----

----

----

----

----

----

----

|                                             | December 31, 2011 |    | December 31, 2010 |   | January 1, 2010 |   |
|--------------------------------------------------|-------------------|---------|-------------------|--------|-----------------|--------|
|                                             |              |    | (Note 21)         |   | (Note 21)       |   |
| ASSETS                                           |              |    |              |   |            |   |
| Current                                          |              |    |              |   |            |   |
| Cash and cash equivalents (Note 3)               | $                 | 2,975   |              | $      | 4,464           |   | $ | 5,197 |   |
| Short-term investments (Note 4)                  |              | 5,407   |              |   | 2,900           |   |   | 2,246 |   |
| Marketable securities (Note 5)                   |              | 13,707  |              |   | 39,400          |   |   | 15,382 |   |
| Other receivables and prepaid expenses           |              | 101     |              |   | 135             |   |   | 52 |   |
|                                             |              |    |              |   |            |   |   |   |   |
| Total Current Assets                             |              | 22,190  |              |   | 46,899          |   |   | 22,877 |   |
|                                             |              |    |              |   |            |   |   |   |   |
| Other long-term assets (Note 6)                  |              | 739     |              |   | 739             |   |   | 739 |   |
| Property, plant and equipment (Note 7)           |              | 1,063   |              |   | 1,272           |   |   | 983 |   |
| Exploration and evaluation assets (Note 8)       |              | 4,694   |              |   | 4,498           |   |   | 4,388 |   |
|                                             |              |    |              |   |            |   |   |   |   |
| Total Assets                                     | $                 | 28,686  |              | $      | 53,408          |   | $ | 28,987 |   |
|                                             |              |    |              |   |            |   |   |   |   |
| LIABILITIES                                      |              |    |              |   |            |   |   |   |   |
| Current                                          |              |    |              |   |            |   |   |   |   |
| Accounts payable                                 | $                 | 60      |              | $      | 16              |   | $ | 189 |   |
| Accrued and other liabilities                    |              | 955     |              |   | 503             |   |   | 212 |   |
|                                             |              |    |              |   |            |   |   |   |   |
| Total Current Liabilities                        |              | 1,015   |              |   | 519             |   |   | 401 |   |
|                                             |              |    |              |   |            |   |   |   |   |
| Decommissioning liability (Note 9)               |              | 1,907   |              |   | 1,654           |   |   | 1,505 |   |
|                                             |              |    |              |   |            |   |   |   |   |
| Total Liabilities                                |              | 2,922   |              |   | 2,173           |   |   | 1,906 |   |
|                                             |              |    |              |   |            |   |   |   |   |
| SHAREHOLDERS' EQUITY                             |              |    |              |   |            |   |   |   |   |
| Share capital (Note 10)                          |              | 77,052  |              |   | 70,314          |   |   | 65,583 |   |
| Reserves (Note 11)                               |              | 10,750  |              |   | 9,597           |   |   | 8,668 |   |
| Deficit                                          |              | (62,038 | )                 |   | (28,676         | )      |   | (47,170 | ) |
|                                             |              |    |              |   |            |   |   |   |   |
| Total Shareholders’ Equity                 |              | 25,764  |              |   | 51,235          |   |   | 27,081 |   |
|                                             |              |    |              |   |            |   |   |   |   |
| Total Liabilities and Shareholders’ Equity | $                 | 28,686  |              | $      | 53,408          |   | $ | 28,987 |   |
| Commitments (Note 18)                            |              |    |              |   |            |   |   |   |   |
|                                             |              |    |              |   |            |   |   |   |   |
|                                             |              |    |              |   |            |   |   |   |   |

| Approved by the Board of Directors:  |                          |   |
|-------------------------------------------|-------------------------------|--------|
|                                      | “John F. Kearney” |   | “Brian A. Atkins, CA” |
|                                      | Director                      |   | Director |

----

|                                            | Year ended December 31, |        |
|-------------------------------------------------|-------------------------|-------------|
|                                            | 2011                    |        | 2010 |   |
|                                            |                    |        | (Note 21) |   |
| Income                                          |                    |        |   |   |
| Investment income                               | $                       | 50          |   | $ | 48 |   |
|                                            |                    |        |   |   |   |   |
| Expenses                                        |                    |        |   |   |   |   |
| Depreciation                                    |                    | 22          |   |   | 23 |   |
| Exploration and evaluation (Note 12)            |                    | 5,489       |   |   | 4,100 |   |
| Listing and regulatory                          |                    | 70          |   |   | 57 |   |
| Management and directors                        |                    | 672         |   |   | 660 |   |
| Office and general                              |                    | 730         |   |   | 407 |   |
| Professional                                    |                    | 279         |   |   | 271 |   |
| Project evaluation                              |                    | 27          |   |   | 46 |   |
| Shareholder and investor communications         |                    | 398         |   |   | 278 |   |
| Share-based compensation                        |                    | 238         |   |   | 951 |   |
|                                            |                    | 7,925       |   |   | 6,793 |   |
|                                            |                    |        |   |   |   |   |
| Other income (expenses)                         |                    |        |   |   |   |   |
| Finance costs (Note 9)                          |                    | (58         | ) |   | (58 | ) |
| Foreign exchange loss                           |                    | (13         | ) |   | (44 | ) |
| Gain (loss) on marketable securities (Note 5)   |                    | (25,693     | ) |   | 25,341 |   |
| Tax deduction recovery (Note 13)                |                    | 277         |   |   | - |   |
|                                            |                    | (25,487     | ) |   | 25,239 |   |
|                                            |                    |        |   |   |   |   |
| Net income (loss) for the year                  |                    | (33,362     | ) |   | 18,494 |   |
|                                            |                    |        |   |   |   |   |
| Other comprehensive income (loss)               |                    | -           |   |   | - |   |
|                                            |                    |        |   |   |   |   |
| Comprehensive income (loss) for the year        | $                       | (33,362     | ) | $ | 18,494 |   |
|                                            |                    |        |   |   |   |   |
|                                            |                    |        |   |   |   |   |
| Net income (loss) per share - basic and diluted | $                       | (0.26       | ) | $ | 0.15 |   |
| Weighted average number of shares outstanding   |                    |        |   |   |   |   |
| Basic                                           |                    | 130,816,879 |   |   | 122,561,368 |   |
| Dilutive effect of stock options and warrants   |                    | -           |   |   | 2,162,940 |   |
| Diluted                                         |                    | 130,816,879 |   |   | 124,724,308 |   |

----

|                                                         | Year ended December 31, |    |
|--------------------------------------------------------------|-------------------------|---------|
|                                                         | 2011                    |    | 2010 |   |
|                                                         |                    |    | (Note 21) |   |
| Operating Activities                                         |                    |    |   |   |
| Net income (loss) for the year                               | $                       | (33,362 | ) | $ | 18,494 |   |
| Reclamation expenditures                                     |                    | -       |   |   | (23 | ) |
| Adjustment for items not involving cash:                     |                    |    |   |   |   |   |
| Accretion and depreciation                                   |                    | 298     |   |   | 216 |   |
| (Gain) loss on marketable securities (Note 5)                |                    | 25,693  |   |   | (25,341 | ) |
| Tax deduction recovery (Note 13)                             |                    | (277    | ) |   | - |   |
| Unrealized foreign exchange                                  |                    | -       |   |   | 44 |   |
| Share-based compensation                                     |                    | 238     |   |   | 951 |   |
| Change in non-cash working capital items:                    |                    |    |   |   |   |   |
| Other receivables and prepaid expenses                       |                    | 34      |   |   | (83 | ) |
| Accounts payable and accrued liabilities                     |                    | 357     |   |   | (197 | ) |
|                                                         |                    | (7,019  | ) |   | (5,939 | ) |
|                                                         |                    |    |   |   |   |   |
| Financing Activities                                         |                    |    |   |   |   |   |
| Capital stock issued                                         |                    | 8,486   |   |   | 5,000 |   |
| Issuance costs                                               |                    | (564    | ) |   | (465 | ) |
| Capital stock issued on exercise of stock options            |                    | 111     |   |   | 277 |   |
| Capital stock issued on exercise of warrants                 |                    | 36      |   |   | 212 |   |
|                                                         |                    | 8,069   |   |   | 5,024 |   |
|                                                         |                    |    |   |   |   |   |
| Investing Activities                                         |                    |    |   |   |   |   |
| Short-term investments                                       |                    | (2,507  | ) |   | (654 | ) |
| Marketable securities                                        |                    | -       |   |   | 1,323 |   |
| Property, plant and equipment                                |                    | (32     | ) |   | (443 | ) |
|                                                         |                    | (2,539  | ) |   | 226 |   |
|                                                         |                    |    |   |   |   |   |
| Impact of exchange rate changes on cash and cash equivalents |                    | -       |   |   | (44 | ) |
|                                                         |                    |    |   |   |   |   |
| Net change in cash and cash equivalents                      | $                       | (1,489  | ) | $ | (733 | ) |
|                                                         |                    |    |   |   |   |   |
|                                                         |                    |    |   |   |   |   |
| Cash and cash equivalents, beginning of year                 | $                       | 4,464   |   | $ | 5,197 |   |
|                                                         |                    |    |   |   |   |   |
| Net change in cash and cash equivalents                      |                    | (1,489  | ) |   | (733 | ) |
|                                                         |                    |    |   |   |   |   |
| Cash and cash equivalents, end of year                       | $                       | 2,975   |   | $ | 4,464 |   |
|                                                         |                    |    |   |   |   |   |
|                                                         |                    |    |   |   |   |   |

----

|                                                  | Common shares |                                              |                                                   |                                     |
|-------------------------------------------------------|---------------|---------------------------------------------------|--------------------------------------------------------|------------------------------------------|
|                                                  | Number        | Amount                                            | Reserves                                               | Deficit                                  | Total |
| Balance, January 1, 2010                              | 118,900,563   | $       65,583 | $        8,668 | $     (47,170)) | $       27,081 |
| Issue of shares between $0.40 and $0.70 per share     | 9,821,429     | 4,723                                             | -                                                      | -                                        | 4,723 |
| Share issuance costs                                  | -             | (503))                                            | -                                                      | -                                        | (503)) |
| Share purchase warrants                               | -             | (195))                                            | 195                                                    | -                                        | - |
| Exercise of options between $0.23 and $0.45 per share | 1,196,250     | 397                                               | (120))                                                 | -                                        | 277 |
| Exercise of warrants at $0.40 per share               | 530,250       | 309                                               | (97))                                                  | -                                        | 212 |
| Share-based compensation                              | -             | -                                                 | 951                                                    | -                                        | 951 |
| Net income for the year                               | -             | -                                                 | -                                                      | 18,494                                   | 18,494 |
| Balance, December 31, 2010                            | 130,448,492   | 70,314                                            | 9,597                                                  | (28,676))                                | 51,235 |
| Issue of shares between $0.67 and $0.75 per share     | 12,275,000    | 8,191                                             | -                                                      | -                                        | 8,191 |
| Share issuance costs                                  | -             | (685))                                            | -                                                      | -                                        | (685)) |
| Share purchase warrants                               | -             | (989))                                            | 989                                                    | -                                        | - |
| Exercise of options between $0.23 and $0.45 per share | 295,000       | 168                                               | (57))                                                  | -                                        | 111 |
| Exercise of warrants at $0.40 per share               | 90,620        | 53                                                | (17))                                                  | -                                        | 36 |
| Share-based compensation                              | -             | -                                                 | 238                                                    | -                                        | 238 |
| Net loss for the year                                 | -             | -                                                 | -                                                      | (33,362))                                | (33,362)) |
| Balance, December 31, 2011                            | 143,109,112   | $       77,052 | $      10,750            | $     (62,038)) | $       25,764 |

----

| 2. | Significant Accounting Policies |
|----|---------------------------------|

| (a)   | Statement of Compliance |
|-----------------|-------------------------|

| (b)   | Basis of Preparation |
|-----------------|----------------------|

----

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

| (c)   | Significant Accounting Judgments, Estimates and Assumptions |
|-----------------|-------------------------------------------------------------|

| (d)   | Financial Assets |
|-----------------|------------------|

----

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

| (e)   | Impairment of Non-Financial Assets |
|-----------------|------------------------------------|

| (f)   | Cash and Cash Equivalents |
|-----------------|---------------------------|

| (g)   | Short-term Investments |
|-----------------|------------------------|

| (h)   | Marketable Securities |
|-----------------|-----------------------|

| (i)   | Foreign Currency Transactions |
|-----------------|-------------------------------|

----

| (j)   | Property, Plant and Equipment (“PPE”) |
|-----------------|---------------------------------------------------|

| Mining equipment (including pilot plant) | 30% |
|------------------------------------------|-----|
| Office equipment                         | 20% |

| (k)   | Exploration and Evaluation Assets |
|-----------------|-----------------------------------|

| (l)   | Financial Liabilities |
|-----------------|-----------------------|

----

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

| (m)   | Decommissioning, Restoration and Similar Liabilities |
|-----------------|------------------------------------------------------|

| (n)   | Flow-through Shares |
|-----------------|---------------------|

| (o)   | Revenue Recognition |
|-----------------|---------------------|

| (p)   | Exploration and Evaluation Costs |
|-----------------|----------------------------------|

| (q)   | Share-based Compensation |
|-----------------|--------------------------|

----

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

| (r)   | Income Taxes |
|-----------------|--------------|

| (s)   | Earnings (Loss) Per Common Share |
|-----------------|----------------------------------|

| (t)   | IFRS Standards Adopted |
|-----------------|------------------------|

| IFRS 1 (Amendment) | First-time Adoption of IFRS          |
|--------------------|--------------------------------------|
| IFRS 7 (Amendment) | Financial Instruments: Disclosure    |
| IAS 1 (Amendment)  | Presentation of Financial Statements |
| IAS 24 (Amendment) | Related Party Disclosures            |
| IAS 34 (Amendment) | Interim Financial Reporting          |

| (u)   | IFRS Standards Issued But Not Yet Effective |
|-----------------|---------------------------------------------|

| IFRS 7 (Amendment) | Financial Instruments : Disclosure (1)                        |
|--------------------|---------------------------------------------------------------|
| IFRS 9             | Financial Instruments (5)                                     |
| IFRS 10            | Consolidated Financial Statements (4)                         |
| IFRS 11            | Joint Arrangements (4)                                        |
| IFRS 12            | Disclosure of Interests in Other Entities (4)                 |
| IFRS 13            | Fair Value Measurement (4)                                    |
| IAS 1 (Amendment)  | Presentation of Financial Statements (3)                      |
| IAS 12 (Amendment) | Income Taxes (2)                                              |
| IAS 19 (Amendment) | Employee Benefits (4)                                         |
| IAS 27 (Amendment) | Separate Financial Statements (4)                             |
| IAS 28 (Amendment) | Investments in Associates and Joint Ventures (4)              |
| IFRIC 20           | Stripping Costs in the Production Phase of a Surface Mine (4) |

| (1)   | For annual periods beginning on or after July 1, 2011 |
|-----------------|-------------------------------------------------------|

| (2)   | For annual periods beginning on or after January 1, 2012 |
|-----------------|----------------------------------------------------------|

| (3)   | For annual periods beginning on or after July 1, 2012 |
|-----------------|-------------------------------------------------------|

| (4)   | For annual periods beginning on or after January 1, 2013 |
|-----------------|----------------------------------------------------------|

| (5)   | For annual periods beginning on or after January 1, 2015 |
|-----------------|----------------------------------------------------------|

|                       | December 31, 2011       |         | December 31, 2010 |   | January 1, 2010         |
|----------------------------|-------------------------|--------------|-------------------|--------|-------------------------|
|                       |   # of Shares | OriginalCost | FairValue         |   |   # of Shares | OriginalCost | FairValue |   |   # of Shares | OriginalCost | FairValue |
| Rio Tinto                  | -                       | -            | -                 |   | -                       | - | - |   | 6,000 | $    213 | $    340 |
|  Vatukoula Gold Mines | 12,573,380              | $10,142      | $13,707           |   | 12,573,380              | $10,142 | $39,400 |   | 12,573,380 | 10,142 | 14,039 |
| Zazu Metal Corp.           | -                       | -            | -                 |   | -                       | - | - |   | 3,400,000 | 646 | 1,003 |
|                       |                    | $10,142      | $13,707           |   |                    | $10,142 | $39,400 |   |   | $11,001 | $15,382 |

----

|                     | Mining Equipment (1)                           | Office Equipment                                    | Leasehold Improvements                              | Prairie Creek Plant & Mill                           | Total                                          |
|--------------------------|------------------------------------------------|-----------------------------------------------------|-----------------------------------------------------|----------------------------------------------------------|------------------------------------------------|
| Cost                     |                                           |                                                |                                                |                                                     |                                           |
| At January 1, 2010       | $     1,192           | $       138      | $        60 | $       500           | $     1,890           |
| Additions                | 431                                            | 13                                                  | -                                                   | -                                                        | 444                                            |
| Disposals                | -                                              | -                                                   | -                                                   | -                                                        | -                                              |
| at December 31, 2010     | 1,623                                          | 151                                                 | 60                                                  | 500                                                      | 2,334                                          |
| Additions                | 24                                             | 8                                                   | -                                                   | -                                                        | 32                                             |
| Disposals                | -                                              | -                                                   | -                                                   | -                                                        | -                                              |
| at December 31, 2011     | $     1,647           | $       159      | $        60 | $     500                       | $     2,366           |
|                     |                                           |                                                |                                                |                                                     |                                           |
| Accumulated Depreciation |                                           |                                                |                                                |                                                     |                                           |
| at January 1, 2010       | $       775 | $       102      | $        30 | $         - | 907                                            |
| Depreciation charge      | 132                                            | 11                                                  | 12                                                  | -                                                        | 155                                            |
| Disposals                | -                                              | -                                                   | -                                                   | -                                                        | -                                              |
| at December 31, 2010     | 907                                            | 113                                                 | 42                                                  | -                                                        | 1,062                                          |
| Depreciation charge      | 219                                            | 11                                                  | 11                                                  | -                                                        | 241                                            |
| Disposals                | -                                              | -                                                   | -                                                   | -                                                        | -                                              |
| at December 31, 2011     | $    1,126                 | $       124      | $        53 | $         - | $     1,303           |
|                     |                                           |                                                |                                                |                                                     |                                           |
| Net Book Value           |                                           |                                                |                                                |                                                     |                                           |
| at January 1, 2010       | $       417 | $        36 | $        30 | $       500           | $       983 |
| at December 31, 2010     | 716                                            | 38                                                  | 18                                                  | 500                                                      | 1,272                                          |
| at December 31, 2011     | 521                                            | 35                                                  | 7                                                   | 500                                                      | 1,063                                          |
|                     |                                           |                                                |                                                |                                                     |                                           |
| (1)Includes pilot plant  |                                           |                                                |                                                |                                                     |                                           |

----

|                             | December 31, 2011                    |   | December 31, 2010                    |   | January 1, 2010                      |
|----------------------------------|--------------------------------------|--------|--------------------------------------|--------|--------------------------------------|
| Prairie Creek mineral use rights | $     3,158 |   | $     3,158 |   | $     3,158 |
| Decommissioning asset            | 1,536                                |   | 1,340                                |   | 1,230                                |
|                             | $     4,694 |   | $     4,498 |   | $     4,388 |

|                              |   | December 31, 2011                    |   | December 31, 2010                    |
|-----------------------------------|--------|--------------------------------------|--------|--------------------------------------|
| Balance – beginning of year |   | $     1,654 |   | $     1,505 |
| Reclamation activity              |   | -                                    |   | (23)                                 |
| Accretion expense                 |   | 58                                   |   | 62                                   |
| Change in estimates               |   | 195                                  |   | 110                                  |
| Balance – end of year       |   | $     1,907 |   | $     1,654 |

----

| 10. | Share Capital |
|-----|---------------|

| (a)   | During the year ended December 31, 2011: |
|-----------------|------------------------------------------|

| i.   | 295,000 options were exercised at prices between $0.23 and $0.45 per common share for proceeds of $111,000. |
|----------------|-------------------------------------------------------------------------------------------------------------|

| ii.   | 90,620 warrants were exercised at a price of $0.40 per common share for proceeds of $36,000. |
|-----------------|----------------------------------------------------------------------------------------------|

| iii.   | Effective June 1, 2011, the Company did not renew its normal course issuer bid (the “Bid”). During the year to date period ended June 1, 2011, the Company did not purchase any common shares pursuant to the Bid. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| iv.   | On December 30, 2011, the Company issued by way of private placement 3,275,000 flow-through shares on a brokered basis at $0.75 per share, for aggregate gross proceeds of $2,456,000. The agent to the private placement was paid a commission of 6.5% of the gross proceeds from the offering and received broker’s warrants to acquire 212,875 non-flow-through shares at any time until June 30, 2013 at a price of $0.75 per share. Net proceeds from the issuance were $2,199,000 after issuance costs comprised of the agent’s commission of $160,000 and other issuance costs of $97,000. The Company also recognized non-cash costs for the fair value of the broker’s warrants granted of $45,000. The sale of tax deductions of $295,000 is deferred and presented as other liabilities. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| v.   | On December 30, 2011, the Company issued by way of non-brokered private placement 9,000,000 units (“Units”) to Zhongrun International Mining Co. Ltd. (“Zhongrun”) at $0.67 per Unit, for aggregate gross proceeds of $6,030,000. Each Unit consists of one common share and one-half of one common share purchase warrant. Each whole warrant will entitle the holder to purchase one common share of the Company at any time until December 30, 2013 at a price of $0.90 per common share. In connection with the Zhongrun financing the Company paid a finder’s fee to an arm’s length intermediary. Net proceeds from the issuance were $5,598,000 after issuance costs comprised of the finder’s fee of $302,000 and other issuance costs of $130,000. The Company allocated $945,000 of the gross proceeds to the fair value of the share purchase warrants. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | During the year ended December 31, 2010: |
|-----------------|------------------------------------------|

| i.   | Effective June 1, 2010, the Company renewed its normal course issuer bid pursuant to which the Company may purchase up to a maximum of 5,000,000 common shares in the capital of the Company. The Bid may be carried out from June 1, 2010 for a period of up to one year. During the year ended December 31, 2010, the Company did not purchase any common shares pursuant to the Bid. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ii.   | On June 30, 2010, the Company issued by way of private placement 6,250,000 flow-through shares on a brokered basis at $0.40 per share, for aggregate gross proceeds of $2,500,000. The agent to the private placement was paid a commission of 7% of the gross proceeds from the offering and received broker’s warrants to acquire 625,000 non-flow-through shares at any time until June 30, 2012 at a price of $0.40 per share. Net proceeds from the issuance were $2,244,000 after issuance costs comprised of the agent’s commission of $175,000 and other issuance costs of $81,000. The Company also recognized non-cash costs consisting of the fair value of the broker’s warrants granted of $114,000 and the sale of tax deductions of $63,000. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| iii.   | On December 23, 2010, the Company issued by way of private placement 3,371,429 flow-through shares on a brokered basis and 200,000 flow-through shares on a non-brokered basis at $0.70 per share, for aggregate gross proceeds of $2,500,000. The agent to the private placement was paid a commission of 7% of the gross proceeds from the offering and received broker’s warrants to acquire 337,143 non-flow-through shares at any time until December 23, 2012 at a price of $0.70 per share. Net proceeds from the issuance were $2,254,000 after issuance costs comprised of the agent’s commission of $165,000 and other issuance costs of $81,000. The Company also recognized non-cash costs consisting of the fair value of the broker’s warrants granted of $81,000 and the sale of tax deductions of $214,000. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                           | Year ended December 31, 2011 |   | Year ended December 31, 2010   |
|--------------------------------|------------------------------|--------|--------------------------------|
|                           | Number of Options            |   | Weighted AverageExercise Price |   | Number of Options |   | Weighted AverageExercise Price |
| Outstanding, beginning of year | 7,500,000                    |   | $  0.46              |   | 6,650,000 |   | $  0.50 |
| Granted                        | 300,000                      |   | 0.71                           |   | 4,930,000 |   | 0.45 |
| Exercised                      | (295,000)                    |   | 0.38                           |   | (1,196,250) |   | 0.23 |
| Expired                        | (870,000)                    |   | 0.90                           |   | (2,840,000) |   | 0.65 |
| Forfeited                      | (225,000)                    |   | 0.45                           |   | (43,750) |   | 0.45 |
| Outstanding, end of year       | 6,410,000                    |   | $  0.41              |   | 7,500,000 |   | $  0.46 |

----

|             | Options Outstanding |   | Options Exercisable             |
|------------------|---------------------|--------|---------------------------------|
| Expiry Date      | Number of Options   |   | Weighted Average Exercise Price |   | Number of Options |   | Weighted Average Exercise Price |
| October 15, 2012 | 75,000              |   | 0.94                            |   | 75,000 |   | 0.94 |
| March 27, 2014   | 1,575,000           |   | 0.23                            |   | 1,575,000 |   | 0.23 |
| May 12, 2015     | 4,460,000           |   | 0.45                            |   | 3,945,000 |   | 0.45 |
| January 27, 2016 | 300,000             |   | 0.71                            |   | 112,500 |   | 0.71 |
|             | 6,410,000           |   | $  0.41               |   | 5,707,500 |   | $  0.40 |

| Year of Grant                                                                     | Year ended December 31, 2011 | Year ended December 31, 2010 |
|-----------------------------------------------------------------------------------|------------------------------|------------------------------|
| Dividend Yield                                                                    | 0%                           | 0%                           |
| Risk free interest rate                                                           | 1.9%                         | 2.2% to 2.4%                 |
| Expected life                                                                     | 2.6 to 3.5 years             | 2.5 to 3.5 years             |
| Expected volatility (1)                                                           | 79.4% to 85.1%               | 79.5% to 86.1%               |
| Weighted average grant date fair value                                            | 0.38                         | 0.23                         |
| Forfeiture rate                                                                   | 1%                           | 1%                           |
| (1) Determined based on historical volatility of the Company’s share price. |                         |

----

|                           | Year ended December 31, 2011 |   | Year ended December 31, 2010   |
|--------------------------------|------------------------------|--------|--------------------------------|
|                           | Number of Warrants           |   | Weighted AverageExercise Price |   | Number of Warrants |   | Weighted AverageExercise Price |
| Outstanding, beginning of year | 431,893                      |   | $  0.63              |   | - |   | $        - |
| Issued                         | 4,712,875                    |   | 0.89                           |   | 962,143 |   | 0.51 |
| Exercised                      | (90,620))                    |   | 0.40                           |   | (530,250)) |   | 0.40 |
| Outstanding, end of year       | 5,054,148                    |   | $ 0.88                         |   | 431,893 |   | $  0.63 |

|              | Warrants Outstanding and Exercisable |
|-------------------|--------------------------------------|
| Expiry Date       |                                 | Number of Warrants |   | Weighted Average Exercise Price |
| June 30, 2012     |                                 | 4,130 |   | $  0.40 |
| December 23, 2012 |                                 | 337,143 |   | 0.70 |
| June 30, 2013     |                                 | 212,875 |   | 0.75 |
| December 30, 2013 |                                 | 4,500,000 |   | 0.90 |
|              |                                 | 5,054,148 |   |  $  0.88 |

| Year of Grant                                                                     | Year ended December 31, 2011 | Year ended December 31, 2010 |
|-----------------------------------------------------------------------------------|------------------------------|------------------------------|
| Dividend Yield                                                                    | 0%                           | 0%                           |
| Risk free interest rate                                                           | 0.96%                        | 1.5% to 1.7%                 |
| Expected life                                                                     | 1.4 to 1.9 years             | 1.9 years                    |
| Expected volatility (1)                                                           | 77.3%                        | 74.4% to 89.1%               |
| Weighted average grant date fair value                                            | 0.21                         | 0.20                         |
| (1) Determined based on historical volatility of the Company’s share price. |                         |

----

|                       | Options                  | Warrants                                                       | Unexercised Options and Warrants | Normal Course Issuer Bid           | Total                    |
|----------------------------|--------------------------|----------------------------------------------------------------|----------------------------------|------------------------------------|--------------------------|
| Balance, January 1, 2010   | $   2,038 | $          - | $   6,026         | $     604 | $   8,668 |
| Share-based compensation   | 951                      | -                                                              | -                                | -                                  | 951                      |
| Stock options exercised    | (120))                   | -                                                              | -                                | -                                  | (120))                   |
| Stock options expired      | (1,144))                 | -                                                              | 1,144                            | -                                  | -                        |
| Stock options forfeited    | (12))                    | -                                                              | 12                               | -                                  | -                        |
| Broker warrants issued     | -                        | 195                                                            | -                                | -                                  | 195                      |
| Broker warrant exercised   | -                        | (97))                                                          | -                                | -                                  | (97))                    |
| Balance, December 31, 2010 | 1,713                    |       98                         | 7,182                            |  604                          | 9,597                    |
| Share-based compensation   | 238                      | -                                                              | -                                | -                                  | 238                      |
| Stock options exercised    | (57))                    | -                                                              | -                                | -                                  | (57))                    |
| Stock options expired      | (600))                   | -                                                              | 600                              | -                                  | -                        |
| Stock options forfeited    | (54))                    | -                                                              | 54                               | -                                  | -                        |
| Broker warrants issued     | -                        | 989                                                            | -                                | -                                  | 989                      |
| Broker warrants exercised  | -                        | (17))                                                          | -                                | -                                  | (17))                    |
| Balance, December 31, 2011 | $   1,240 | $   1,070                                       | $   7,836         | $     604 | $ 10,750                 |

----

|                                            | Year ended December 31, 2011 | Year ended December 31, 2010 |
|-------------------------------------------------|------------------------------|------------------------------|
| Assaying and metallurgical studies              | $                            | 22                           | $          23 |
| Camp operation and project development          |                         | 329                          | 669 |
| Diamond drilling                                |                         | 1,984                        | 2,001 |
| Feasibility study                               |                         | 1,198                        | - |
| Insurance, lease and rental                     |                         | 59                           | 56 |
| Permitting and environmental                    |                         | 1,653                        | 1,163 |
| Transportation and travel                       |                         | 25                           | 57 |
|                                            |                         | 5,270                        | 3,969 |
|                                            |                         |                         |   |
| Depreciation – mining plant and equipment |                         | 219                          | 131 |
| Total exploration and evaluation expenses       | $                            | 5,489                        | $     4,100 |
|                                            |                         |                         |   |
| Exploration and evaluation, beginning of year   | $                            | 41,898                       | $   37,798 |
| Total exploration and evaluation expenses       |                         | 5,489                        | 4,100 |
| Exploration and evaluation, end of year         | $                            | 47,387                       | $   41,898 |

----

|                                                                   |   |   | 2011                              |   | 2010                                 |
|------------------------------------------------------------------------|--------|--------|-----------------------------------|--------|--------------------------------------|
| Statutory tax rate                                                     |   |   | 27.54%                            |   | 29.1%                                |
| Income taxes/(recovery) computed at statutory rates                    |   |   | $    (9,187)) |   | $     5,357 |
| Permanent differences                                                  |   |   | 75                                |   | 301                                  |
| Expired losses                                                         |   |   | -                                 |   | 301                                  |
| Renunciation of flow-through shares                                    |   |   | 1,377                             |   | -                                    |
| Other                                                                  |   |   | (352))                            |   | (130))                               |
| (Gain)/loss on marketable securities subject to capital gains tax rate |   |   | 3,566                             |   | (3,620))                             |
| Income tax rate changes                                                |   |   | 44                                |   | (194))                               |
| Tax benefits not yet recognized                                        |   |   | 4,477                             |   | (2,015))                             |
|                                                                   |   |   | -                                 |   | -                                    |

|                                 | 2011                                 |   | 2010                                 |
|--------------------------------------|--------------------------------------|--------|--------------------------------------|
| Non-capital loss carry forwards      | $     4,318 |   | $     3,815 |
| Plant and equipment                  | 253                                  |   | 189                                  |
| Resource interests                   | 5,089                                |   | 4,753                                |
| Other                                | 721                                  |   | 549                                  |
| Deferred income tax liability        | (442))                               |   | (3,951))                             |
| Net unrecognized deferred income tax | $     9,939 |   | $     5,355 |

----

|   | Year   | Total                                          |
|--------|--------|------------------------------------------------|
|   | 2014   | $       886 |
|   | 2015   | 895                                            |
|   | 2026   | 1,005                                          |
|   | 2027   | 2,755                                          |
|   | 2028   | 3,746                                          |
|   | 2029   | 2,455                                          |
|   | 2030   | 2,632                                          |
|   | 2031   | 2,055                                          |
|   |   | $   16,429                      |

----

| (a)   | Categories of financial instruments |
|-----------------|-------------------------------------|

|                          |                        | December 31, 2011                    | December 31, 2010                    | January 1, 2010                      |
|-------------------------------|-----------------------------|--------------------------------------|--------------------------------------|--------------------------------------|
| Cash and cash equivalents     | FVTPL                       | $     2,975 | $     4,464 | $     5,197 |
| Short-term investments        | FVTPL                       | 5,407                                | 2,900                                | 2,246                                |
| Marketable securities         | FVTPL                       | 13,707                               | 39,400                               | 15,382                               |
| Other receivables             | Loans and receivables       | 68                                   | 100                                  | 33                                   |
| Restricted cash               | FVTPL                       | 214                                  | 214                                  | 214                                  |
| Accounts payable              | Other financial liabilities | (60)                                 | (16)                                 | (189)                                |
| Accrued and other liabilities | Other financial liabilities | (660)                                | (226)                                | (212)                                |

| (b)   | Fair value measurements |
|-----------------|-------------------------|

| December 31, 2011         | Level 1                              | Level 2 | Level 3 | Total                                |
|---------------------------|--------------------------------------|---------|---------|--------------------------------------|
| Cash and cash equivalents | $     2,975 | -       | -       | $     2,975 |
| Short-term investments    | 5,407                                | -       | -       | 5,407                                |
| Marketable securities     | 13,707                               | -       | -       | 13,707                               |
| Restricted cash           | 214                                  | -       | -       | 214                                  |

| December 31, 2010         | Level 1                        | Level 2 | Level 3 | Total                          |
|---------------------------|--------------------------------|---------|---------|--------------------------------|
| Cash and cash equivalents | $    4,464 | -       | -       | $    4,464 |
| Short-term investments    | 2,900                          | -       | -       | 2,900                          |
| Marketable securities     | 39,400                         | -       | -       | 39,400                         |
| Restricted cash           | 214                            | -       | -       | 214                            |

| January 1, 2010                 | Level 1                        | Level 2 | Level 3 | Total                          |
|---------------------------------|--------------------------------|---------|---------|--------------------------------|
|  Cash and cash equivalents | $    5,197 | -       | -       | $    5,197 |
| Short-term investments          | 2,246                          | -       | -       | 2,246                          |
| Marketable securities           | 15,382                         | -       | -       | 15,382                         |
| Restricted cash                 | 214                            | -       | -       | 214                            |

----

| (c)   | Market risk |
|-----------------|-------------|

| (d)   | Interest rate risk |
|-----------------|--------------------|

| (e)   | Foreign currency risk |
|-----------------|-----------------------|

| (f)   | Credit risk |
|-----------------|-------------|

| (g)   | Liquidity risk |
|-----------------|----------------|

----

|   | (a) | The Company has entered into certain operating lease agreements for office space and equipment. These agreements require the Company to make the following lease payments: |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Year ending December 31, |   | Total                              |
|--------------------------|--------|------------------------------------|
| 2012                     |   | $     148 |
| 2013                     |   | 150                                |
| 2014                     |   | 147                                |
| 2015                     |   | 149                                |
| 2016                     |   | 151                                |
| 2017                     |   | 88                                 |
|                     |   | $     833 |

|   | (b) | The Company has a letter of guarantee outstanding in the amount of $214,000 as security for the Company fulfilling certain obligations pursuant to an Authorization granted by DFO relating to road repairs in proximity to the Prairie Creek Mine Site (see Note 6). |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | The Company, on January 6, 2012, closed a bought deal public offering of 7,610,000 units (“Units”) at $0.67 per Unit for total proceeds of $5,098,700 (the “Public Offering”). Each Unit consists of one common share and one-half of one common share purchase warrant. Each whole warrant will entitle the holder to purchase one common share of the Company at an exercise price of $0.90 per common share for a period of 24 months from the date of issuance. The Public Offering was completed by a syndicate of underwriters. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | The Company, on February 10, 2012, closed the second and final tranche of the non-brokered private placement with Zhongrun International Mining Co. Ltd. Consisting of an additional 6,000,000 units (“Units”) at $0.67 per Unit for gross proceeds of $4,020,000. Each Unit consists of one common share and one-half of one common share purchase warrant. Each whole warrant will entitle the holder to purchase one common share of the Company at an exercise price of $0.90 per common share for a period of 24 months from the date of issuance. In connection with this financing the Company paid a finder’s fee of 5% to an arm’s length intermediary. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (a)   | IFRS 3, Business Combinations: Applied prospectively from the Transition Date; |
|-----------------|--------------------------------------------------------------------------------|

| (b)   | IFRS 16, Property, Plant & Equipment and IFRS 23, Borrowing Costs: Borrowing costs related to qualifying assets not capitalized unless commencement date for capitalization is on or after the Transition date; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | IAS 17, Leases: Leases are classified based on the lease terms in force at the Transition date; |
|-----------------|-------------------------------------------------------------------------------------------------|

| (d)   | IFRIC 4, Determining whether an arrangement contains a lease: Applied to arrangements existing at the Transition date on the basis of facts and circumstances at that date; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | IFRS 2, Share-Based Payments: Not applied retrospectively to fully vested equity settled grants; |
|-----------------|--------------------------------------------------------------------------------------------------|

| (f)   | IFRIC 1, Changes in Existing Decommissioning, Restoration and Similar Liabilities: Decommissioning liability included in the cost of the related asset is not accounted for on a fully retrospective basis; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g)   | IAS 39, Financial Instruments: Recognition & Measurement: Financial instrument designated as FVTPL upon the Transition Date. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------|

----

| (a)   | Decommissioning liability |
|-----------------|---------------------------|

| (b)   | Flow-through shares |
|-----------------|---------------------|

| (c)   | Share-based Compensation |
|-----------------|--------------------------|

----

|                                             |   | As at January 1, 2010 |     |
|--------------------------------------------------|--------|-----------------------|----------|
|                                             | Note   | GAAP                  |     | Effect of Transition to IFRS |   | IFRS |   |
|                                             |   |                  |     |   |   |   |   |
| ASSETS                                           |   |                  |     |   |   |   |   |
| Current                                          |   |                  |     |   |   |   |   |
| Cash and cash equivalents                        |   | $                     | 5,197    |   | $ | - |   | $ | 5,197 |   |
| Short-term investments                           |   |                  | 2,246    |   |   | - |   |   | 2,246 |   |
| Marketable securities                            |   |                  | 15,382   |   |   | - |   |   | 15,382 |   |
| Other receivables and prepaid expenses           |   |                  | 52       |   |   | - |   |   | 52 |   |
|                                             |   |                  |     |   |   |   |   |   |   |   |
| Total Current Assets                             |   |                  | 22,877   |   |   | - |   |   | 22,877 |   |
|                                             |   |                  |     |   |   |   |   |   |   |   |
| Other long-term assets                           |   |                  | 739      |   |   | - |   |   | 739 |   |
| Property, plant and equipment                    |   |                  | 983      |   |   | - |   |   | 983 |   |
| Exploration and evaluation assets                | (a)    |                  | 4,553    |   |   | (165 | ) |   | 4,388 |   |
|                                             |   |                  |     |   |   |   |   |   |   |   |
| Total Assets                                     |   | $                     | 29,152   |   | $ | (165 | ) | $ | 28,987 |   |
|                                             |   |                  |     |   |   |   |   |   |   |   |
| LIABILITIES                                      |   |                  |     |   |   |   |   |   |   |   |
| Current                                          |   |                  |     |   |   |   |   |   |   |   |
| Accounts payable                                 |   | $                     | 189      |   | $ | - |   | $ | 189 |   |
| Accrued and other liabilities                    |   |                  | 212      |   |   | - |   |   | 212 |   |
|                                             |   |                  |     |   |   |   |   |   |   |   |
| Total Current Liabilities                        |   |                  | 401      |   |   | - |   |   | 401 |   |
|                                             |   |                  |     |   |   |   |   |   |   |   |
| Decommissioning liability                        | (a)    |                  | 1,238    |   |   | 267 |   |   | 1,505 |   |
|                                             |   |                  |     |   |   |   |   |   |   |   |
| Total Liabilities                                |   |                  | 1,639    |   |   | 267 |   |   | 1,906 |   |
|                                             |   |                  |     |   |   |   |   |   |   |   |
| SHAREHOLDERS' EQUITY                             |   |                  |     |   |   |   |   |   |   |   |
| Share capital                                    |   |                  | 65,583   |   |   | - |   |   | 65,583 |   |
| Reserves                                         |   |                  | 8,668    |   |   | - |   |   | 8,668 |   |
| Deficit                                          | (a)    |                  | (46,738) |   |   | (432 | ) |   | (47,170 | ) |
|                                             |   |                  |     |   |   |   |   |   |   |   |
| Total Shareholders’ Equity                 |   |                  | 27,513   |   |   | (432 | ) |   | 27,081 |   |
|                                             |   |                  |     |   |   |   |   |   |   |   |
| Total Liabilities and Shareholders’ Equity |   | $                     | 29,152   |   | $ | (165 | ) | $ | 28,987 |   |

----

|                                             |               | As at December 31, 2010 |    |
|--------------------------------------------------|--------------------|-------------------------|---------|
|                                             | Note               | GAAP                    |    | Effect of Transition to IFRS |   | IFRS |   |
|                                             |               |                    |    |   |   |   |   |
| ASSETS                                           |               |                    |    |   |   |   |   |
| Current                                          |               |                    |    |   |   |   |   |
| Cash and cash equivalents                        |               | $                       | 4,464   |   | $ | - |   | $ | 4,464 |   |
| Short-term investments                           |               |                    | 2,900   |   |   | - |   |   | 2,900 |   |
| Marketable securities                            |               |                    | 39,400  |   |   | - |   |   | 39,400 |   |
| Other receivables and prepaid expenses           |               |                    | 135     |   |   | - |   |   | 135 |   |
|                                             |               |                    |    |   |   |   |   |   |   |   |
| Total Current Assets                             |               |                    | 46,899  |   |   | - |   |   | 46,899 |   |
|                                             |               |                    |    |   |   |   |   |   |   |   |
| Other long-term assets                           |               |                    | 739     |   |   | - |   |   | 739 |   |
| Property, plant and equipment                    |               |                    | 1,272   |   |   | - |   |   | 1,272 |   |
| Exploration and evaluation assets                | (a)                |                    | 4,553   |   |   | (55 | ) |   | 4,498 |   |
|                                             |               |                    |    |   |   |   |   |   |   |   |
| Total Assets                                     |               | $                       | 53,463  |   | $ | (55 | ) | $ | 53,408 |   |
|                                             |               |                    |    |   |   |   |   |   |   |   |
| LIABILITIES                                      |               |                    |    |   |   |   |   |   |   |   |
| Current                                          |               |                    |    |   |   |   |   |   |   |   |
| Accounts payable                                 |               | $                       | 16      |   | $ | - |   | $ | 16 |   |
| Accrued and other liabilities                    | (b)                |                    | 226     |   |   | 277 |   |   | 503 |   |
|                                             |               |                    |    |   |   |   |   |   |   |   |
| Total Current Liabilities                        |               |                    | 242     |   |   | 277 |   |   | 519 |   |
|                                             |               |                    |    |   |   |   |   |   |   |   |
| Decommissioning liability                        | (a)                |                    | 1,300   |   |   | 354 |   |   | 1,654 |   |
|                                             |               |                    |    |   |   |   |   |   |   |   |
| Total Liabilities                                |               |                    | 1,542   |   |   | 631 |   |   | 2,173 |   |
|                                             |               |                    |    |   |   |   |   |   |   |   |
| SHAREHOLDERS' EQUITY                             |               |                    |    |   |   |   |   |   |   |   |
| Share capital                                    | (b)                |                    | 70,591  |   |   | (277 | ) |   | 70,314 |   |
| Reserves                                         | (c)                |                    | 9,661   |   |   | (64 | ) |   | 9,597 |   |
| Deficit                                          | (a), (b) & (c) |                    | (28,331 | ) |   | (345 | ) |   | (28,676 | ) |
|                                             |               |                    |    |   |   |   |   |   |   |   |
| Total Shareholders’ Equity                 |               |                    | 51,921  |   |   | (686 | ) |   | 51,235 |   |
|                                             |               |                    |    |   |   |   |   |   |   |   |
| Total Liabilities and Shareholders’ Equity |               | $                       | 53,463  |   | $ | (55 | ) | $ | 53,408 |   |

----

|                              |   | Year ended December 31, 2010 |   |
|-----------------------------------|--------|------------------------------|--------|
|                              | Note   | GAAP                         |   | Effect of Transition to IFRS |   | IFRS |   |
|                              |   |                         |   |   |   |   |   |
| Income                            |   | $                            | 48     |   |   | - |   | $ | 48 |   |
| Expenses                          | (c)    |                         | (6,857 | ) |   | 64 |   |   | (6,793 | ) |
| Other income                      | (a)    |                         | 25,216 |   |   | 23 |   |   | 25,239 |   |
|                              |   |                         |   |   |   |   |   |   |   |   |
| Net income for the year           |   |                         | 18,407 |   |   | 87 |   |   | 18,494 |   |
|                              |   |                         |   |   |   |   |   |   |   |   |
| Other comprehensive income        |   |                         | -      |   |   | - |   |   | - |   |
|                              |   |                         |   |   |   |   |   |   |   |   |
| Comprehensive income for the year |   | $                            | 18,407 |   | $ | 87 |   | $ | 18,494 |   |

|                                                         |          | Year ended December 31, 2010 |    |
|--------------------------------------------------------------|---------------|------------------------------|---------|
|                                                         | Note          | GAAP                         |    | Effect of Transition to IFRS |   | IFRS |   |
|                                                         |          |                         |    |   |   |   |   |
| Operating Activities                                         |          |                         |    |   |   |   |   |
| Net income for the year                                      | (a) & (c) | $                            | 18,407  |   | $ | 87 |   | $ | 18,494 |   |
| Reclamation expenditures                                     | (a)           |                         | (19     | ) |   | (4 | ) |   | (23 | ) |
| Adjustment for items not involving cash:                     |          |                         |    |   |   |   |   |   |   |   |
| Accretion and depreciation                                   | (a)           |                         | 235     |   |   | (19 | ) |   | 216 |   |
| (Gain) loss on marketable securities                         |          |                         | (25,341 | ) |   | - |   |   | (25,341 | ) |
| Unrealized foreign exchange                                  |          |                         | 44      |   |   | - |   |   | 44 |   |
| Share-based compensation                                     | (c)           |                         | 1,015   |   |   | (64 | ) |   | 951 |   |
| Change in non-cash working capital items                     |          |                         | (280    | ) |   | - |   |   | (280 | ) |
|                                                         |          |                         | (5,939  | ) |   | - |   |   | (5,939 | ) |
|                                                         |          |                         |    |   |   |   |   |   |   |   |
| Financing Activities                                         |          |                         | 5,024   |   |   | - |   |   | 5,024 |   |
| Investing Activities                                         |          |                         | 226     |   |   | - |   |   | 226 |   |
| Impact of exchange rate changes on cash and cash equivalents |          | (44                          | )       |   | - |   |   | (44 | ) |
|                                                         |          |                         |    |   |   |   |   |   |   |   |
| Decrease in cash and cash equivalents                        |          | (733                         | )       |   | - |   |   | (733 | ) |
|                                                         |          |                         |    |   |   |   |   |   |   |   |
| Cash and cash equivalents, beginning of year                 |          | 5,197                        |    |   | - |   |   | 5,197 |   |
|                                                         |          |                         |    |   |   |   |   |   |   |   |
| Cash and cash equivalents, end of year                       |          | $                            | 4,464   |   | $ | - |   | $ | 4,464 |   |

----