----

----

| Vancouver, Canada | Chartered Accountants |
|-------------------|-----------------------|
|              |                  |
| March 28, 2013    |                  |

----

----

|                               | Page                                                             |
|------------------------------------|------------------------------------------------------------------|
|                               |                                                             |
| Independent Auditors’ Report | 1                                                                |
|                               |                                                             |   |
| Contents                           | 3                                                                |
|                               |                                                             |   |
|                          | 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 |

----

----

|                                              |   | December 31, |        |   | December 31, |   |
|---------------------------------------------------|--------|--------------|-------------|--------|--------------|--------|
|                                              |   | 2012         |        |   | 2011         |   |
|                                              |   | $            |        |   | $            |   |
| Assets                                            |   |         |        |   |         |   |   |   |
|                                              |   |         |        |   |         |   |   |   |
| Current                                           |   |         |        |   |         |   |   |   |
| Cash and cash equivalents (Note 3)                |   |         | 10,785,758  |   |         |   | 7,886,869 |   |
| Receivables (Note 4)                              |   |         | 102,953     |   |         |   | 93,596 |   |
| Prepaid expenses (Note 5)                         |   |         | 85,948      |   |         |   | 71,508 |   |
|                                              |   |         | 10,974,659  |   |         |   | 8,051,973 |   |
|                                              |   |         |        |   |         |   |   |   |
| Property and equipment (Note 6)                   |   |         | 41,652      |   |         |   | 58,912 |   |
|                                              |   |         |        |   |         |   |   |   |
| Exploration and evaluation assets (Note 7)        |   |         | 42,165,595  |   |         |   | 17,126,450 |   |
|                                              |   |         |        |   |         |   |   |   |
| Reclamation bonds (Note 8)                        |   |         | 300,658     |   |         |   | 75,207 |   |
|                                              |   |         |        |   |         |   |   |   |
|                                              |   |         | 53,482,564  |   |         |   | 25,312,542 |   |
|                                              |   |         |        |   |         |   |   |   |
| Liabilities                                       |   |         |        |   |         |   |   |   |
|                                              |   |         |        |   |         |   |   |   |
| Current                                           |   |         |        |   |         |   |   |   |
| Accounts payable and accrued liabilities (Note 9) |   |         | 1,838,851   |   |         |   | 1,210,776 |   |
| Due to shareholders (Note 12)                     |   |         | -           |   |         |   | 2,005 |   |
|                                              |   |         | 1,838,851   |   |         |   | 1,212,781 |   |
|                                              |   |         |        |   |         |   |   |   |
| Shareholders' equity                              |   |         |        |   |         |   |   |   |
| Share capital (Note 10)                           |   |         | 60,102,516  |   |         |   | 27,828,590 |   |
| Reserves (Note 10)                                |   |         | 4,316,102   |   |         |   | 3,852,852 |   |
| Deficit                                           |   |         | (12,774,905 | )      |         |   | (7,581,681 | ) |
|                                              |   |         | 51,643,713  |   |         |   | 24,099,761 |   |
|                                              |   |         |        |   |         |   |   |   |
|                                              |   |         | 53,482,564  |   |         |   | 25,312,542 |   |

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

----

----

|                                       |   | For the year ended December 31, |       |
|--------------------------------------------|--------|---------------------------------|------------|
|                                       |   | 2012                            |       |   | 2011 |   |
|                                       |   | $                               |       |   | $ |   |
|                                       |   |                            |       |   |   |   |   |   |
| Expenses                                   |   |                            |       |   |   |   |   |   |
| Advertising and promotion                  |   |                            | 97,756     |   |   |   | 67,985 |   |
| Bank charge and interest                   |   |                            | 17,383     |   |   |   | 8,523 |   |
| Consulting fees                            |   |                            | 186,472    |   |   |   | 167,073 |   |
| Depreciation                               |   |                            | 17,260     |   |   |   | 17,261 |   |
| Foreign exchange loss                      |   |                            | 522,946    |   |   |   | 56,224 |   |
| Insurance                                  |   |                            | 50,857     |   |   |   | 20,762 |   |
| Investor relations                         |   |                            | 255,974    |   |   |   | 234,388 |   |
| Management fees                            |   |                            | 675,712    |   |   |   | 424,000 |   |
| Office                                     |   |                            | 219,801    |   |   |   | 210,033 |   |
| Professional fees                          |   |                            | 493,239    |   |   |   | 450,569 |   |
| Property investigation                     |   |                            | -          |   |   |   | 17,041 |   |
| Regulatory and shareholders’ service |   |                            | 263,726    |   |   |   | 66,094 |   |
| Rent                                       |   |                            | 126,354    |   |   |   | 122,630 |   |
| Share-based compensation (Note 10)         |   |                            | 1,340,120  |   |   |   | 1,468,957 |   |
| Travel and related                         |   |                            | 780,266    |   |   |   | 465,546 |   |
| Wages and salaries                         |   |                            | 223,650    |   |   |   | 192,568 |   |
|                                       |   |                            |       |   |   |   |   |   |
|                                       |   |                            | (5,271,516 | ) |   |   | (3,989,654 | ) |
|                                       |   |                            |       |   |   |   |   |   |
|                                       |   |                            |       |   |   |   |   |   |
| Interest income                            |   |                            | 78,292     |   |   |   | 93,083 |   |
| Loss on debt settlement (Note 10)          |   |                            | -          |   |   |   | (242,309 | ) |
|                                       |   |                            |       |   |   |   |   |   |
| Loss and comprehensive loss for the year   |   |                            | (5,193,224 | ) |   |   | (4,138,880 | ) |
|                                       |   |                            |       |   |   |   |   |   |
| Basic and diluted loss per share           |   |                            | (0.07      | ) |   |   | (0.07 | ) |
|                                       |   |                            |       |   |   |   |   |   |
| Weighted average number of common          |   |                            |       |   |   |   |   |   |
|  shares outstanding                   |   |                            | 75,049,087 |   |   |   | 56,559,912 |   |

----

----

|                                                                                                                    |   | For the year ended December 31, |        |
|-------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|-------------|
|                                                                                                                    |   | 2012                            |        |   | 2011 |   |
|                                                                                                                    |   | $                               |        |   | $ |   |
|  Cash flows used in operating activities                                                                           |   |                            |        |   |   |   |   |   |
|  Net loss for the year                                                                                             |   |                            | (5,193,224  | ) |   |   | (4,138,880 | ) |
|  Items not affecting cash and cash equivalents                                                                     |   |                            |        |   |   |   |   |   |
|  Depreciation                                                                                                      |   |                            | 17,260      |   |   |   | 17,261 |   |
|  Share-based compensation                                                                                          |   |                            | 1,340,120   |   |   |   | 1,468,957 |   |
|  Loss on debt settlement                                                                                           |   |                            | -           |   |   |   | 242,309 |   |
|  Changes in non-cash working capital items                                                                         |   |                            |        |   |   |   |   |   |
|  Increase in receivables                                                                                           |   |                            | (9,357      | ) |   |   | (44,226 | ) |
|  Increase in prepaid expenses                                                                                      |   |                            | (14,440     | ) |   |   | (21,805 | ) |
|  Decrease in accounts payable and accrued liabilities                                                              |   |                            | (21,075     | ) |   |   | (8,918 | ) |
|                                                                                                                    |   |                            | (3,880,716  | ) |   |   | (2,485,302 | ) |
|                                                                                                                    |   |                            |        |   |   |   |   |   |
|  Cash flows used in investing activities                                                                           |   |                            |        |   |   |   |   |   |
|  Reclamation bonds                                                                                                 |   |                            | (225,451    | ) |   |   | (38,487 | ) |
|  Exploration and evaluation assets expenditures                                                                    |   |                            | (24,389,995 | ) |   |   | (8,704,435 | ) |
|                                                                                                                    |   |                            | (24,615,446 | ) |   |   | (8,742,922 | ) |
|                                                                                                                    |   |                            |        |   |   |   |   |   |
|  Cash flows from financing activities                                                                              |   |                            |        |   |   |   |   |   |
|  Proceeds from share issuances                                                                                     |   |                            | 20,514,000  |   |   |   | 11,950,000 |   |
|  Share issuance costs                                                                                              |   |                            | (1,863,253  | ) |   |   | (990,510 | ) |
|  Proceeds from exercise of warrants                                                                                |   |                            | 12,078,559  |   |   |   | 3,967,967 |   |
|  Proceeds from exercise of stock options                                                                           |   |                            | 667,750     |   |   |   | 78,000 |   |
|  Shareholders' loan repayment                                                                                      |   |                            | (2,005      | ) |   |   | - |   |
|                                                                                                                    |   |                            | 31,395,051  |   |   |   | 15,005,457 |   |
|                                                                                                                    |   |                            |        |   |   |   |   |   |
|  Net change in cash and cash equivalents                                                                           |   |                            | 2,898,889   |   |   |   | 3,777,233 |   |
|                                                                                                                    |   |                            |        |   |   |   |   |   |
|  Cash and cash equivalents, beginning of year                                                                      |   |                            | 7,886,869   |   |   |   | 4,109,636 |   |
|                                                                                                                    |   |                            |        |   |   |   |   |   |
|  Cash and cash equivalents, end of year                                                                            |   |                            | 10,785,758  |   |   |   | 7,886,869 |   |
|                                                                                                                    |   |                            |        |   |   |   |   |   |
|  Non-cash transactions                                                                                             |   |                            |        |   |   |   |   |   |
|  Financing fees - warrants                                                                                         |   |                            | -           |   |   |   | 752,464 |   |
|  Shares issued for debt settlement                                                                                 |   |                            | -           |   |   |   | 467,309 |   |
|  Exploration and evaluation assets expenditures in accounts  payable and accrued liabilities at year end |   |                            | 1,559,798   |   |   |   | 910,648 |   |
|  Due to shareholders offset by prepaid expenses                                                                    |   |                            | -           |   |   |   | 1,750 |   |

----

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|                                 |   | Number of Shares Issued |       |   | Share Capital |   |       | Reserves |   |   | Deficit   |   |   | Total Shareholders' Equity |        |
|--------------------------------------|--------|-------------------------|------------|--------|---------------|--------|------------|----------|--------|--------|-----------|--------|--------|----------------------------|-------------|
|                                 |   |                    |       |   | $             |   |       | $        |   |   | $         |   |   | $                          |        |
| 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                 |   |                    | -          |   |          |   | (1,673,414 | )        |   |   | -         |   |   |                       | -           |   |   |   | (1,673,414 | ) |
| Agents warrants issued for           |   |                    | -          |   |          |   | -          |     |   |   | 752,464   |   |   |                       | -           |   |   |   | 752,464 |   |
|    private placements |
| 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 |   |
|                                 |   |                    |       |   |          |   |       |     |   |   |      |   |   |                       |        |   |   |   |   |   |
| Shares issued for cash               |   |                    | 10,000,000 |   |          |   | 20,514,000 |     |   |   | -         |   |   |                       | -           |   |   |   | 20,514,000 |   |
| Share issuance costs                 |   |                    | -          |   |          |   | (1,863,253 | )        |   |   | -         |   |   |                       | -           |   |   |   | (1,863,253 | ) |
| Warrants exercised                   |   |                    | 12,193,257 |   |          |   | 12,386,529 |     |   |   | (307,970  | )      |   |                       | -           |   |   |   | 12,078,559 |   |
| Stock options exercised              |   |                    | 950,000    |   |          |   | 1,236,650  |     |   |   | (568,900  | )      |   |                       | -           |   |   |   | 667,750 |   |
| Share-based compensation             |   |                    | -          |   |          |   | -          |     |   |   | 1,340,120 |   |   |                       | -           |   |   |   | 1,340,120 |   |
| Net loss for the year                |   |                    | -          |   |          |   | -          |     |   |   | -         |   |   |                       | (5,193,224  | ) |   |   | (5,193,224 | ) |
| Balance at December 31, 2012         |   |                    | 83,820,109 |   |          |   | 60,102,516 |     |   |   | 4,316,102 |   |   |                       | (12,774,905 | ) |   |   | 51,643,713 |   |

----

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----

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|   | 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. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | Costs directly related to the acquisition and exploration of exploration and evaluation assets are capitalized once the legal rights to explore the exploration and evaluation assets 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.  Exploration and evaluation assets are reviewed for impairment when facts and circumstances suggest that the carrying amount may exceed its recoverable amount. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

----

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

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| a)   |  IFRS 7 – Financial Instruments: Disclosures applied to offsetting financial assets and financial liabilities in accordance with IAS 32. It is effective for annual periods beginning on or after January 1, 2013 with early adoption permitted. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b)   |  IFRS 9 – Financial Instruments: Classification and Measurement applies to classification and measurement of financial assets and liabilities as defined in IAS 39. It is effective for annual periods beginning on or after January 1, 2015 with early adoption permitted. The Company does not expect any effect on the Company’s financial statements. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c)   |  IFRS 10 – Consolidation replaces SIC-12 Consolidation—Special Purpose Entities and parts of IAS 27 Consolidated and Separate Financial Statements requires an entity to consolidate an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. It is effective for annual periods beginning on or after January 1, 2013 with early adoption permitted. The Company does not expect any effect on the Company’s financial statements. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d)   |  IFRS 12 – Disclosure of Interest in Other Entities establishes disclosure requirements for interests in other entities, such as joint arrangements, associates, and special purpose vehicles and off balance sheet vehicles. The standard carries forward existing disclosures and also introduces additional disclosures addressing the nature of, and risks associated with, an entity’s interests in other entities. It is effective for annual periods beginning on or after January 1, 2013 with early adoption permitted. The Company does not expect any effect on the Company’s financial statements. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| e)   |  IAS 27 – Separate Financial Statement addresses accounting for subsidiaries, jointly controlled entities and associates in non-consolidated financial statements. It is effective for annual periods beginning on or after January 1, 2013 with early adoption permitted. The Company does not expect any effect on the Company’s financial statements. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| f)   |  IAS 1 – Presentation of Financial Statements amendment requires components of other comprehensive income (OCI) to be separately presented between those that may be reclassified to income and those that will not. The amendments are effective for annual periods beginning on or after July 1, 2012. The Company does not expect any effect on the Company’s financial statements. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| g)   |  IAS 32 – Financial Instruments: Presentation amendment provides clarification on the application of offsetting rules. The amendments are effective for annual periods beginning on or after January 1, 2014. The Company does not expect any effect on the Company’s financial statements. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                      |   | December 31, 2012 |       |   | December 31, 2011 |   |
|-------------------------------------------|--------|-------------------|------------|--------|-------------------|--------|
|                                      |   | $                 |       |   | $                 |   |
| Cash at bank                              |   |              | 2,137,699  |   |              |   | 1,707,465 |   |
| Cash held in lawyers’ trust account |   |              | 90,894     |   |              |   | 86,576 |   |
| Cash equivalents                          |   |              | 8,557,165  |   |              |   | 6,092,828 |   |
|                                      |   |              |       |   |              |   |   |   |
|                                      |   |              | 10,785,758 |   |              |   | 7,886,869 |   |

|                 |   | December 31, 2012 |    |   | December 31, 2011 |   |
|----------------------|--------|-------------------|---------|--------|-------------------|--------|
|                 |   | $                 |    |   | $                 |   |
| Sales tax receivable |   |              | 102,953 |   |              |   | 92,579 |   |
| Employee advances    |   |              | -       |   |              |   | 1,017 |   |
|                 |   |              |    |   |              |   |   |   |
|                 |   |              | 102,953 |   |              |   | 93,596 |   |

----

----

|             |   | December 31, 2012 |   |   | December 31, 2011 |   |
|------------------|--------|-------------------|--------|--------|-------------------|--------|
|             |   | $                 |   |   | $                 |   |
| Prepaid expenses |   |              | 79,791 |   |              |   | 65,351 |   |
| Deposits         |   |              | 6,157  |   |              |   | 6,157 |   |
|             |   |              |   |   |              |   |   |   |
|             |   |              | 85,948 |   |              |   | 71,508 |   |

|   | NOTE 6 - Property and Equipment |
|--------|---------------------------------|

|                                            |   | Leasehold improvements |   |   | Furniture and fixtures |   |   | Total  |   |
|-------------------------------------------------|--------|------------------------|--------|--------|------------------------|--------|--------|--------|--------|
|                                            |   | $                      |   |   | $                      |   |   | $      |   |
| Cost:                                           |   |                   |   |   |                   |   |   |   |   |   |   |   |
| At December 31, 2011 and December 31, 2012 |   |                   | 65,275 |   |                   |   | 21,028 |   |   |   | 86,303 |   |
| Depreciation:                                   |   |                   |   |   |                   |   |   |   |   |   |   |   |
| At December 31, 2011                            |   |                   | 19,583 |   |                   |   | 7,808  |   |   |   | 27,391 |   |
| Charge for the year                             |   |                   | 13,056 |   |                   |   | 4,204  |   |   |   | 17,260 |   |
| At December 31, 2012                       |   |                   | 32,639 |   |                   |   | 12,012 |   |   |   | 44,651 |   |
| Net book value:                                 |   |                   |   |   |                   |   |   |   |   |   |   |   |
| At December 31, 2011                            |   |                   | 45,692 |   |                   |   | 13,220 |   |   |   | 58,912 |   |
| At December 31, 2012                            |   |                   | 32,636 |   |                   |   | 9,016  |   |   |   | 41,652 |   |

|                          |   | 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 year           |   |                   | 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 |   |

----

----

|   | Expenditures for the fiscal year related to exploration and evaluation assets located in Nevada, USA are as follows: |
|--------|----------------------------------------------------------------------------------------------------------------------|

|                                   |   | Crescent Valley |      |   | Railroad |   |       | Camp Douglas |   |   | South Railroad |   |   | Total  |      |
|----------------------------------------|--------|-----------------|-----------|--------|----------|--------|------------|--------------|--------|--------|----------------|--------|--------|--------|-----------|
|                                   |   | $               |      |   | $        |   |       | $            |   |   | $              |   |   | $      |      |
|                                   |   |            |      |   |     |   |       |         |   |   |           |   |   |   |      |   |   |   |   |   |
| 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                               |   |            | 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 |   |
|                                   |   |            |      |   |     |   |       |         |   |   |           |   |   |   |      |   |   |   |   |   |
| Property acquisition and staking costs |   |            | 47,827    |   |     |   | -          |         |   |   | -              |   |   |   | -         |   |   |   | 47,827 |   |
| Exploration expenses                   |   |            |      |   |     |   |       |         |   |   |           |   |   |   |      |   |   |   |   |   |
| Claim maintenance fees                 |   |            | 176,121   |   |     |   | 55,651     |         |   |   | 41,476         |   |   |   | 10,784    |   |   |   | 284,032 |   |
| Consulting                             |   |            | 62,786    |   |     |   | 1,044,743  |         |   |   | 146,924        |   |   |   | 26,254    |   |   |   | 1,280,707 |   |
| Data analysis                          |   |            | 4,598     |   |     |   | 141,786    |         |   |   | 10,863         |   |   |   | -         |   |   |   | 157,247 |   |
| Drilling                               |   |            | 448,837   |   |     |   | 14,685,461 |         |   |   | 1,600,491      |   |   |   | -         |   |   |   | 16,734,789 |   |
| Equipment                              |   |            | 8,777     |   |     |   | 182,629    |         |   |   | 17,187         |   |   |   | -         |   |   |   | 208,593 |   |
| Geological                             |   |            | 9,849     |   |     |   | 88,201     |         |   |   | 48,636         |   |   |   | -         |   |   |   | 146,686 |   |
| Lease payments                         |   |            | 189,282   |   |     |   | 164,115    |         |   |   | 54,714         |   |   |   | 1,385,260 |   |   |   | 1,793,371 |   |
| Sampling and processing                |   |            | 142,073   |   |     |   | 749,969    |         |   |   | 104,859        |   |   |   | -         |   |   |   | 996,901 |   |
| Site development                       |   |            | 22,806    |   |     |   | 567,964    |         |   |   | -              |   |   |   | -         |   |   |   | 590,770 |   |
| Supplies                               |   |            | 11,044    |   |     |   | 2,185,516  |         |   |   | 482,830        |   |   |   | -         |   |   |   | 2,679,390 |   |
| Travel                                 |   |            | 1,408     |   |     |   | 103,390    |         |   |   | 14,034         |   |   |   | -         |   |   |   | 118,832 |   |
|                                   |   |            | 1,125,408 |   |     |   | 19,969,425 |         |   |   | 2,522,014      |   |   |   | 1,422,298 |   |   |   | 25,039,145 |   |
|                                   |   |            |      |   |     |   |       |         |   |   |           |   |   |   |      |   |   |   |   |   |
| Balance as at December 31, 2012        |   |            | 3,055,492 |   |     |   | 34,715,615 |         |   |   | 2,879,738      |   |   |   | 1,514,750 |   |   |   | 42,165,595 |   |

----

----

| ·   | 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 (incurred) |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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   |   |      | 940,000 |   |   |   | 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 |   | (Paid) |
| 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      |         |   |
|-----------|--------------|--------|
| 2011      | $20,000      | (paid) |
| 2012      | 20,000       | (paid) |
| 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, the Company must: |
|--------|---------------------------------------------------------------------|

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

| ·   | Pay US$1,200,000 to RSM  (paid) |
|--------------------|-------------------------------------------|

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

----

----

| Year            |                |   |
|-----------------|---------------------|--------|
| 2011            | $  63,522 | (Paid) |
| 2012            | 72,236              | (Paid) |
| 2013            | 72,236              |   |
| 2014            | 84,940              |   |
| 2015            |  86,683        |   |
| 2016            | 99,387              |   |
| 2017            | 101,130             |   |
| 2018            | 113,834             |   |
| 2019            | 115,577             |   |
| 2020            | 115,577             |   |
| 2021 and onward | 125,829             |   |

----

----

|                |   | December 31, 2012 |      |   | December 31, 2011 |   |
|---------------------|--------|-------------------|-----------|--------|-------------------|--------|
|                |   | $                 |      |   | $                 |   |
| Accounts payable    |   |              | 1,702,930 |   |              |   | 665,801 |   |
| Accrued liabilities |   |              | 135,921   |   |              |   | 544,975 |   |
|                |   |              |      |   |              |   |   |   |
|                |   |              | 1,838,851 |   |              |   | 1,210,776 |   |

----

----

|                             |   | Number of warrants |        |   | Weighted average exercise price |   |
|----------------------------------|--------|--------------------|-------------|--------|---------------------------------|--------|
|                             |   |               |        |   | $                               |   |
| Outstanding at December 31, 2010 |   |               | 16,989,448  |   |                            |   | 0.94 |   |
| Issued                           |   |               | 880,526     |   |                            |   | 0.95 |   |
| Exercised                        |   |               | (4,896,191  | )      |                            |   | 0.81 |   |
| Outstanding at December 31, 2011 |   |               | 12,973,783  |   |                            |   | 0.99 |   |
| Exercised                        |   |               | (12,193,257 | )      |                            |   | 0.99 |   |
| Outstanding at December 31, 2012 |   |               | 780,526     |   |                            |   | 0.95 |   |

| ExercisePrice |   | Number Outstanding |   | Expiry Date   |
|---------------|--------|--------------------|--------|---------------|
| $             |   |               |   |          |
| 0.95          |   | 780,526            |   | March 3, 2013 |

----

----

----

----

|                             |   | Number of options |      |   | Weighted average exercise price |   |
|----------------------------------|--------|-------------------|-----------|--------|---------------------------------|--------|
|                             |   |              |      |   | $                               |   |
| 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 |   |
| Granted                          |   |              | 1,135,000 |   |                            |   | 1.40 |   |
| Exercised                        |   |              | (950,000  | )      |                            |   | 0.70 |   |
| Outstanding at December 31, 2012 |   |              | 4,220,000 |   |                            |   | 1.01 |   |

| ExercisePrice |   | Number Outstanding |      |   | Number Exercisable |   |      | Expiry Date |   |
|---------------|--------|--------------------|-----------|--------|--------------------|--------|-----------|-------------|--------|
| $             |   |               |      |   |               |   |      |        |   |   |
| 0.65          |   |               | 1,305,000 |   |               |   | 1,305,000 |        |   | July 13, 2015 |   |
| 0.82          |   |               | 200,000   |   |               |   | 200,000   |        |   | October 6, 2015 |   |
| 0.71          |   |               | 700,000   |   |               |   | 700,000   |        |   | 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 |   |
| 1.16          |   |               | 715,000   |   |               |   | 715,000   |        |   | February 2, 2017 |   |
| 1.82          |   |               | 150,000   |   |               |   | 150,000   |        |   | March 29, 2017 |   |
| 2.73          |   |               | 25,000    |   |               |   | 25,000    |        |   | June 1, 2017 |   |
| 1.68          |   |               | 50,000    |   |               |   | 50,000    |        |   | August 30, 2017 |   |
| 1.68          |   |               | 20,000    |   |               |   | 20,000    |        |   | September 4, 2017 |   |
| 1.81          |   |               | 150,000   |   |               |   | 150,000   |        |   | September 5, 2017 |   |
|          |   |               | 4,220,000 |   |               |   | 4,220,000 |        |   |   |   |   |

|   | 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. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | NOTE 11 - Segmented Information |
|--------|---------------------------------|

|                              |   | As at December 31, 2012 |   |
|-----------------------------------|--------|-------------------------|--------|
|                              |   | Canada                  |   |   | US |   |   | Total |   |
|                              |   | $                       |   |   |   | $ |   |   |   | $ |   |   |
| Reclamation bonds                 |   |                    | -      |   |   |   | 300,658 |   |   |   | 300,658 |   |
| Property and equipment            |   |                    | 33,730 |   |   |   | 7,922 |   |   |   | 41,652 |   |
| Exploration and evaluation assets |   |                    | -      |   |   |   | 42,165,595 |   |   |   | 42,165,595 |   |
|                              |   |                    | 33,730 |   |   |   | 42,474,175 |   |   |   | 42,507,905 |   |

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

| i.   | Incurred rent expense of $73,575 (December 31, 2011 - $73,575) to a company controlled by a director and officer of the Company. As at December 31, 2012, an advance of $7,913 (December 31, 2011 - $16,913), on account of future expenses was included in prepaid expenses and $6,867 (December 31, 2011 - $17,491) was included in accounts payable and accrued liabilities owing to a company controlled by a director and officer of the Company. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ii.   | As at December 31, 2012, an advance of $1,480 (December 31, 2011 - $Nil) to a company controlled by a director and officer of the Company, on account of future expenses was included in prepaid expenses. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| iii.   | As at December 31, 2012, $6,974 (December 31, 2011 - $Nil) was included in accounts payable and accrued liabilities owing to a company controlled by a director of the Company. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| iv.   | Amounts due to shareholders are unsecured, non-interest bearing and have no fixed terms of repayment.  As at December 31, 2012, there is a balance outstanding of $Nil (December 31, 2011 - $2,005). |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| v.   | As of December 31, 2012, $Nil (December 31, 2011 - $6,000) was included in accounts payable and accrued liabilities owing to a former director of the Company. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| vi.   | As of December 31, 2012, $Nil (December 31, 2011 - $6,720) was included in accounts payable and accrued liabilities owing to a director of the Company. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                           |   | For the year ended December 31, |      |
|------------------------------------------------|--------|---------------------------------|-----------|
|                                           |   | 2012                            |      |   | 2011 |   |
|                                           |   | $                               |      |   | $ |   |
| Management fees                                |   |                            | 675,712   |   |   |   | 424,000 |   |
| Professional  fees                   |   |                            | 12,000    |   |   |   | 70,000 |   |
| Secretarial fees                               |   |                            | -         |   |   |   | 9,000 |   |
| Exploration and evaluation assets expenditures |   |                            | 281,664   |   |   |   | 134,518 |   |
| Wages and salaries                             |   |                            | 14,577    |   |   |   | 33,629 |   |
| Share-based compensation                       |   |                            | 832,722   |   |   |   | 589,111 |   |
|                                           |   |                            | 1,816,675 |   |   |   | 1,260,258 |   |

|                                                                    |   | Years ended December 31, |       |
|-------------------------------------------------------------------------|--------|--------------------------|------------|
|                                                                    |   | 2012                     |       |   | 2011 |   |
|                                                                    |   | $                        |       |   | $ |   |
|                                                                    |   |                     |       |   |   |   |   |   |
| Loss before income taxes                                                |   |                     | (5,193,224 | ) |   |   | (4,138,880 | ) |
|                                                                    |   |                     |       |   |   |   |   |   |
| Combined federal and provincial statutory income tax rate               |   |                     | 25.00      | % |   |   | 26.50 | % |
|                                                                    |   |                     |       |   |   |   |   |   |
| Expected income tax recovery at statutory tax rates                     |   |                     | (1,298,000 | ) |   |   | (1,097,000 | ) |
| Impact of different statutory tax rates on earnings of subsidiaries     |   |                     | (186,000   | ) |   |   | (31,000 | ) |
| Non-deductible expenditures                                             |   |                     | 477,000    |   |   |   | 395,000 |   |
| Impact of future income tax rates applied versus current statutory rate |   |                     | -          |   |   |   | 33,000 |   |
| Share issuance costs                                                    |   |                     | (466,000   | ) |   |   | (244,000 | ) |
| Change in unrecognized deductible temporary differences and others      |   |                     | 1,473,000  |   |   |   | 944,000 |   |
| Total                                                                   |   |                     | -          |   |   |   | - |   |

----

----

|                              |   | As of December 31, |      |
|-----------------------------------|--------|--------------------|-----------|
|                              |   | 2012               |      |   | 2011 |   |
|                              |   | $                  |      |   | $ |   |
|                              |   |               |      |   |   |   |   |   |
| Share issuance costs              |   |               | 603,000   |   |   |   | 326,000 |   |
| Non-capital losses                |   |               | 3,211,000 |   |   |   | 1,805,000 |   |
| Capital assets                    |   |               | 5,000     |   |   |   | 4,000 |   |
| Exploration and evaluation assets |   |               | 1,127,000 |   |   |   | 1,127,000 |   |
| Total                             |   |               | 4,946,000 |   |   |   | 3,262,000 |   |

|                              |   | As of December 31, |       |
|-----------------------------------|--------|--------------------|------------|
|                              |   | 2012               |       |   | Expiry dates |   |   | 2011 |   |   | Expiry dates |   |
|                              |   | $                  |       |   |   |   |   | $ |   |   |   |   |
|                              |   |               |       |   |   |   |   |   |   |   |   |   |
| Share issuance costs              |   |               | 2,410,000  |   |   | 2013 to 2016 |   |   |   | 1,304,000 |   |   | 2012 to 2015 |   |
| Non-capital losses                |   |               | 11,679,000 |   |   | 2014 to 2032 |   |   |   | 7,595,000 |   |   | 2014 to 2031 |   |
| Capital assets                    |   |               | 19,000     |   |   | No Expiry |   |   |   | 17,000 |   |   | No Expiry |   |
| Exploration and evaluation assets |   |               | 4,507,000  |   |   | No Expiry |   |   |   | 4,507,000 |   |   | No Expiry |   |

|   | Tax attributes are subject to review, and potential adjustment, by tax authorities. |
|--------|-------------------------------------------------------------------------------------|

----

----

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

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

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

| d)   | Liquidity risk |
|----------------|----------------|

| e)   | Commodity price 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. In November 2012, the Company assumed the lease and became the primary lessee. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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 a monthly rent payment of US$4,400.  As at December 31, 2012, 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  |   |        |   | 52,531 |   |   |   | 134,935 |   |
| Payable later than one year and not later than five years |   |             | 20,601  |   |        |   | 35,020 |   |   |   | 55,621 |   |
| Payable later than five years                             |   |             | -       |   |        |   | -      |   |   |   | - |   |
| Total                                                     |   |             | 103,005 |   |        |   | 87,551 |   |   |   | 190,556 |   |

| 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. During 2012, the Board of Directors approved amendments to these consulting agreements whereby the total combined payment will increase to approximately $72,583 per month. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| a)   | In March 2013, the Company granted 50,000 stock options exercisable at $1.03 for a period of 5 years. |
|----------------|-------------------------------------------------------------------------------------------------------|

| b)   | Subsequent to year end, 780,526 share purchase warrants expired. |
|----------------|------------------------------------------------------------------|

----