|        |
|--------|
|   |   |
|   | CONSOLIDATED FINANCIAL STATEMENTS |
|   | For the years ended December 31, 2010 and 2009 |
|   |   |
|   | (Expressed in U.S. dollars) |

----

----

----

| (Signed) “Peter N. Cowley” |   | (Signed) “Donat K. Madilo” |
|----------------------------------------|--------|----------------------------------------|
| Peter N. Cowley, President             |   | Donat K. Madilo, CFO                   |

----

----

----

----

| LONCOR RESOURCES INC.       |
|-----------------------------|
| CONSOLIDATED BALANCE SHEETS |
| (Expressed in U.S. dollars) |
|                        |

| As at                      |   | December 31, 2010 |        |   | December 31, 2009 |   |
|---------------------------------|--------|-----------------------------|-------------|--------|-----------------------------|--------|
|                            |   |                        |        |   |                        |   |
| ASSETS                          |   |                        |        |   |                        |   |
| Current                         |   |                        |        |   |                        |   |
| Cash                            |   | $                           | 10,449,774  |   |                        | $      | 1,536,166 |   |
| Advances receivable             |   |                        | 17,132      |   |                        |   | 2,798 |   |
| Prepaid expenses                |   |                        | 165,753     |   |                        |   | 98,663 |   |
| Due from related party (Note 8) |   |                        | 2,346       |   |                        |   | - |   |
|                            |   |                        | 10,635,005  |   |                        |   | 1,637,627 |   |
|                            |   |                        |        |   |                        |   |   |   |
| Capital assets (Note 5)         |   |                        | 548,700     |   |                        |   | 27,651 |   |
| Mineral properties (Note 4)     |   |                        | 12,402,328  |   |                        |   | 4,954,402 |   |
| Intangible assets (Note 6)      |   |                        | 1           |   |                        |   | 1 |   |
|                            |   | $                           | 23,586,034  |   |                        | $      | 6,619,681 |   |
| LIABILITIES                     |   |                        |        |   |                        |   |   |   |
| Current                         |   |                        |        |   |                        |   |   |   |
| Accounts payable                |   | $                           | 408,962     |   |                        | $      | 44,776 |   |
| Accrued liabilities             |   |                        | 73,864      |   |                        |   | 47,575 |   |
| Due to related parties (Note 8) |   |                        | 118,765     |   |                        |   | 510,867 |   |
| Notes payable (Note 7)          |   |                        | -           |   |                        |   | 2,403,508 |   |
|                            |   |                        | 601,591     |   |                        |   | 3,006,726 |   |
|                            |   |                        |        |   |                        |   |   |   |
| Employee retention (Note 9)     |   |                        | 210,036     |   |                        |   | - |   |
| Future income taxes (Note 13)   |   |                        | 337,747     |   |                        |   | 422,694 |   |
|                            |   |                        | 1,149,374   |   |                        |   | 3,429,420 |   |
| Commitments (Note 11)           |   |                        |        |   |                        |   |   |   |
|                            |   |                        |        |   |                        |   |   |   |
| SHAREHOLDERS’ EQUITY      |   |                        |        |   |                        |   |   |   |
|                            |   |                        |        |   |                        |   |   |   |
| Share capital (Note 10(b))      |   |                        | 40,635,959  |   |                        |   | 20,341,246 |   |
| Contributed surplus             |   |                        | 2,722,678   |   |                        |   | 591,558 |   |
| Deficit                         |   |                        | (20,921,977 | )      |                        |   | (17,742,543 | ) |
|                            |   |                        | 22,436,660  |   |                        |   | 3,190,261 |   |
|                            |   | $                           | 23,586,034  |   |                        | $      | 6,619,681 |   |

| (signed) “Peter N. Cowley” |   | (signed) “Arnold T. Kondrat” |
|----------------------------------------|--------|------------------------------------------|
| Peter N. Cowley, Director              |   | Arnold T. Kondrat, Director              |

----

| LONCOR RESOURCES INC.                                        |
|--------------------------------------------------------------|
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
| (Expressed in U.S. dollars)                                  |
| For the years ended December 31, 2010 and 2009               |

|                                               |   | 2010   |       |   | 2009   |   |
|----------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                               |   |   |       |   |   |   |
| Revenue                                            |   |   |       |   |   |   |
| Royalties                                          |   | $      | -          |   |   | $      | 1,129 |   |
| Expenses                                           |   |   |       |   |   |   |   |   |
| Professional fees                                  |   |   | 238,356    |   |   |   | 227,026 |   |
| Consulting fees (Note 10(d))                       |   |   | 389,679    |   |   |   | 99,446 |   |
| Travel                                             |   |   | 115,517    |   |   |   | 2,959 |   |
| Office and sundry                                  |   |   | 78,023     |   |   |   | 12,946 |   |
| Shareholder relations and promotion                |   |   | 39,002     |   |   |   | 31,478 |   |
| Interest and bank charges                          |   |   | 1,231      |   |   |   | 145,460 |   |
| Management fees (Note 8)                           |   |   | 194,338    |   |   |   | 189,731 |   |
| Salaries                                           |   |   | 585,543    |   |   |   | 49,275 |   |
| Stock based compensation (Note 10(d))              |   |   | 1,004,983  |   |   |   | 197,654 |   |
| Depreciation and amortization                      |   |   | 851        |   |   |   | 6,680 |   |
| Impairment loss (Note 4)                           |   |   | 957,318    |   |   |   | - |   |
| Foreign exchange (gain) loss                       |   |   | (307,662   | )      |   |   | 48,863 |   |
|                                               |   |   | 3,297,179  |   |   |   | 1,011,518 |   |
| Net Loss from Operations                           |   |   | (3,297,179 | )      |   |   | (1,010,389 | ) |
| Loss on sale of trademarks and inventory           |   |   | -          |   |   |   | (4,138 | ) |
| Interest income                                    |   |   | 32,798     |   |   |   | 3,636 |   |
| Net Loss Pre-Tax                                   |   |   | (3,264,381 | )      |   |   | (1,010,891 | ) |
| Income tax (recovery)                              |   |   | 84,947     |   |   |   | - |   |
| Net Loss and Comprehensive Loss for the year       |   | $      | (3,179,434 | )      |   | $      | (1,010,891 | ) |
| Net loss per share (basic and diluted)(Note 10(e)) |   | $      | (0.08      | )      |   | $      | (0.04 | ) |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| CONSOLIDATED STATEMENTS OF CASH FLOWS          |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

|                                                     |   | 2010   |       |   | 2009   |   |
|----------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Cash Provided by (Used for)                              |   |   |       |   |   |   |
| Operations                                               |   |   |       |   |   |   |
| Net loss for the year                                    |   | $      | (3,179,434 | )      |   | $      | (1,010,891 | ) |
| Depreciation and amortization                            |   |   | 851        |   |   |   | 6,680 |   |
| Stock based compensation (Note 10(d))                    |   |   | 1,004,983  |   |   |   | 197,654 |   |
| Stock based compensation – consulting (Note 10(d)) |   |   | 239,843    |   |   |   | 77,955 |   |
| Impairment loss                                          |   |   | 957,318    |   |   |   | - |   |
| Recovery of tax                                          |   |   | (84,947    | )      |   |   | - |   |
| Retention allowance (Note 9)                             |   |   | 210,036    |   |   |   | - |   |
| Loss on disposition of trademarks and inventory          |   |   | -          |   |   |   | 4,138 |   |
| Net change in working capital items other than cash:     |   |   |       |   |   |   | - |   |
| Accrued interest on notes payable                        |   |   | -          |   |   |   | 144,466 |   |
| Advances receivable                                      |   |   | (14,334    | )      |   |   | (2,798 | ) |
| Prepaid expenses                                         |   |   | (67,090    | )      |   |   | (95,481 | ) |
| Due from related parties                                 |   |   | 83,692     |   |   |   | 27,980 |   |
| Accounts payable                                         |   |   | 364,186    |   |   |   | (365,203 | ) |
| Accrued liabilities                                      |   |   | 26,289     |   |   |   | 14,735 |   |
|                                                     |   |   | (458,607   | )      |   |   | (1,000,765 | ) |
| Financing activities                                     |   |   |       |   |   |   |   |   |
| Due to related parties                                   |   |   | (478,140   | )      |   |   | (160,544 | ) |
| Issue of common shares                                   |   |   | 20,720,403 |   |   |   | 2,024,160 |   |
| Repayment of notes payable                               |   |   | (2,403,508 | )      |   |   | - |   |
|                                                     |   |   | 17,838,755 |   |   |   | 1,863,616 |   |
| Investing activities                                     |   |   |       |   |   |   |   |   |
| Sale of trademarks                                       |   |   | -          |   |   |   | 50,000 |   |
| Purchase of capital assets                               |   |   | (647,553   | )      |   |   | (29,781 | ) |
| Exploration expenditures                                 |   |   | (7,818,987 | )      |   |   | (953,349 | ) |
|                                                     |   |   | (8,466,540 | )      |   |   | (933,130 | ) |
| Net increase (decrease) in cash during the year          |   |   | 8,913,608  |   |   |   | (70,279 | ) |
|                                                     |   |   |       |   |   |   |   |   |
| Cash, beginning of the year                              |   |   | 1,536,166  |   |   |   | 1,606,445 |   |
|                                                     |   |   |       |   |   |   |   |   |
| Cash, end of the year                                    |   | $      | 10,449,774 |   |   | $      | 1,536,166 |   |
|                                                     |   |   |       |   |   |   |   |   |
| Supplementary information                                |   |   |       |   |   |   |   |   |
| Interest paid                                            |   | $      | -          |   |   | $      | 17,674 |   |
| Non-cash transactions                                    |   |   |       |   |   |   |   |   |
| Stock based compensation included in mineral properties  |   | $      | 460,604    |   |   | $      | 40,749 |   |
| Amortization included in mineral properties              |   | $      | 125,653    |   |   | $      | 2,361 |   |

----

| LONCOR RESOURCES INC.                                 |
|-------------------------------------------------------|
| CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY |
| (Expressed in U.S. dollars)                           |
| For the years ended December 31, 2010 and 2009        |

|                                               |   | Number ofShares |       |   | Share CapitalAmount (Note 10) |   |       | ContributedSurplus |   |   | Deficit   |   |
|----------------------------------------------------|--------|----------------------|------------|--------|-----------------------------------------|--------|------------|--------------------|--------|--------|-----------|--------|
|                                               |   |                 |       |   |                                    |   |       |               |   |   |      |   |
| December 31, 2008                                  |   |                 | 27,753,247 |   |                                    | $      | 18,317,086 |               |   | $      | 275,200   |   |   | $ | (16,731,652 | ) |
| Stock based compensation                           |   |                 | -          |   |                                    |   | -          |               |   |   | 316,358   |   |   |   | - |   |
| Issued share capital                               |   |                 | 3,000,000  |   |                                    |   | 2,024,160  |               |   |   | -         |   |   |   | - |   |
| Net loss and comprehensive loss for the year       |   |                 | -          |   |                                    |   | -          |               |   |   | -         |   |   |   | (1,010,891 | ) |
|                                               |   |                 |       |   |                                    |   |       |               |   |   |      |   |   |   |   |   |
| December 31, 2009                                  |   |                 | 30,753,247 |   |                                    | $      | 20,341,246 |               |   | $      | 591,558   |   |   | $ | (17,742,543 | ) |
| Issued share capital (Note 10(b))                  |   |                 | 14,166,500 |   |                                    |   | 18,443,418 |               |   |   | -         |   |   |   | - |   |
| Share issue costs (Notes 8 and 10(b))              |   |                 | -          |   |                                    |   | (1,743,289 | )                  |   |   | -         |   |   |   | - |   |
| Warrant exercises (Note 10(c))                     |   |                 | 2,497,998  |   |                                    |   | 3,462,577  |               |   |   |      |   |   |   |   |   |
| Stock based compensation (Note 10(d))              |   |                 | -          |   |                                    |   | -          |               |   |   | 2,131,120 |   |   |   | - |   |
| Compensation option exercise (Notes 10(b) and (c)) |   |                 | -          |   |                                    |   | 132,007    |               |   |   | -         |   |   |   | - |   |
| Net loss and comprehensive loss for the year       |   |                 | -          |   |                                    |   | -          |               |   |   | -         |   |   |   | (3,179,434 | ) |
| December  31, 2010                       |   |                 | 47,417,745 |   |                                    | $      | 40,635,959 |               |   | $      | 2,722,678 |   |   | $ | (20,921,977 | ) |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

| Field camps                   | - straight line over 4 years |
|-------------------------------|------------------------------|
| Field equipment               | - straight line over 4 years |
| Office furniture and fixtures | - straight line over 5 years |
| Office equipment              | - straight line over 4 years |
| Vehicles                      | -straight line over 4 years  |
| Communication equipment       | -straight line over 4 years  |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

|                                        |   | Year endedDecember 31,2010 |      |   | Year endedDecember 31,2009 |   |    | CumulativefromNovember 28,2008 toDecember 31,2010 |   |
|---------------------------------------------|--------|--------------------------------------|-----------|--------|--------------------------------------|--------|---------|------------------------------------------------------------------|--------|
|                                        |   |                                 |      |   |                                 |   |    |                                                             |   |
| Exploration Cost:                           |   |                                 |      |   |                                 |   |    |                                                             |   |
| Field camps - houses                        |   | $                                    | 843,661   |   |                                 | $      | 73,929  |                                                             |   | $ | 917,590 |   |
| Helicopter expenses                         |   |                                 | 1,182,004 |   |                                 |   | -       |                                                             |   |   | 1,182,004 |   |
| Geochemistry                                |   |                                 | 377,373   |   |                                 |   | 22,846  |                                                             |   |   | 400,219 |   |
| Geology                                     |   |                                 | 89,005    |   |                                 |   | 39,119  |                                                             |   |   | 138,624 |   |
| Geophysics                                  |   |                                 | 565       |   |                                 |   | -       |                                                             |   |   | 565 |   |
| Drilling                                    |   |                                 | 841,061   |   |                                 |   | -       |                                                             |   |   | 841,061 |   |
| Consulting fees                             |   |                                 | 213,923   |   |                                 |   | 151,700 |                                                             |   |   | 370,623 |   |
| Professional fees                           |   |                                 | 29,380    |   |                                 |   | 45,200  |                                                             |   |   | 74,580 |   |
| Shareholder relations and promotion         |   |                                 | 307,513   |   |                                 |   | 22,839  |                                                             |   |   | 330,352 |   |
| Travel                                      |   |                                 | 530,732   |   |                                 |   | 253,244 |                                                             |   |   | 784,666 |   |
| Office and sundry                           |   |                                 | 586,826   |   |                                 |   | 57,350  |                                                             |   |   | 644,176 |   |
| Amortization of plant and equipment         |   |                                 | 125,653   |   |                                 |   | 2,361   |                                                             |   |   | 128,122 |   |
| Salaries                                    |   |                                 | 2,362,669 |   |                                 |   | 251,939 |                                                             |   |   | 2,619,608 |   |
|  Stock based compensation (Note 10(d)) |   |                                 | 460,604   |   |                                 |   | 40,749  |                                                             |   |   | 501,353 |   |
|  Interest and bank charges             |   |                                 | 77,556    |   |                                 |   | 16,680  |                                                             |   |   | 95,223 |   |
| Recruitment and training                    |   |                                 | 5,130     |   |                                 |   | -       |                                                             |   |   | 5,130 |   |
| Vehicles                                    |   |                                 | 197,890   |   |                                 |   | -       |                                                             |   |   | 197,890 |   |
| Guest houses                                |   |                                 | 12,208    |   |                                 |   | 15,624  |                                                             |   |   | 27,832 |   |
| Security                                    |   |                                 | 161,491   |   |                                 |   | 2,879   |                                                             |   |   | 164,370 |   |
| Impairment loss                             |   |                                 | (957,318  | )      |                                 |   | -       |                                                             |   |   | (957,318 | ) |
| Mineral properties acquired                 |   |                                 | -         |   |                                 |   | -       |                                                             |   |   | 3,935,658 |   |
|                                        |   |                                 |      |   |                                 |   |    |                                                             |   |   |   |   |
| Total expenditure                           |   | $                                    | 7,447,926 |   |                                 | $      | 996,459 |                                                             |   | $ | 12,402,328 |   |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

|                          |   | Cost   |    |   | AccumulatedDepreciation |   |    | Net BookValue |   |
|-------------------------------|--------|--------|---------|--------|-------------------------|--------|---------|--------------------|--------|
| Field camps                   |   | $      | 237,300 |   |                    | $      | 46,742  |               |   | $ | 190,558 |   |
| Field equipment               |   |   | 34,554  |   |                    |   | 5,781   |               |   |   | 28,773 |   |
| Communication equipment       |   |   | 41,393  |   |                    |   | 7,831   |               |   |   | 33,562 |   |
| Office furniture and fixtures |   |   | 96,525  |   |                    |   | 91,835  |               |   |   | 4,690 |   |
| Office equipment              |   |   | 83,315  |   |                    |   | 14,409  |               |   |   | 68,906 |   |
| Vehicles                      |   |   | 275,967 |   |                    |   | 53,756  |               |   |   | 222,211 |   |
|                          |   | $      | 769,054 |   |                    | $      | 220,354 |               |   | $ | 548,700 |   |

|                          |   | Cost   |    |   | Accumulated Depreciation |   |   | Net BookValue |   |
|-------------------------------|--------|--------|---------|--------|-------------------------------|--------|--------|---------------|--------|
| Field camps                   |   | $      | 19,100  |   |                          | $      | 1,194  |          |   | $ | 17,906 |   |
| Field equipment               |   |   | 2,878   |   |                          |   | 180    |          |   |   | 2,698 |   |
| Office furniture and fixtures |   |   | 92,268  |   |                          |   | 91,224 |          |   |   | 1,044 |   |
| Office equipment              |   |   | 7,255   |   |                          |   | 1,252  |          |   |   | 6,003 |   |
|                          |   | $      | 121,501 |   |                          | $      | 93,850 |          |   | $ | 27,651 |   |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

|                            |   | Cost |   |   | AccumulatedAmortization |   |   | Net BookValue |   |
|---------------------------------|--------|------|--------|--------|-------------------------|--------|--------|--------------------|--------|
| Trademarks, licenses and rights |   | $    | 1      |   |                    | $      | -      |               |   | $ | 1 |   |

|                            |   | Cost |   |   | AccumulatedAmortization |   |   | Net BookValue |   |
|---------------------------------|--------|------|--------|--------|-------------------------|--------|--------|---------------|--------|
| Trademarks, licenses and rights |   | $    | 1      |   |                    | $      | -      |          |   | $ | 1 |   |

| Face value of note as at |   | December 31 , 2010 |   |   | December 31, 2009 |   |
|---------------------------------------------------|--------|-----------------------------------|--------|--------|-----------------------------|--------|
|                                              |   |                              |   |   |                        |   |
| Promissory note 1 (1)                             |   | $                                 | -      |   |                        | $      | 1,333,659 |   |
|                                              |   |                              |   |   |                        |   |   |   |
| Promissory note 2 (2)                             |   |                              | -      |   |                        |   | 835,701 |   |
|                                              |   |                              |   |   |                        |   |   |   |
| Promissory note 3 (3)                             |   |                              | -      |   |                        |   | 234,148 |   |
|                                              |   |                              |   |   |                        |   |   |   |
| Total                                             |   | $                                 | -      |   |                        | $      | 2,403,508 |   |

|   | (1) | This note bore interest at a rate of 8% per annum and was due on demand after December 31, 2009. |
|--------|-----|--------------------------------------------------------------------------------------------------|

|   | (2) | This note bore interest at a rate of 6% per annum and was due on demand after December 31, 2009. |
|--------|-----|--------------------------------------------------------------------------------------------------|

|   | (3) | This note bore interest at a rate of 8% per annum and was due on demand after December 31, 2009. |
|--------|-----|--------------------------------------------------------------------------------------------------|

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

|   | (a) | Authorized Share Capital |
|--------|-----|--------------------------|

|   | (b) | Issued Share Capital – Common Shares |
|--------|-----|--------------------------------------------|

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

|   | (b) | Issued Share Capital – Common Shares (continued) |
|--------|-----|--------------------------------------------------------|

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

| Date ofGrant |   | NumberOutstandingatDecember 31, 2009 |   |   | WarrantsIssuedDuring theperiod |   |      | WarrantsExercised |   |   | NumberOutstandingatDecember 31,2010 |   |   | ExercisePrice (Cdn $) |      |   | ExercisePeriod(months) |   |   | Remaining Contractual Life (months) |   |
|-------------------|--------|------------------------------------------------|--------|--------|-------------------------------------|--------|-----------|-------------------|--------|--------|------------------------------------------|--------|--------|---------------------------------|-----------|--------|------------------------|--------|--------|----------------------------------------------------|--------|
|              |   |                                           |   |   |                                |   |      |              |   |   |                                     |   |   |                            |      |   |                   |   |   |                                               |   |
| 02/18/10          |   |                                           | -      |   |                                |   | 4,083,250 |              |   |   | 400,000                                  |   |   |                            | 3,683,250 |   |                   | $      | 1.45   |                                               |   |   | 24 |   |   |   | 13.5 |   |
| 02/18/10          |   |                                           | -      |   |                                |   | 2,000,000 |              |   |   | 2,000,000                                |   |   |                            | -         |   |                   | $      | 1.45   |                                               |   |   | 24 |   |   |   | - |   |
| 12/16/10          |   |                                           | -      |   |                                |   | 1,000,000 |              |   |   | -                                        |   |   |                            | 1,000,000 |   |                   | $      | 2.30   |                                               |   |   | 24 |   |   |   | 23.5 |   |
|              |   |                                           | -      |   |                                |   | 7,083,250 |              |   |   | 2,400,000                                |   |   |                            | 4,683,250 |   |                   |   |   |                                               |   |   |   |   |   |   |   |   |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

|              |   |                                           |      |   |                                      |   |    | Options outstanding and exercisable |
|-------------------|--------|------------------------------------------------|-----------|--------|-------------------------------------------|--------|---------|----------------------------------------------------|
| Date ofGrant |   | NumberOutstandingatDecember 31, 2009 |      |   | OptionsGrantedDuring the period |   |    | OptionsForfeited                                   |   |   | NumberOutstandingatDecember 31,2010 |   |   | OptionsExercisableatDecember 31,2010 |   |   | ExercisePrice(Cdn $) |   | ExpiryDate |
|              |   |                                           |      |   |                                      |   |    |                                               |   |   |   |   |   |   |   |   |   |   |   |
| 09/30/09          |   |                                           | 1,885,000 |   |                                      |   | -       |                                               |   |   | 50,000 |   |   |   | 1,835,000 |   |   |   | 917,500 |   |   | $ | 1.20 |   | 9/30/14 |
| 10/26/09          |   |                                           | 750,000   |   |                                      |   | -       |                                               |   |   | - |   |   |   | 750,000 |   |   |   | 375,000 |   |   | $ | 1.00 |   | 10/26/14 |
| 03/11/10          |   |                                           | -         |   |                                      |   | 895,000 |                                               |   |   | 75,000 |   |   |   | 820,000 |   |   |   | 205,000 |   |   | $ | 1.25 |   | 03/11/15 |
| 03/23/10          |   |                                           | -         |   |                                      |   | 60,000  |                                               |   |   | - |   |   |   | 60,000 |   |   |   | 15,000 |   |   | $ | 1.25 |   | 03/23/15 |
|              |   |                                           | 2,635,000 |   |                                      |   | 955,000 |                                               |   |   | 125,000 |   |   |   | 3,465,000 |   |   |   | 1,512,500 |   |   |   |   |   |   |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

|   | (i) | risk-free interest rate: 1.65% to 1.90%, which is based on the Bank of Canada Zero Coupon Bond Rate (2009: 1.89% - 1.90%) |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | expected volatility: 156.38% to 156.56%, which is based on the Company’s and other junior mining companies’ historical stock prices (2009: 157.43% - 157.75%) |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | expected life: 2-3 years (2009: - 3 years) |
|--------|-------|--------------------------------------------|

|   | (iv) | expected dividends: $Nil (2009: - $Nil) |
|--------|------|-----------------------------------------|

| Non-vested options         |   | Number ofOptions |       |   | Weightedaverage grantdate fair value(Cdn$) |   |
|---------------------------------|--------|-----------------------|------------|--------|-----------------------------------------------------------|--------|
| Non-vested at December 31, 2009 |   |                  | 2,635,000  |   |                                                      | $      | 0.98 |   |
| Granted                         |   |                  | 955,000    |   |                                                      |   | 0.98 |   |
| Vested                          |   |                  | (1,512,500 | )      |                                                      |   | (0.98 | ) |
| Forfeited                       |   |                  | (125,000   | )      |                                                      |   | (1.01 | ) |
| Non-vested at December 31, 2010 |   |                  | 1,952,500  |   |                                                      | $      | 0.99 |   |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

| 2011   |   | $ | 238,420 |   |
|--------|--------|---|---------|--------|
|   |   | $ | 238,420 |   |

|                             |   | December 31, 2010 |       |   | December 31,2009 |   |
|----------------------------------|--------|-----------------------------|------------|--------|-----------------------|--------|
|                             |   |                        |       |   |                  |   |
| Congo – mineral properties |   | $                           | 12,402,328 |   |                  | $      | 4,954,402 |   |
| Congo – capital assets     |   |                        | 546,358    |   |                  |   | 24,458 |   |
| Canada – capital assets    |   |                        | 2,342      |   |                  |   | 3,193 |   |
| Canada – intangible assets |   |                        | 1          |   |                  |   | 1 |   |
|                             |   | $                           | 12,951,029 |   |                  | $      | 4,982,054 |   |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

|                                                                                      |   | 2010   |       |   | 2009   |   |
|-------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                                                      |   |   |       |   |   |   |
| Statutory tax rate                                                                        |   |   | 31         | %      |   |   | 33 | % |
|                                                                                      |   |   |       |   |   |   |   |   |
| Income tax recovery computed at combined rates                                            |   | $      | (1,011,958 | )      |   | $      | (333,594 | ) |
| Difference between Canadian rates and rates applicable to subsidiary in the United States |   |   | 25         |   |   |   | (48 | ) |
| Expired losses                                                                            |   |   | 782,918    |   |   |   | 171,954 |   |
| Foreign exchange differences                                                              |   |   | (181,507   | )      |   |   | (77,954 | ) |
| Change in tax rate                                                                        |   |   | 43,643     |   |   |   | 61,722 |   |
| Permanent difference relating to non-deductible expenses                                  |   |   | 349,798    |   |   |   | 60,728 |   |
| Change in future tax rates                                                                |   |   | -          |   |   |   | 55,447 |   |
| Change in valuation allowance                                                             |   |   | (67,866    | )      |   |   | 61,745 |   |
| Income tax recovery                                                                       |   | $      | (84,947    | )      |   | $      | — |   |

|                               |   | 2010   |       |   | 2009   |   |
|------------------------------------|--------|--------|------------|--------|--------|--------|
|                               |   |   |       |   |   |   |
| Capital assets                     |   | $      | 29,296     |   |   | $      | $ 27,488 |   |
| Non-capital losses carried forward |   |   | 1,233,044  |   |   |   | 894,316 |   |
| US capital losses                  |   |   | -          |   |   |   | 782,918 |   |
| Other                              |   |   | 376,864    |   |   |   | 2,349 |   |
|                               |   |   | 1,639,204  |   |   |   | 1,707,071 |   |
| Valuation allowance                |   |   | (1,639,204 | )      |   |   | (1,707,071 | ) |
| Net future tax asset               |   | $      | -          |   |   | $      | - |   |

|                     |   | 2010   |    |   | 2009   |   |
|--------------------------|--------|--------|---------|--------|--------|--------|
|                     |   |   |    |   |   |   |
| Mineral properties       |   | $      | 337,747 |   |   | $      | 422,694 |   |
| Net future tax liability |   | $      | 337,747 |   |   | $      | 422,694 |   |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

| 2012   |   | $      | 726,000   |   |
|--------|--------|--------|-----------|--------|
| 2023   |   |   | 34,000    |   |
| 2024   |   |   | 112,000   |   |
| 2025   |   |   | 217,000   |   |
| 2026   |   |   | 342,000   |   |
| 2027   |   |   | 173,000   |   |
| 2028   |   |   | 261,000   |   |
| 2029   |   |   | 884,000   |   |
| 2030   |   |   | 679,000   |   |
|   |   | $      | 3,428,000 |   |

| 2022   |   | $      | 102,000   |   |
|--------|--------|--------|-----------|--------|
| 2023   |   |   | 277,000   |   |
| 2024   |   |   | 236,000   |   |
| 2025   |   |   | 39,000    |   |
| 2026   |   |   | 158,000   |   |
| 2027   |   |   | 246,000   |   |
| 2028   |   |   | 8,500     |   |
| 2029   |   |   | 5,400     |   |
| 2030   |   |   | 1,200     |   |
|   |   | $      | 1,073,100 |   |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

|                                                 |   | Canadian dollars |      |
|------------------------------------------------------|--------|-----------------------|-----------|
| Cash                                                 |   |                  | 1,682,245 |   |
| Prepaids                                             |   |                  | 27,636    |   |
| Accounts payable                                     |   |                  | (116,415  | ) |
| Total foreign currency net working capital           |   |                  | 1,593,466 |   |
| US$ exchange rate                                    |   |                  | 1.0054    |   |
| Total foreign currency net working capital in US$    |   | $                     | 1,602,070 |   |
| Impact of a 10% strengthening of the US$ on net loss |   | $                     | 160,207   |   |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

|                        |   | December 31, 2010 |       |   | December 31, 2009 |   |
|-----------------------------|--------|-----------------------------|------------|--------|-----------------------------|--------|
|                        |   |                        |       |   |                        |   |
| Cash                        |   | $                           | 10,449,774 |   |                        | $      | 1,536,166 |   |
| Advances receivable         |   |                        | 17,132     |   |                        |   | 2,798 |   |
| Advances to related parties |   |                        | 2,346      |   |                        |   | - |   |
|                        |   | $                           | 10,469,252 |   |                        | $      | 1,538,964 |   |

|   | · | Quoted prices for similar assets/liabilities in active markets; |
|--------|--------|-----------------------------------------------------------------|

|   | · | Quoted prices for identical or similar assets in non-active markets (few transactions, limited information, non-current prices, high variability over time); |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Inputs other than quoted prices that are observable for the asset/liability (e.g. interest rates, yield curves, volatilities, default rates, etc.); and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Inputs that are derived principally from or corroborated by other observable market data. |
|--------|--------|-------------------------------------------------------------------------------------------|

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

| December 31, 2010 |   | Fair Value Measurements at Reporting Date Using: |       |
|-------------------|--------|--------------------------------------------------|------------|
| Assets:           |   | Level 1                                          |       | Level 2 |   | Level 3 |   |
| Cash              |   | $                                                | 10,449,774 |   |   — |   |   | — |   |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

| 17. | GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES |
|-----|---------------------------------------------------------------|

|   | (a) | Mineral Properties |
|--------|-----|--------------------|

|   | (b) | Fair Value of Warrants |
|--------|-----|------------------------|

|   | (i) | risk-free interest rate: 1.54% to 1.76%, which is based on the Bank of Canada Zero Coupon Bond Rate |
|--------|-----|-----------------------------------------------------------------------------------------------------|

|   | (ii) | expected volatility: 134.02% to 156.56%, which is based on the Company’s historical stock prices |
|--------|------|--------------------------------------------------------------------------------------------------------|

|   | (iii) | expected life: 1-2 years |
|--------|-------|--------------------------|

|   | (iv) | expected dividends: $Nil |
|--------|------|--------------------------|

|   | (c) | Recently issued United States Accounting Standards |
|--------|-----|----------------------------------------------------|

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

| 17. | GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES (Continued) |
|-----|---------------------------------------------------------------------------|

|   | (d) | The impact of the foregoing on the consolidated financial statements is as follows: |
|--------|-----|-------------------------------------------------------------------------------------|

| For the years ended December 31         |   | 2010   |        |   | 2009   |   |
|-----------------------------------------|--------|--------|-------------|--------|--------|--------|
| Net loss for the year per Canadian GAAP |   | $      | (3,179,434  | )      |   | $      | (1,010,891 | ) |
| Mineral Properties (Note a)             |   |   | (8,405,244  | )      |   |   | (996,459 | ) |
| Income tax recovery (Note a)            |   |   | (84,947     | )      |   |   | - |   |
| Fair value of Warrants (Note b)         |   |   | (2,405,857  | )      |   |   | - |   |
| Loss per U.S. GAAP                      |   |   | (14,075,482 | )      |   |   | (2,007,350 | ) |
| Total comprehensive loss per U.S. GAAP  |   | $      | (14,075,482 | )      |   | $      | (2,007,350 | ) |
| Loss per share (basic and diluted)      |   | $      | (0.34       | )      |   | $      | (0.07 | ) |

|                                                                |   | December 31, 2010 |        |   | December 31, 2009 |   |
|---------------------------------------------------------------------|--------|-------------------|-------------|--------|-------------------|--------|
|                                                                |   |              |        |   |              |   |
| Total assets per Canadian GAAP                                      |   | $                 | 23,586,034  |   |              | $      | 6,619,681 |   |
| Mineral Properties (Note a)                                         |   |              | (12,402,328 | )      |              |   | (4,954,402 | ) |
|                                                                |   |              |        |   |              |   |   |   |
| Total assets per U.S. GAAP                                          |   | $                 | 11,183,706  |   |              | $      | 1,665,279 |   |
|                                                                |   |              |        |   |              |   |   |   |
| Total liabilities per Canadian GAAP                                 |   | $                 | 1,149,374   |   |              | $      | 3,429,420 |   |
| Future income taxes (Note a)                                        |   |              | (337,747    | )      |              |   | (422,694 | ) |
| Fair value of Warrants (Note b)                                     |   |              | 6,006,322   |   |              |   | - |   |
| Total liabilities per U.S. GAAP                                     |   | $                 | 6,817,949   |   |              | $      | 3,006,726 |   |
|                                                                |   |              |        |   |              |   |   |   |
| Shareholders’ equity per Canadian GAAP                        |   | $                 | 22,436,660  |   |              | $      | 3,190,261 |   |
| Mineral Properties (Note a)                                         |   |              | (12,402,328 | )      |              |   | (4,954,402 | ) |
| Future income taxes (Note a)                                        |   |              | 337,747     |   |              |   | 422,694 |   |
| Fair Value of Warrants (Note b)                                     |   |              | (6,006,322  | )      |              |   | - |   |
|                                                                |   |              |        |   |              |   |   |   |
| Total shareholders’ equity per U.S. GAAP                      |   | $                 | 4,365,757   |   |              | $      | (1,341,447 | ) |
|                                                                |   |              |        |   |              |   |   |   |
| Total liabilities and shareholders’ equity per U.S. GAAP |   | $                 | 11,183,706  |   |              | $      | 1,665,279 |   |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

| For the year ended December 31, |   | 2010   |       |   | 2009   |   |
|----------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Cash flow provided by (used in)                          |   |   |       |   |   |   |
|                                                     |   |   |       |   |   |   |
| Operating activities per Canadian GAAP                   |   | $      | (458,607   | )      |   | $      | (1,000,765 | ) |
|                                                     |   |   |       |   |   |   |   |   |
| Mineral Properties (Note a)                              |   |   | (7,818,987 | )      |   |   | (953,349 | ) |
|                                                     |   |   |       |   |   |   |   |   |
| Operating activities per U.S. GAAP                       |   |   | (8,277,594 | )      |   |   | (1,954,114 | ) |
|                                                     |   |   |       |   |   |   |   |   |
| Investing activities per Canadian GAAP                   |   |   | (8,466,540 | )      |   |   | (933,130 | ) |
| Mineral Properties (Note a)                              |   |   | 7,818,987  |   |   |   | 953,349 |   |
|                                                     |   |   |       |   |   |   |   |   |
| Investing activities per U.S. GAAP                       |   |   | (647,553   | )      |   |   | 20,219 |   |
|                                                     |   |   |       |   |   |   |   |   |
| Financing activities per Canadian & U.S. GAAP        |   |   | 17,838,755 |   |   |   | 1,863,616 |   |
|                                                     |   |   |       |   |   |   |   |   |
| Net increase (decrease) in cash during the year          |   |   | 8,913,608  |   |   |   | (70,279 | ) |
|                                                     |   |   |       |   |   |   |   |   |
| Cash, beginning of year                                  |   |   | 1,536,166  |   |   |   | 1,606,445 |   |
|                                                     |   |   |       |   |   |   |   |   |
| Cash, end of year                                        |   | $      | 10,449,774 |   |   | $      | 1,536,166 |   |

----

| LONCOR RESOURCES INC.                          |
|------------------------------------------------|
| Notes to the consolidated financial statements |
| (Expressed in U.S. dollars)                    |
| For the years ended December 31, 2010 and 2009 |

|   | (e) | Exploration Stage Company |
|--------|-----|---------------------------|

| Exploration expenses                             |   | $      | (11,950,667 | )      |
|--------------------------------------------------|--------|--------|-------------|--------|
| Reversal of fair value increment (Note a)        |   |   | (1,408,979  | )      |
| Reversal of future income taxes (Note a)         |   |   | 422,694     |   |
| Fair Value of Warrants (Note b)                  |   |   | (2,405,857  | )      |
| General and administrative expenses              |   |   | (4,026,262  | )      |
| Interest income                                  |   |   | 36,486      |   |
| Net loss to December 31, 2010, being the         |   |   |        |   |
| deficit accumulated during the exploration stage |   | $      | (19,332,585 | )      |

| Cash flows used in operating activities       |   | $      | (12,830,476 | )      |
|-----------------------------------------------|--------|--------|-------------|--------|
| Cash flows provided from investing activities |   |   | (651,919    | )      |
| Cash flows provided by financing activities   |   |   | 23,932,169  |   |
| Cash, December 31, 2010                       |   | $      | 10,449,774  |   |

|   | (f) | Income Statement |
|--------|-----|------------------|

|   | (g) | Income Taxes |
|--------|-----|--------------|

----

|   | (h) | Fair Value Hierarchy |
|--------|-----|----------------------|

| December 31, 2010 Liabilities: |   |  Level 1 |   |   | Level 2 |    |   | Level 3 |   |
|-------------------------------------|--------|---------------|--------|--------|---------|---------|--------|---------|--------|
|  Warrants                      |   | —       |   |   |    | — |   |    | $      | 6,006,322 |   |

| December 31, 2010(Level 3) |   | Balancebeginning of year |   |   | Issuance during the year |   |      | Reclassification of liabilitywarrants to equity |   |   | Loss recognized change in fair value |   |   | Balance end of year |      |
|----------------------------|--------|--------------------------|--------|--------|-------------------------------|--------|-----------|------------------------------------------------------|--------|--------|--------------------------------------|--------|--------|--------------------------|-----------|
|  Warrants             |   | $                        | -      |   |                          | $      | 6,630,487 |                                                 |   | $      | (3,030,021                           | )      |   | $                        | 2,405,857 |   |   | $ | 6,006,322 |   |

----