ) |   | (10,959,085 | )
| | Total assets per US GAAP                                                | $ | 21,168,408  |   | $ | 29,425,738  |  
| | Total liabilities
      per Canadian and US GAAP                        | $ | 542,783     |   | $ | 387,706     |  
| | Total shareholders equity per Canadian
      GAAP                      |   | 41,325,974  |   |   | 39,997,117  |  
| | Expenditures on
      mineral property interests expensed under US GAAP |   | (20,700,349 | ) |   | (10,959,085 | )
| | Total shareholders equity per US GAAP                                  |   | 20,625,625  |   |   | 29,038,032  |  
| | Total liabilities
      and shareholders equity per US GAAP            | $ | 21,168,408  |   | $ | 29,425,738  |  

| | ii) | Reconciliation of net loss and comprehensive loss
  :
| | --- | -----------------------------------------------------

Statements of operations for the years
ended January 31,

| |                                                                         |   |             |   |   |            |   |   |            |  
| | ----------------------------------------------------------------------- | - | ----------- | - | - | ---------- | - | - | ---------- | -
| |                                                                         |   | 2011        |   |   | 2010       |   |   | 2009       |  
| |                                                                         |   |             |   |   |            |   |   | (Note 3)   |  
| | Reconciliation of net loss                                              |   |             |   |   |            |   |   |            |  
| |                                                                         |   |             |   |   |            |   |   |            |  
| | Net loss per Canadian GAAP                                              | $ | (3,996,832  | ) | $ | (3,605,068 | ) | $ | (2,646,137 | )
| | Expenditures on
      mineral property interests expensed under US GAAP |   | (9,741,264  | ) |   | (4,099,925 | ) |   | (6,384,962 | )
| |                                                                         |   |             |   |   |            |   |   |            |  
| | Net loss per US
      GAAP                                              | $ | (13,738,096 | ) | $ | (7,704,993 | ) | $ | (9,031,099 | )
| |                                                                         |   |             |   |   |            |   |   |            |  
| | Basic and diluted
      loss per share in accordance with Canadian GAAP | $ | (0.06       | ) | $ | (0.07      | ) | $ | (0.11      | )
| |                                                                         |   |             |   |   |            |   |   |            |  
| | Basic and diluted
      loss per share in accordance with US GAAP       | $ | (0.20       | ) | $ | (0.15      | ) | $ | (0.36      | )
| |                                                                         |   |             |   |   |            |   |   |            |  
| | Weighted average
      number of common shares outstanding              |   | 69,372,422  |   |   | 49,819,536 |   |   | 24,859,595 |  

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

22

---

|15. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
      GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(contd)
|--- | ------------------------------------------------------------------------------------------------------

| | a) | Differences in accounting principles
  (contd)
| | -- | ------------------------------------------------

| | i) | Reconciliation of net loss and comprehensive loss
      (contd):
| | -- | ------------------------------------------------------------------

Statement of comprehensive loss for
the years ended January 31,

| |                                                                         |   |             |   |   |            |   |   |            |  
| | ----------------------------------------------------------------------- | - | ----------- | - | - | ---------- | - | - | ---------- | -
| |                                                                         |   | 2011        |   |   | 2010       |   |   | 2009       |  
| |                                                                         |   |             |   |   |            |   |   | (Note 3)   |  
| |                                                                         |   |             |   |   |            |   |   |            |  
| | Comprehensive loss in accordance with
      Canadian GAAP               | $ | (3,996,832  | ) | $ | (3,605,068 | ) | $ | (2,646,137 | )
| | Expenditures on
      mineral property interests expensed under US GAAP |   | (9,741,264  | ) |   | (4,099,925 | ) |   | (6,384,962 | )
| |                                                                         |   |             |   |   |            |   |   |            |  
| | Comprehensive
      loss in accordance with US GAAP                     | $ | (13,738,096 | ) | $ | (7,704,993 | ) | $ | (9,031,099 | )

| | iv. | Reconciliation of cash flows :                               
| | --- | -------------------------------------------------------------
| |     |                                                              
| |     | Statements of cash flow for the years ended January
      31,

| |                                                                               |   |             |   |   |            |   |   |             |  
| | ----------------------------------------------------------------------------- | - | ----------- | - | - | ---------- | - | - | ----------- | -
| |                                                                               |   | 2011        |   |   | 2010       |   |   | 2009        |  
| |                                                                               |   |             |   |   |            |   |   | (Note 3)    |  
| | Net cash used in operating activities in
      accordance with Canadian GAAP  | $ | (2,326,220  | ) | $ | (1,673,834 | ) | $ | (743,448    | )
| | Adjustments to net loss involving use of cash                                 |   |             |   |   |            |   |   |             |  
| | Write-off of capitalized mineral property
      interest costs                |   | (9,124,200  | ) |   | (4,035,849 | ) |   | (6,401,392  | )
| | Net cash used in
      operating activities in accordance with US GAAP        |   | (11,450,420 | ) |   | (5,709,683 | ) |   | (7,144,840  | )
| |                                                                               |   |             |   |   |            |   |   |             |  
| | Net cash used in investing activities in accordance with
      Canadian GAAP  |   | (9,412,456  | ) |   | (4,287,855 | ) |   | (11,521,213 | )
| | Reclassification of capitalized mineral property interests
      expenditures |   | 9,124,200   |   |   | 4,035,849  |   |   | 6,401,392   |  
| | Net cash used in
      investing activities in accordance with US GAAP        | $ | (288,256    | ) | $ | (252,006   | ) | $ | (5,119,821  | )

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

23

---

|15. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
      GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (contd)
|--- | -------------------------------------------------------------------------------------------------------
|    |                                                                                                        
|    | b)                                                                                                     
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        

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

24

---

|15. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
      GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(contd)
|--- | ------------------------------------------------------------------------------------------------------
|    |                                                                                                       
|    | b)                                                                                                    
|    |                                                                                                       
|    |                                                                                                       
|    |                                                                                                       
|    |                                                                                                       
|    |                                                                                                       
|    |                                                                                                       
|    |                                                                                                       
|    |                                                                                                       

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

25

---

|ITEM 18. | FINANCIAL STATEMENTS
|-------- | --------------------

Not applicable.

|ITEM 19. | EXHIBITS
|-------- | --------

|1.1(1)  | Articles effective August 21,
      2006.                                                                                                                                                                       
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.1(2)  | Option Agreement with Jose Clemente Contreras
      Centeno and Ylmany Diomar Barrenechea Solis dated July 7, 2010 whereby we
    were granted the option to earn a 100% interest in the Cangaza Property.      
|4.2(2)  | Option Agreement with Michelle
      Berendson Berninzon dated June 11, 2010 whereby we were granted the option
      to earn a 100% interest in the Marita Property.                                           
|4.3(2)  | Option Agreement with Carlos Ballon Barraza
      dated October 18, 2007 whereby we were granted the option to earn a 100%
      interest in the Vicmarama Property.                                            
|4.4(2)  | Option Agreement with Carlos
      Ballon Barraza dated October 18, 2007 whereby we were granted the option
      to earn a 100% interest in the Maravilla Property.                                            
|4.5(2)  | Option Agreement with Carlos Ballon Barraza
      dated October 18, 2007 whereby we were granted the option to earn a 100%
      interest in the Lahaina 2 Property.                                            
|4.6(2)  | Option Agreement with Carlos
      Ballon Barraza dated October 18, 2007 whereby we were granted the option
      to earn a 100% interest in the Lahaina 1 Property.                                            
|4.7(3)  | Royalty Option Agreement between Dorato
      Resources Inc. and Franco-Nevada Corporation dated August 18, 2008.                                                                                               
|4.8(3)  | First Amendment to the Royalty
      Option Agreement between Dorato Resources Inc. and Franco- Nevada
      Corporation dated March 30, 2009.                                                                  
|4.9(3)  | Stock Option Plan.                                                                                                                                                                                              
|8.1(3)  | List of Subsidiaries (see Item
      4.C  Organizational Structure)                                                                                                                                            
|11.1(1) | Code of Ethics.                                                                                                                                                                                                 
|12.1    | Certification of the Chief
      Executive Officer Pursuant To Rule 13a-14 Or 15d-14 of the
        Securities Exchange Act Of 1934, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.
|12.2    | Certification of the Chief Financial Officer
      Pursuant To Rule 13a-14 Or 15d-14 of the Securities Exchange Act
      of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.  
|13.1    | Certification of the Chief
      Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002.                                               
|13.2    | Certification of the Chief Financial Officer
      pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002.                                               

---

|(1) | Incorporated by reference from our Annual Report on
      Form 20-F filed on May 24, 2007 with the Securities and Exchange
      Commission.    
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                 
|(2) | Incorporated by reference from our Annual Report on
      Form 20-F filed on August 1, 2008 with the Securities and Exchange
      Commission.  
|    |                                                                                                                                                 
|(3) | Incorporated by reference from our Annual Report on
      Form 20-F filed on August 24, 2009 .with the Securities and Exchange
      Commission.

---

SIGNATURES

The registrant hereby certifies that it meets all of the
requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.

DORATO RESOURCES INC.

| | /s/ | Keith J. Henderson 
| | --- | -------------------
| | By: | Keith J. Henderson,
| |     | President & CEO    

Date: July 29, 2011

---