----

----

|                                                                   |   | Page  |
|------------------------------------------------------------------------|--------|------------|
| Auditors’ Report                                                 |   | 2          |
|                                                                   |   |       |
| Consolidated Statements of Financial Position                     |   | 4          |
|                                                                   |   |       |
| Consolidated Statements of Comprehensive Loss                          |   | 5          |
|                                                                   |   |       |
| Consolidated Statements of Cash Flows                             |   | 6          |
|                                                                   |   |       |
| Consolidated Statements of Changes in Shareholders’ Equity  |   | 7          |
|                                                                   |   |       |
| Notes to Consolidated Financial Statements                        |   | 8          |
|                                                                   |   |       |

----

----

| Vancouver, Canada | Chartered Accountants |
|-------------------|-----------------------|
|              |                  |
| April 27, 2012    |                  |

----

----

|                                              |   | December 31, |       |   | December 31,  |   |       | January 1,    |   |
|---------------------------------------------------|--------|--------------|------------|--------|---------------|--------|------------|---------------|--------|
|                                              |   | 2011         |       |   | 2010(Note 19) |   |       | 2010(Note 19) |   |
|                                              |   | $            |       |   |          | $      |       |          |   | $ |   |   |
| Assets                                            |   |         |       |   |          |   |       |          |   |   |   |   |
|                                              |   |         |       |   |          |   |       |          |   |   |   |   |
| Current                                           |   |         |       |   |          |   |       |          |   |   |   |   |
| Cash and cash equivalents (Note 4)                |   |         | 7,886,869  |   |          |   | 4,109,636  |          |   |   | 919,739 |   |
| Receivables (Note 5)                              |   |         | 93,596     |   |          |   | 49,370     |          |   |   | 6,747 |   |
| Prepaid expenses                                  |   |         | 71,508     |   |          |   | 51,453     |          |   |   | 3,046 |   |
|                                              |   |         | 8,051,973  |   |          |   | 4,210,459  |          |   |   | 929,532 |   |
|                                              |   |         |       |   |          |   |       |          |   |   |   |   |
| Property and equipment (Note 6)                   |   |         | 58,912     |   |          |   | 76,173     |          |   |   | 6,750 |   |
|                                              |   |         |       |   |          |   |       |          |   |   |   |   |
| Mineral property interests (Note 7)               |   |         | 17,126,450 |   |          |   | 8,181,798  |          |   |   | 4,484,497 |   |
|                                              |   |         |       |   |          |   |       |          |   |   |   |   |
| Reclamation bonds (Note 8)                        |   |         | 75,207     |   |          |   | 36,720     |          |   |   | - |   |
|                                              |   |         |       |   |          |   |       |          |   |   |   |   |
|                                              |   |         | 25,312,542 |   |          |   | 12,505,150 |          |   |   | 5,420,779 |   |
|                                              |   |         |       |   |          |   |       |          |   |   |   |   |
| Liabilities                                       |   |         |       |   |          |   |       |          |   |   |   |   |
|                                              |   |         |       |   |          |   |       |          |   |   |   |   |
| Current                                           |   |         |       |   |          |   |       |          |   |   |   |   |
| Accounts payable and accrued liabilities (Note 9) |   |         | 1,210,776  |   |          |   | 1,274,037  |          |   |   | 122,074 |   |
| Due to shareholders (Note 14)                     |   |         | 2,005      |   |          |   | 3,755      |          |   |   | 22,528 |   |
| Notes payable (Note 10)                           |   |         | -          |   |          |   | -          |          |   |   | 658,500 |   |
|                                              |   |         | 1,212,781  |   |          |   | 1,277,792  |          |   |   | 803,102 |   |
|                                              |   |         |       |   |          |   |       |          |   |   |   |   |
| Shareholders' equity                              |   |         |       |   |          |   |       |          |   |   |   |   |
| Capital stock (Note 11)                           |   |         | 27,828,590 |   |          |   | 12,855,676 |          |   |   | 4,909,362 |   |
| Reserves (Note 11)                                |   |         | 3,852,852  |   |          |   | 2,111,153  |          |   |   | - |   |
| Deficit                                           |   |         | (7,581,681 | )      |          |   | (3,739,471 | )             |   |   | (291,685 | ) |
|                                              |   |         | 24,099,761 |   |          |   | 11,227,358 |          |   |   | 4,617,677 |   |
|                                              |   |         |       |   |          |   |       |          |   |   |   |   |
|                                              |   |         | 25,312,542 |   |          |   | 12,505,150 |          |   |   | 5,420,779 |   |

| “Jonathan Awde” |   | “Richard Silas” |
|-----------------------------|--------|-----------------------------|
| Jonathan Awde, Director     |   | Richard Silas, Director     |

----

----

|                                           |   | For the year ended December 31, |       |
|------------------------------------------------|--------|---------------------------------|------------|
|                                           |   | 2011                            |       |   | 2010(Note 19) |   |
|                                           |   | $                               |       |   |   | $ |   |   |
|  Expenses                                 |   |                            |       |   |   |   |   |   |
| Advertising and promotion                      |   |                            | 67,985     |   |   |   | 65,089 |   |
| Bank charges                                   |   |                            | 8,523      |   |   |   | 6,245 |   |
| Consulting fees                                |   |                            | 167,073    |   |   |   | 392,200 |   |
| Depreciation                                   |   |                            | 17,261     |   |   |   | 9,380 |   |
| Foreign exchange loss                          |   |                            | 56,224     |   |   |   | 35,791 |   |
| Insurance                                      |   |                            | 20,762     |   |   |   | 11,214 |   |
| Investor relations                             |   |                            | 234,388    |   |   |   | 189,604 |   |
| Loan interest                                  |   |                            | -          |   |   |   | 23,422 |   |
| Management fees                                |   |                            | 424,000    |   |   |   | 201,905 |   |
| Office                                         |   |                            | 210,033    |   |   |   | 118,371 |   |
| Professional fees                              |   |                            | 450,569    |   |   |   | 276,487 |   |
| Property investigation                         |   |                            | 17,041     |   |   |   | 14,811 |   |
| Regulatory and shareholder services            |   |                            | 66,094     |   |   |   | 36,103 |   |
| Rent                                           |   |                            | 122,630    |   |   |   | 52,239 |   |
| Share-based compensation (Note 11)             |   |                            | 1,468,957  |   |   |   | 1,776,672 |   |
| Travel and entertainment                       |   |                            | 465,546    |   |   |   | 214,875 |   |
| Wages and salaries                             |   |                            | 192,568    |   |   |   | 23,952 |   |
|                                           |   |                            |       |   |   |   |   |   |
|  Loss before other items                  |   |                            | (3,989,654 | ) |   |   | (3,448,360 | ) |
|                                           |   |                            |       |   |   |   |   |   |
| Other items                                    |   |                            |       |   |   |   |   |   |
| Interest income                                |   |                            | 93,083     |   |   |   | 574 |   |
| Loss on debt settlement (Note 11)              |   |                            | (242,309   | ) |   |   | - |   |
|                                           |   |                            |       |   |   |   |   |   |
|  Loss and comprehensive loss for the year |   |                            | (4,138,880 | ) |   |   | (3,447,786 | ) |
|                                           |   |                            |       |   |   |   |   |   |
|  Basic and diluted loss per share         |   |                            | (0.07      | ) |   |   | (0.11 | ) |
|                                           |   |                            |       |   |   |   |   |   |
|  Weighted average number of common        |   |                            |       |   |   |   |   |   |
|  shares outstanding                       |   |                            | 56,559,912 |   |   |   | 32,467,466 |   |

----

----

|                                                                |   | For the year ended December 31, |       |
|---------------------------------------------------------------------|--------|---------------------------------|------------|
|                                                                |   | 2011                            |       |   | 2010(Note 19) |   |
|                                                                |   | $                               |       |   |   | $ |   |   |
|  Cash flows used in operating activities                       |   |                            |       |   |   |   |   |   |
|  Net loss for the year                                         |   |                            | (4,138,880 | ) |   |   | (3,447,786 | ) |
|  Items not affecting cash:                                     |   |                            |       |   |   |   |   |   |
|  Depreciation                                                  |   |                            | 17,261     |   |   |   | 9,380 |   |
|  Share-based compensation                                      |   |                            | 1,468,957  |   |   |   | 1,776,672 |   |
|  Loss on debt settlement                                       |   |                            | 242,309    |   |   |   | - |   |
|  Changes in non-cash working capital items                     |   |                            |       |   |   |   |   |   |
|  Increase in receivables                                       |   |                            | (44,226    | ) |   |   | (8,580 | ) |
|  Increase in prepaid expenses                                  |   |                            | (21,805    | ) |   |   | (27,878 | ) |
|  (Decrease) increase in accounts payable                       |   |                            | (8,918     | ) |   |   | 32,181 |   |
|                                                                |   |                            | (2,485,302 | ) |   |   | (1,666,011 | ) |
|                                                                |   |                            |       |   |   |   |   |   |
|  Cash flows used in investing activities                       |   |                            |       |   |   |   |   |   |
|  Acquisition of property and equipment                         |   |                            | -          |   |   |   | (78,803 | ) |
|  Reclamation bonds                                             |   |                            | (38,487    | ) |   |   | (36,720 | ) |
|  Mineral property expenditures                                 |   |                            | (8,704,435 | ) |   |   | (3,084,197 | ) |
|                                                                |   |                            | (8,742,922 | ) |   |   | (3,199,720 | ) |
|                                                                |   |                            |       |   |   |   |   |   |
|  Cash flows from financing activities                          |   |                            |       |   |   |   |   |   |
|  Proceeds from share issuances                                 |   |                            | 11,950,000 |   |   |   | 6,005,170 |   |
|  Share issuance costs                                          |   |                            | (990,510   | ) |   |   | (632,952 | ) |
|  Proceeds from exercise of warrants                            |   |                            | 3,967,967  |   |   |   | - |   |
|  Proceeds from exercise of stock options                       |   |                            | 78,000     |   |   |   | - |   |
|  Notes payable repayment                                       |   |                            | -          |   |   |   | (658,500 | ) |
|  Loan to GSV prior to recapitalization                         |   |                            | -          |   |   |   | (154,650 | ) |
|  Due to shareholders                                           |   |                            | -          |   |   |   | (18,773 | ) |
|  Cash acquired on recapitalization                             |   |                            | -          |   |   |   | 3,678,349 |   |
|  Recapitalization costs                                        |   |                            | -          |   |   |   | (163,016 | ) |
|                                                                |   |                            | 15,005,457 |   |   |   | 8,055,628 |   |
|                                                                |   |                            |       |   |   |   |   |   |
|  Net change in cash and cash equivalents                       |   |                            | 3,777,233  |   |   |   | 3,189,897 |   |
|                                                                |   |                            |       |   |   |   |   |   |
|  Cash and cash equivalents, beginning of year                  |   |                            | 4,109,636  |   |   |   | 919,739 |   |
|                                                                |   |                            |       |   |   |   |   |   |
|  Cash and cash equivalents, end of year                        |   |                            | 7,886,869  |   |   |   | 4,109,636 |   |
|                                                                |   |                            |       |   |   |   |   |   |
|  Cash paid for interest                                        |   |                            | -          |   |   |   | 46,850 |   |
|                                                                |   |                            |       |   |   |   |   |   |
|  Non-cash transactions                                         |   |                            |       |   |   |   |   |   |
|  Net assets assumed on recapitalization of the Company         |   |                            | -          |   |   |   | 3,141,153 |   |
|  Financing fees - warrants                                     |   |                            | 752,464    |   |   |   | 334,481 |   |
|  Shares issued for debt settlement                             |   |                            | 467,309    |   |   |   | - |   |
|  Mineral property expenditures in accounts payable at year end |   |                            | 910,648    |   |   |   | 670,431 |   |
|  Share issuance costs in accounts payable at year end          |   |                            | -          |   |   |   | 69,560 |   |
|  Due to shareholders offset by prepaid expenses                |   |                            | 1,750      |   |   |   | - |   |

----

----

|                                           |   | Number of Shares Issued |        |   | Capital Stock |   |       | Reserves -Special Warrants |   |   | Reserves |   |   | Deficit |      |   | Total Shareholders' Equity |   |
|------------------------------------------------|--------|-------------------------|-------------|--------|---------------|--------|------------|----------------------------|--------|--------|----------|--------|--------|---------|-----------|--------|----------------------------|--------|
|                                           |   |                    |        |   | $             |   |       |                       | $      |   |     |   | $      |    |      |   | $                          |   |   |   | $ |   |   |
|                                           |   |                    |        |   |          |   |       |                       |   |   |     |   |   |    |      |   |                       |   |   |   |   |   |   |
| Balance at January 1, 2010                     |   |                    | 24,784,571  |   |          |   | 4,909,362  |                       |   |   | -        |   |   |    | -         |   |                       |   | (291,685 | ) |   |   | 4,617,677 |   |
| Capital stock of JKR Gold Resources Ltd.       |   |                    | (24,784,571 | )      |          |   | -          |                       |   |   | -        |   |   |    | -         |   |                       |   | - |   |   |   | - |   |
| Capital stock of the Company                   |   |                    | 3,136,069   |   |          |   | -          |                       |   |   | -        |   |   |    | -         |   |                       |   | - |   |   |   | - |   |
| Issuance of special warrants                   |   |                    | -           |   |          |   | -          |                       |   |   | 916,500  |   |   |    | -         |   |                       |   | - |   |   |   | 916,500 |   |
| Special warrant issuance costs                 |   |                    | -           |   |          |   | -          |                       |   |   | (152,748 | )      |   |    | -         |   |                       |   | - |   |   |   | (152,748 | ) |
| Shares issued pursuant to acquisition (Note 3) |   |                    | 30,348,747  |   |          |   | 3,141,153  |                       |   |   | -        |   |   |    | -         |   |                       |   | - |   |   |   | 3,141,153 |   |
| Exchange of special warrants for shares        |   |                    | 1,410,000   |   |          |   | 763,752    |                       |   |   | (763,752 | )      |   |    | -         |   |                       |   | - |   |   |   | - |   |
| Shares issued for cash                         |   |                    | 7,809,493   |   |          |   | 5,076,170  |                       |   |   | -        |   |   |    | -         |   |                       |   | - |   |   |   | 5,076,170 |   |
| Share issuance costs                           |   |                    | -           |   |          |   | (884,245   | )                          |   |   | -        |   |   |    | -         |   |                       |   | - |   |   |   | (884,245 | ) |
| Recapitalization costs                         |   |                    | -           |   |          |   | (163,016   | )                          |   |   | -        |   |   |    | -         |   |                       |   | - |   |   |   | (163,016 | ) |
| Warrants exercised                             |   |                    | 31,250      |   |          |   | 12,500     |                       |   |   | -        |   |   |    | -         |   |                       |   | - |   |   |   | 12,500 |   |
| Agents warrants issued for private placements  |   |                    | -           |   |          |   | -          |                       |   |   | -        |   |   |    | 334,481   |   |                       |   | - |   |   |   | 334,481 |   |
| Share-based compensation                       |   |                    | -           |   |          |   | -          |                       |   |   | -        |   |   |    | 1,776,672 |   |                       |   | - |   |   |   | 1,776,672 |   |
| Net loss for the year (Note 19)                |   |                    | -           |   |          |   | -          |                       |   |   | -        |   |   |    | -         |   |                       |   | (3,447,786 | ) |   |   | (3,447,786 | ) |
|  Balance at December 31, 2010             |   |                    | 42,735,559  |   |          |   | 12,855,676 |                       |   |   | -        |   |   |    | 2,111,153 |   |                       |   | (3,739,471 | ) |   |   | 11,227,358 |   |
|                                           |   |                    |        |   |          |   |       |                       |   |   |     |   |   |    |      |   |                       |   |   |   |   |   |   |   |
| Shares issued for cash                         |   |                    | 12,578,947  |   |          |   | 11,950,000 |                       |   |   | -        |   |   |    | -         |   |                       |   | - |   |   |   | 11,950,000 |   |
| Warrants exercised                             |   |                    | 4,896,191   |   |          |   | 4,079,936  |                       |   |   | -        |   |   |    | (111,969  | )      |                       |   | - |   |   |   | 3,967,967 |   |
| Stock options exercised                        |   |                    | 120,000     |   |          |   | 149,083    |                       |   |   | -        |   |   |    | (71,083   | )      |                       |   | - |   |   |   | 78,000 |   |
| Shares issued for debt settlement              |   |                    | 346,155     |   |          |   | 467,309    |                       |   |   | -        |   |   |    | -         |   |                       |   | - |   |   |   | 467,309 |   |
| Share issuance costs                           |   |                    | -           |   |          |   | (920,950   | )                          |   |   | -        |   |   |    | -         |   |                       |   | - |   |   |   | (920,950 | ) |
| Agents warrants issued for private placements  |   |                    | -           |   |          |   | (752,464   | )                          |   |   | -        |   |   |    | 752,464   |   |                       |   | - |   |   |   | - |   |
| Share-based compensation                       |   |                    | -           |   |          |   | -          |                       |   |   | -        |   |   |    | 1,468,957 |   |                       |   | - |   |   |   | 1,468,957 |   |
| Stock options cancelled                        |   |                    | -           |   |          |   | -          |                       |   |   | -        |   |   |    | (296,670  | )      |                       |   | 296,670 |   |   |   | - |   |
| Net loss for the year                          |   |                    | -           |   |          |   | -          |                       |   |   | -        |   |   |    | -         |   |                       |   | (4,138,880 | ) |   |   | (4,138,880 | ) |
|  Balance at December 31, 2011             |   |                    | 60,676,852  |   |          |   | 27,828,590 |                       |   |   | -        |   |   |    | 3,852,852 |   |                       |   | (7,581,681 | ) |   |   | 24,099,761 |   |

----

----

----

----

|   | The functional currency of an entity is the currency of the primary economic environment in which the entity operates. The functional currency of the Company and each of its subsidiaries is the Canadian dollar. The functional currency determinations were conducted through an analysis of the consideration factors identified in IAS 21, The Effects of Changes in Foreign Exchange Rates. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Transactions in currencies other than Canadian dollars are recorded at exchange rates prevailing on the dates of the transactions. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated at the period end exchange rate while non-monetary assets and liabilities are translated at historical rates.  Revenues and expenses are translated at the exchange rates approximating those in effect on the date of the transactions.  Exchange gains and losses arising on translation are included in comprehensive loss. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | Pre-exploration costs are expensed as incurred. |
|--------|-------------------------------------------------|

|   | Costs directly related to the exploration and evaluation of mineral properties are capitalized once the legal rights to explore the mineral properties are acquired or obtained.  When the technical and commercial viability of a mineral resource has been demonstrated and a development decision has been made, the capitalized costs of the related property are transferred to mining assets and depreciated using the units of production method on commencement of commercial production. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | If it is determined that capitalized acquisition, exploration and evaluation costs are not recoverable, or the property is abandoned or management has determined an impairment in value, the property is written down to its recoverable amount.  Mineral properties are reviewed for impairment when facts and circumstances suggest that the carrying amount may exceed its recoverable amount. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | Financial assets |
|--------|------------------|

----

----

| Asset                              | Basis               | Period               |
|------------------------------------|---------------------|----------------------|
| Furniture and Fixtures        | Straight-line  | 5 years         |
| Leasehold Improvements   | Straight-line  | Remaining lease term |

----

----

----

----

----

| Title of the new IFRS standard                                                    |   | Requiredapplication dateof the IFRS                |
|----------------------------------------------------------------------------------------|--------|----------------------------------------------------|
|                                                                                   |   |                                               |
| Amendments to IAS 12 – Income Taxes - Deferred Tax:Recovery of Underlying Assets |   | For periods beginning on orafter January 1, 2012.  |
|                                                                                   |   |                                               |
| IFRS 9, Financial Instruments                                                          |   | For periods beginning on or after January 1, 2015. |
|                                                                                   |   |                                               |
| IFRS 10, Consolidated Financial Statements                                             |   | For periods beginning on or after January 1, 2013. |
|                                                                                   |   |                                               |
| IFRS 11, Joint Arrangements                                                            |   | For periods beginning on or after January 1, 2013. |
|                                                                                   |   |                                               |
| IFRS 12, Disclosure of Interests in Other Entities                                     |   | For periods beginning on or after January 1, 2013. |

----

----

----

| Cash                                     |   | $      | 3,678,349 | ) |
|------------------------------------------|--------|--------|-----------|---|
| Receivables                              |   |   | 34,043    | ) |
| Prepaid expenses                         |   |   | 20,529    | ) |
| Accounts payable and accrued liabilities |   |   | (437,118  | ) |
| Loan payable                             |   |   | (154,650  | ) |
| Total                                    |   | $      | 3,141,153 | ) |

|                                      | December 31, 2011 | December 31, 2010 | January 1, 2010 |
|-------------------------------------------|-------------------|-------------------|-----------------|
|                                      | $                 | $                 | $               |
| Cash at bank                              | 1,707,465         | 4,058,907         | 919,739         |
| Cash held in lawyers’ trust account | 86,576            | 50,729            | -               |
| Cash equivalents                          | 6,092,828         | -                 | -               |
|                                      |              |              |            |
|                                      | 7,886,869         | 4,109,636         | 919,739         |

|                 | December 31, 2011 | December 31, 2010 | January 1, 2010 |
|----------------------|-------------------|-------------------|-----------------|
|                 | $                 | $                 | $               |
| Sales tax receivable | 92,579            | 49,370            | 6,747           |
| Employee advances    | 1,017             | -                 | -               |
|                 |              |              |            |
|                 | 93,596            | 49,370            | 6,747           |

----

----

|                          | Leasehold improvements | Furniture and fixtures |  Total |
|-------------------------------|------------------------|------------------------|-------------|
|                          | $                      | $                      | $           |
| Cost:                         |                   |                   |        |
| At December 31, 2010 and 2011 | 65,275                 | 21,028                 | 86,303      |
| Depreciation:                 |                   |                   |        |
| At December 31, 2010          | 6,527                  | 3,603                  | 10,130      |
| Charge for the period         | 13,056                 | 4,205                  | 17,261      |
| At December 31, 2011          | 19,583                 | 7,808                  | 27,391      |
| Net book value:               |                   |                   |        |
| At December 31, 2010          | 58,748                 | 17,425                 | 76,173      |
| At December 31, 2011          | 45,692                 | 13,220                 | 58,912      |

|                  | Leasehold improvements | Furniture and fixtures |  Total |
|-----------------------|------------------------|------------------------|-------------|
|                  | $                      | $                      | $           |
| Cost:                 |                   |                   |        |
| At January 1, 2010    | -                      | 7,500                  | 7,500       |
| Additions             | 65,275                 | 13,528                 | 78,803      |
| At December 31, 2010  | 65,275                 | 21,028                 | 86,303      |
| Depreciation:         |                   |                   |        |
| At January 1, 2010    | -                      | 750                    | 750         |
| Charge for the period | 6,527                  | 2,853                  | 9,380       |
| At December 31, 2010  | 6,527                  | 3,603                  | 10,130      |
| Net book value:       |                   |                   |        |
| At January 1, 2010    | -                      | 6,750                  | 6,750       |
| At December 31, 2010  | 58,748                 | 17,425                 | 76,173      |

----

----

|                                   |   | Crescent Valley |      |   | Railroad |   |       | Camp Douglas |   |   | South Railroad |   |   | Total  |   |
|----------------------------------------|--------|-----------------|-----------|--------|----------|--------|------------|--------------|--------|--------|----------------|--------|--------|--------|--------|
|                                   |   | $               |      |   |     | $      |       |         |   | $      |           |   |   | $      |   |   |   | $ |   |   |
| Balance as at January 1, 2010          |   |            | 629,478   |   |     |   | 3,855,019  |         |   |   | -              |   |   |   | -      |   |   |   | 4,484,497 |   |
|                                   |   |            |      |   |     |   |       |         |   |   |           |   |   |   |   |   |   |   |   |   |
| Property acquisition and staking costs |   |            | 103,630   |   |     |   | -          |         |   |   | -              |   |   |   | -      |   |   |   | 103,630 |   |
| Assessment fees                        |   |            | 1,007     |   |     |   | -          |         |   |   | 7,771          |   |   |   | -      |   |   |   | 8,778 |   |
| Claim maintenance fees                 |   |            | 53,890    |   |     |   | 73,946     |         |   |   | 49,752         |   |   |   | -      |   |   |   | 177,588 |   |
| Consulting                             |   |            | 24,823    |   |     |   | 249,998    |         |   |   | -              |   |   |   | -      |   |   |   | 274,821 |   |
| Data analysis                          |   |            | 8,027     |   |     |   | 8,044      |         |   |   | -              |   |   |   | -      |   |   |   | 16,071 |   |
| Drilling/exploration                   |   |            | 249,920   |   |     |   | 1,912,864  |         |   |   | -              |   |   |   | -      |   |   |   | 2,162,784 |   |
| Equipment                              |   |            | -         |   |     |   | 18,310     |         |   |   | -              |   |   |   | -      |   |   |   | 18,310 |   |
| Geological                             |   |            | 1,018     |   |     |   | 31,357     |         |   |   | 3,814          |   |   |   | -      |   |   |   | 36,189 |   |
| Lease payments                         |   |            | 118,161   |   |     |   | 110,312    |         |   |   | 47,457         |   |   |   | -      |   |   |   | 275,930 |   |
| Legal fees for property acquisition    |   |            | -         |   |     |   | -          |         |   |   | 17,910         |   |   |   | -      |   |   |   | 17,910 |   |
| Sampling and processing                |   |            | 15,444    |   |     |   | 25,053     |         |   |   | -              |   |   |   | -      |   |   |   | 40,497 |   |
| Site development                       |   |            | -         |   |     |   | 171,283    |         |   |   | -              |   |   |   | -      |   |   |   | 171,283 |   |
| Supplies                               |   |            | 7,132     |   |     |   | 346,898    |         |   |   | -              |   |   |   | -      |   |   |   | 354,030 |   |
| Travel                                 |   |            | 2,609     |   |     |   | 36,871     |         |   |   | -              |   |   |   | -      |   |   |   | 39,480 |   |
|                                   |   |            | 585,661   |   |     |   | 2,984,936  |         |   |   | 126,704        |   |   |   | -      |   |   |   | 3,697,301 |   |
|                                   |   |            |      |   |     |   |       |         |   |   |           |   |   |   |   |   |   |   |   |   |
| Balance as at December 31, 2010        |   |            | 1,215,139 |   |     |   | 6,839,955  |         |   |   | 126,704        |   |   |   | -      |   |   |   | 8,181,798 |   |
|                                   |   |            |      |   |     |   |       |         |   |   |           |   |   |   |   |   |   |   |   |   |
| Claim maintenance fees                 |   |            | 72,325    |   |     |   | 159,782    |         |   |   | 29,402         |   |   |   | -      |   |   |   | 261,509 |   |
| Consulting                             |   |            | 40,941    |   |     |   | 494,421    |         |   |   | 13,811         |   |   |   | 9,164  |   |   |   | 558,337 |   |
| Data analysis                          |   |            | 2,402     |   |     |   | 18,225     |         |   |   | 68,898         |   |   |   | -      |   |   |   | 89,525 |   |
| Drilling/exploration                   |   |            | 368,615   |   |     |   | 5,664,552  |         |   |   | -              |   |   |   | -      |   |   |   | 6,033,167 |   |
| Equipment                              |   |            | 2,035     |   |     |   | 28,093     |         |   |   | -              |   |   |   | -      |   |   |   | 30,128 |   |
| Geological                             |   |            | 1,235     |   |     |   | 37,032     |         |   |   | 42,996         |   |   |   | -      |   |   |   | 81,263 |   |
| Lease payments                         |   |            | 145,997   |   |     |   | 129,724    |         |   |   | 49,020         |   |   |   | 83,288 |   |   |   | 408,029 |   |
| Sampling and processing                |   |            | 15,879    |   |     |   | 233,478    |         |   |   | 14,914         |   |   |   | -      |   |   |   | 264,271 |   |
| Site development                       |   |            | -         |   |     |   | 281,582    |         |   |   | -              |   |   |   | -      |   |   |   | 281,582 |   |
| Supplies                               |   |            | 65,516    |   |     |   | 793,462    |         |   |   | 8,079          |   |   |   | -      |   |   |   | 867,057 |   |
| Travel                                 |   |            | -         |   |     |   | 65,884     |         |   |   | 3,900          |   |   |   | -      |   |   |   | 69,784 |   |
|                                   |   |            | 714,945   |   |     |   | 7,906,235  |         |   |   | 231,020        |   |   |   | 92,452 |   |   |   | 8,944,652 |   |
|                                   |   |            |      |   |     |   |       |         |   |   |           |   |   |   |   |   |   |   |   |   |
| Balance as at December 31, 2011        |   |            | 1,930,084 |   |     |   | 14,746,190 |         |   |   | 357,724        |   |   |   | 92,452 |   |   |   | 17,126,450 |   |

----

----

|   | · | Pay Aurelio US$100,000 and reimbursement of US$16,567 of closing costs (paid) |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | Issue 600,000 common shares to Aurelio (issued at a value of $228,000) |
|--------|--------|------------------------------------------------------------------------|

|   | · | Pay Aurelio US$100,000 on or before August 31, 2010 (paid) |
|--------|--------|------------------------------------------------------------|

|   | · | Incur exploration expenditures of US$1,500,000 on or before August 31, 2012, with the Company having the option of making a cash payment to Aurelio of any shortfall |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Assume the obligations on each of the four underlying lease agreements |
|--------|--------|------------------------------------------------------------------------|

| Lessor | Mathewson                                                                            | WFW      | KM/IC    | KM/RC    | Total                     |   |
|--------|--------------------------------------------------------------------------------------|----------|----------|----------|---------------------------|--------|
|   |                                                                                 |     |     |     |                      |   |
| Year   |                                                                                 |     |     |     |                      |   |
| 2009   |           $ 35,000                 | $ 12,500 | $ 25,000 | $ 25,000 | $   97,500 | (Paid) |
| 2010   |              40,000 | 12,500   | 30,000   | 30,000   | 112,500                   | (Paid) |
| 2011   |              45,000 | 12,500   | 35,000   | 35,000   | 127,500                   | (Paid) |
| 2012   |              50,000 | 17,500   | 40,000   | 40,000   | 147,500                   |   |
| 2013   |              55,000 | 17,500   | 45,000   | 45,000   | 162,500                   |   |
| 2014   |              60,000 | 17,500   | 50,000   | 50,000   | 177,500                   |   |
| Onward |              60,000 | 17,500   | 50,000   | 50,000   | 177,500                   |   |

| Year      |   | Payments     |   |
|-----------|--------|--------------|--------|
| 2011      |   | $20,000      | (paid) |
| 2012      |   | 20,000       |   |
| 2013      |   |  30,000 |   |
| 2014      |   | 40,000       |   |
| 2015      |   | 50,000       |   |
| 2016-2020 |   | 60,000       |   |

----

----

|   | a. | Aladdin Sweepstakes Consolidated Mining Company (“Aladdin”) Lease/Purchase Agreement dated August 1, 2002; whereby RSM was granted the option to purchase the property on or before August 1, 2009 for a lump sum payment of US$2,000,000 less any lease payments as credits towards the payment, subject to a retained 1% NSR.  As of August 2009, RSM had made total lease payments of $235,000. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | Tomera Mining Lease dated January 22, 2003, which is subject to annual lease payments and expiring in January 2011. This lease is also subject to a 5% NSR.  The lease was not extended in January 2011 but was replaced with five separate leases which were entered into in September 2010 as described below. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c. | Sylvania Mining Lease Agreement dated December 1, 2005 which is subject to annual lease payments and expiring in December 2021. This lease is also subject to a 5 % NSR. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | To acquire the interest in the Railroad property, JMD must: |
|--------|-------------------------------------------------------------|

|   | · | Pay the remaining balance of US$1,765,000 to Aladdin  (paid) |
|--------|--------|------------------------------------------------------------------------|

|   | · | Pay US$1,200,000 to RSM  (paid by JKR prior to acquisition of JMD) |
|--------|--------|------------------------------------------------------------------------------|

|   | · | Pay the final lease payment of US$31,800 on the Tomera Mining Lease (paid) |
|--------|--------|----------------------------------------------------------------------------|

|   | · | Pay the 2009 lease payment of US$8,000 on the Sylvania Mining Lease (paid) |
|--------|--------|----------------------------------------------------------------------------|

|   | · | Pay the 2010 lease payment of US$8,000 on the Sylvania Mining Lease (paid) |
|--------|--------|----------------------------------------------------------------------------|

|   | · | Pay future annual lease payments under the Sylvania Mining Lease of US$20,000 per annum until 2020. |
|--------|--------|-----------------------------------------------------------------------------------------------------|

| Year   |   | Payments     |   |
|--------|--------|--------------|--------|
| 2010   |   | $70,040      | (Paid) |
| 2011   |   |  70,040 | (Paid) |
| 2012   |   |  70,040 |   |
| 2013   |   | 78,588       |   |
| 2014   |   | 78,588       |   |
| 2015   |   | 87,137       |   |
| 2016   |   | 87,137       |   |
| Onward |   |  96,887 |   |

----

----

----

----

| Year   |   | Payments     |   |
|--------|--------|--------------|--------|
| 2011   |   | $63,522      | (Paid) |
| 2012   |   | 63,522       |   |
| 2013   |   | 63,522       |   |
| 2014   |   |  76,226 |   |
| 2015   |   | 76,226       |   |
| 2016   |   | 88,930       |   |
| 2017   |   | 88,930       |   |
| 2018   |   | 101,635      |   |
| 2019   |   | 101,635      |   |
| 2020   |   | 101,635      |   |
| Onward |   | 111,887      |   |

|                | December 31,2011 | December 31,2010 | January 1, 2010 |
|---------------------|------------------|------------------|-----------------|
|                | $                | $                | $               |
| Accounts payable    | 665,801          | 1,213,616        | 64,187          |
| Accrued liabilities | 544,975          | 60,421           | 57,887          |
|                |             |             |            |
|                | 1,210,776        | 1,274,037        | 122,074         |

----

----

|                                    |   | Balance as at    |    |   |       |   |    | Balance as at    |   |
|-----------------------------------------|--------|------------------|---------|--------|------------|--------|---------|------------------|--------|
|                                    |   | December 31,2009 |    |   | Repayments |   |    | December 31,2010 |   |
|                                    |   |             |    |   |       |   |    |             |   |
| Note payable issued August 14, 2009 (i) |   | $                | 3,000   |   |       | $      | 3,000   |             |   | $ | - |   |
| Note payable issued October 2, 2009(i)  |   |             | 100,000 |   |       |   | 100,000 |             |   |   | - |   |
| Note payable issued August 17, 2009     |   |             | 75,000  |   |       |   | 75,000  |             |   |   | - |   |
| Note payable issued July 24, 2009 (ii)  |   |             | 309,500 |   |       |   | 309,500 |             |   |   | - |   |
| Note payable issued August 27, 2009     |   |             | 80,000  |   |       |   | 80,000  |             |   |   | - |   |
| Note payable issued August 21, 2009     |   |             | 91,000  |   |       |   | 91,000  |             |   |   | - |   |
|                                    |   |             | 658,500 |   |       |   | 658,500 |             |   |   | - |   |

|   | i) | The note payable was issued to an arm’s length party of JKR prior to its acquisition (Note 3), however the lender is an officer of the Company. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ii) | The note payable was issued to a company owned by a director of the Company. |
|--------|-----|------------------------------------------------------------------------------|

----

----

----

----

|                                                    |   | Number of warrants |       |   | Weighted average exercise price |   |
|---------------------------------------------------------|--------|--------------------|------------|--------|---------------------------------|--------|
|                                                    |   |               |       |   | $                               |   |   |
| Outstanding and exercisable at January 1, 2010          |   |               | -          |   |                            |   | - |   |
| Outstanding warrants of the Company on recapitalization |   |               | 1,466,875  |   |                            |   | 0.40 |   |
| Issued                                                  |   |               | 15,553,823 |   |                            |   | 0.99 |   |
| Exercised                                               |   |               | (31,250    | )      |                            |   | 0.40 |   |
| Outstanding and exercisable at December 31, 2010        |   |               | 16,989,448 |   |                            |   | 0.94 |   |
| Issued                                                  |   |               | 880,526    |   |                            |   | 0.95 |   |
| Exercised                                               |   |               | (4,896,191 | )      |                            |   | 0.81 |   |
| Outstanding and exercisable at December 31, 2011        |   |               | 12,973,783 |   |                            |   | 0.99 |   |

| ExercisePrice |   | Number Outstanding |   | Expiry Date        |
|---------------|--------|--------------------|--------|--------------------|
| $             |   |               |   |               |
| 0.65          |   | 98,700             |   | March 16, 2012     |
| 1.00          |   | 5,059,339          |   | July 12, 2012      |
| 0.65          |   | 137,400            | *      | September 10, 2012 |
| 1.00          |   | 2,684,616          | *      | September 10, 2012 |
| 1.00          |   | 2,046,800          | *      | September 21, 2012 |
| 0.65          |   | 33,437             | *      | September 22, 2012 |
| 1.00          |   | 615,385            | *      | September 22, 2012 |
| 0.65          |   | 43,888             | *      | September 29, 2012 |
| 1.00          |   | 1,373,692          | *      | September 29, 2012 |
| 0.95          |   | 880,526            |   | March 3, 2013      |
|          |   | 12,973,783         |   |               |

|   | * These warrants are subject to an acceleration clause whereby if the weighted average trading price of the Company’s shares is equal to or exceeds $1.50 per share for a period of 15 consecutive trading days then the Company will have the right to accelerate the expiry dates of the warrants upon 30 days notice. On March 20, 2012, the Company gave notice to the warrant holders that the expiry date of the warrants has been accelerated, and set to expire on April 19, 2012 (Note 18). |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                             |   | Number of options |      |   | Weighted average exercise price |   |
|----------------------------------|--------|-------------------|-----------|--------|---------------------------------|--------|
|                             |   |              |      |   | $                               |   |   |
| Outstanding at January 1, 2010   |   |              | -         |   |                            |   | - |   |
| Granted                          |   |              | 3,000,000 |   |                            |   | 0.70 |   |
| Outstanding at December 31, 2010 |   |              | 3,000,000 |   |                            |   | 0.70 |   |
| Granted                          |   |              | 1,955,000 |   |                            |   | 0.99 |   |
| Exercised                        |   |              | (120,000  | )      |                            |   | 0.65 |   |
| Forfeited                        |   |              | (800,000  | )      |                            |   | 0.80 |   |
| Outstanding at December 31, 2011 |   |              | 4,035,000 |   |                            |   | 0.83 |   |

----

----

| ExercisePrice |   | Number Outstanding |   | Number Exercisable |   | Expiry Date      |
|---------------|--------|--------------------|--------|--------------------|--------|------------------|
| $             |   |               |   |               |   |             |
| 0.73          |   | 200,000            |   | 200,000            |   | February 1, 2014 |
| 0.65          |   | 1,830,000          |   | 1,830,000          |   | July 13, 2015    |
| 0.82          |   | 250,000            |   | 250,000            |   | October 6, 2015  |
| 0.71          |   | 850,000            |   | 850,000            |   | January 25, 2016 |
| 1.27          |   | 400,000            |   | 400,000            |   | March 17, 2016   |
| 1.40          |   | 350,000            |   | 350,000            |   | April 5, 2016    |
| 1.26          |   | 155,000            |   | 155,000            |   | June 29, 2016    |
|          |   | 4,035,000          |   | 4,035,000          |   |             |

|   | The stock option reserve records items recognized as share-based compensation expense until such time that the stock options are exercised, at which time the corresponding amount will be transferred to share capital. If vested options expire unexercised or are forfeited, the amount recorded is transferred to deficit. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                       | As at December 31, 2011 |
|----------------------------|-------------------------|
|                       | Canada                  | US | Total |
|                       | $                       | $ | $ |
| Reclamation bonds          | -                       | 75,207 | 75,207 |
| Property and equipment     | 47,822                  | 11,090 | 58,912 |
| Mineral property interests | -                       | 17,126,450 | 17,126,450 |
|                       | 47,822                  | 17,212,747 | 17,260,569 |

|                       | As at December 31, 2010 |
|----------------------------|-------------------------|
|                       | Canada                  | US | Total |
|                       | $                       | $ | $ |
| Reclamation bonds          | -                       | 36,720 | 36,720 |
| Property and equipment     | 61,913                  | 14,260 | 76,173 |
| Mineral property interests | -                       | 8,181,798 | 8,181,798 |
|                       | 61,913                  | 8,232,778 | 8,294,691 |

----

----

|                                                                    |   | December 31, 2011 |       |    | December 31,2010 |   |
|-------------------------------------------------------------------------|--------|-------------------|------------|---------|------------------|--------|
|                                                                    |   | $                 |       |    |             | $      |   |   |
| Loss before income taxes                                                |   |              | (4,138,880 | )       |             |   | (3,447,786 | ) |
|                                                                    |   |              |       |    |             |   |   |   |
| Combined federal and provincial statutory income tax rate               |   |              | 26.50      | %       |             |   | 28.50 | % |
|                                                                    |   |              |       |    |             |   |   |   |
| Expected income tax recovery at statutory tax rates                     |   |              | (1,097,000 | )       |             |   | (983,000 | ) |
| Impact of different statutory tax rates on earnings of subsidiaries     |   |              | (31,000    | )  |             |   | (12,000 | )  |
| Non-deductible expenditures                                             |   |              | 395,000    |    |             |   | 509,000 |   |
| Impact of future income tax rates applied versus current statutory rate |   |              | 33,000     |    |             |   | 56,000 |   |
| Share issuance costs                                                    |   |              | (244,000   | )  |             |   | (247,000 | )  |
| Impact of acquisition                                                   |   |              | -          |    |             |   | (209,000 | )  |
| Change in unrecognized deductible temporary differences and others      |   |              | 944,000    |    |             |   | 886,000 |   |
| Total                                                                   |   |              | -          |    |             |   | - |   |

|                       | 2011      |   | Expiry dates |   | 2010   |      |
|----------------------------|-----------|--------|--------------|--------|--------|-----------|
|                       | $         |   |         |   |   | $         |   |
|                       |      |   |         |   |   |      |   |
| Share issuance costs       | 1,304,000 |   | 2012 to 2015 |   |   | 767,000   |   |
| Non-capital losses         | 7,595,000 |   | 2014 to 2031 |   |   | 4,747,000 |   |
| Capital assets             | 17,000    |   | No Expiry    |   |   | 13,000    |   |
| CEC                        | -         |   |         |   |   | 1,000     |   |
| Mineral property interests | 4,507,000 |   | No Expiry    |   |   | 4,507,000 |   |

----

----

|   | i. | As at December 31, 2011, $17,491 (December 31, 2010 - $33,390) was included in accounts payable and accrued liabilities owing to a company controlled by a director and officer of the Company. An advance of $16,913 (December 31, 2010 - $Nil), on account of future expenses and fees was included in prepaid expenses. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ii. | As at December 31, 2011, $12,720 (December 31, 2010 - $Nil) was included in accounts payable owing to directors of the Company. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------|

|   | iii. | Amounts due to shareholders are unsecured, non-interest bearing and have no fixed terms of repayment.  As at December 31, 2011, there is a balance outstanding of $2,005 (December 31, 2010 - $3,755). |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | iv. | In March 2011, the Company granted to a director and officer an NSR of 0.5% to 1% on all properties staked by him and acquired by the Company subject to certain provisions including a buy-down provision of $500,000 per 0.5%. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | v. | Incurred rent expense of $73,575 (December 31, 2010 - $30,656) to a company controller by a director and officer of the Company. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------|

|                          |   | For the year ended December 31, |      |
|-------------------------------|--------|---------------------------------|-----------|
|                          |   | 2011                            |      |   | 2010 |   |
|                          |   |                            |      |   |   |   |
| Management fees               |   | $                               | 424,000   |   |   | $ | 197,405 |   |
| Professional  fees  |   |                            | 70,000    |   |   |   | - |   |
| Secretarial fees              |   |                            | 9,000     |   |   |   | - |   |
| Mineral property expenditures |   |                            | 134,518   |   |   |   | 154,545 |   |
| Wages and salaries            |   |                            | 33,629    |   |   |   | - |   |
| Share-based compensation      |   |                            | 589,111   |   |   |   | 839,064 |   |
|                          |   |                            | 1,260,258 |   |   |   | 1,191,014 |   |

----

----

|   | a) | Currency risk |
|--------|----|---------------|

|   | b) | Credit risk |
|--------|----|-------------|

|   | c) | Interest rate risk |
|--------|----|--------------------|

----

----

|   | a) | On January 1, 2010, the Company entered into a sublease agreement for an office space in Vancouver, B.C. for a term of 4 years and 3 months expiring March 31, 2014 and incurring monthly rent payments of $6,867 per month. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | On September 1, 2011, the Company entered into a commercial lease agreement for an office space in Elko, Nevada for a term of 36 months expiring August 30, 2014, incurring monthly rent payment of US$4,400.  As at December 31, 2011, a security deposit of US$2,400 was paid and is included in prepaid expenses. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                      | Vancouver Office | Elko Office | Total   |
|-----------------------------------------------------------|------------------|-------------|---------|
|                                                      | $                | $           | $       |
| Payable not later than one year                           | 82,404           | 53,698      | 136,102 |
| Payable later than one year and not later than five years | 103,005          | 89,496      | 192,501 |
| Payable later than five years                             | -                | -           | -       |
| Total                                                     | 185,409          | 143,194     | 328,603 |

|   | c) | In March 2011, the Company signed four separate consulting agreements with consultants, officers, and directors of the Company to provide management consulting and exploration services to the Company for an indefinite term effective January 1, 2011 and one consulting agreement with an officer and director of the Company to provide management consulting services to the Company for an indefinite term effective February 1, 2011. The agreements require total combined payments of $52,500 per month.  Included in each agreement is a provision for a two year payout in the event of termination without cause and three year payout in the event of a change in control. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a) | In February 2012, the Company granted 740,000 stock options to certain directors, officers, consultants, and employee of the Company at a price of $1.16 per share. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | In March 2012, the Company gave notice to certain warrant holders that the expiry date of the warrants had been accelerated, and set to expire on April 19, 2012 (Note 11). |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | Subsequent to December 31, 2011, the Company entered into various lease agreements with certain land holders. All of the leases have a primary term of 10 years, but will continue thereafter as long as commercial mining operations are being conducted on the lands. Each lease is subject to a small upfront signing bonus and annual advance minimum royalty payments for US$17.50 per acre in the first and second year, increasing to US$28.00 per acre in the seventh year and thereafter, of which approximately US$32,796 has been paid to date. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d) | In March 2012, the Company granted 150,000 stock options to certain directors of the Company at a price of $1.82 per share. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------|

|   | e) | Subsequent to December 31, 2011, 313,425 share purchase warrants were exercised at a price of $0.65 per share for total proceeds of $203,726 and 8,890,554 share purchase warrants were exercised at a price of $1.00 per share for total proceeds of $8,890,554. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | f) | Subsequent to December 31, 2011, 70,000 stock options were exercised at a price of $0.65 per share for total proceeds of $45,500 and 25,000 stock options were exercised at a price of $0.71 per share for total proceeds of $17,750. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | b) | to apply the requirements of IFRS 2, Share-based payment, only to equity instruments granted after November 7, 2002  which had not vested as of the Transition Date; and |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | The reconciliation between Canadian GAAP and IFRS consolidated statement of financial position as at January 1, 2010 (date of transition to IFRS) is provided below: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                             | January 1, 2010 |   |
|--------------------------------------------------|-----------------|--------|
|                                             | Note            |   | GAAP |   |   | Effect of transition to IFRS |   |   | IFRS |   |
|                                             |            |   |   | $ |   |   |   | $ |   |   |   | $ |   |
| Assets                                           |            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                                          |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                                             |            |   |   | 919,739 |   |   |   | - |   |   |   | 919,739 |   |
| Receivables                                      |            |   |   | 6,747 |   |   |   | - |   |   |   | 6,747 |   |
| Prepaid expenses                                 |            |   |   | 3,046 |   |   |   | - |   |   |   | 3,046 |   |
|                                             |            |   |   | 929,532 |   |   |   | - |   |   |   | 929,532 |   |
|                                             |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Property and equipment                           |            |   |   | 6,750 |   |   |   | - |   |   |   | 6,750 |   |
|                                             |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Mineral property interests                       | (a)             |   |   | 4,654,950 |   |   |   | (170,453 | ) |   |   | 4,484,497 |   |
|                                             |            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |            |   |   | 5,591,232 |   |   |   | (170,453 | ) |   |   | 5,420,779 |   |
|                                             |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities                                      |            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                                          |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts payable and accrued liabilities         |            |   |   | 122,074 |   |   |   | - |   |   |   | 122,074 |   |
| Due to shareholders                              |            |   |   | 22,528 |   |   |   | - |   |   |   | 22,528 |   |
| Notes payable                                    |            |   |   | 658,500 |   |   |   | - |   |   |   | 658,500 |   |
|                                             |            |   |   | 803,102 |   |   |   | - |   |   |   | 803,102 |   |
|                                             |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred income taxes                            | (a)             |   |   | 170,453 |   |   |   | (170,453 | ) |   |   | - |   |
|                                             |            |   |   | 973,555 |   |   |   | (170,453 | ) |   |   | 803,102 |   |
|                                             |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Shareholders’ equity                       |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital stock                                    |            |   |   | 4,909,362 |   |   |   | - |   |   |   | 4,909,362 |   |
| Deficit                                          |            |   |   | (291,685 | ) |   |   | - |   |   |   | (291,685 | ) |
|                                             |            |   |   | 4,617,677 |   |   |   | - |   |   |   | 4,617,677 |   |
|                                             |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Total shareholders’ equity and liabilities |            |   |   | 5,591,232 |   |   |   | (170,453 | ) |   |   | 5,420,779 |   |

----

----

|                                             | December 31, 2010 |   |
|--------------------------------------------------|-------------------|--------|
|                                             | Note              |   | GAAP |   |   | Effect of transition to IFRS |   |   | IFRS |   |
|                                             |              |   |   | $ |   |   |   | $ |   |   |   | $ |   |
| Assets                                           |              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |              |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                                          |              |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                                             |              |   |   | 4,109,636 |   |   |   | - |   |   |   | 4,109,636 |   |
| Receivables                                      |              |   |   | 49,370 |   |   |   | - |   |   |   | 49,370 |   |
| Prepaid expenses                                 |              |   |   | 51,453 |   |   |   | - |   |   |   | 51,453 |   |
|                                             |              |   |   | 4,210,459 |   |   |   | - |   |   |   | 4,210,459 |   |
|                                             |              |   |   |   |   |   |   |   |   |   |   |   |   |
| Property and equipment                           |              |   |   | 76,173 |   |   |   | - |   |   |   | 76,173 |   |
|                                             |              |   |   |   |   |   |   |   |   |   |   |   |   |
| Mineral property interests                       | (a)               |   |   | 8,352,251 |   |   |   | (170,453 | ) |   |   | 8,181,798 |   |
|                                             |              |   |   |   |   |   |   |   |   |   |   |   |   |
| Reclamation bonds                                |              |   |   | 36,720 |   |   |   | - |   |   |   | 36,720 |   |
|                                             |              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |              |   |   | 12,675,603 |   |   |   | (170,453 | ) |   |   | 12,505,150 |   |
|                                             |              |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities                                      |              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |              |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                                          |              |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts payable and accrued liabilities         |              |   |   | 1,274,037 |   |   |   | - |   |   |   | 1,274,037 |   |
| Due to shareholders                              |              |   |   | 3,755 |   |   |   | - |   |   |   | 3,755 |   |
|                                             |              |   |   | 1,277,792 |   |   |   | - |   |   |   | 1,277,792 |   |
|                                             |              |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred income taxes                            | (a)               |   |   | 143,453 |   |   |   | (143,453 | ) |   |   | - |   |
|                                             |              |   |   | 1,421,245 |   |   |   | (143,453 | ) |   |   | 1,277,792 |   |
|                                             |              |   |   |   |   |   |   |   |   |   |   |   |   |
| Shareholders’ equity                       |              |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital stock                                    |              |   |   | 12,855,676 |   |   |   | - |   |   |   | 12,855,676 |   |
| Reserves                                         | (b)               |   |   | 2,111,153 |   |   |   | - |   |   |   | 2,111,153 |   |
| Deficit                                          | (a)               |   |   | (3,712,471 | ) |   |   | (27,000 | ) |   |   | (3,739,471 | ) |
|                                             |              |   |   | 11,254,358 |   |   |   | (27,000 | ) |   |   | 11,227,358 |   |
|                                             |              |   |   |   |   |   |   |   |   |   |   |   |   |
| Total shareholders’ equity and liabilities |              |   |   | 12,675,603 |   |   |   | (170,453 | ) |   |   | 12,505,150 |   |

----

----

|                                     | For the Year Ended December 31, 2010 |   |
|------------------------------------------|--------------------------------------|--------|
|                                     | Note                                 |   | GAAP |   |   | Effect of transition to IFRS |   |   | IFRS |   |
|                                     |                                 |   | $ |   |   | $ |   |   | $ |   |
| EXPENSES                                 |                                 |   |   |   |   |   |   |   |   |   |
| Advertising and promotion                |                                 |   |   | 65,089 |   |   |   | - |   |   |   | 65,089 |   |
| Bank charge and interest                 |                                 |   |   | 6,245 |   |   |   | - |   |   |   | 6,245 |   |
| Consulting fees                          |                                 |   |   | 392,200 |   |   |   | - |   |   |   | 392,200 |   |
| Depreciation                             |                                 |   |   | 9,380 |   |   |   | - |   |   |   | 9,380 |   |
| Foreign exchange loss                    |                                 |   |   | 35,791 |   |   |   | - |   |   |   | 35,791 |   |
| Insurance                                |                                 |   |   | 11,214 |   |   |   | - |   |   |   | 11,214 |   |
| Investor relations                       |                                 |   |   | 189,604 |   |   |   | - |   |   |   | 189,604 |   |
| Loan interest                            |                                 |   |   | 23,422 |   |   |   | - |   |   |   | 23,422 |   |
| Management fees                          |                                 |   |   | 201,905 |   |   |   | - |   |   |   | 201,905 |   |
| Office                                   |                                 |   |   | 118,371 |   |   |   | - |   |   |   | 118,371 |   |
| Professional fees                        |                                 |   |   | 276,487 |   |   |   | - |   |   |   | 276,487 |   |
| Property investigation                   |                                 |   |   | 14,811 |   |   |   | - |   |   |   | 14,811 |   |
| Regulatory and shareholder service       |                                 |   |   | 36,103 |   |   |   | - |   |   |   | 36,103 |   |
| Rent                                     |                                 |   |   | 52,239 |   |   |   | - |   |   |   | 52,239 |   |
| Share-based compensation                 |                                 |   |   | 1,776,672 |   |   |   | - |   |   |   | 1,776,672 |   |
| Travel and entertainment                 |                                 |   |   | 214,875 |   |   |   | - |   |   |   | 214,875 |   |
| Wages and salaries                       |                                 |   |   | 23,952 |   |   |   | - |   |   |   | 23,952 |   |
|                                     |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss before other item                   |                                 |   |   | 3,448,360 |   |   |   | - |   |   |   | 3,448,360 |   |
|                                     |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER ITEM                               |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                          |                                 |   |   | 574 |   |   |   | - |   |   |   | 574 |   |
|                                     |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss before income taxes                 |                                 |   |   | (3,447,786 | ) |   |   | - |   |   |   | (3,447,786 | ) |
|                                     |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred income tax recovery             | (a)                                  |   |   | 27,000 |   |   |   | (27,000 | ) |   |   | - |   |
|                                     |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss and comprehensive loss for the year |                                 |   |   | (3,420,786 | ) |   |   | (27,000 | ) |   |   | (3,447,786 | ) |

----

----

|                                            | For the Year Ended December 31, 2010 |   |
|-------------------------------------------------|--------------------------------------|--------|
|                                            | Note                                 |   | GAAP |   |   | Effect of transition to IFRS |   |   | IFRS |   |
|                                            |                                 |   | $ |   |   | $ |   |   | $ |   |
| Cash flows used in operating activities         |                                 |   |   |   |   |   |   |   |   |   |
| Loss for the year                               | (a)                                  |   |   | (3,420,786 | ) |   |   | (27,000 | ) |   |   | (3,447,786 | ) |
| Items not affecting cash:                       |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|  Depreciation                              |                                 |   |   | 9,380 |   |   |   | - |   |   |   | 9,380 |   |
|  Share-based compensation                  |                                 |   |   | 1,776,672 |   |   |   | - |   |   |   | 1,776,672 |   |
|  Deferred income tax recovery              | (a)                                  |   |   | (27,000 | ) |   |   | 27,000 |   |   |   | - |   |
|  Changes in non-cash working capital items |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|  Increase in receivables                   |                                 |   |   | (8,580 | ) |   |   | - |   |   |   | (8,580 | ) |
|  Increase in prepaid expenses              |                                 |   |   | (27,878 | ) |   |   | - |   |   |   | (27,878 | ) |
|  Increase in accounts payable              |                                 |   |   | 32,181 |   |   |   | - |   |   |   | 32,181 |   |
|                                            |                                 |   |   | (1,666,011 | ) |   |   | - |   |   |   | (1,666,011 | ) |
|                                            |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows used in investing activities         |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|  Acquisition of property and equipment     |                                 |   |   | (78,803 | ) |   |   | - |   |   |   | (78,803 | ) |
|  Reclamation bonds                         |                                 |   |   | (36,720 | ) |   |   | - |   |   |   | (36,720 | ) |
|  Mineral property expenditures             |                                 |   |   | (3,084,197 | ) |   |   | - |   |   |   | (3,084,197 | ) |
|                                            |                                 |   |   | (3,199,720 | ) |   |   | - |   |   |   | (3,199,720 | ) |
|                                            |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows for financing activities             |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|  Proceed from share issuances              |                                 |   |   | 6,005,170 |   |   |   | - |   |   |   | 6,005,170 |   |
|  Share issuance costs                      |                                 |   |   | (632,952 | ) |   |   | - |   |   |   | (632,952 | ) |
|  Notes payable repayment                   |                                 |   |   | (658,500 | ) |   |   | - |   |   |   | (658,500 | ) |
|  Due to shareholders                       |                                 |   |   | (18,773 | ) |   |   | - |   |   |   | (18,773 | ) |
|  Loan to GSV prior to recapitalization     |                                 |   |   | (154,650 | ) |   |   | - |   |   |   | (154,650 | ) |
|  Cash acquired on recapitalization         |                                 |   |   | 3,678,349 |   |   |   | - |   |   |   | 3,678,349 |   |
|  Recapitalization costs                    |                                 |   |   | (163,016 | ) |   |   | - |   |   |   | (163,016 | ) |
|                                            |                                 |   |   | 8,055,628 |   |   |   | - |   |   |   | 8,055,628 |   |
|                                            |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Net change in cash                              |                                 |   |   | 3,189,897 |   |   |   | - |   |   |   | 3,189,897 |   |
|                                            |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash, beginning of year                         |                                 |   |   | 919,739 |   |   |   | - |   |   |   | 919,739 |   |
|                                            |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash, end of year                               |                                 |   |   | 4,109,636 |   |   |   | - |   |   |   | 4,109,636 |   |

----

----

|   | a) | Deferred tax on mineral properties |
|--------|----|------------------------------------|

|   | Under Canadian GAAP, the Company recorded future income taxes on temporary differences arising on the initial recognition of the Railroad Project property interest in a transaction which was not a business combination and affected neither accounting profit (loss) nor taxable profit (loss). IAS 12, Income Taxes ("IAS 12"), does not permit the recognition of deferred taxes on such transactions. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As of December 31, 2010, the Company derecognized the impacts of all deferred taxes which had previously been recognized on the initial acquisition of mineral properties through transactions not considered business combinations and affecting neither accounting profit (loss) nor taxable profit (loss). |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | Share-based payments |
|--------|----|----------------------|

|   | c) | Reserves |
|--------|----|----------|

----