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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

Form 20F /A
  Amendment No. 1

___ 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, 2010

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)

#1920  1188 West Georgia Street Vancouver, British
Columbia, V6E 4A2(Address of principal executive offices)

Keith J. Henderson#1920-1188 West Georgia
Street, Vancouver, BC V6E 4A2, 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, 2010
|--------------------------- | -------------------------------
|Common Shares, no par value | 68,388,537                     

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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EXPLANATORY NOTE

This Amendment No. 1 on Form
20-F/A (the "Amendment No. 1") amends our Annual Report on Form 20-F for the
fiscal year ended January 31, 2010, originally filed on August 24, 2010 (the
"2010 Form 20-F"). We are filing this Amendment No. 1 in response to certain
comments made by the staff of the Securities and Exchange Commission (the
"SEC"). In response to such comments, we have amended and restated Items
[3.A, 4.B, 4.D, 5.A, 6.A, 6.B, 7.B, 9.A, 15T, 17 and 19][NTD: Confirm
item references.]

We are also filing currently
dated certifications of our Chief Executive Officer and Chief Financial Officer,
as required under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, and a
currently dated letter from BDO Canada LLP (formerly BDO Dunwoody LLP) in
respect of Item 16F.

No item of or disclosures
appearing in our 2010 Form 20-F are affected by this filing other than the items
described above. This report on Form 20-F/A is presented as of the filing date
of the 2010 Form 20-F and does not reflect events occurring after that date, or
modify or update disclosures in any way.

3

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TABLE OF CONTENTS

|Part   | Item                             |               |                                                               | Page
|------ | -------------------------------- | ------------- | ------------------------------------------------------------- | ----
|       |                                  |               |                                                               |     
|       | Glossary                         | 6            
|       | Forward-Looking
      Statements | 8            
|PART I | 1                                | ITEM
      1  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
      ADVISERS   | 9   
|       | 2                                | ITEM 2        | OFFER
      STATISTICS AND EXPECTED TIMETABLE                 | 9   
|       | 3                                | ITEM
      3. | KEY INFORMATION                                               | 9   
|       |                                  | 3.A           | Selected Financial
      Data                                 | 9   
|       |                                  | 3.B           | Capitalization and Indebtedness                               | 11  
|       |                                  | 3.C           | Reasons for the
      Offer and Use of Proceeds               | 11  
|       |                                  | 3.D           | Risk Factors                                                  | 11  
|       | 4                                | ITEM 4        | INFORMATION ON THE COMPANY                                    | 20  
|       |                                  | 4.A           | History and Development of the Company                        | 20  
|       |                                  | 4.B           | Business
      Overview                                       | 20  
|       |                                  | 4.C           | Organizational Structure                                      | 24  
|       |                                  | 4.D           | Property, Plants
      and Equipment                          | 25  
|       | 5                                | ITEM
      5  | OPERATING AND FINANCIAL REVIEW AND
      PROSPECTS            | 34  
|       |                                  | 5.A           | Operating
      Results                                       | 34  
|       |                                  | 5.B           | Liquidity and Capital Resources                               | 37  
|       |                                  | 5.C           | Research and
      Development, Patents and Licences, etc.    | 38  
|       |                                  | 5.D           | Trend Information                                             | 38  
|       |                                  | 5.E           | Off-Balance Sheet
      Arrangements                          | 38  
|       |                                  | 5.F           | Tabular Disclosure of Contractual
      Obligations           | 38  
|       | 6                                | ITEM 6        | DIRECTORS,
      SENIOR MANAGEMENT AND EMPLOYEES              | 38  
|       |                                  | 6.A           | Directors and Senior Management                               | 38  
|       |                                  | 6.B           | Compensation                                                  | 41  
|       |                                  | 6.C           | Board Practices                                               | 44  
|       |                                  | 6.D           | Employees                                                     | 44  
|       |                                  | 6.E           | Share Ownership                                               | 45  
|       | 7                                | ITEM 7        | MAJOR
      SHAREHOLDERS AND RELATED PARTY TRANSACTIONS       | 47  
|       |                                  | 7.A           | Major Shareholders                                            | 47  
|       |                                  | 7.B           | Related Party
      Transactions                              | 48  
|       |                                  | 7.C           | Interests of Experts and Counsel                              | 49  
|       | 8                                | ITEM 8.       | FINANCIAL
      INFORMATION                                   | 49  
|       |                                  | 8.A           | Consolidated Statements and Other Financial
      Information | 49  
|       |                                  | 8.B           | Significant
      Changes                                     | 49  
|       | 9                                | ITEM
      9  | THE OFFER AND LISTING                                         | 50  
|       |                                  | 9.A           | Offer and Listing
      Details                               | 50  
|       |                                  | 9.B           | Plan of Distribution                                          | 51  
|       |                                  | 9.C           | Markets                                                       | 51  
|       |                                  | 9.D           | Selling Shareholders                                          | 51  
|       |                                  | 9.E           | Dilution                                                      | 51  
|       |                                  | 9.F           | Expenses of the Issue                                         | 51  
|       | 10                               | ITEM 10.      | ADDITIONAL
      INFORMATION                                  | 51  
|       |                                  | 10.A          | Share Capital                                                 | 51  
|       |                                  | 10.B          | Memorandum and
      Articles of Association                  | 51  
|       |                                  | 10.C          | Material Contracts                                            | 53  
|       |                                  | 10.D          | Exchange
      Controls                                       | 53  
|       |                                  | 10.E          | Taxation                                                      | 53  
|       |                                  | 10.F          | Dividends and
      Paying Agents                             | 63  
|       |                                  | 10.G          | Statement by Experts                                          | 63  
|       |                                  | 10.H          | Documents on
      Display                                    | 63  
|       |                                  | 10.I          | Subsidiary Information                                        | 63  

---

|               | 11         | ITEM 11         | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                         | 63 
|-------------- | ---------- | --------------- | ---------------------------------------------------------------------------------- | ---
|               | 12         | ITEM 12         | DESCRIPTION OF
      SECURITIES OTHER THAN EQUITY SECURITIES                       | 65 
|PART
      II  | 13         | ITEM 13         | DEFAULTS, DIVIDEND ARREARAGES AND
      DELINQUENCIES                              | 65 
|               | 14         | ITEM
      14.  | MATERIAL
      MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 66 
|               |            |                 | Material Modifications to the Rights of Security
      Holders                     | 66 
|               |            |                 | Use of Proceeds                                                                    | 66 
|               | 15T        | ITEM 15T.       | CONTROLS AND PROCEDURES                                                            | 66 
|               | 16A        | ITEM
      16A  | AUDIT COMMITTEE FINANCIAL EXPERT                                                   | 67 
|               | 16B        | ITEM 16B.       | CODE OF ETHICS                                                                     | 67 
|               | 16C        | ITEM
      16C  | PRINCIPAL
      ACCOUNTANT FEES AND SERVICES                                       | 67 
|               | 16D        | ITEM 16D.       | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
      COMMITTEES                   | 68 
|               | 16E        | ITEM
      16E. | PURCHASES
      OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS       | 68 
|               | 16F        | ITEM 16F.       | CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT                                       | 68 
|               | 16G        | ITEM
      16G. | CORPORATE
      GOVERNANCE                                                         | 69 
|PART
      III | 17         | ITEM 17.        | FINANCIAL STATEMENTS                                                               | 69 
|               | 18         | ITEM
      18.  | FINANCIAL
      STATEMENTS                                                         | 100
|               | 19         | ITEM 19.        | EXHIBITS                                                                           | 100
|               | SIGNATURES | 102            

5

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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 | silver    
|-- | ----------
|As | arsenic   
|Au | gold      
|Cu | copper    
|Hg | mercury   
|Mo | molybdenum
|Pb | lead      
|Sb | antimony  
|Sn | tin       
|W  | tungsten  
|Zn | 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 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                                                                                                                                                                                                                                  
|             |                                                                                                                                                                                                                                                  
|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                                                                                                                                                                     
|             |                                                                                                                                                                                                                                                  
|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             

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|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                                                   
|               |                                                                                                                                  
|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                                               

7

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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 theSecurities Act of 1933, as amended. Under SEC Industry
Guide 7 standards, a final or bankable feasibility study is
required to report reserves, the three-year historical average price is used in
any reserve or cash flow analysis to designate reserves and the primary
environmental analysis or report must be filed with the appropriate governmental
authority. 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.

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. 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.

8

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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, 2010 and
2009 and for the years ended January 31, 2010, 2009 and 2008, 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, 2010, 2009 and
2008 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 the consolidated financial statements in Item 17. The
  Company has omitted the presentation of selected financial data for its 2007
  and 2006 fiscal years 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 16 of the consolidated financial statements for a
  discussion of the material differences between Canadian GAAP and U.S. GAAP -
  See Item 17 Financial Statements.

|                                          | Fiscal Years Ended January 31
|----------------------------------------- | -----------------------------
|                                          | 2010 Cdn $                   
|Revenue                                   | Nil                          
|Loss from operations                      | (3,373,452)                  
|Loss from continuing operations           | (3,605,068)                  
|Net Loss                                  | (3,605,068)                  
|Net Loss from operations per share        | (0.07)                       
|Loss from continuing operations per share | (0.07)                       
|Diluted net loss per share                | (0.07)                       

9

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The weighted average outstanding shares used to calculate income
  (loss) per share for the following fiscal periods are: 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 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 Year Ended January 31
|------------------------------ | ----------------------------
|2010 Cdn $                     | 2009 Cdn $                  
|Total Assets                   | 40,384,823                  
|Total Liabilities              | 387,706                     
|Share capital                  | 49,160,012                  
|Shareholders Equity (Deficit) | 39,997,117                  

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 31
|------------------------------------------------------------------------- | -----------------------------
|                                                                          | 2010 Cdn $                   
|Consolidated Balance Sheets                                               |                              
|Total assets per Canadian GAAP                                            | 40,384,823                   
|Expenditures on mineral property interests
      expensed under U.S. GAAP | (10,959,085)                 
|Total assets per U.S. GAAP                                                | 29,425,738                   
|Total liabilities per Canadian GAAP and
      U.S. GAAP                   | 387,706                      
|Total shareholders equity under Canadian
      GAAP                      | 39,997,117                   
|Expenditures on mineral property interests
      expensed under U.S. GAAP | (10,959,085)                 
|Total shareholders equity per U.S. GAAP                                  | 29,038,032                   
|Total liabilities and shareholders equity
      per U.S. GAAP            | 29,425,738                   

|                                                            | Fiscal Years Ended January 31
|----------------------------------------------------------- | -----------------------------
|2010 Cdn $                                                  | 2009 Cdn $                   
|Consolidated Statement of Operations                        |                              
|Net Loss per Canadian GAAP Expenditures on mineral property | (3,605,068)                  
|interests expensed under U.S. GAAP                          | (4,099,925)                  
|Net loss per U.S. GAAP                                      | (7,704,993)                  
|Net loss per share per U.S. GAAP                            | (0.15)                       

Exchange Rate Data

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

10

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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 August 18, 2010, the exchange rate was USD
1.00 per CAD 1.04. The high and low exchange rates (CAD per USD 1.00) for each
month during the previous six months were as follows:

|               | High   | Low   
|-------------- | ------ | ------
|July 2010      | 1.0660 | 1.0284
|June, 2010     | 1.0606 | 1.0199
|May, 2010      | 1.0778 | 1.0116
|April, 2010    | 1.0201 | 0.9961
|March, 2010    | 1.0421 | 1.0113
|February, 2010 | 1.0734 | 1.0420

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 31
|---------------------------- | --------------------------
|                             | 2010                      
|Average Rate during Year (1) | 1.1272                    
|Year End                     | 1.0693                    
|High                         | 1.2991                    
|Low                          | 1.0234                    

| | (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.

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, 2010 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.

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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
- 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.

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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 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.

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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.

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.

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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.

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.

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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 the fiscal year ended January 31, 2010 , 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
during the fiscal year ended January 31, 2010, 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
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.

Recent market events and conditions, including disruptions in
the U.S. and international credit markets and other financial systems and the
deterioration of the U.S. and global economic conditions, could, among other
things, impede access to capital or increase the cost of capital, which would
have an adverse effect on the Companys ability to fund its working capital and
other capital requirements.

In 2007 and into 2008, the U.S. credit markets began to
experience serious disruption due to a deterioration in residential property
values, defaults and delinquencies in the residential mortgage market
(particularly, subprime and non-prime mortgages) and a decline in the credit
quality of mortgage backed securities. These problems led to a slow-down in
residential housing market transactions, declining housing prices, delinquencies
in non-mortgage consumer credit and a general decline in consumer confidence.
These conditions continued and worsened in 2008, causing a loss of confidence in
the broader U.S. and global credit and financial markets and resulting in the
collapse of, and government intervention in, major banks, financial institutions
and insurers and creating a climate of greater volatility, less liquidity,
widening of credit spreads, a lack of price transparency, increased credit
losses and tighter credit conditions. Notwithstanding various actions by the
U.S. and foreign governments, concerns about the general condition of the
capital markets, financial instruments, banks, investment banks, insurers and
other financial institutions caused the broader credit markets to further
deteriorate and stock markets to decline substantially. In addition, general
economic indicators have deteriorated, including declining consumer sentiment,
increased unemployment and declining economic growth and uncertainty about
corporate earnings.

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

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 effect 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.

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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, 2010, and based on current business plans
and financial expectations, the Company believes that it will be a PFIC for the
current tax year. 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, 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.

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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, 2010 and through August 6, 2010 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.

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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 #1920  1188 West
Georgia 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.

|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.

20

---

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 18 mineral claims, comprising an aggregate of 16,158
      hectares (the Vicmarama Property). In order to earn a 100%
      interest in the Vicmarama Property, we agreed to issue a total of 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|2. | Maravilla Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | We have fulfilled the commercial terms of the option to
      earn 100% interest in 18 mineral claims, comprising an aggregate of 14,500
      hectares (the Maravilla Property). In order to earn a 100%
      interest in the Maravilla Property, we agreed to issue 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.                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|3. | Lahaina 1 Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | We have fulfilled the commercial terms of the option to
      earn a 100% interest in 17 mineral claims, comprising an aggregate of
      15,468 hectares (the Lahaina 1 Property). In order to earn the
      100% interest in the Lahaina 1 Property, we issued 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.                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|4. | Lahaina 2 Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | We have fulfilled the commercial terms of the option to
      earn 100% interest in 11 mineral claims, comprising an aggregate of 9,659
      hectares (the Lahaina 2 Property). In order to earn a 100%
      interest in the Lahaina 2 Property, we agreed to issue 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.                                 

21

---

|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.                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | 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 1, 2009, the Company entered into an
      assignment/option agreement to earn a 100% interest in 25 mineral claims
      (the "David Property") comprising an aggregate of 22,010.31
      hectares. 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.                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|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.
      The Marita Property consists of 16 mineral rights, comprising an aggregate
      of 13,903.56 hectares. 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 $200,000 (paid) within 10 days of
      TSX.V approval (received on June 15, 2010), issue 50,000 common shares 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|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.
      The Cangaza Property consists of 14 concessions comprising an aggregate of
      10,427 hectares. 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:                                                                                                                                                                                                                                                                                                                                                                                 

22

---

|                                        | Cash Payments  | Common Shares
|--------------------------------------- | -------------- | -------------
|Within 10-days of
       TSX.V approval | $30,000 (paid) | 200,000      
|3 months after TSX.V
        approval   | $40,000        |              
|4 months after TSX.V
        approval   |                | 200,000      
|9 months after TSX.V
        approval   | $40,000        | 200,000      
|12 months after
        TSX.V approval  | $40,000        |              
|14 months after
        TSX.V approval  |                | 200,000      
|18 months after
        TSX.V approval  |                | 250,000      
|Total:                                  | $150,000       | 1,050,000    

TSX.V acceptance of the transaction was
received on July 13, 2010.

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, 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      | -                                   | -                              | 71,0301                                   | 5,000                           
|Marita Property     | 1,000,000                           | 1,000,000                      | 200,000                                   | -                               
|Cangaza Property    | 1,050,000                           | 1,050,000                      | 150,000                                   | 120,000                         
|Total:              | 17,550,000                          | 2,050,000                      | 5,280,301                                 | 125,000                         

Private Placements

During the year ended January 31, 2010, the Company completed
the following transactions:

|i)  | On March 31, 2009, the Company closed a private placement
      through the issuance of 12,000,000 units at a price of $0.50 per unit for
      total 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 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 TSX.V 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 30thday following such notice. In connection with this
      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 described above.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|ii) | The Company issued 2,650,000 common shares for mineral
      properties, comprised of 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

23

---

|iii) | On January 26, 2010, the Company 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 of which is exercisable to purchase one unit of the Company at the
      price of $1.05 per unit for 18 months until July 26, 2011, each
      compensation option unit having the same terms as the placement units
      described above.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|iv)  | On January 29, 2010, the Company closed a non-brokered
      private placement of 4,761,000 units at $1.05 per unit for total 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                    

Royalty Agreement with Franco-Nevada

On July 18,
  2008, the Company entered into a Royalty Option Agreement with Franco-Nevada
  Corporation (Franco-Nevada). Franco-Nevada agreed to purchase
  1,500,000 common shares at a price of $1.70 per common share. The price of $1.70
  represented a 15% premium over the 20 day average market price prior to the
  date of the news release announcing the agreement. The private placement was
  completed in August 2008. Under the terms of the agreement, Franco-Nevada will
  be offered the right to participate in all subsequent financings of the Company
  on a pro-rata basis for a period of two years. Franco-Nevada exercised this
  right in the Companys private placement that closed March 31, 2009.

Dorato agreed to grant 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;
- 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.

|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.

24

---

|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 Cordiellera del Condor Property Departmento 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       | HECTARES
|------------ | --------- | ----------------------------- | ---------- | --------
|LAHAINA 1    | 010257406 | CARLOS ARMANDO BALLON BARRAZA | 2006-06-12 | 803.34  
|LAHAINA 2    | 010257506 | CARLOS ARMANDO BALLON BARRAZA | 2006-06-12 | 900.00  
|LAHAINA 3    | 010257606 | CARLOS ARMANDO BALLON BARRAZA | 2006-06-12 | 900.00  
|LAHAINA 4    | 010257706 | CARLOS ARMANDO BALLON BARRAZA | 2006-06-12 | 689.24  
|LAHAINA 5    | 010257806 | CARLOS ARMANDO BALLON BARRAZA | 2006-06-12 | 800.00  

25

---

|MININGRIGHT   | CODE      | TITULAR                          | DATE       | HECTARES
|------------- | --------- | -------------------------------- | ---------- | --------
|LAHAINA 6     | 010257906 | CARLOS ARMANDO BALLON BARRAZA    | 2006-06-12 | 975.93  
|LAHAINA 7     | 010258006 | CARLOS ARMANDO BALLON BARRAZA    | 2006-06-12 | 1,000.00
|LAHAINA 8     | 010258106 | CARLOS ARMANDO BALLON BARRAZA    | 2006-06-12 | 1,000.00
|LAHAINA 9     | 010258206 | CARLOS ARMANDO BALLON BARRAZA    | 2006-06-12 | 1,000.00
|LAHAINA 10    | 010258306 | CARLOS ARMANDO BALLON BARRAZA    | 2006-06-12 | 1,000.00
|LAHAINA 11    | 010258406 | CARLOS ARMANDO BALLON BARRAZA    | 2006-06-12 | 900.00  
|LAHAINA 12    | 010258506 | CARLOS ARMANDO BALLON BARRAZA    | 2006-06-12 | 800.00  
|LAHAINA 13    | 010258606 | CARLOS ARMANDO BALLON BARRAZA    | 2006-06-12 | 882.51  
|LAHAINA 14    | 010258706 | CARLOS ARMANDO BALLON BARRAZA    | 2006-06-12 | 1,000.00
|LAHAINA 15    | 010258806 | CARLOS ARMANDO BALLON BARRAZA    | 2006-06-12 | 1,000.00
|LAHAINA 16    | 010258906 | CARLOS ARMANDO BALLON BARRAZA    | 2006-06-12 | 1,000.00
|LAHAINA 17    | 010259006 | CARLOS ARMANDO BALLON BARRAZA    | 2006-06-12 | 800.00  
|LAHAINA 18    | 010459106 | CARLOS ARMANDO BALLON BARRAZA    | 2006-10-27 | 907.78  
|LAHAINA 19    | 010459206 | CARLOS ARMANDO BALLON BARRAZA    | 2006-10-27 | 922.46  
|LAHAINA 20    | 010459306 | CARLOS ARMANDO BALLON BARRAZA    | 2006-10-27 | 1,000.00
|LAHAINA 21    | 010459406 | CARLOS ARMANDO BALLON BARRAZA    | 2006-10-27 | 200.00  
|LAHAINA 22    | 010459506 | CARLOS ARMANDO BALLON BARRAZA    | 2006-10-27 | 956.68  
|LAHAINA 23    | 010459606 | CARLOS ARMANDO BALLON BARRAZA    | 2006-10-27 | 800.00  
|LAHAINA 24    | 010459706 | CARLOS ARMANDO BALLON BARRAZA    | 2006-10-27 | 947.89  
|LAHAINA 25    | 010459806 | CARLOS ARMANDO BALLON BARRAZA    | 2006-10-27 | 973.43  
|LAHAINA 26    | 010459906 | CARLOS ARMANDO BALLON BARRAZA    | 2006-10-27 | 1,000.00
|LAHAINA 27    | 010460106 | CARLOS ARMANDO BALLON BARRAZA    | 2006-10-27 | 1,000.00
|LAHAINA 281   | 010460006 | CARLOS ARMANDO BALLON BARRAZA    | 2006-10-27 | 951.44  
|MARAVILLA 2   | 010081007 | CARLOS ARMANDO BALLON BARRAZA    | 2007-01-12 | 1,000.00
|MARAVILLA 3   | 010081107 | CARLOS ARMANDO BALLON BARRAZA    | 2007-01-12 | 1,000.00
|MARAVILLA 4   | 010081207 | CARLOS ARMANDO BALLON BARRAZA    | 2007-01-12 | 1,000.00
|MARAVILLA 6   | 010081407 | CARLOS ARMANDO BALLON BARRAZA    | 2007-01-12 | 1,000.00
|MARAVILLA 7   | 010081507 | CARLOS ARMANDO BALLON BARRAZA    | 2007-01-12 | 800.00  
|MARAVILLA 8   | 010081607 | CARLOS ARMANDO BALLON BARRAZA    | 2007-01-12 | 700.00  
|MARAVILLA 9   | 010081707 | CARLOS ARMANDO BALLON BARRAZA    | 2007-01-12 | 700.00  
|MARAVILLA 10  | 010082007 | CARLOS ARMANDO BALLON BARRAZA    | 2007-01-12 | 1,000.00
|MARAVILLA 12  | 010088007 | CARLOS ARMANDO BALLON BARRAZA    | 2007-01-17 | 932.08  
|MARAVILLA 13  | 010088107 | CARLOS ARMANDO BALLON BARRAZA    | 2007-01-17 | 1,000.00
|MARAVILLA 14  | 010088207 | CARLOS ARMANDO BALLON BARRAZA    | 2007-01-17 | 873.48  
|MARAVILLA 15  | 010088307 | CARLOS ARMANDO BALLON BARRAZA    | 2007-01-17 | 907.60  
|MARAVILLA 16  | 010088407 | CARLOS ARMANDO BALLON BARRAZA    | 2007-01-17 | 94.85   
|MARAVILLA 17  | 010088507 | CARLOS ARMANDO BALLON BARRAZA    | 2007-01-17 | 1,000.00
|MARAVILLA 182 | 010406207 | CARLOS ARMANDO BALLON BARRAZA    | 2007-08-01 | 1,000.00
|APU           | 010211695 | COMPAÑIA MINERA AFRODITA S.A.C.  | 1995-01-02 | 8.75    
|CAMPANA 1     | 010056393 | COMPAÑIA MINERA AFRODITA S.A.C.  | 1993-02-15 | 1,000.00
|CAMPANA 2     | 010056293 | COMPAÑIA MINERA AFRODITA S.A.C.  | 1993-02-15 | 900.00  
|COMAINA 1     | 010056193 | COMPAÑIA MINERA AFRODITA S.A.C.  | 1993-02-15 | 1,000.00
|COMAINA 2     | 010056493 | COMPAÑIA MINERA AFRODITA S.A.C.  | 1993-02-15 | 1,000.00
|COMAINA 3     | 010064993 | COMPAÑIA MINERA AFRODITA S.A.C.  | 1993-03-30 | 1,000.00
|HITO          | 010064793 | COMPAÑIA MINERA AFRODITA S.A.C.3 | 1993-03-30 | 100.00  
|VICMARAMA 1   | 010456306 | CARLOS ARMANDO BALLÓN BARRAZA    | 2006-10-27 | 400.00  
|VICMARAMA 2   | 010455906 | CARLOS ARMANDO BALLÓN BARRAZA    | 2006-10-27 | 815.02  
|VICMARAMA 3   | 010455406 | CARLOS ARMANDO BALLÓN BARRAZA    | 2006-10-27 | 1,000.00
|VICMARAMA 4   | 010455206 | CARLOS ARMANDO BALLÓN BARRAZA    | 2006-10-27 | 800.00  
|VICMARAMA 5   | 010455706 | CARLOS ARMANDO BALLÓN BARRAZA    | 2006-10-27 | 792.41  
|VICMARAMA 6   | 010455506 | CARLOS ARMANDO BALLÓN BARRAZA    | 2006-10-27 | 1,000.00
|PAMINA        | 010173707 | CARLOS ARMANDO BALLÓN BARRAZA    | 2007-03-08 | 1,000.00

|1 | All the Lahaina Mining Rights were part of an Option Transfer Agreement entered into by Carlos Ballón and Dorato Perú
       S.A.C. on October, 11 th  2007.  
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|2 | All the Maravilla Mining Rights were part of an Option Transfer Agreement entered into by Carlos Ballón and Dorato Perú
       S.A.C. on October, 11 th  2007.
|3 | All the Compañía Minera Afrodita S.A.C. shares were part of an Option Transfer Agreement  entered with  Dorato 
      Perú S.A.C. on October, 18 th
   2007.  

---

|MININGRIGHT     | CODE      | TITULAR                        | DATE       | HECTARES
|--------------- | --------- | ------------------------------ | ---------- | --------
|VICMARAMA 8     | 010456106 | CARLOS ARMANDO BALLÓN BARRAZA  | 2006-10-27 | 1,000.00
|VICMARAMA 9     | 010455806 | CARLOS ARMANDO BALLÓN BARRAZA  | 2006-10-27 | 1,000.00
|VICMARAMA 10    | 010454906 | CARLOS ARMANDO BALLÓN BARRAZA  | 2006-10-27 | 900.00  
|VICMARAMA 13    | 010455106 | CARLOS ARMANDO BALLÓN BARRAZA  | 2006-10-27 | 808.88  
|VICMARAMA 14    | 010456006 | CARLOS ARMANDO BALLÓN BARRAZA  | 2006-10-27 | 674.68  
|VICMARAMA 15    | 010456206 | CARLOS ARMANDO BALLÓN BARRAZA  | 2006-10-27 | 1,000.00
|VICMARAMA 16    | 010455606 | CARLOS ARMANDO BALLÓN BARRAZA  | 2006-10-27 | 967.02  
|VICMARAMA 174   | 010460206 | CARLOS ARMANDO BALLÓN BARRAZA  | 2006-10-27 | 1,000.00
|MARAVILLA 19    | 010023208 | CARLOS ARMANDO BALLON BARRAZA  | 2008-01-15 | 1,000.00
|MARAVILLA 20    | 010023308 | CARLOS ARMANDO BALLON BARRAZA  | 2008-01-15 | 500.00  
|MARAVILLA 21    | 010023408 | CARLOS ARMANDO BALLON BARRAZA  | 2008-01-15 | 700.00  
|MARAVILLA 22    | 010023508 | CARLOS ARMANDO BALLON BARRAZA  | 2008-01-15 | 219.74  
|DAVID B1        | 010326408 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 1,000.00
|DAVID B2        | 010326508 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 1,000.00
|DAVID B3        | 010326608 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 1,000.00
|DAVID B4        | 010326708 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 1,000.00
|DAVID B5        | 010326908 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 1,000.00
|DAVID B6        | 010326808 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 534.11  
|DAVID B7        | 010327008 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 1,000.00
|DAVID B8        | 010327108 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 1,000.00
|DAVID B9        | 010327208 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 1,000.00
|DAVID B10       | 010327308 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 1,000.00
|DAVID B11       | 010327408 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 1,000.00
|DAVID B12       | 010327508 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 1,000.00
|DAVID B13       | 010327608 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 1,000.00
|DAVID B14       | 010327708 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 1,000.00
|DAVID B15       | 010327808 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 556.46  
|DAVID B16       | 010327908 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 800.00  
|DAVID B17       | 010328008 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 1,000.00
|DAVID B18       | 010328108 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 1,000.00
|DAVID B19       | 010328208 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 1,000.00
|DAVID B20       | 010328308 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 1,000.00
|DAVID B215      | 010328408 | CARLOS ARMANDO BALLON BARRAZA  | 2008-06-02 | 700.00  
|EESM 9          | 010645407 | MICHELLE BERENDSON BERNINZON   | 2007-12-11 | 997.48  
|EESM 10         | 010645507 | MICHELLE BERENDSON BERNINZON   | 2007-12-11 | 873.94  
|EESM 11         | 010645607 | MICHELLE BERENDSON BERNINZON   | 2007-12-11 | 1,000.00
|EESM 12         | 010645707 | MICHELLE BERENDSON BERNINZON   | 2007-12-11 | 1,000.00
|EESM 13         | 010645807 | MICHELLE BERENDSON BERNINZON   | 2007-12-11 | 1,000.00
|EESM 14         | 010645907 | MICHELLE BERENDSON BERNINZON   | 2007-12-11 | 926.45  
|EEMS 15         | 010646007 | MICHELLE BERENDSON BERNINZON   | 2007-12-11 | 1,000.00
|EESM 16         | 010646107 | MICHELLE BERENDSON BERNINZON   | 2007-12-11 | 959.70  
|EESM 17         | 010646207 | MICHELLE BERENDSON BERNINZON   | 2007-12-11 | 768.97  
|EESM 18         | 010646307 | MICHELLE BERENDSON BERNINZON   | 2007-12-11 | 822.52  
|EESM 21         | 010000508 | MICHELLE BERENDSON BERNINZON   | 2008-01-02 | 254.50  
|EESM 29         | 010330608 | MICHELLE BERENDSON BERNINZON   | 2008-06-03 | 1,000.00
|EESM 30         | 010330708 | MICHELLE BERENDSON BERNINZON   | 2008-06-03 | 1,000.00
|EESM 31         | 010330808 | MICHELLE BERENDSON BERNINZON   | 2008-06-03 | 700.00  
|EESM 37         | 010364308 | MICHELLE BERENDSON BERNINZON   | 2008-06-24 | 1,000.00
|EESM 386        | 010364208 | MICHELLE BERENDSON BERNINZON   | 2008-06-24 | 600.00  
|Alto Cangaza 10 | 010655408 | COMPAÑIA MINERA CANGAZA S.A.C. | 2008-11-19 | 1,000.00
|Alto Cangaza 11 | 010655208 | COMPAÑIA MINERA CANGAZA S.A.C  | 2008-11-19 | 1,000.00
|Alto Cangaza 12 | 010655308 | COMPAÑIA MINERA CANGAZA S.A.C  | 2008-11-19 | 900.00  

|4 | The 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, 11 th
       2007.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5 | Maravilla 19, 20, 21, 22 and David Mining Rights were part of an Option Transfer Agreement entered into by Carlos Balló
      n and Dorato Perú S.A.C. on June 5, 2009.    
|6 | The EESM Mining Rights were part of a Mineral Option Transfer Agreement entered into by Michelle Berendson and Dorato Resources 
      Inc. on June, 9 th
 2010.           

27

---

|MININGRIGHT     | CODE        | TITULAR                        | DATE       | HECTARES
|--------------- | ----------- | ------------------------------ | ---------- | --------
|Alto Cangaza 13 | 010655508   | COMPAÑIA MINERA CANGAZA S.A.C  | 2008-11-19 | 600.00  
|Alto Cangaza 14 | 010655708   | COMPAÑIA MINERA CANGAZA S.A.C  | 2008-11-19 | 1,000.00
|Alto Cangaza 15 | 010655608   | COMPAÑIA MINERA CANGAZA S.A.C  | 2008-11-19 | 1,000.00
|Rio Cangaza 1   | 010656008   | COMPAÑIA MINERA CANGAZA S.A.C  | 2008-11-19 | 500.00  
|Rio Cangaza 2   | 010656108   | COMPAÑIA MINERA CANGAZA S.A.C  | 2008-11-19 | 1,000.00
|Rio Ayambis 1   | 010656208   | COMPAÑIA MINERA CANGAZA S.A.C  | 2008-11-19 | 1,000.00
|Rio Ayambis 2   | 010656308   | COMPAÑIA MINERA CANGAZA S.A.C  | 2008-11-19 | 500.00  
|Rio Ayambis 3   | 010656408   | COMPAÑIA MINERA CANGAZA S.A.C  | 2008-11-19 | 500.00  
|Rio Ayambis 4   | 010656508   | COMPAÑIA MINERA CANGAZA S.A.C  | 2008-11-19 | 800.00  
|Rio Ayambis 5   | 010656608   | COMPAÑIA MINERA CANGAZA S.A.C  | 2008-11-19 | 327.004 
|Rio Ayambis 6A  | 010006909   | COMPAÑIA MINERA CANGAZA S.A.C  | 2009-01-13 | 900.00  
|Rio Naraime 1   | 010655908   | COMPAÑIA MINERA CANGAZA S.A.C7 | 2008-11-19 | 400.00  
|DANI8           | 010194409   | ELSA LORENA ZUAZO VILLARROEL   | 2009-08-03 | 1,000.00
|TOTAL           | 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 volcanics and
sediments cut by young intrusives 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 volcanics.

|7 | All the Compañía Minera Cangaza S.A.C. shares were part of an Option Transfer Agreeement entered with Dorato Perú 
      S.A.C. on December, 28th2009.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|8 | Dani was part of an Option Transfer Agreement entered into by Lorena Zuazo ando Dorato Perú S.A.C. on December, 16
      th  2009.                    

28

---



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 porphyrytic
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

Exploration, undertaken by Minera Afrodita in Peru, is focused
on drill-testing the Taricori gold-system and further defining gold
mineralization targets throughout the extensive 1,050 square kilometre
land-holding. The Taricori Gold Zone is a well-exposed, advanced target, where
drill-testing has discovered significant gold mineralization. Management
considers that this discovery, while significant, represents only a small
fraction of the overall potential in the Cordillera. It is important to
note that in this zone, the same permissive rocks and similar mineralization
mapped in Ecuador continue across the border into Peru.

29

---

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. The true extent of the Taricori Zone mineralized
system will only be determined through continued drill testing and sampling.

Phase I drilling resulted in a total of approximately 2,455
metres for a total of 13 drillholes, drilled from 3 platforms. 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.

Phase II drilling is in progress with holes TAR-014 to -027
complete and results received to TAR-020.

The main east-west trending zone of mineralization is a
structurally controlled contact zone between granodiorite of the Zamora
Batholith and younger volcanic dacite and/or rhyolite, where mineralization
occurs as vein or fault material with vein, consisting of massive sulphide
mineralization ((pyrite-sphalerite (Zn)-Galena (Pb)+/-Chalcopyrite (Cu)), with
locally coarse visible gold.

Other mineralized structural zones occur throughout the hanging
wall and footwall to this zone in a variety of orientations, the dominant of
which is multiple north-east trending structures containing similar styles of
mineralization. Hanging wall rocks comprise mixed volcanic and sedimentary
sequences.

Results to
  date indicate that a series of mineralized veins have been intersected, with
  variable grade and thickness (below is a summary of intersections for the first
  20 drill holes). Considerably more drilling will be required with positive results
  before a decision will be reached to proceed with a resource estimate. As such
  the Taricori project should be considered to be in a phase of early stage exploration.

SUMMARY OF TARICORI DRILL RESULTS

|DRILLHOLE      |                | FROM   | TO    | WIDTH           | GOLD           | SILVER       
|-------------- | -------------- | ------ | ----- | --------------- | -------------- | -------------
|TAR 001        | Intersection 1 | 78     | 110.2 | 32.2m           | 1.03
      g/t | 4.3
      g/t
|including      | 89             | 96     | 7.0m  | 1.94
      g/t  | 3.6
      g/t 
|and            | 103.52         | 106.8  | 3.28m | 2.29
      g/t  | 2.8
      g/t 
|TAR 002        | Intersection 1 | 28.7   | 36.7  | 8.0m            | 0.70
      g/t | 3.0
      g/t
|Intersection 2 | 316            | 328    | 12.0m | 4.58
      g/t  | 2.1
      g/t 
|including      | 316            | 320    | 4.0m  | 12.81
      g/t | 3.7
      g/t 
|TAR 003        | Intersection 1 | 35     | 49    | 14.0m           | 0.93
      g/t | 6.6
      g/t
|including      | 35             | 39     | 4.0m  | 2.22
      g/t  | 11.5
      g/t
|Intersection 2 | 81             | 94     | 13.0m | 1.36
      g/t  | 9.2
      g/t 
|including      | 90             | 92.2   | 2.2   | 3.48
      g/t  | 35.3
      g/t
|TAR 004        | Intersection 1 | 38     | 52    | 14.0m           | 0.92
      g/t | 1.7
      g/t
|Intersection 2 | 79.3           | 83.3   | 4.0m  | 1.61
      g/t  | 9.8
      g/t 
|Intersection 3 | 148.45         | 150    | 1.55m | 1.81
      g/t  | 14.7
      g/t
|TAR 005        | Intersection 1 | 39     | 45    | 6               | 0.59
      g/t | 8.2
      g/t
|Intersection 2 | 152.4          | 156.45 | 4.05m | 0.78
      g/t  | 13.9
      g/t
|TAR 006        | Intersection 1 | 24     | 62.1  | 38.1m           | 0.51
      g/t | 4.7
      g/t
|Intersection 2 | 69.95          | 75     | 5.05m | 0.73
      g/t  | 3.0
g/t       
|Intersection 3 | 126.77         | 154    | 27.23 | 0.75
      g/t  | 10.4
      g/t

30

---

|DRILLHOLE      |                | FROM   | TO     | WIDTH           | GOLD            | SILVER         
|-------------- | -------------- | ------ | ------ | --------------- | --------------- | ---------------
|TAR 007        | Intersection 1 | 42.8   | 44.25  | 1.45m           | 4.59
      g/t  | 37.9
      g/t 
|Intersection 2 | 45.2           | 61.58  | 16.38m | 1.89
      g/t  | 57.9
      g/t 
|including      | 45.2           | 48     | 2.8m   | 3.49
      g/t  | 126.3
      g/t
|and            | 50.25          | 54.6   | 4.35m  | 3.12
      g/t  | 88.8
      g/t 
|TAR 008        | Intersection 1 | 65     | 67.75  | 2.75m           | 2.78
      g/t  | 47.9
      g/t 
|Intersection 2 | 87.68          | 96.37  | 8.69m  | 3.29
      g/t  | 61.0
      g/t 
|and            | 93.97          | 96.37  | 2.40m  | 8.42
      g/t  | 187.7
      g/t
|TAR 009        | Intersection 1 | 4.8    | 8.5    | 3.7m            | 1.45
      g/t  | 3.7
      g/t  
|Intersection 2 | 43.5           | 49.5   | 6.0m   | 1.46
      g/t  | 6.9
      g/t  
|TAR 011        | Intersection 1 | 0      | 3      | 3.0m            | 4.95
      g/t  | 5.3
      g/t  
|Intersection 2 | 23.56          | 24.8   | 2.54m  | 4.14
      g/t  | 18.4
      g/t 
|Intersection 3 | 32.86          | 33.65  | 0.79m  | 8.34
      g/t  | 35.6
      g/t 
|TAR 012        | Intersection 1 | 16     | 34     | 18.0m           | 41.58
      g/t | 46.9
      g/t 
|including      | 20             | 34     | 14.0m  | 53.37
      g/t | 59.6
      g/t 
|and            | 22             | 23.22  | 1.22m  | 602.98 g/t      | 574.94 g/t     
|Intersection 2 | 49.3           | 72     | 22.70m | 2.96
      g/t  | 16.2
      g/t 
|including      | 64.96          | 72     | 7.04m  | 7.4
      g/t   | 22.7
      g/t 
|and            | 64.96          | 65.91  | 0.95m  | 32.39
      g/t | 88.7
      g/t 
|TAR 013        | Intersection 1 | 13.45m | 52.36m | 38.93m          | 7.05
      g/t  | 48.4
      g/t 
|including      | 27.37m         | 50.14m | 24.14m | 11.10
      g/t | 67.6
      g/t 
|including      | 32.74m         | 40.11m | 7.37m  | 33.48
      g/t | 151.9
      g/t
|TAR-014        | Intersection 1 | 13.10  | 16.15  | 3.05m           | 4.37
      g/t  | 17.55
      g/t
|and            | 19.71          | 24.19  | 4.48m  | 1.02
      g/t  | 13.50
      g/t
|and            | 34.68          | 37.21  | 2.53m  | 2.60
      g/t  | 22.34
      g/t
|TAR-015        | Intersection 1 | 12.86  | 23.10  | 10.24m          | 4.63
      g/t  | 12.93
      g/t
|and            | 28.62          | 30.65  | 2.03m  | 1.14 g/t        | 16.85 g/t      
|and            | 32.50          | 36.47  | 1.97m  | 1.13 g/t        | 11.40 g/t      
|and            | 77.12          | 78.85  | 1.73m  | 1.47
      g/t  | 33.18
      g/t
|and            | 123.15         | 125.0  | 1.85m  | 1.81 g/t        | 20.73 g/t      
|and            | 151.1          | 153.0  | 1.90m  | 2.01
      g/t  | 14.58
      g/t
|TAR-016        | Intersection 1 | 19.5   | 28.27  | 8.77m           | 1.19
      g/t  | 23.27
      g/t
|and            | 33             | 37.84  | 4.84m  | 0.72
      g/t  | 20.53
      g/t
|and            | 47.50          | 49.17  | 1.67m  | 0.90
      g/t  | 9.52
      g/t 
|and            | 92.67          | 99.00  | 6.33m  | 22.67
      g/t | 65.71
      g/t
|TAR-017        | Intersection 1 | 12.86  | 28.15  | 15.29m          | 2.51 g/t        | 22.37 g/t      
|including      | 21.0           | 28.15  | 7.15m  | 4.70
      g/t  | 20.75
      g/t
|Intersection 2 | 38.58          | 39.85  | 1.27m  | 3.28
      g/t  | 24.80
      g/t
|and            | 48.0           | 51.49  | 3.49m  | 1.19
      g/t  | 15.20
      g/t
|TAR-018        | Intersection 1 | 11.10  | 13.41  | 2.31m           | 1.10
      g/t  | 25.51g/t       
|Intersection 2 | 34.50          | 41.62  | 7.12m  | 2.90
      g/t  | 33.46
      g/t
|including      | 37.50          | 40.82  | 3.32m  | 5.68
      g/t  | 54.68
      g/t
|including      | 39.46          | 40.82  | 1.36m  | 12.67
      g/t | 74.06
      g/t
|Intersection 3 | 93.20          | 96.40  | 3.20m  | 3.01
      g/t  | 51.04
      g/t
|TAR-019        | Intersection 1 | 30.52  | 41.37  | 10.85m          | 0.50
      g/t  | 13.54
      g/t
|Intersection 2 | 61.00          | 63.00  | 2.00m  | 0.88
      g/t  | 10.08
      g/t
|Intersection 3 | 76.60          | 78.27  | 1.67m  | 7.82
      g/t  | 131.41 g/t     
|TAR-020        | Intersection1  | 100.95 | 109.88 | 8.93m           | 10.84
      g/t | 49.21
      g/t
|including      | 101.47         | 106.80 | 5.33m  | 17.33
      g/t | 66.39
      g/t
|including      | 101.79         | 106.10 | 4.31m  | 21.06
      g/t | 70.93          

31

---

Regional Work  Project Pipeline

In addition to the flagship Taricori Gold Zone, regional work
continues to advance additional targets for drill testing. In 2008, a total of
155 square kilometres were geochemically and geophysically screened, resulting
in the identification of multiple high-priority targets. Phase II reconnaissance
and prospecting began in early July 2009 on multiple gold targets identified
during Minera Afroditas 2008 work program. In particular, anomalies at Lucero
and Canelo have advanced well, with significant mineralization discovered.
Updates on Lucero and other targets arising from work completed in 2010 will be
provided as results become available.

Canelo Target

The Canelo target is interpreted to be a possible extension of,
  or fault displaced continuation of the Taricori Zone, due to proximity, orientation
  and similar lithologies being present. It occurs as an extensive zone from adjacent
  to the Taricori Zone, south from the border with Ecuador, extending north-east
  of the Taricori Zone. Electromagnetic data has revealed a strong conductivity
  trend to the north east that is coincident with a strong magnetic anomaly. Prospecting
  has entailed confirming and extending mineralization through mapping and sampling
  of creek outcrops as well as contour soil sampling. Continued work will focus
  on detailed mapping, sampling and evaluating drill targets. The
  project is currently at the earliest stage of exploration.

Lucero Target

Lucero is interpreted as an intrusion-related gold-copper
target, Field work has confirmed that multiple styles of mineralization are
occurring, possibly indicating multiple phases of mineralization. Anomalous
samples occur adjacent to the contact between interpreted Tertiary
volcanic-related intrusives and sedimentary rocks (sandstone and limestone)
designated as part of the Triassic-Jurassic Pucara Formation and the Cretaceous
Oriente Hollin and/or Sarayaquillo Formations. The interpretation is of an
intrusion-related gold-copper system, conceptually capable of hosting a
bulk-tonnage target. There is also extensive evidence of related iron-skarn
mineralization adjacent to the Pucara limestones, noted as garnet-scapolite
alteration.

Highest grade gold and copper rock sample anomalies are
clustered and broadly coincident with a strong electromagnetic (EM) anomaly.
Geochemical anomalies are due to mineralization in sandstones and magnetite
bearing iron-skarn and thus believed to be intrusion related. Zinc and lead
anomalies also occur, but appear to be mutually exclusive spatially to gold in
soil samples. In particular, there is a zone of high-grade zinc anomalies
associated with an andesitic body adjacent to limestone. Mineralization has thus
far been dominantly, but not exclusively, coincident with the magnetic and
conductivity anomalies revealed through the airborne geophysics, suggesting that
mineral zonation may extend for some distance from the present known work area.

In the core of the electromagnetic anomaly, gold and copper
anomalies occur in multiple adjacent samples. In particular, 10 adjacent rock
samples over 30 m strike length grade up to 11.17 g/t gold and average 2.85 g/t
gold and 0.37% copper. Future drill targeting will likely focus in this core
area of geophysical and geochemical anomalies.

Due to extensive organic and regolithic surficial cover, the
development of a firm mineralization model is still in progress, and will be
greatly dependent on examination of future drill core. Mineralization is also
present as stockwork veining in a sandstone sequence associated with quartz-eye
dike emplacement. Having multiple styles of mineralization indicates that there
were potentially multiple phases of mineralization, adding that a significant
volume of mineralization could have been developed.

Recent work on the Lucero target has focused on confirming and
  expanding zones of significant gold mineralization by way of grid and channel
  sampling. For the grid, 100m spaced lines have been created for evenly spaced
  soil sampling as well as outcrop sampling where exposed. This will allow for
  generation of an effective geochemical review of the zone while forming a detailed
  geological map. Present work is continuing on this grid, and evaluating the
  potential expansion of the known zone of mineralization to the south and east.
  The Lucero project is an
  advanced exploration target. Drilling, when undertaken, will evaluate the depth,
  thickness and grade of exploration and will be a critical step in determining
  the future exploration activities.

32

---

Cobrecon Porphyry Target

The Cobrecon Porphyry Target is a high-priority target, located
within 5-10km south of the Taricori Gold Zone. Porphyry systems are already
known in the Ecuadorian Cordillera del Condor terrane with deposits such as the
Mirdor District to the north (Corriente Resources). Mirador is a classic
calc-alkaline porphyry related to the emplacement of late-stage granodiorite and
monzogranitic intrusive phases of the Zamora batholiths. To the south of
Taricori and the Chinapintza District, El Hito and Santa Barbara represent two
significant porphyry systems. The deposits have not been dated but are probably
the same age as the Corriente porphyries. El Hito, situated on the Peruvian
border, contains copper mineralization in a quartz diorite to granodiorite stock
that has intruded Misahualli andesites. In 2000, Valerie Gold drill four core
holes in the central part of the deposit on the Ecuadorian side which returned
intersections up to 300 meters long grading about 0.3% Cu with minor gold. Santa
Barbara is a high-level Cu-Au porphyry-skarn deposit located about 4 km west of
El Hito. Mineralization is described as occurring in stockwork zones in altered
porphyry and within skarn zones in a roof pendant of Misahualli volcanics .

The Cobrecon anomaly is interpreted to reflect a
  potentially large porphyry copper-molybdenum system, with possible gold-porphyry
  and skarn mineralization. Visible copper oxides and molybdenite have been noted
  from surface rock sampling and panned samples of stream sediments contain visible
  gold. The total target area as presently defined is greater than 29 km2, which
  geologically provides potential for a nested porphyry cluster. Extensive geochemical
  data will allow detailed mapping to be highly targeted, honing geologists into
  the centre of the system. The
  current surface exploration work will determine if drill testing is warranted
  to further evaluate the target.

AngloGold completed work in this area in 2004-05, under an
option agreement with Minera Afrodita. They completed exploration on the
northern portion of the Cobrecon target area, which they called Conguime.
Following detailed geochemical sampling, AngloGold defined 5 drill targets on
the property, but these drillholes were not drilled due to a corporate decision
at the time to cease exploration in Peru.

Planned Work

Drilling will continue on the Taricori project through the remainder
  of 2010. SRK Consulting has been retained to begin work on resource estimation
  if the results of Phase II
  drilling are sufficiently positive to justify this work.

A drill permit application has been prepared for Lucero and will
  be submitted on completion of community information workshops. Drilling is planned
  for 2010 to test a number of targets identified during surface prospecting.
  The initial drill program
  will consist of approximately 3,000 metres of drilling, with additional drilling
  contingent on success.

An extensive
  geophysical survey is planned for August 2010 with results expected in late
  Q3  this survey is planned to cover approximately 900 square kilometres
  with magnetic, electromagnetic and electromagnetic data collection. Anomalies
  and targets identified will be followed up as soon as possible thereafter using
  regional exploration techniques such as stream sediment sampling and geological
  mapping. The targets will be continually prioritized and the best drill targets
  will be drill tested through 2011 and 2012.

The budget
  for 2010 is $11 million, with a similar budget anticipated for 2011. Through
  the latter part of 2010 and 2011 the Company aims to screen 15 geophysical targets
  and drill test the best 3 targets.

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.

33

---

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, 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 $328,530 was incurred in
fiscal 2010 compared to $223,863 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.

34

---

Year Ended January 31, 2009 compared to year ended January
31, 2008

We incurred a net loss of $2,646,137 for the year ended January
31, 2009, compared to a net loss of $281,832 in the year ended January 31, 2008.
The increase in net loss resulted from increased expenditures relating to the
Companys projects in Peru and stock-based compensation of $1,879,484. The
Company had no active project in fiscal 2008. Significant comparative changes
are as follows:

Office and administrative expenses of $223,863 was recorded
during fiscal 2009 compared to $67,275 recorded in fiscal 2008. The increase was
due to increased activities following our change of business. The Company also
maintains an office in Peru. This category also includes $14,805 of stock-based
compensation charges.

Professional fees of $209,251 during fiscal 2009 compared to
$66,313 recorded in fiscal 2008. The increase was a result of the legal costs
associated with the mineral properties acquisition, accounting services and
other regulatory requirements relating to our change of business. This category
also includes $34,944 of stock-based compensation charges.

Investor relations expenses of $307,943 during fiscal 2009
compared to $nil recorded in fiscal 2008, 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 $143,221 of stock-based compensation charges.

Consulting fees of $2,217,769 during fiscal 2009 compared to
$40,000 in fiscal 2008. The increase was due to increased personnel expenses and
a stock-based compensation charge of $1,686,514.

Travel and promotion expenses of $96,280 during fiscal 2009
compared to $5,173 recorded in fiscal 2008. The increase was due to an increase
in activities relating to the Peruvian properties.

As a result of the strengthening of the Peruvian currency
against the Canadian dollar, we recognized a foreign exchange gain of $358,533
in fiscal 2009 compared to $15,726 in fiscal 2008.

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.

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.

35

---

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.

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.

36

---

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 ongoing 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. 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 and cash payments, to the
vendors or optionees thereof).

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 focusing on
the development of its Peruvian mineral properties.

The Company expects that it will operate at a loss for the
foreseeable future and that it will require additional financing to fund further
exploration of current mineral properties, to acquire additional mineral
properties (if applicable) and to continue its operations (including general and
administrative expenses) beyond the end of 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. Specific
plans related to the use of proceeds will be devised once financing has been
completed and management knows what funds will be available for these purposes.
During the fiscal year ended January 31, 2010, the Company completed three
private placements of 26,732,850 common shares for gross proceeds of
$21,469,493.

37

---

The Company had cash of $15,868,072 as of January 31, 2010,
compared to $1,013,670 at January 31, 2009, and working capital of $15,572,151
as of January 31, 2010, compared to working capital of $817,002 as of January
31, 2009. The increase in cash on hand and working capital was the result of our
financings which closed in March 2009 and January 2010 and raised proceeds of
$19,264,745 net of costs, less $4,287,855 in cash used principally in
exploration activities and less $1,733,520 in cash used in operating activities.

At January 31, 2009, the Company had cash and cash equivalents
of $1,013,670 (2008 - $5,865,283), representing a decrease of $4,851,613 from
January 31, 2008. We had a working capital of $817,002 as of January 31, 2009
(2008 - $5,663,222). The decrease in cash on hand and resultant decrease in
working capital was the result of increased expenditures in the mineral
properties in Peru during the fiscal year ended January 31, 2009.

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 5 in the Companys consolidated financial
statements for the year ended January 31, 2010.

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 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.

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

The following table summarizes our contractual obligations as
of January 31, 2010:

|                            | 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.

38

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|Name                  | Position                  | Age | Date of First Election
      or Appointment
|--------------------- | ------------------------- | --- | -------------------------------------------
|Keith J. Henderson    | Director, President & CEO | 40  | December 1, 2008                           
|Anton J. Drescher (1) | Director                  | 53  | December 1998                              
|Mark D. Cruise (1)    | Director                  | 40  | July 30, 2008                              
|Augusto Baertl (1)    | Director                  | 67  | June 10, 2009                              
|Gordon Neal           | Director                  | 55  | November 9, 2009                           
|Carlos Ballon         | Director                  | 50  | July 20, 2010                              
|Michael W. Kinley     | Chief Financial Officer   | 60  | July 30, 2008                              
|Marla K. Ritchie      | Corporate Secretary       | 47  | 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.

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 TSX.V listed
companies: International Tower Hill Mines Ltd., Trevali Resources Corp. and USA
Video Interactive Corp. Mr. Drescher is also President and a director of
Ravencrest Resources Inc., a public company reporting in British Columbia. 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 Resources Corp. a CNSX listed company and is an
officer of Cardero Resource Corp., a public company listed on the Toronto Stock
Exchange.

Augusto Baertl (Director)  Mr. Baertl is a Peruvian
mining engineer who has held a number of senior positions with Peruvian and
international mining companies. He served as Mine Manager, President and Chief
Executive Officer of Compañía Minera Milpo, one of Peru's largest mining
companies, from 1967 to 1996. From 1997 to 2002, Mr. Baertl served as President
and Executive Chairman of Compañía Minera Antamina and oversaw the exploration,
feasibility studies and development of the project. He is a member of the
American Institute of Mining Metallurgical and Petroleum Engineers (AIME), the
Instituto de Ingenieros de Minas del Perú and the Colegio de Ingenieros del
Perú- Capítulo de Minas and, was also the President of the Peruvian mining
society, Sociedad de Minera, Petroleo y Energia. Mr. Baertl graduated from
Universidad Nacional de Ingeniería in 1965 and also participated in the Senior
Management Program at Harvard Business School and in the CEO Management Program
at Northwestern University. Mr. Baertl is also a director of Alturas Minerals
S.A. a public company listed on the Toronto Stock Exchange.

39

---

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.

Michael W. Kinley(Chief Financial Officer)Mr. Kinley possesses extensive public company experience. He received his
Bachelor of Commerce degree (Hon. Accounting) from Mount Allison University in
1971 and his Chartered Accountant designation in 1973 in Ontario while with
KPMG, where he became a partner in 1981. Since 1993, Mr. Kinley has been the
president of Winslow Associates Management & Communications Inc., a private
consulting firm which provides accounting and regulatory support services to
junior public companies. Mr. Kinley is currently the Chief Financial Officer of
the following companies: Cardero Resource Corp., GFK Resources Inc., Indico
Resources Limited, International Tower Hill Mines Ltd., Trevali Resources Corp.
and Wealth Minerals Ltd. Mr. Kinley is also a director of the following TSX.V
listed companies: GFK Resources Inc. and Indico Resources Limited.

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.,
Indico Resources Ltd., International Tower Hill Mines Ltd., Trevali Resources
Corp. 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.

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.

40

---

The following table identifies, as of August 6, 2010, 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 Resources Corp.
    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 Resources Corp.                                                                                                         | Natural resource 
      Natural
    resource                                                                           | VPBusiness Dev. 
      CEO, Pres.
    & Dir.                      
|Augusto Baertl     | Alturas Minerals S.A.                                                                                                                                             | Natural resource                                                                                                       | Director                                                           
|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                                                                
|Michael W. Kinley  | Cardero Resource Corp. 
      GFK
      Resources Inc. Indico Resources Ltd. International Tower Hill
    Mines Ltd. Trevali Resources Corp. Wealth Minerals Ltd. | Natural resource 
      Natural
      resource Natural resource Natural resource Natural resource
    Natural resource | CFO 
      CFO, Director CFO,
    Director CFO CFO CFO             
|Marla K. Ritchie   | Cardero Resource Corp.
      
      Indico Resources Ltd. International Tower Hill Mines Ltd.
    Trevali Resources Corp. Wealth Minerals Ltd.                    | Natural resource 
      Natural
      resource Natural resource Natural resource Natural resource                      | Secretary 
      Secretary
Secretary Secretary Secretary           

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

Executive Compensation

For the fiscal year ending January 31, 2010, the Company paid
an aggregate of $342,600 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 some, but not all, of its senior
management. In the case of the Company, disclosure is required for the current
Chief Executive Officer and Chief Financial Officer, as well as for each of the
three most highly compensated executive officers, other than the CEO and CFO,
who were serving as executive officers at the end of the most recently completed
financial year and whose total salary and bonus exceeds $150,000. In the case of
the Company, only the compensation of the CEO and CFO 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 compensation
information for the fiscal years ended January 31, 2010, January 31, 2009 and
January 31, 2008 to the Named Executive Officers.

41

---

|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) | 2010 2009 2008                     | 194,600(2)24,000 Nil | Nil Nil Nil                | 156,012 93,355 Nil          | Nil Nil Nil                                             | Nil Nil Nil          | Nil Nil Nil                   | Nil Nil Nil              
|Michael Kinley       Chief Financial
      Officer(4)                 | 2010 2009 2008                     | 60,000 (3)Nil Nil    | Nil Nil Nil                | 85,250 73,089 Nil           | Nil Nil Nil                                             | Nil Nil Nil          | Nil Nil Nil                   | Nil 30,000 Nil           

|(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.                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                           
|(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 long term incentive plan awards
defined as any plan providing compensation intended to motivate performance
over a period longer than one financial year and does not include option or SAR
plans or plans for compensation through restricted shares or units.

During the fiscal year ended January 31, 2010, 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 Date               
|--------------- | ------------------------------------------ | ----------------------------------------------------- | ------------------------------------------- | ------------------------------------------------------------------------------------------------ | ------------------------------
|Keith Henderson | 400,000                                    | 8%                                                    | $0.60                                       | $0.60                                                                                            | April 9, 2011                 
|Michael Kinley  | 100,000 80,000                             | 4%                                                    | $0.60 $1.09                                 | $0.60 $0.85                                                                                      | April 9, 2011 January 29. 2012

| | (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, 2010 by the NEOs and the
financial year-end value of unexercised options on an aggregated basis:

|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/ Unexercisable
|--------------- | ----------------------------------------- | ----------------------------------------- | ------------------------------------------------------------------------------------ | -----------------------------------------------------------------------------------------------------------------------
|Keith Henderson | Nil                                       | Nil                                       | 900,000/Nil                                                                          | 591,000/Nil                                                                                                            
|Michael Kinley  | Nil                                       | Nil                                       | 280,000/Nil                                                                          | 142,200/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 29, 2010, being the last trading day of the
      Companys shares for the fiscal year, of $1.09 per share, less the
      exercise price per share.[NTD: Confirm table is consistent with
        revisions to this footnote.]

42

---

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, 2010.

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 also executive officers 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, 2010, the persons serving as our directors who were not also
executive officers received the following directors fees:

|Name                      | Fees earned (Cdn$)
|------------------------- | ------------------
|Augusto Baertl            | $6,000            
|Mark Cruise               | $24,000           
|Anton Drescher            | $24,000           
|Gordon Neal               | $6,000            
|Jeffrey Pontius
      (1) | $4,000            

|(1) | Jeffrey Pontius resigned as a director of the
Company on February 13, 2009.
|--- | ---------------------------------------------------------------------------

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, 2010 to the
directors of the Company who were not executive officers:

|Name                      | Securities Under
      Option (#) | Exercise Price
      (CAD/Security) | Market Value of Securities
      Underlying Options on Date of
      Grant(1) (CAD/Security) | Expiration Date                                     
|------------------------- | --------------------------------- | ----------------------------------- | -------------------------------------------------------------------------------------------- | ----------------------------------------------------
|Augusto Baertl            | 250,000 125,000                   | $0.60 $1.09                         | $0.60 $1.09                                                                                  | June 10, 2011 January 29, 2012                      
|Mark Cruise               | 100,000 25,000                    | $0.60 $1.09                         | $0.60 $1.09                                                                                  | April 9, 2011 January 29, 2012                      
|Anton Drescher            | 50,000 90,000 125,000             | $0.60 $0.45 $1.09                   | $0.60 $0.45 $1.09                                                                            | April 9,2011 October 30, 2011 January
      29, 2012
|Gordon Neal               | 250,000 125,000                   | $0.45 $1.09                         | $0.45 $1.09                                                                                  | October 30, 2011 January 29, 2012                   
|Jeffrey Pontius
      (2) | Nil                               | N/A                                 | N/A                                                                                          | N/A                                                 

| | (1) | Value calculated using the closing price of
      Common Shares on the TSX.V on the date of grant.
| | --- | --------------------------------------------------------------------------------------------------
| | (2) | Jeffrey Pontius resigned as a director of the
      Company on February 13, 2009.                 

In addition, Mr. Baertl received $10,951 in other compensation
during the fiscal year ended January 31, 2010 for consulting fees.

43

---

|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 Section 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
Augusto Baertl

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.

The Company has no compensation or remuneration committee.

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

As at January 31, 2010 and the date of filing this Annual
Report, the Company did not have any employees nor did the Company have any
employees as at January 31, 2009 and 2008. The Company retains consultants to
perform administrative and financial accounting/bookkeeping services.

44

---

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

The following table sets out the beneficial ownership of
Company common shares by the Companys directors and NEOs as of August 6, 2010.

|Name                                                      | Common Shares Beneficially Owned(1) | Percentage of Class(2)
|--------------------------------------------------------- | ----------------------------------- | ----------------------
|Keith J. Henderson
      (3)                              | 981,322                             | 1.4%                  
|Anton J. Drescher (4)                                     | 1,535,221                           | 2.2%                  
|Mark D. Cruise (5)                                        | 607,500                             | 0.9%                  
|Augusto Baertl (6)                                        | 400,000                             | 0.6%                  
|Gordon Neal (7)                                           | 400,000                             | 0.6%                  
|Carlos Ballon(8)                                          | 8,118,750                           | 11.6%                 
|Michael W. Kinley (9)                                     | 360,000                             | 0.5%                  
|All Executive Officers and Directors
      as a Group(10) | 12,402,793                          | 17.0%                 

| | (1)  | Includes common shares issuable pursuant to stock options
      and common share purchase warrants that are exercisable on, or within 60
      days after, August 6, 2010.                                                                                                                                                                                                                                                                                                         
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (2)  | Percentages are based on 68,881,445 common shares
      outstanding as of August 6, 2010. Common shares subject to stock options
      and common share purchase warrants that are exercisable on, or within 60
      days after, August 6, 2010 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 900,000 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, August
      6, 2010.                                                                                                                                                                                                                                                 
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (4)  | Includes 400,000 common shares issuable pursuant to stock
      options and 80,000 common shares issuable pursuant to common share
      purchase warrants that are exercisable on, or within 60 days after, August
      6, 2010.                                                                                                                                                                                                                                                 
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (5)  | Includes 400,000 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, August
      6, 2010.                                                                                                                                                                                                                                                 
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (6)  | Includes 400,000 common shares issuable pursuant to stock
      options that are exercisable on, or within 60 days after, August 6,
      2010.                                                                                                                                                                                                                                                                                                                                    
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (7)  | Includes 400,000 common shares issuable pursuant to stock
      options that are exercisable on, or within 60 days after, August 6,
      2010.                                                                                                                                                                                                                                                                                                                                    
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (8)  | Includes 1,142,500 common shares issuable pursuant to
      stock options that are exercisable on, or within 60 days after, August 6,
      2010.                                                                                                                                                                                                                                                                                                                                  
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (9)  | Includes 300,000 common shares issuable pursuant to stock
      options that are exercisable on, or within 60 days after, August 6,
      2010.                                                                                                                                                                                                                                                                                                                                    
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (10) | Includes 3,942,500 common shares issuable pursuant to
      stock options and 102,941 common shares issuable pursuant to common share
      purchase warrants that are exercisable on, or within 60 days after, August
      6, 2010.                                                                                                                                                                                                                                              

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.

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 20, 2010.

The material terms of the Plan are as follows:

45

---

|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.                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|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 August 6, 2010 there were 6,877,500 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 August 6, 2010, options with respect to an additional 10,645
Common Shares are available for grant under the Plan.

46

---

The stock options held by our NEOs and directors as of August
6, 2010 are as follows:

|Name            | Securities Under Options
      Granted (#) | Exercise or Base Price
      (CAD/Security) | Expiration Date                                                                   
|--------------- | ------------------------------------------ | ------------------------------------------- | ----------------------------------------------------------------------------------
|Keith Henderson | 500,000 400,000                            | $0.30 $0.60                                 | January 7, 2011 April 9, 2011                                                     
|Michael Kinley  | 20,000 100,000 80,000 100,000              | $0.30 $0.60 $1.09 $0.85                     | January 7, 2011 April 9, 2011 January
      29, 2012 May 27, 2012                 
|Anton Drescher  | 10,000 50,000 90,000 125,000
      125,000 | $0.30 $0.60 $0.45 $1.09 $0.75               | January 7, 2012 April 9, 2011 October
      30, 2011 January 29, 2012 May 27, 2012
|Mark Cruise     | 62,500 100,000 25,000 212,500              | $0.30 $0.60 $1.09 $0.85                     | January 7, 2012 April 9, 2011 January
      29, 2012 May 27, 2012                 
|Augusto Baertl  | 250,000 125,000 25,000                     | $0.60 $1.09 $0.85                           | June 10, 2011 January 29, 2012 May 27,
      2012                                 
|Gordon Neal     | 250,000 125,000 25,000                     | $0.45 $1.09 $0.85                           | October 30, 2011 January 29, 2012 May
      27, 2012                              
|Carlos Ballon   | 550,000 500,000 92,500                     | $0.60 $1,09 $0.85                           | April 9, 2011 January 29, 2012 May 27,
2012                                       

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

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

As at August 6, 2010, 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)              | 8,118,750                           | 11.6%              
|Franco-Nevada Corporation (4)        | 4,500,000                           | 6.4%               
|Sprott Asset
      Management LP (5) | 6,424,000                           | 9.3%               

| | (1) | Includes common shares issuable pursuant to stock options
      and common share purchase warrants that are exercisable on, or within 60
      days after, August 6, 2010.                                                                                                                                                                                                                                                                                                         
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (2) | Percentages are based on 68,881,445 common shares
      outstanding as of August 6, 2010. Common shares subject to stock options
      and common share purchase warrants that are exercisable on, or within 60
      days after, August 6, 2010 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 1,142,500 common shares issuable pursuant to
      stock options that are exercisable on, or within 60 days after, August 6,
      2010.                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (4) | Includes 1,000,000 common share purchase warrants that
      are exercisable on, or within 60 days after, August 6, 2010.                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (5) | Based on amended Schedule 13G filed with the Securities
      and Exchange Commission on January 26, 2010.                                                                                                                                                                                                                                                                                                                                                                         

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.

47

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As of August 6, 2010, there were 68,881,445 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 66 registered shareholders owning Common
Shares, of which 36 of these registered shareholders, holding approximately
7,253,850 (10.5%) Common Shares, are residents of the United States, 13 of these
registered shareholders, holding approximately 57,863,595 (84.0%) Common Shares,
are residents of Canada, and 17 of these registered shareholders, holding
approximately 3,754,000 (5.4%) 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, 2009
  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, 2010, the
        Company paid Acuitas an aggregate of $194,600 (2009 - $24,000, 2008- $Nil).
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2. | Pursuant to an oral agreement, effective as and from
        August 1, 2008, the Company has retained Winslow Associates Management
        & Communications Inc. (Winslow), a company controlled
        by Michael W. Kinley, the Chief Financial Officer of the Company, 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
        is without a fixed term, and is terminable by either party on 30 days notice. During the financial year
      ended January 31, 2010, the Company paid Winslow an aggregate of $30,000
    (2009 - $30,000, 2008 - $Nil).                                                                                                  

48

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|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, Michael
      Kinley 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4. | On November 18, 2008 and December 5, 2008, the Company's
      wholly-owned subsidiary, Dorato Peru S.A.C., made loans in the amount of
      USD$300,000 and USD$583,000 (the Loan), respectively, to Trevali
      Resources Corp. (Trevali), a company with certain directors or officers
      (Mark Cruise, Michael Kinley, Marla Ritchie) in common with the Company.
      The largest amount outstanding during the financial year ended January 31,
      2010 and to the date hereof under the Loan was USD$883,000. The Loan
      transaction was unauthorized and had received neither regulatory or Board
      approval, however, all related party transactions have been properly
      reflected in the Companys 2010 and 2009 audited annual and subsequent
      interim financial statements in accordance with Canadian GAAP, except that
      the Loan transaction would not be in the normal course of the Companys
      operations as described in the notes thereto. On July 15, 2009, the
      Company entered into a demand loan agreement with Trevali to document the
      outstanding portion of the Loan pursuant to which the Loan was payable on
      the earlier of December 31, 2009 or on demand by the Company. The
      agreement included interest on the Loan payable to Dorato at a rate of
      LIBOR plus 5% per annum. The Loan was repaid in cash, with interest, on
      July 31, 2009.

|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, 2010 and 2009 and for the fiscal years ended January 31, 2010,
2009 and 2008, 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.

49

---

|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  | Low   
|---- | ----- | ------
|2010 | $1.35 | $0.53 
|2009 | $2.37 | $0.19 
|2008 | $2.40 | $ 0.67
|2007 | $0.99 | $0.30 
|2006 | $0.48 | $0.22 

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
NEX until April 24, 2008 and thereafter on the TSX.V:

|Quarter Ended    | High  | Low  
|---------------- | ----- | -----
|July 31, 2010    | $0.96 | $0.55
|April 30, 2010   | $1.27 | $0.53
|January 31, 2010 | $1.35 | $0.50
|October 31, 2009 | $0.68 | $0.35
|July 31, 2009    | $0.55 | $0.42
|April 30, 2009   | $0.81 | $0.47
|January 31, 2009 | $0.62 | $0.19
|October 31, 2008 | $1.55 | $0.33
|July 31, 2008    | $1.75 | $1.31
|April 30, 2008   | $2.37 | $1.50

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  | Low  
|------------- | ----- | -----
|July 2010     | $0.80 | $0.55
|June 2010     | $0.87 | $0.62
|May 2010      | $0.96 | $0.66
|April 2010    | $1.07 | $0.87
|March 2010    | $1.27 | $0.70
|February 2010 | $1.15 | $0.53

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:

|Quarter Ended  | High      | Low     
|-------------- | --------- | --------
|July 31, 2010  | US$0.9388 | US$0.555
|April 30, 2010 | US$1.24   | US$0.541

50

---

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 since the listing of our common shares on the
OTCQX International on March 2, 2010:

|Month      | High      | Low      
|---------- | --------- | ---------
|July 2010  | US$0.73   | US$0.555 
|June 2010  | US$0.84   | US$0.66  
|May 2010   | US$0.9388 | US$0.737 
|April 2010 | US$1.05   | US$0.895 
|March 2010 | US$1.24   | US$0.7184

|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.

|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.

51

---

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
non-resident to hold shares in a Canadian company.

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.

52

---

|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.                                                                                                      
|   |                                                                                                                                                                                                                             
|7. | Demand Loan Agreement between the Company and Trevali
      Resources Corp., a company with certain officers and directors in common
      with the Company, dated July 15, 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.

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
(Canada), 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 Act and the regulations under the
Income Tax Act, all proposed amendments to the Income TaxAct and the Income Tax Act regulations 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
provisions of the Canada-U.S. Tax Convention (1980). It has been assumed that
any proposed amendments to the Income Tax Act and the Income Tax
Act regulations will be enacted in substantially their present form.

53

---

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. 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.
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. 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. Tax Convention. A
common share will generally not be taxable Canadian property to a holder
provided (i) that at any particular time during the 60-month period that ends at
that time that the common share is listed on a designated stock exchange within
the meaning of the Income Tax Act (which includes the TSX.V) on the date
of disposition, and provided 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 Act and options in respect of or interests in, or for civil
law rights in any such properties. Where a common share is taxable Canadian
property to a U.S. resident holder who is a "qualifying" person for purposes of
the Canada-U.S. 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. 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.

54

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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 Act to 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, this 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.

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.

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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 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). 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.

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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 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.

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 means 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 (a) 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, (b) property used in the
trade or business of such foreign corporation that would be subject to the
allowance for depreciation under Section 167 of the Code, or (c) supplies of a
type regularly used or consumed by such foreign corporation in the ordinary
course of its trade or business.

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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, 2010, and based on current business plans and financial
expectations, the Company believes that it will be a PFIC for the current tax
year. 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-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.

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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.

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.

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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 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.

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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 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.

Gain or loss recognized by a U.S. Holder on the sale or other
taxable disposition of Common Shares generally will be treated as U.S. source
for purposes of applying the U.S. foreign tax credit rules unless the gain is
subject to tax in Canada and is resourced as foreign source under the
Canada-U.S. Tax Convention and such U.S. Holder elects to treat such gain or
loss as foreign source.

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.

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Recent Legislative Developments

Newly enacted legislation requires certain U.S. Holders who are
individuals, estates or trusts 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. In addition, for tax years beginning after March 18, 2010, new
legislation requires certain U.S. Holders who are individuals that hold certain
foreign financial assets (which may include the Common Shares) to report
information relating to such assets, subject to certain exceptions. U.S. Holders
should consult their tax advisors regarding the effect, if any, of this
legislation 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.

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,
recently enacted legislation generally imposes new U.S. return disclosure
obligations (and related penalties) 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, and, if applicable, filing obligations relating to a
Mark-to-Market or QEF Election.

62

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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, 2010), 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.

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

Material contracts and publicly available corporate records may
be viewed at our head office located at Suite 1920  1188 West Georgia Street,
Vancouver, British Columbia, V6E 4A2.

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.

63

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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, 2010. The
Company is not subject to externally imposed capital requirements.

The Company classifies its cash; accounts receivable and due
from related parties as loans and receivables; accounts payable and accrued
liabilities and due to related parties as other financial liabilities.

The carrying values of cash, 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.

| |                                                      |   |            |  |   |           | 
| | ---------------------------------------------------- | - | ---------- |  | - | --------- | 
| | Cash                                                 |   | 2010       |  |   | 2009      | 
| | Held at a major Canadian financial
      institution | $ | 15,911,974 |  | $ | 870,479   | 
| | Peruvian financial institution                       |   | -          |  |   | 143,191   | 
| |                                                      | $ | 15,911,974 |  | $ | 1,013,670 | 

The credit risk associated with cash 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, 2010, the cash balance of $15,868,072 will
      likely be sufficient to meet the needs for the coming year. Liabilities as
      at January 31, 2010 are as follows:

| |                                          |   |         |   |   |        |  |   |         |  |   |         |  
| | ---------------------------------------- | - | ------- | - | - | ------ |  | - | ------- |  | - | ------- | -
| |                                          |   | 0 to 3  |   |   | 3 to 6 |  |   | 6 to 12 |  |   |         |  
| |                                          |   | months  |   |   | months |  |   | months  |  |   | Total   |  
| | Peru bank indebtedness                   | $ | (43,902 | ) | $ | -      |  | $ | -       |  | $ | (43,902 | )
| | Accounts payable and accrued liabilities |   | 345,398 |   |   | -      |  |   | -       |  |   | 345,398 |  
| | Due to related parties                   |   | 42,308  |   |   | -      |  |   | -       |  |   | 42,308  |  
| |                                          | $ | 343,804 |   | $ | -      |  |   | - $     |  |   | 343,804 |  

64

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|(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.                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                            
|    | iii.                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                            

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.

65

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|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 15T. | 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.

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,
2010 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, 2010.

This Annual Report does not include an attestation report of
the Companys registered public accounting firm regarding internal control over
financial reporting. Managements report was not subject to attestation by the
Companys registered public accounting firm pursuant to temporary rules of the
SEC that permit the Company to provide only managements report in this Annual
Report.

66

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Changes in Internal Control over Financial
reporting

During the
  period covered by this Annual Report, a change occurred in the Companys
  internal control over financial reporting that has materially affected, or is
  reasonably likely to materially affect, the Companys internal control
  over financial reporting, as a result of the introduction of an Inter-corporate
  and Conflict of Interests Policy in June, 2009 which arose due to an unauthorized
  loan to a related company. On November 18, 2008 and December 5, 2008, the Company's
  wholly-owned subsidiary, Dorato Peru S.A.C., made loans in the amount of USD$300,000
  and USD$583,000 (the Loan), respectively, to Trevali Resources Corp.
  (Trevali), a company with certain directors or officers (Mark Cruise,
  Michael Kinley, Marla Ritchie) in common with the Company. The largest amount
  outstanding during the financial year ended January 31, 2010 and to the date
  hereof under the Loan was USD$883,000. The Loan transaction was unauthorized
  and had received neither regulatory or Board approval, however, all related
  party transactions have been properly reflected in the Companys 2010 and
  2009 audited annual and subsequent interim financial statements in accordance
  with Canadian GAAP, except that the Loan transaction would not be in the normal
  course of the Companys operations as described in the notes thereto. On
  July 15, 2009, the Company entered into a demand loan agreement with Trevali
  to document the outstanding portion of the Loan pursuant to which the Loan was
  payable on the earlier of December 31, 2009 or on demand by the Company. The
  agreement included interest on the Loan payable to Dorato at a rate of LIBOR
  plus 5% per annum. The Loan was repaid in cash, with interest, on July 31, 2009.
  The adoption of an Inter-corporate and Conflict of Interests Policy in June
  2009 was effective in overcoming the previously reported control deficiency.

|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 #1920-1188 West Georgia Street,
Vancouver, British Columbia, V6E 4A2.

|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, 2010 and 2009.

|Year ended January
      31 |   | 2010   |  |   | 2009   | 
|--------------------------- | - | ------ |  | - | ------ | 
|                            |   |        |  |   |        | 
|Audit fees                  | $ | 66,300 |  | $ | 52,028 | 
|Audit-related fees          |   | -      |  |   | -      | 
|Tax fees(1)                 | $ | 5,000  |  | $ | 2,794  | 
|All other fees(2)           | $ | 15,000 |  |   | -      | 
|                            |   |        |  |   |        | 
|Total                       | $ | 86,300 |  | $ | 54,822 | 

| | (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.

67

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|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
|--------- | --------------------------------------------------

Effective October 22, 2008, we engaged Smythe Ratcliffe LLP as
our independent registered public accounting firm, and effective the same date,
BDO Canada LLP (formerly BDO Dunwoody LLP) (BDO) resigned as our independent
registered public accounting firm at the request of the Company. Our board of
directors, on recommendation of the audit committee, approved both the
engagement of Smythe Ratcliffe LLC and the resignation of BDO.

During years ended January 31, 2008 and 2007, and the
subsequent interim period through October 22, 2008, there were no (i)
disagreements (as defined in Item 16F (a)(1)(iv) of Form 20F and the related
instructions to Item 16F) with BDO on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures,
which disagreements if not resolved to their satisfaction would have caused them
to make reference in connection with their opinion to the subject matter of the
disagreement, or (ii) reportable events (as defined in Item 16F (a)(1)(v) of
Form 20F).

The audit reports of BDO on the consolidated financial
statements of the Company as of and for the years ended January 31, 2008 and
2007 did not contain any adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope or accounting principles,
except BDOs audit report dated May 28, 2008 (except for Notes 9 and 10 which
are dated as of July 14, 2008) with respect to the consolidated financial
statements of the Company as at January 31, 2008 and 2007 and for each of the
years in the three-year period ended January 31, 2008 provide the following
statement:

|The reporting standards of the Public Company Accounting
      Oversight Board (United States) (PCAOB) for auditors require the
      addition of an explanatory paragraph (following the opinion paragraph)
      when the financial statements are affected by conditions and events that
      cast substantial doubt on the Companys ability to continue as a going
      concern, such as those described in Note 1 to the financial statements.
      PCAOB reporting standards also require the addition of an explanatory
      paragraph when changes in an accounting policy, such as those described in
      Note 2, have a material effect on the consolidated financial statements.
      Although we conducted our audit in accordance with both Canadian generally
      accepted auditing standards and the standards of the PCAOB, our report to
      the shareholders on the Consolidated Financial Statements dated May 28,
      2008, except for Notes 9 and 10 which are dated as of July 14, 2008 is
      expressed in accordance with Canadian reporting standards which do not
      permit a reference to such conditions and events in the auditors report
      when these are adequately disclosed in the financial statements.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During the years ended January 31, 2008 and 2007, and the
subsequent interim period through October 22, 2008, neither we nor anyone on our
behalf consulted with Smythe Ratcliffe LLP concerning (a) the application of
accounting principles to a specified transaction, either completed or proposed;
or the type of audit opinion that might be rendered on our consolidated financial statements, and
Smythe Ratcliffe LLP concluded that neither any written report nor any oral
advice was provided to us that was an important factor considered by us in
reaching a decision as to the accounting, auditing or financial reporting issue;
or (b) any matter that was either the subject of a disagreement with the former
auditors or a reportable event.

68

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We have provided BDO with a copy of the disclosure in this Item
16F and requested BDO furnish us with a letter addressed to the Securities and
Exchange Commission stating whether it agrees with the statements we have made
in this Item 16F, and if not, stating the respects in which it does not agree. A
letter from BDO is attached as Exhibit 15.1 to this annual report on Form 20-F.

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

Not applicable.

PART III

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

We are filing with this annual report the following:

- Auditors Report dated August 18, 2010.
- Consolidated Balance Sheets at January 31, 2010 and January 31, 2009.
- Consolidated Statements of Operations and Deficit for the years ended
  January 31, 2010, January 31, 2009 and January 31, 2008.
- Consolidated Statements of Cash Flows for the years ended January 31,
  2010, January 31, 2009 and January 31, 2008.
- Notes to the Consolidated Financial Statements for the years ended January
  31, 2010, January 31, 2009 and January 31, 2008.

69

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CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

January 31, 2010 and 2009

70

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DORATO RESOURCES INC.

January 31, 2010 and 2009

|INDEX                                                   | Page   
|------------------------------------------------------- | -------
|Audited Consolidated Financial
      Statements         |        
|Managements Responsibility for Financial Reporting     |        
|Auditors Report                                        |        
|Consolidated Balance Sheets                             | 74     
|Consolidated Statements of Operations and
      Deficit | 75     
|Consolidated Statements of Cash Flows                   | 76     
|Notes to the Consolidated Financial
      Statements    | 77  99

71

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MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING

The accompanying consolidated financial statements of Dorato
Resources Inc. have been prepared by management in accordance with Canadian
generally accepted accounting principles and reflect managements best estimates
and judgment based on information currently available. The financial information
contained elsewhere in this report has been reviewed to ensure consistency with
the 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 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)             | Michael Kinley (signed)
|------------------------------------- | -------------------------
|Keith Henderson                       | Michael Kinley           
|President and Chief Executive Officer | Chief Financial Officer  
|                                      |                          
|Vancouver, British Columbia           |                          
|August 18, 2010                       |                          

72

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AUDITORS REPORT

TO THE SHAREHOLDERS OF DORATO RESOURCES INC.

We have audited the consolidated balance sheets of Dorato
Resources Inc. as at January 31, 2010 and 2009 and the consolidated statements
of operations and deficit and cash flows for each of the years in the three-year
period ended January 31, 2010. These financial statements are the responsibility
of the Companys management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally
accepted auditing standards and the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.

In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the Company as at
January 31, 2010 and 2009 and the results of its operations and its cash flows
for each of the years in the three-year period ended January 31, 2010 in
accordance with Canadian generally accepted accounting principles.

Smythe Ratcliffe LLP (signed)

Chartered Accountants

Vancouver, British Columbia August 18, 2010

COMMENTS BY AUDITORS FOR US READERS

In the United States, reporting standards of the Public Company
Accounting Oversight Board for auditors require the addition of an explanatory
paragraph (following the opinion paragraph) when the financial statements are
affected by conditions and events that cast substantial doubt on the Companys
ability to continue as a going concern, such as described in note 1 to the
financial statements. Our report to the shareholders dated August 18, 2010, is
expressed in accordance with Canadian reporting standards, which do not permit a
reference to such events and conditions in the auditors report when these are
adequately disclosed in the financial statements.

Smythe Ratcliffe LLP (signed)

Chartered Accountants

Vancouver, Canada August 18, 2010

73

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

|                                               |   | 2010        |   |   | 2009        |  
|---------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                               |   |             |   |   | (Note 3)    |  
|ASSETS                                         |   |             |   |   |             |  
|                                               |   |             |   |   |             |  
|Current                                        |   |             |   |   |             |  
|Cash and cash equivalents                      | $ | 15,868,072  |   | $ | 1,013,670   |  
|Accounts receivable                            |   | 75,941      |   |   | 96,270      |  
|Prepaid expenses                               |   | 15,844      |   |   | 129,038     |  
|                                               |   |             |   |   |             |  
|                                               |   | 15,959,857  |   |   | 1,238,978   |  
|                                               |   |             |   |   |             |  
|Due from related parties(Note 9)               |   | -           |   |   | 991,905     |  
|Property and equipment(Note 5)                 |   | 72,424      |   |   | 79,015      |  
|Exploration advances                           |   | 108,890     |   |   | 14,498      |  
|Mineral property interests(Note 6)             |   | 24,243,652  |   |   | 17,198,302  |  
|                                               |   |             |   |   |             |  
|                                               | $ | 40,384,823  |   | $ | 19,522,698  |  
|                                               |   |             |   |   |             |  
|LIABILITIES AND SHAREHOLDERS EQUITY           |   |             |   |   |             |  
|                                               |   |             |   |   |             |  
|Current                                        |   |             |   |   |             |  
|Accounts payable and accrued
      liabilities | $ | 345,398     |   | $ | 234,670     |  
|Due to related parties
      (Note 9)          |   | 42,308      |   |   | 187,306     |  
|                                               |   |             |   |   |             |  
|                                               |   | 387,706     |   |   | 421,976     |  
|                                               |   |             |   |   |             |  
|Shareholders equity                           |   |             |   |   |             |  
|Capital stock (Note 7)                         |   | 49,160,012  |   |   | 27,430,598  |  
|Contributed surplus
      (Note 7)             |   | 4,690,878   |   |   | 1,918,829   |  
|Deficit                                        |   | (13,853,773 | ) |   | (10,248,705 | )
|                                               |   |             |   |   |             |  
|                                               |   | 39,997,117  |   |   | 19,100,722  |  
|                                               |   |             |   |   |             |  
|                                               | $ | 40,384,823  |   | $ | 19,522,698  |  

Nature and continuance of operations (Note 1)Subsequent events (Note 14)

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.

74

---

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

|                                                           |   | 2010        |   |   | 2009        |   |   | 2008       |  
|---------------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ---------- | -
|                                                           |   |             |   |   | (Note 3)    |   |   | (Note 3)   |  
|Expenses                                                   |   |             |   |   |             |   |   |            |  
|Amortization                                               | $ | 20,765      |   | $ | 6,349       |   | $ | 2,044      |  
|Consulting fees (notes 8 and 9)                            |   | 1,994,054   |   |   | 2,217,769   |   |   | 40,000     |  
|Investor relations (notes 8 and 9)                         |   | 438,886     |   |   | 307,943     |   |   | -          |  
|Office and miscellaneous (notes 8 and 9)                   |   | 328,530     |   |   | 223,863     |   |   | 67,275     |  
|Professional fees (notes 8 and 9)                          |   | 305,426     |   |   | 209,251     |   |   | 66,313     |  
|Property investigations                                    |   | 169,520     |   |   | -           |   |   | 131,329    |  
|Regulatory (note 9)                                        |   | 25,680      |   |   | 51,847      |   |   | 15,094     |  
|Travel and promotion (note 9)                              |   | 90,591      |   |   | 96,280      |   |   | 5,173      |  
|                                                           |   | (3,373,452  | ) |   | (3,113,302  | ) |   | (327,228   | )
|                                                           |   |             |   |   |             |   |   |            |  
|Other items                                                |   |             |   |   |             |   |   |            |  
|Gain (loss) on foreign exchange                            |   | (271,058    | ) |   | 358,533     |   |   | 15,726     |  
|Interest income (note 9)                                   |   | 39,442      |   |   | 124,003     |   |   | 29,670     |  
|Loss on disposal of equipment                              |   | -           |   |   | (15,371     | ) |   | -          |  
|                                                           |   | (231,616    | ) |   | 467,165     |   |   | 45,396     |  
|                                                           |   |             |   |   |             |   |   |            |  
|Net loss and comprehensive loss for the year               |   | (3,605,068  | ) |   | (2,646,137  | ) |   | (281,832   | )
|                                                           |   |             |   |   |             |   |   |            |  
|Deficit, beginning of year                                 |   | (10,248,705 | ) |   | (7,602,568  | ) |   | (7,320,736 | )
|Deficit, end of year                                       | $ | (13,853,773 | ) | $ | (10,248,705 | ) | $ | (7,602,568 | )
|                                                           |   |             |   |   |             |   |   |            |  
|Basic and fully diluted loss per share                     | $ | (0.07       | ) | $ | (0.11       | ) | $ | (0.05      | )
|                                                           |   |             |   |   |             |   |   |            |  
|Weighted average number of common shares
      outstanding |   | 49,819,536  |   |   | 24,859,595  |   |   | 5,399,532  |  

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

75

---

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

|                                               |   | 2010       |   |   | 2009        |   |   | 2008      |  
|---------------------------------------------- | - | ---------- | - | - | ----------- | - | - | --------- | -
|                                               |   |            |   |   | (Note 3)    |   |   | (Note 3)  |  
|Operating activities                           |   |            |   |   |             |   |   |           |  
|Loss for the year                              | $ | (3,605,068 | ) | $ | (2,646,137  | ) | $ | (281,832  | )
|Add items not affecting cash                   |   |            |   |   |             |   |   |           |  
|Amortization                                   |   | 20,765     |   |   | 6,349       |   |   | 2,044     |  
|Stock-based
      compensation                 |   | 1,521,621  |   |   | 1,879,484   |   |   | -         |  
|Loss on disposal of equipment                  |   | -          |   |   | 15,371      |   |   | -         |  
|Loss on foreign
      exchange                 |   | 135,419    |   |   | 11,462      |   |   | -         |  
|Changes in non-cash items                      |   |            |   |   |             |   |   |           |  
|Accounts
      receivable                      |   | 20,329     |   |   | (59,086     | ) |   | (35,940   | )
|Prepaid expenses                               |   | 113,194    |   |   | (127,014    | ) |   | (51       | )
|Accounts payable
      and accrued liabilities |   | 205,218    |   |   | 37,715      |   |   | 17,918    |  
|Due to related parties                         |   | (144,998   | ) |   | 187,306     |   |   | -         |  
|Cash used in operating activities              |   | (1,733,520 | ) |   | (694,550    | ) |   | (297,861  | )
|                                               |   |            |   |   |             |   |   |           |  
|Investing activities                           |   |            |   |   |             |   |   |           |  
|Exploration advances                           |   | (94,392    | ) |   | (14,498     | ) |   | -         |  
|Mineral property interests                     |   | (5,035,775 | ) |   | (10,430,534 | ) |   | (258,770  | )
|Advances to (repayment from) related party     |   | 856,486    |   |   | (991,905    | ) |   | -         |  
|Purchase of equipment                          |   | (14,174    | ) |   | (84,276     | ) |   | (14,082   | )
|Cash used in
      investing activities        |   | (4,287,855 | ) |   | (11,521,213 | ) |   | (272,852  | )
|                                               |   |            |   |   |             |   |   |           |  
|Financing activities                           |   |            |   |   |             |   |   |           |  
|Issuance of capital stock                      |   | 21,926,993 |   |   | 7,400,552   |   |   | 660,000   |  
|Share subscriptions receivable                 |   | -          |   |   | -           |   |   | 5,349,448 |  
|Share issuance costs                           |   | (1,051,216 | ) |   | (36,402     | ) |   | -         |  
|Cash provided by financing activities          |   | 20,875,777 |   |   | 7,364,150   |   |   | 6,009,448 |  
|                                               |   |            |   |   |             |   |   |           |  
|                                               |   |            |   |   |             |   |   |           |  
|Increase (decrease) in cash                    |   | 14,854,402 |   |   | (4,851,613  | ) |   | 5,438,735 |  
|Cash and cash equivalents, beginning of year   |   | 1,013,670  |   |   | 5,865,283   |   |   | 426,548   |  
|                                               |   |            |   |   |             |   |   |           |  
|Cash and cash equivalents, end of year         | $ | 15,868,072 |   | $ | 1,013,670   |   | $ | 5,865,283 |  
|Cash and cash equivalents consists of:         |   |            |   |   |             |   |   |           |  
|Cash                                           | $ | 15,868,072 |   | $ | 1,013,670   |   | $ | 748,167   |  
|Term deposit and GIC                           |   | -          |   |   | -           |   |   | 5,117,116 |  
|                                               | $ | 15,868,072 |   | $ | 1,013,670   |   | $ | 5,865,283 |  

Supplemental disclosure with respect to cash flows(Note
11)

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

76

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

|1. | NATURE AND CONTINUANCE OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Dorato Resources Inc. (the "Company") is incorporated
      under the laws of British Columbia, Canada. Commencing in the prior year,
      the Company is engaged in the acquisition, 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Several adverse conditions cast substantial doubt on the
      validity of this assumption. The Company has incurred significant
      operating losses (2010 - $3,605,068; 2009 - $2,646,137; 2008 - $281,832),
      has working capital of $15,572,151 (2009 - $817,002), has a deficit of
      $13,853,773 (2009 - $10,248,705), 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

77

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

|2. | SIGNIFICANT ACCOUNTING POLICIES(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Use of estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The preparation of financial statements in accordance
      with 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 accruals of
      liabilities, rates of amortization, 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Gains and losses arising from this translation of foreign
      currency are included in the determination of net loss for the
  year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Cash consists of cash on deposit at major financial
      institutions in Canada and Peru.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | 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.

78

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

|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 annually,
      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.

79

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

|2. | SIGNIFICANT ACCOUNTING POLICIES(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | 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.                                                                                                                                                             

80

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

|2. | SIGNIFICANT ACCOUNTING POLICIES(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Financial instruments and comprehensive income(contd...)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | 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.                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Adoption of new accounting standards and
      developments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Goodwill and Intangible Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In February 2008, the CICA issued Handbook Section 3064,
      Goodwill and Intangible Assets, replacing Section 3062, Goodwill and
      Other Intangible Assets, and Section 3450, Research and Development
      Costs. These sections establish standards for the recognition,
      measurement, presentation and disclosure of goodwill subsequent to its
      initial recognition and of intangible assets by profit-oriented
      enterprises. Standards concerning goodwill are unchanged from the
      standards included in the previous Section 3062. The section was effective
      for the Company after February 1, 2009. The adoption of this standard had
      no effect on the Companys consolidated financial statements.                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In June 2007, the CICA amended Handbook Section 1400,
      General Standards of Financial Statement Presentation, which requires
      management to make an assessment of a companys ability to continue as a
      going concern. When financial statements are not prepared on a going
      concern basis that fact shall be disclosed together with the basis on
      which the financial statements are prepared and the reason why the company
      is not considered a going concern. The section was effective for the
      Company on February 1, 2009. The adoption of this standard had no effect
      on the Companys consolidated financial statements.                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | 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. The Company is currently
      evaluating the impact of the conversion on the Companys consolidated
      financial statements and is considering accounting policy choices
      available under IFRS.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | 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.                                                                                                                                                                                                                                                                                                                                                                  

81

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

|2. | SIGNIFICANT ACCOUNTING POLICIES(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Future accounting changes(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Business Combinations(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | 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. Earlier adoption of these sections is permitted as
      of the beginning of a fiscal year. All three sections must be adopted
      concurrently. The Company is currently evaluating the impact of the
      adoption of these sections.                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|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 effect of these changes
      in reporting currency is summarized below:                                                                                                                                                                                                                                                                                                                  

| |                                  |   |                  |   |   |                        |   |   |            |  
| | -------------------------------- | - | ---------------- | - | - | ---------------------- | - | - | ---------- | -
| |                                  |   | Reported in      |   |   | As previously          |  
| |                                  |   | Canadian dollars |   |   | reported in US dollars |  
| |                                  |   | 2009             |   |   | 2008                   |   |   | 2009       |  
| | Total assets                     | $ | 19,522,698       |   | $ | n/a                    |   | $ | 16,012,317 |  
| | Total liabilities                |   | 421,976          |   |   | n/a                    |   | $ | 344,039    |  
| | Total shareholders equity       |   | 19,100,722       |   |   | n/a                    |   | $ | 15,668,278 |  
| | Net loss for the year            |   | 2,646,137        |   |   | 281,832                |   | $ | 2,569,513  |  
| | Comprehensive loss for the year  |   | 2,646,137        |   |   | 281,832                |   | $ | 5,221,464  |  
| |                                  |   |                  |   |   |                        |   |   |            |  
| | Basic and diluted loss per share |   | (0.11            | ) |   | (0.05                  | ) | $ | (0.10      | )

82

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

|4. | RISK MANAGEMENT AND FINANCIAL
INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                 
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company classifies its cash; accounts receivable and
      due from related parties as loans and receivables; accounts payable and
      accrued liabilities and due to related parties as other financial
      liabilities.                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The carrying values of cash, 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                                                 |   | 2010       |  |   | 2009      | 
| |                                                      |   |            |  |   | (Note 3)  | 
| | Held at a major Canadian financial
      institution | $ | 15,911,974 |  | $ | 870,479   | 
| | Peruvian financial institution                       |   | -          |  |   | 143,191   | 
| |                                                      | $ | 15,911,974 |  | $ | 1,013,670 | 

| |     | The credit risk associated with cash 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, 2010, the cash balance of $15,868,072 will
      likely be sufficient to meet the needs for the coming year. Liabilities as
      at January 31, 2010 are as follows:

| |                                          |   |         |   |   |        |  |   |         |  |   |         |  
| | ---------------------------------------- | - | ------- | - | - | ------ |  | - | ------- |  | - | ------- | -
| |                                          |   | 0 to 3  |   |   | 3 to 6 |  |   | 6 to 12 |  |   |         |  
| |                                          |   | months  |   |   | months |  |   | months  |  |   | Total   |  
| | Peru bank indebtedness                   | $ | (43,902 | ) | $ | -      |  | $ | -       |  | $ | (43,902 | )
| | Accounts payable and accrued liabilities |   | 345,398 |   |   | -      |  |   | -       |  |   | 345,398 |  
| | Due to related parties                   |   | 42,308  |   |   | -      |  |   | -       |  |   | 42,308  |  
| |                                          | $ | 343,804 |   | $ | -      |  | $ | -       |  | $ | 343,804 |  

83

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

|4. | RISK MANAGEMENT AND FINANCIAL INSTRUMENTS(contd...)
|-- | ----------------------------------------------------
|   |                                                     
|   | (c)                                                 
|   |                                                     
|   |                                                     
|   |                                                     
|   |                                                     
|   |                                                     
|   |                                                     
|   |                                                     
|   |                                                     
|   |                                                     
|   |                                                     
|   |                                                     
|   |                                                     
|   |                                                     
|   |                                                     
|   |                                                     
|5. | PROPERTY AND EQUIPMENT                              

| |                        |   |        |  |   |              |  |   |          |  |   |        |  |   |              |  |   |          | 
| | ---------------------- | - | ------ |  | - | ------------ |  | - | -------- |  | - | ------ |  | - | ------------ |  | - | -------- | 
| |                        |   | 2010   |  |   | 2009         | 
| |                        |   |        |  |   | Accumulated  |  |   | Net Book |  |   |        |  |   | Accumulated  |  |   | Net Book | 
| |                        |   | Cost   |  |   | Amortization |  |   | Value    |  |   | Cost   |  |   | Amortization |  |   | Value    | 
| |                        |   |        |  |   |              |  |   |          |  |   |        |  |   | (Note 3)     |  |   |          | 
| | Computer equipment     | $ | 23,644 |  | $ | 8,192        |  | $ | 15,452   |  | $ | 13,841 |  | $ | 2,814        |  | $ | 11,027   | 
| | Office equipment       |   | 57,744 |  |   | 12,262       |  |   | 45,482   |  |   | 53,373 |  |   | 1,053        |  |   | 52,320   | 
| | Leasehold improvements |   | 17,061 |  |   | 5,571        |  |   | 11,490   |  |   | 17,061 |  |   | 1,393        |  |   | 15,668   | 
| |                        | $ | 98,449 |  | $ | 26,025       |  | $ | 72,424   |  | $ | 84,275 |  | $ | 5,260        |  | $ | 79,015   | 

84

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

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

| |                                     |   |              |  |   |            |  |   |            |  |   |            | 
| | ----------------------------------- | - | ------------ |  | - | ---------- |  | - | ---------- |  | - | ---------- | 
| |                                     |   | Central Zone |  |   | North Zone |  |   | South Zone |  |   | Total      | 
| |                                     |   |              |  |   |            |  |   |            |  |   |            | 
| | Balance, January 31, 2008 (Note 3)  | $ | 474,198      |  | $ | -          |  | $ | -          |  | $ | 474,198    | 
| |                                     |   |              |  |   |            |  |   |            |  |   |            | 
| | Acquisition costs:                  |   |              |  |   |            |  |   |            |  |   |            | 
| | Cash payments                       |   | 3,120,060    |  |   | 420,967    |  |   | 488,115    |  |   | 4,029,142  | 
| | Common shares issued                |   | 5,153,250    |  |   | 845,227    |  |   | 311,523    |  |   | 6,310,000  | 
| | Deferred exploration costs:         |   |              |  |   |            |  |   |            |  |   |            | 
| | Incurred during the year:           |   |              |  |   |            |  |   |            |  |   |            | 
| | Field expenses                      |   | 2,826,295    |  |   | -          |  |   | -          |  |   | 2,826,295  | 
| | Peruvian value
      added tax      |   | 712,001      |  |   | -          |  |   | -          |  |   | 712,001    | 
| | Land maintenance and tenure         |   | 377,326      |  |   | -          |  |   | -          |  |   | 377,326    | 
| | Personnel                           |   | 951,623      |  |   | -          |  |   | -          |  |   | 951,623    | 
| | Public relations                    |   | 123,269      |  |   | -          |  |   | -          |  |   | 123,269    | 
| | Survey and
      mapping            |   | 863,281      |  |   | -          |  |   | -          |  |   | 863,281    | 
| | Travel                              |   | 531,167      |  |   | -          |  |   | -          |  |   | 531,167    | 
| | Total expenditures for the year     |   | 14,658,272   |  |   | 1,266,194  |  |   | 799,638    |  |   | 16,724,104 | 
| |                                     |   |              |  |   |            |  |   |            |  |   |            | 
| | 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                      |   | 1,533,269    |  |   | -          |  |   | -          |  |   | 1,533,269  | 
| | Data acquisition
      and analysis |   | 789,063      |  |   | -          |  |   | -          |  |   | 789,063    | 
| | Peruvian value added tax            |   | 174,122      |  |   | -          |  |   | -          |  |   | 174,122    | 
| | Land maintenance
      and tenure   |   | 10,322       |  |   | -          |  |   | -          |  |   | 10,322     | 
| | Personnel                           |   | 1,047,582    |  |   | -          |  |   | -          |  |   | 1,047,582  | 
| | Public relations                    |   | 402,675      |  |   | -          |  |   | -          |  |   | 402,675    | 
| | Survey and mapping                  |   | 39,480       |  |   | -          |  |   | -          |  |   | 39,480     | 
| | Travel                              |   | 103,412      |  |   | -          |  |   | -          |  |   | 103,412    | 
| | 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 | 

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.

85

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

|6. | MINERAL PROPERTY INTERESTS(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Property Acquisitions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | During the year ended January 31, 2008, the Company
      entered into five option agreements to earn a 100% interest in 70 mineral
      mining concessions located in Peru (the Mineral Claims), and for which
      Canadian regulatory approval was received on April 24, 2008. Peruvian
      Government approval (Supreme Decree) is required for the exercise of the
      undernoted option agreements, and is in the process of being obtained.
      Although the commercial terms of all the undernoted option agreements have
      now been completed, none of the options have been exercised. Mineral
      Claims together comprise the Cordillera del Condor Copper  Gold Project.
      As consideration for the Mineral Claims, the Company has issued 15,500,000
      common shares and paid a total of US$4,286,031 as follows, including
      subsequently acquired claims:
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | v)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | vi)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

86

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

|6. | MINERAL PROPERTY INTERESTS(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | 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, 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:
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | 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.                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Environmental expenditures that relate to ongoing
      environmental and reclamation programs are charged against earnings as
      incurred or capitalized and amortized depending on their future economic
      benefits. Estimated future removal and site restoration costs, when the
      ultimate liability is reasonably determinable, are charged against
      earnings over the estimated remaining life of the related business
      operation, net of expected recoveries. The Company is not aware of any
      AROs as of January 31, 2010 and 2009.                                                                                                                         

87

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

|7. | CAPITAL STOCK AND CONTRIBUTED SURPLUS         
|-- | ----------------------------------------------
|   |                                               
|   | Authorized:                                   
|   |                                               
|   | 100,000,000 common shares without par
  value.

| |                                                                    |  |            |  |   |            |   |   |             |  
| | ------------------------------------------------------------------ |  | ---------- |  | - | ---------- | - | - | ----------- | -
| |                                                                    |  | Number     |  |   | Capital    |   |   | Contributed |  
| |                                                                    |  | of Shares  |  |   | Stock      |   |   | Surplus     |  
| | Issued and outstanding                                             |  |            |  |   |            |   |   |             |  
| | Balance, January 31, 2008 (Note 3)                                 |  | 6,818,187  |  | $ | 8,407,000  |   | $ | -           |  
| | Private placements                                                 |  | 18,500,000 |  |   | 12,750,000 |   |   | -           |  
| | Shares issued for mineral property interests                       |  | 12,850,000 |  |   | 6,310,000  |   |   | -           |  
| | Share issue costs                                                  |  | -          |  |   | (36,402    | ) |   | -           |  
| | Stock-based compensation                                           |  | -          |  |   | -          |   |   | 1,918,829   |  
| |                                                                    |  |            |  |   |            |   |   |             |  
| | Balance, January 31, 2009 (Note 3)                                 |  | 38,168,187 |  |   | 27,430,598 |   |   | 1,918,829   |  
| | Private placements                                                 |  | 26,732,850 |  |   | 21,469,493 |   |   | -           |  
| | Shares issued for mineral property interests                       |  | 2,650,000  |  |   | 1,945,500  |   |   | -           |  
| | Exercise of options                                                |  | 62,500     |  |   | 18,750     |   |   | -           |  
| | Exercise of warrants                                               |  | 675,000    |  |   | 438,750    |   |   | -           |  
| | Agents compensation                                               |  | 100,000    |  |   | 50,000     |   |   | -           |  
| | Share issue costs                                                  |  | -          |  |   | (2,204,748 | ) |   | 1,103,532   |  
| | Stock-based compensation                                           |  | -          |  |   | -          |   |   | 1,680,186   |  
| | Reallocation from contributed surplus on
      exercise of options |  | -          |  |   | 11,669     |   |   | (11,669     | )
| | Balance, January 31, 2010                                          |  | 68,388,537 |  | $ | 49,160,012 |   | $ | 4,690,878   |  

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

| | i)   | Closed a private placement through the issuance of
      12,000,000 units at a price of $0.50 per unit for total 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 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 TSX Venture Exchange 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 30thday 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.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ii)  | 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 value at $0.84 per shares for a total of
      $840,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | iii) | 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 of which is exercisable to
      purchase one unit of the Company at the price of $1.05 for 18 months until
      July 26, 2011, each compensation option unit having the same terms as the
      placement units above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

88

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

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

During the year ended January 31, 2010,
the Company (contd...)

| | iv) | 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.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During the year ended January 31, 2009,
the Company:

| | i)   | Issued 17,000,000 common shares pursuant to a
      non-brokered private placement for total proceeds of $10,200,000 at a
      price of $0.60 per share.                                                                                                                                                                               
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                         
| | ii)  | Issued 4,150,000 common shares for mineral properties
      valued at $0.60 per share for a total of $2,490,000.                                                                                                                                                                                                                        
| |      |                                                                                                                                                                                                                                                                                                                                         
| | iii) | Completed a non-brokered private placement with
      Franco-Nevada Corporation for 1,500,000 common shares at a price of $1.70
      per common share for gross proceeds of $2,550,000. Franco-Nevada was also
      granted the right to participate in all subsequent financings on a
      pro-rata basis for a period of two years.
| |      |                                                                                                                                                                                                                                                                                                                                         
| | iv)  | Issued 4,000,000 common shares for mineral properties
      valued at $0.485 per share for a total of $1,940,000.                                                                                                                                                                                                                       
| |      |                                                                                                                                                                                                                                                                                                                                         
| | v)   | Issued 4,700,000 common shares for mineral properties
      valued at $0.40 per share for a total of
$1,880,000.                                                                                                                                                                                                                        

|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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | A summary of the status of the stock option plan as of
      January 31, 2010 and 2009, and changes during the years ended on those
      dates is presented below:                                                                                                                                                                                                                                                                                                                                                                                                                       

| |                                        |  |           |   |  |                | 
| | -------------------------------------- |  | --------- | - |  | -------------- | 
| |                                        |  | 2010      |   |  | 2009           | 
| |                                        |  |           |   |  | Weighted       | 
| |                                        |  | Number of |   |  | Average        | 
| |                                        |  | Options   |   |  | Exercise Price | 
| |                                        |  |           |   |  |                | 
| | Options outstanding, beginning of year |  | 3,600,000 |   |  | $1.09          | 
| | Granted                                |  | 4,150,000 |   |  | $0.75          | 
| | Exercised                              |  | (62,500   | ) |  | $0.30          | 
| | Cancelled/Expired                      |  | (990,000  | ) |  | $1.37          | 
| | Options outstanding, end of year       |  | 6,697,500 |   |  | $0.85          | 

89

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

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

Stock options outstanding are as
follows:

| |                                     |  |          |  |  |           |  |  |             |  |  |          |  |  |           |  |  |             | 
| | ----------------------------------- |  | -------- |  |  | --------- |  |  | ----------- |  |  | -------- |  |  | --------- |  |  | ----------- | 
| |                                     |  | 2010     |  |  | 2009      | 
| |                                     |  |          |  |  |           |  |  | Exercisable |  |  |          |  |  |           |  |  | Exercisable | 
| |                                     |  | Exercise |  |  | Number of |  |  | at Year     |  |  | Exercise |  |  | Number of |  |  | at Year     | 
| | Expiry Date                         |  | Price    |  |  | Options   |  |  | End         |  |  | Price    |  |  | Options   |  |  | End         | 
| |                                     |  |          |  |  |           |  |  |             |  |  |          |  |  | (Note 3)  |  |  |             | 
| | May 23, 2010 (subsequently expired) |  | $1.40    |  |  | 1,640,000 |  |  | 1,640,000   |  |  | $1.40    |  |  | 2,412,500 |  |  | 2,412,500   | 
| | June 20, 2010                       |  | $      - |  |  | -         |  |  | -           |  |  | $1.40    |  |  | 187,500   |  |  | 93,750      | 
| | January 7, 2011                     |  | $0.30    |  |  | 907,500   |  |  | 907,500     |  |  | $0.30    |  |  | 1,000,000 |  |  | 973,750     | 
| | April 9, 2011                       |  | $0.60    |  |  | 1,550,000 |  |  | 1,550,000   |  |  | $      - |  |  | -         |  |  | -           | 
| | June 10, 2011                       |  | $0.60    |  |  | 250,000   |  |  | 250,000     |  |  | $      - |  |  | -         |  |  | -           | 
| | August 31, 2011                     |  | $0.50    |  |  | 150,000   |  |  | 150,000     |  |  | $      - |  |  | -         |  |  | -           | 
| | October 30, 2011                    |  | $0.45    |  |  | 700,000   |  |  | 700,000     |  |  | $      - |  |  | -         |  |  | -           | 
| | January 29, 2012                    |  | $1.09    |  |  | 1,500,000 |  |  | 1,500,000   |  |  | $      - |  |  | -         |  |  | -           | 
| |                                     |  |          |  |  | 6,697,500 |  |  | 6,697,500   |  |  |          |  |  | 3,600,000 |  |  | 3,480,000   | 
| |                                     |  |          |  |  |           |  |  |             |  |  |          |  |  |           |  |  |             | 
| | July 26, 2011 (Agents option)      |  | $1.05    |  |  | 947,325   |  |  | 947,325     |  |  | $      - |  |  | -         |  |  | -           | 
| |                                     |  |          |  |  | 7,644,825 |  |  | 7,644,825   |  |  |          |  |  | 3,600,000 |  |  | 3,480,000   | 

Stock-based compensation

During the year ended January 31, 2010
(2009 and 2008 - Note 3), the Company granted 4,150,000 (2009 - 3,600,000; 2008
- Nil) stock options with a fair value of $1,680,186 (2009 - $1,918,829; 2008 -
$Nil), or $0.41 (2009 - $0.53; 2008 - $Nil) per option, calculated using the
Black-Scholes option pricing model. The stock-based compensation for 2010 was
allocated $1,352,156 (2009 - $1,686,514; $2008 - $Nil) to consulting, $149,231
(2009 - $143,221; 2008 - $Nil) to investor relations, $158,566 (2009 - $39,345;
2008 - $Nil) to mineral properties, $20,233 (2009 - $34,944; 2008 - $Nil) to
professional fee, and $Nil (2009 - $14,805; 2008 - $Nil) to office and
miscellaneous.

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

| |                                   |  |         |  |  |         |  |  |      | 
| | --------------------------------- |  | ------- |  |  | ------- |  |  | ---- | 
| |                                   |  | 2010    |  |  | 2009    |  |  | 2008 | 
| | Risk-free interest rate           |  | 1.30%   |  |  | 2.48%   |  |  | NA   | 
| | Expected life of options/warrants |  | 2 years |  |  | 2 years |  |  | NA   | 
| | Annualized volatility             |  | 116.57% |  |  | 104.83% |  |  | NA   | 
| | Dividend rate                     |  | 0.00%   |  |  | 0.00%   |  |  | NA   | 

Warrants

| |                                |  |            |   |   |               |  |  |               | 
| | ------------------------------ |  | ---------- | - | - | ------------- |  |  | ------------- | 
| |                                |  | 2010       |   |   | 2009 (Note 3) |  |  | 2008 (Note 3) | 
| |                                |  |            |   |   | Weighted      |  |  |               | 
| |                                |  | Number     |   |   | Average       |  |  | Number        | 
| |                                |  | of         |   |   | Exercise      |  |  | of            | 
| |                                |  | Warrants   |   |   | Price         |  |  | Warrants      | 
| | Balance, beginning of the year |  | -          |   | $ | -             |  |  | -             | 
| | Issued during the year         |  | 15,090,089 |   | $ | 1.17          |  |  | -             | 
| | Exercised                      |  | (675,000   | ) | $ | 0.65          |  |  | -             | 
| |                                |  |            |   |   |               |  |  |               | 
| | Balance, end of year           |  | 14,415,089 |   | $ | 1.20          |  |  | -             | 

90

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

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

At January 31, 2010, warrants
outstanding were as follows:

| |             |          |               
| | ----------- | -------- | --------------
| | Number      | Exercise |               
| | of Warrants | Price    | Expiry Date   
| | 5,375,000   | $0.65    | March 31, 2011
| | 1,200,000   | $0.70    | March 31, 2011
| | 5,459,588   | $1.65    | July 26, 2011 
| | 2,380,501   | $1.65    | July 29, 2011 
| | 14,415,089  |          |               

At January 31, 2009, there were no
warrants outstanding.

|9. | RELATED PARTY TRANSACTIONS                                                                                                                            
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                       
|   | During the year ended January 31, 2010 (2009 and 2008 -
      Note 3), the Company entered into the following transactions with related
      parties:
|   |                                                                                                                                                       
|   | a)                                                                                                                                                    
|   |                                                                                                                                                       
|   | b)                                                                                                                                                    
|   |                                                                                                                                                       
|   | c)                                                                                                                                                    
|   |                                                                                                                                                       
|   | d)                                                                                                                                                    
|   |                                                                                                                                                       
|   |                                                                                                                                                       
|   |                                                                                                                                                       
|   | e)                                                                                                                                                    

91

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

|10. | INCOME TAXES                                                                                                                                              
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                           
|    | A reconciliation of income taxes at statutory rates with
      the reported taxes is as follows for the years ended January 31, 2010,
      2009 and 2008:

| |                                                 |   |            |   |   |            |   |   |          |  
| | ----------------------------------------------- | - | ---------- | - | - | ---------- | - | - | -------- | -
| |                                                 |   | 2010       |   |   | 2009       |   |   | 2008     |  
| |                                                 |   |            |   |   | (Note 3)   |   |   | (Note 3) |  
| | Net loss for the year                           | $ | (3,605,068 | ) | $ | (2,646,137 | ) | $ | (281,832 | )
| | Expected income tax recovery                    | $ | (1,077,659 | ) | $ | (818,189   | ) | $ | (95,429  | )
| | Temporary differences                           |   | (28,322    | ) |   | (76,455    | ) |   | (2,374   | )
| | Stock-based compensation                        |   | 456,833    |   |   | 582,097    |   |   | -        |  
| | Change in temporary differences                 |   | (168,565   | ) |   | 6,137      |   |   | 299      |  
| | Reduction in future income taxes resulting from |   |            |   |   |            |   |   |          |  
| | statutory rate reduction                        |   | 101,431    |   |   | 45,411     |   |   | 11,765   |  
| | Unrecognized benefit of non-capital losses      |   | 716,282    |   |   | 260,999    |   |   | 85,739   |  
| |                                                 | $ | -          |   | $ | -          |   | $ | -        |  

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

| |                     |   |            |   |   |          |  
| | ------------------- | - | ---------- | - | - | -------- | -
| |                     |   | 2010       |   |   | 2009     |  
| |                     |   |            |   |   | (Note 3) |  
| | Non-capital losses  | $ | 870,867    |   | $ | 325,454  |  
| | Mineral properties  |   | (49,478    | ) |   | (10,230  | )
| | Share issue costs   |   | 215,703    |   |   | 7,572    |  
| | Equipment           |   | (655       | ) |   | (2,651   | )
| |                     |   | 1,036,437  |   |   | 320,145  |  
| | Valuation allowance |   | (1,036,437 | ) |   | (320,145 | )
| |                     | $ | -          |   | $ | -        |  

The Company has available for deduction
against future taxable income in Canada and Peru non-capital losses of
approximately $3,404,000. These losses, if not utilized, will expire through to
2030. Subject to certain restrictions, the Company has exploration and
development expenditures of approximately $14,200,000 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.

|11. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH
      FLOW
|--- | -------------------------------------------------------

| |                                                                  |   |           |  |   |           |  |   |         | 
| | ---------------------------------------------------------------- | - | --------- |  | - | --------- |  | - | ------- | 
| | Supplemental
      cash flow information                         |   | 2010      |  |   | 2009      |  |   | 2008    | 
| |                                                                  |   |           |  |   |           |  |   |         | 
| | Interest received                                                | $ | 39,442    |  | $ | 124,003   |  | $ | 29,670  | 
| | Interest paid                                                    | $ | -         |  | $ | -         |  | $ | -       | 
| | Income taxes paid                                                | $ | -         |  | $ | -         |  | $ | -       | 
| | Non-cash transactions                                            |   |           |  |   |           |  |   |         | 
| | Shares issued
      to acquire mineral property interest         | $ | 1,945,500 |  | $ | 6,310,000 |  | $ | -       | 
| | Shares issued as agents commission                              | $ | 50,000    |  | $ | -         |  | $ | -       | 
| | Accounts payable included in mineral
      property expenditures | $ | 64,483    |  | $ | 158,973   |  | $ | 215,428 | 

92

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

|12. | SEGMENTED INFORMATION                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                     
|    | The business of the Company is the acquisition,
      exploration and development of mineral properties. Geographic information
      is as follows:

| |                            |   |            |  |   |            |   |   |            |  |   |         |  |   |            |  |   |            | 
| | -------------------------- | - | ---------- |  | - | ---------- | - | - | ---------- |  | - | ------- |  | - | ---------- |  | - | ---------- | 
| |                            |   | 2010       |  |   | 2009       |  
| |                            |   | Canada     |  |   | Peru       |   |   | Total      |  |   | Canada  |  |   | Peru       |  |   | Total      | 
| |                            |   |            |  |   |            |   |   |            |  |   |         |  |   | (Note 3)   |  |   |            | 
| | Cash (indebtedness)        | $ | 15,911,974 |  | $ | (43,902    | ) | $ | 15,868,072 |  | $ | 870,479 |  | $ | 143,191    |  | $ | 1,013,670  | 
| | Mineral property interests |   | -          |  |   | 24,243,652 |   |   | 24,243,652 |  |   | -       |  |   | 17,198,302 |  |   | 17,198,302 | 
| | Other assets               |   | 99,914     |  |   | 173,185    |   |   | 273,099    |  |   | 110,818 |  |   | 1,199,908  |  |   | 1,310,726  | 
| | Total assets               | $ | 16,011,888 |  | $ | 24,372,935 |   | $ | 40,384,823 |  | $ | 981,297 |  | $ | 18,541,401 |  | $ | 19,522,698 | 

|13. | 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, 2010. The Company is
      not subject to externally imposed capital requirements.                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|14. | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Subsequent to January 31, 2010:                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | v)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

93

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

|14. | SUBSEQUENT EVENTS(contd)
|--- | --------------------------

|Due within 10 days of TSXV Approval | $ 200,000 (paid)
|----------------------------------- | ----------------
|First Anniversary                   | 50,000 shares   
|Second Anniversary                  | 200,000 shares  
|Third Anniversary                   | 750,000 shares  

| | vi) | On July 7, 2010, the Company signed an option agreement
      (the Option Agreement) to acquire an additional land package in the
      Cordillera del Condor District of northwest Peru (Cangaza Property). The
      Cangaza Property consists of 14 concessions comprising an aggregate of
      10,427 hectares. Under the terms of the Option Agreement, which is subject
      to regulatory approval (received July 13, 2010), the Company can earn a
      100% interest in the Cangaza Property in exchange for the cash payments
      totaling $150,000 and the issuance of 1,050,000 common shares as
      follows:
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                  |   |               |  |  |               | 
| | -------------------------------- | - | ------------- |  |  | ------------- | 
| |                                  |   | Cash Payments |  |  | Common Shares | 
| | Within 10 days of TSXV approval | $ | 30,000        |  |  | 200,000       | 
| | 3 months after TSXV approval    | $ | 40,000        |  |  | -             | 
| | 4 months after TSXV approval    |   | -             |  |  | 200,000       | 
| | 9 months after TSXV approval    | $ | 40,000        |  |  | 200,000       | 
| | 12 months after TSXV approval   | $ | 40,000        |  |  | -             | 
| | 14 months after TSXV approval   |   | -             |  |  | 200,000       | 
| | 18 months after TSXV approval   |   | -             |  |  | 250,000       | 
| |                                  | $ | 150,000       |  |  | 1,050,000     | 

|15. | COMPARATIVE FIGURES                                                                                    
|--- | -------------------------------------------------------------------------------------------------------
|    |                                                                                                        
|    | Certain comparative figures have been reclassified to
      conform to the current years presentation.
|    |                                                                                                        
|16. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
      GENERALLY ACCEPTED ACCOUNTING PRINCIPLES          
|    |                                                                                                        
|    | a)                                                                                                     
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        
|    |                                                                                                        

94

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

|16. | DIFFERENCES BETWEEN CANADIAN AND UNITED
      STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(contd)
|--- | ------------------------------------------------------------------------------------------------------

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

| |                                                                         |   |             |   |   |               |  
| | ----------------------------------------------------------------------- | - | ----------- | - | - | ------------- | -
| |                                                                         |   | 2010        |   |   | 2009 (Note 3) |  
| | Total assets per Canadian GAAP                                          | $ | 40,384,823  |   | $ | 19,522,698    |  
| | Expenditures on mineral property interests expensed under
      US GAAP |   | (10,959,085 | ) |   | (6,859,160    | )
| |                                                                         |   |             |   |   |               |  
| | Total assets per
      US GAAP                                          | $ | 29,425,738  |   | $ | 12,663,538    |  
| |                                                                         |   |             |   |   |               |  
| | Total liabilities per Canadian and US GAAP                              |   |             |   |   |               |  
| |                                                                         | $ | 387,706     |   | $ | 421,976       |  
| |                                                                         |   |             |   |   |               |  
| | Total shareholders equity per Canadian
      GAAP                      |   | 39,997,117  |   |   | 19,100,722    |  
| | Expenditures on mineral property interests expensed under
      US GAAP |   | (10,959,085 | ) |   | (6,859,160    | )
| |                                                                         |   |             |   |   |               |  
| | Total shareholders equity per US GAAP                                  |   | 29,038,032  |   |   | 12,241,562    |  
| |                                                                         |   |             |   |   |               |  
| | Total liabilities
      and shareholders equity per US GAAP            | $ | 29,425,738  |   | $ | 12,663,538    |  

95

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

|16. | DIFFERENCES BETWEEN CANADIAN AND UNITED
      STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(contd)
|--- | ------------------------------------------------------------------------------------------------------

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

| |                                                                         |   |            |   |   |            |   |   |           |  
| | ----------------------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | --------- | -
| |                                                                         |   | 2010       |   |   | 2009       |   |   | 2008      |  
| |                                                                         |   |            |   |   | (Note 3)   |   |   | (Note 3)  |  
| | Reconciliation of net loss                                              |   |            |   |   |            |   |   |           |  
| |                                                                         |   |            |   |   |            |   |   |           |  
| | Net loss per Canadian GAAP                                              | $ | (3,605,068 | ) | $ | (2,646,137 | ) | $ | (281,832  | )
| | Expenditures on mineral property interests expensed under
      US GAAP |   | (4,099,925 | ) |   | (6,384,962 | ) |   | (474,198  | )
| |                                                                         |   |            |   |   |            |   |   |           |  
| | Net loss per US
      GAAP                                              | $ | (7,704,993 | ) | $ | (9,031,099 | ) | $ | (756,030  | )
| |                                                                         |   |            |   |   |            |   |   |           |  
| | Basic and diluted
      loss per share in accordance with Canadian GAAP | $ | (0.07      | ) | $ | (0.11      | ) | $ | (0.05     | )
| |                                                                         |   |            |   |   |            |   |   |           |  
| | Basic and diluted
      loss per share in accordance with US GAAP       | $ | (0.15      | ) | $ | (0.36      | ) | $ | (0.14     | )
| |                                                                         |   |            |   |   |            |   |   |           |  
| | Weighted average
      number of common shares outstanding              |   | 49,819,536 |   |   | 24,859,595 |   |   | 5,399,532 |  

Statement of comprehensive loss for
the years ended January 31, 2010, 2009 and 2008:

| |                                                                         |   |            |   |   |            |   |   |          |  
| | ----------------------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | -------- | -
| |                                                                         |   | 2010       |   |   | 2009       |   |   | 2008     |  
| |                                                                         |   |            |   |   | (Note 3)   |   |   | (Note 3) |  
| |                                                                         |   |            |   |   |            |   |   |          |  
| | Comprehensive loss in accordance with
      Canadian GAAP               | $ | (3,605,068 | ) | $ | (2,646,137 | ) | $ | (281,832 | )
| | Expenditures on mineral property interests expensed under
      US GAAP |   | (4,099,925 | ) |   | (6,384,962 | ) |   | (474,198 | )
| |                                                                         |   |            |   |   |            |   |   |          |  
| | Comprehensive
      loss in accordance with US GAAP                     | $ | (7,704,993 | ) | $ | (9,031,099 | ) | $ | (756,030 | )

96

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

|16. | DIFFERENCES BETWEEN CANADIAN AND UNITED
      STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(contd)
|--- | ------------------------------------------------------------------------------------------------------

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

| |                                                                              |   |            |   |   |             |   |   |          |  
| | ---------------------------------------------------------------------------- | - | ---------- | - | - | ----------- | - | - | -------- | -
| |                                                                              |   | 2010       |   |   | 2009        |   |   | 2008     |  
| |                                                                              |   |            |   |   | (Note 3)    |   |   | (Note 3) |  
| | Net cash used in operating activities in
      accordance with Canadian GAAP | $ | (1,733,520 | ) | $ | (694,550    | ) | $ | (297,861 | )
| | Adjustments to net loss involving use of cash                                |   |            |   |   |             |   |   |          |  
| | Write-off of capitalized mineral property
      expenditures                 |   | (4,035,849 | ) |   | (6,402,071  | ) |   | (258,770 | )
| | Net cash used in
      operating activities in accordance with US GAAP       | $ | (5,769,369 | ) | $ | (7,096,621  | ) | $ | (556,631 | )
| | Net cash used in investing activities in
      accordance with Canadian GAAP |   | (4,287,855 | ) |   | (11,521,213 | ) |   | (272,852 | )
| | Reclassification of capitalized mineral property
      expenditures          |   | 4,035,849  |   |   | 6,402,071   |   |   | 258,770  |  
| | Net cash used in investing activities in accordance with US
      GAAP       | $ | (252,006   | ) | $ | (5,119,142  | ) | $ | (14,082  | )

| | b) | Recent US accounting pronouncements
| | -- | -----------------------------------
| |    |                                    
| |    | i)                                 
| |    |                                    
| |    | ii)                                

97

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

|16. | DIFFERENCES BETWEEN CANADIAN AND UNITED
      STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(contd)
|--- | ------------------------------------------------------------------------------------------------------

| | b) | Recent US accounting pronouncements (contd)
| | -- | ---------------------------------------------

| | iii) | In June 2009, the FASB issued new guidance which is now
      part of ASC 810-10 (formerly SFAS Statement No. 167), to improve financial
      reporting by enterprises involved with variable interest entities. The
      FASB undertook this project to address (1) the effects on certain
      provisions of FASB Interpretation No. 46 (revised December 2003),
      Consolidation of Variable Interest Entities(which is now part of
      ASC 810-10), as a result of the elimination of the qualifying
      special-purpose entity,and (2) constituent concerns about the
      application of certain key provisions of ASC 810-10, including those in
      which the accounting and disclosures under ASC 810-10 do not always
      provide timely and useful information about an enterprises involvement in
      a variable interest entity. This new guidance is effective as of the
      beginning of each reporting entitys first annual reporting period that
      begins after November 15, 2009, for interim periods within that first
      annual reporting period, and for interim and annual reporting periods
      thereafter. Earlier application is prohibited. This new guidance is not
      expected to have a material impact on the Companys consolidated financial
      statements.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | iv)  | In June 2009, the FASB issued new guidance which is now
      part of ASC 105-10 (the Codification) (formerly Statement of
      Financial Accounting StandardsNo. 168, The FASB Accounting
      Standards CodificationTMand the Hierarchy of Generally
      Accepted Accounting Principles), which will become the source of
      authoritative U.S. GAAP recognized by the FASB to be applied by
      nongovernmental entities. Rules and interpretive releases of the SEC under
      authority of federal securities laws are also sources of authoritative
      GAAP for SEC registrants. On the effective date of the Codification, the
      Codification will supersede all then-existing non-SEC accounting and
      reporting standards. All other non-grandfathered non-SEC accounting
      literature not included in the Codification will become non-
      authoritative. The Codification is effective for financial statements
      issued for interim and annual periods ending after September 15, 2009. The
      adoption of the Codification only had the effect of amending references to
      authoritative accounting guidance in the Companys consolidated financial
      statements.                                                                                                 
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | v)   | In August 2009, the FASB issued Accounting Standards
      Update (ASU) No. 2009-05, Measuring Liabilities at Fair Value(ASU 2009-05). This update provides amendments to ASC 820, Fair
      Value Measurements and Disclosure, for the fair value measurement of
      liabilities when a quoted price in an active market is not available. ASU
      2009-05 is effective for reporting periods beginning after August 28,
      2009. This new guidance is not expected to have a material impact on the
      Companys consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | vi)  | In September 2009, the FASB issued ASU No. 2009-12,
      Investments in Certain Entities That Calculate Net Asset Value Per
      Share (or Its Equivalent)(ASU 2009-12). This update provides
      amendments to ASC Topic 820, Fair Value Measurements and
      Disclosure, permitting companies to estimate the fair value of
      investments within ASC 820s scope using the net asset value per share.
      ASU 2009-05 is effective for reporting periods ending after December 15,
      2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

98

---

|DORATO RESOURCES INC.                         
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|YEARS ENDED JANUARY 31, 2010 AND 2009         
|(Expressed in Canadian Dollars)               
|                                              

|16. | DIFFERENCES BETWEEN CANADIAN AND UNITED
      STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(contd)
|--- | ------------------------------------------------------------------------------------------------------

| | b) | Recent US accounting pronouncements (contd)
| | -- | ---------------------------------------------
| |    |                                              
| |    | vii)                                         
| |    |                                              
| |    | viii)                                        
| |    |                                              
| |    | ix)                                          

99

---

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

Not applicable.

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

|1.1(1)  | Articles effective
        August 21, 2006.                                                                                                                                                                         
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.1(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.                                            
|4.2(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.                                            
|4.3(2)  | Option Agreement with Carlos
        Ballon Barraza dated October 18, 2007 whereby we were granted the option
        to earn a 100% interest in the Lahaina 2 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 Lahaina 1 Property.                                            
|4.5(3)  | Royalty Option Agreement between
        Dorato Resources Inc. and Franco-Nevada Corporation dated August 18, 2008.                                                                                                 
|4.6(3)  | First Amendment
        to the Royalty Option Agreement between Dorato Resources Inc. and Franco-
        Nevada Corporation dated March 30, 2009.                                                                  
|4.7(3)  | Stock Option Plan.                                                                                                                                                                                                  
|4.8(3)  | Demand Loan Agreement
        between Trevali Resources Corp. and the Company dated July 15, 2009.                                                                                                                  
|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.                                               
|15.1    | Letter
        from BDO Dunwoody LLP dated February
        25, 2011.                                                                                                                                               

100

---

|(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.

101

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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: February
  28, 2011

102

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