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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

Form 10-K

[ x ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended May 31, 2009

OR

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to
_____________.

Commission file number: 000-51775

STERLING GROUP VENTURES,
INC.(Exact name of registrant as specified in its
charter)

|Nevada                                           | 72-1535634                          
|------------------------------------------------ | ------------------------------------
|(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.)
|organization)                                    |                                     
|                                                 |                                     
|900  789 West Pender Street                     |                                     
|Vancouver BC                                     | V6C 1H2                             
|(Address of principal executive offices)         | (Zip Code)                          

Registrants telephone number, including area code (604)
893-8891

Securities registered pursuant to Section 12(b) of the Act:

|Title of each class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|None                | None                                     

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.001 (Title of class)

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [ x
]

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or 15(d) of the Act. Yes [ ] No [ x ]

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ x ]  No [ ]

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definitions of large accelerated filer, accelerated
filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check
one):

|Large accelerated filer [ ] | Accelerated filer [ ]          
|--------------------------- | -------------------------------
|Non-accelerated filer [ ]   | Smaller reporting company [ x ]

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act). Yes [ ] No [ x ]

The aggregate market value of the voting and non-voting share of
Common Stock held by non-affiliates of the registrant was approximately $969,047
based on the closing trading price for the common equity as of November 28, 2008
(at $0.04 per share closing price).

The number of shares of common stock, par value $0.001 per
share, outstanding as of August 27, 2009 was 43,826,175.

Documents incorporated by reference: None.

1

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STERLING GROUP VENTURES INC.Form 10-KTABLE OF
CONTENTS

|               |                                                                                                                          | Page
|-------------- | ------------------------------------------------------------------------------------------------------------------------ | ----
|               |                                                                                                                          |     
|PART I        
|Item
      1.  | Business                                                                                                                 | 4   
|Item 1A.       | Risk Factors                                                                                                             | 7   
|Item
      1B. | Unresolved
      Staff Comments                                                                                          | 9   
|Item 2.        | Properties                                                                                                               | 9   
|Item
      3.  | Legal
      Proceedings                                                                                                  | 11  
|Item 4.        | Submission of Matters to a Vote of Security Holders                                                                      | 11  
|               |                                                                                                                          |     
|PART II       
|Item
      5.  | Market
      for Registrant's Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities | 11  
|Item 6.        | Selected Financial Data                                                                                                  | 13  
|Item
      7.  | Management's
      Discussion and Analysis of Financial Condition and Results of Operations                              | 13  
|Item 7A.       | Quantitative and Qualitative Disclosures About Market Risk                                                               | 16  
|Item
      8.  | Financial
      Statements and Supplementary Data                                                                        | 16  
|Item 9.        | Changes in and Disagreements With Accountants on Accounting
      and Financial Disclosure                               | 39  
|Item
      9A. | Controls
      and Procedures                                                                                            | 39  
|Item 9B.       | Other Information                                                                                                        | 39  
|               |                                                                                                                          |     
|               | PART III                                                                                                                 |     
|Item
      10. | Directors,
      Executive Officers and Corporate Governance                                                             | 39  
|Item 11.       | Executive Compensation                                                                                                   | 41  
|Item
      12. | Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters               | 43  
|Item 13.       | Certain Relationships and Related Transactions and Director
      Independence                                           | 43  
|Item
      14. | Principal
      Accountant Fees and Services                                                                             | 43  
|               |                                                                                                                          |     
|               | PART IV                                                                                                                  |     
|Item 15.       | Exhibits and Financial Statement Schedules                                                                               | 44  
|               |                                                                                                                          |     
|SIGNATURES    

2

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Cautionary Statement Regarding Forward-Looking Statements

Safe Harbor Statement under the United States Private
Securities Litigation Reform Act of 1995: Except for the statements of
historical fact contained herein, the information constitutes forward-looking
statements within the meaning of the Private Securities Litigation reform Act
of 1995. Such forward looking statements, including but not limited to those
with respect to the price of lithium, lithium carbonate, potash, other metals
and chemicals, the timing and amount of estimated production, costs of
production, reserve determination and reserve conversion rates, involve known
and unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievement of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward looking statements. Such factors include, among others, risks
relating to the integration of the acquisition, risks that the company may not
be able to raise the necessary capital, risks relating to international
operations, risks relating to joint venture operations, the actual results of
current exploration activities, the actual results of current reclamation
activities, conclusions of economic evaluations, changes in project parameters
as plans continue to be refined, future prices of lithium, lithium carbonate,
potash, and other metals and chemicals, as well as those factors affecting the
mineral industry. Although the Company has attempted to identify important
factors that could cause actual results to differ materially, there may be other
factors that cause results not to be as anticipated, estimated or intended.
There can be no assurance that such statements will prove to be accurate as
actual results and future events could differ materially from those anticipated
in such statements. Accordingly, readers should not place undue reliance on
forward-looking statements.

This annual report contains forward-looking statements as that
term is defined in the Private Securities Litigation Reform Act of 1995. These
statements relate to future events or our future financial performance. Some
discussions in this report may contain forward-looking statements that involve
risk and uncertainty. A number of important factors could cause our actual
results to differ materially from those expressed in any forward-looking
statements made by us in this report. Forward-looking statements are often
identified by words like: believe, expect, estimate, anticipate,
intend, project and similar expressions or words which, by their nature,
refer to future events.

In some cases, you can also identify forward-looking statements
by terminology such as may, will, should, plans, predicts, potential
or continue or the negative of these terms or other comparable terminology.
These statements are only predictions and involve known and unknown risks,
uncertainties and other factors, including the risks in the section entitled
"Risk Factors", that may cause our or our industry's actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
these forward-looking statements.

Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity or achievements. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.

Our financial statements are stated in United States Dollars
(US$) and are prepared in accordance with United States Generally Accepted
Accounting Principles. All references to  $ refer to US Dollars, all
references to CA $ refer to Canadian Dollars , all references to RMB refer
to Chinese Yuan and all references to "common shares" refer to the common shares
in our capital stock.

As used in this annual report, the terms "we", "us", "our", 
the Company and "Sterling" mean Sterling Group Ventures, Inc., unless otherwise
indicated.

Sterling is an exploration stage company. There is no assurance
that commercially viable mineral deposits exist on the claims that we have under
option. Further exploration will be required before a final evaluation as to the
economic and legal feasibility of the claims is determined.

3

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PART I

ITEM 1. BUSINESS.

General

We were incorporated in the state of Nevada on September 13,
2001 and established a fiscal year end of May 31. Since our incorporation, we
have engaged in the business of exploration and development of a mineral
property. On January 20, 2004, Sterling completed the acquisition of all of the
issued and outstanding shares of Micro Express Ltd. (Micro), which was
incorporated on July 17, 1994. Pursuant to the transaction, the Company issued
an aggregate of 25,000,000 shares of Sterlings common stock to the stockholders
of Micro in exchange for 100% of the shares of Micro common stock. The business
combination was accounted for as a reverse acquisition whereby the purchase
method of accounting was used with Micro being the accounting parent and the
Company being the accounting subsidiary.

We are a start-up, exploration stage company engaged in the
search and exploration of lithium and related minerals. There is no assurance a
commercially viable mineral deposit exists on any of our properties. Further
exploration will be required before a final evaluation as to the economic and
legal feasibility of our claims is determined. We have not yet generated or
realized any revenues from our business operations. Our statutory registered
agent's office is located at 123 West Nye Lane, Suite 129, Carson City, Nevada
89706 and our business office is located at 900  789 West Pender Street,
Vancouver, B.C., Canada, V6C 1H2. Our telephone number is (604) 893-8891 and fax
number is (604) 408-8515

Lithium and Lithium Carbonate Overview

Lithium is a solid soft alkali metal which has an atomic number
of 3 and is the lightest of all metals, with a density of about half of that of
water. The metal is naturally occurring in minute amounts in ore and brine
deposits. The major ores used to mine lithium are spodumene, petalite and
lepidolite. While spodumene is the most common lithium ore mined, it is also
more expensive than mining brine deposits as the process is more
complicated.

Lithium carbonate (Li2CO3) occurs naturally in brine or salt
lake deposits or water and is the starting point in the manufacturing of lithium
and various lithium chemicals which are used in batteries, ceramics and glass,
in primary aluminum production, in the manufacture of lubricants and greases,
drugs and others products.

According to the Mineral Information Institute (MII), most
lithium is recovered from brine, or water with a high concentration of lithium
carbonate. Brines trapped in the Earths crust (called subsurface brines) are
the major source material for lithium carbonate. These sources, which are
recovered generally through solar evaporation, are less expensive to mine than
sources from rock such as spodumene, petalite, and other lithium-bearing
minerals.

DXC Salt Lake Project

On July 11, 2005, the Company signed a letter of intent with
Beijing Mianping Salt Lake Research Institute (Mianping) for the development
of Dangxiongcuo (DXC) salt lake property in Nima county of Naqu district in
Tibet, China. Pursuant to the Letter of Intent, the parties have agreed to set
up a Joint Venture Company in Tibet, China to share the benefits, risks and
losses of the project.

On September 16, 2005, the Company through its wholly owned
subsidiary, Micro Express Holdings Inc. (MEH), signed an agreement (the
Mianping Agreement) with Beijing Mianping Salt Lake Research Institute for the
development of Dangxiongcuo salt lake property in Nima county of Naqu district
in Tibet, China. The Agreement follows a Letter of Intent signed between the
parties on July 11, 2005.

Mianping which is a private company holds the exploration
permit on the Dangxiongcuo Salt Lake and the surrounding area issued by Tibet
Bureau of Land and Resources of China. Dangxiongcuo Salt Lake is a classic brine
type deposit. The number of the exploration permit is 5400000620013. The area
covered by the permit is 89.06 km2 (8,906 hectares) and it was valid until Feb
23, 2007. The recording date is February 24, 2006. Mianping has renewed its
permit on March 4th 2007. The new number is 5400000730283. The area
covered by the permit is 89.06 km2 (8,906 hectares) and it was valid until March
14th 2008. The recording date is March 4, 2007. The license is now
under renewal process. There is a mandated routine for converting this
exploration permit into a mining permit.

4

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Pursuant to the Mianping Agreement signed on September 16,
2005, the parties agreed to set up a Cooperative Company (the Cooperative) to
develop DXC Salt Lake. The objective of the Cooperative was to use the funds
provided by Sterling through MEH and the skills and technology provided by
Mianping to produce lithium carbonate (Li2CO3), potash and other chemicals from
brine. MEH was to own 65% and Mianping 35% of the Cooperative. It was
anticipated that the total investment in the Cooperative shall be approximately
240 million RMB (or approximately US$35 million) and would result in production
of 5,000 tonnes per year of lithium carbonate and by products (potash and other
chemicals). Mianping guaranted the production cost of lithium carbonate would be
less than 11,000 RMB per tonne (or approximately US $1,600 per tonne).

On July 3, 2007, MEH received a letter from Mianping stating
that the agreement between MEH and Mianping should be deemed terminated as a
result of lack of progress in the approval for the establishment of the joint
venture company and was considering a lawsuit against the Company and MEH. MEH
had responded that Mianpings claim had no legal grounds as the lack of progress
was not caused by MEH or the Company. There has been no legal action to date and
none is expected. By letter dated August 25, 2008, Mianping had confirmed to the
Companys auditor that the agreement dated Sept. 16, 2005 was terminated
effective July 8, 2008. This agreement was replaced by the agreement with Zhong
Chuan International Mining Holdings Co. Ltd. dated July 8, 2008.

On July 8, 2008, the Company signed an agreement (the
"Agreement") with Zhong Chuan International Mining Holding Co., Ltd. ("Zhong
Chuan"), Ximing Sun and Charles Yan - shareholders of Monte Sea Holdings Ltd.
(collectively hereinafter "Monte Sea Shareholders") to restructure the
transactions contemplated under the Mianping Agreement signed by Mianping and
MEH on September 16, 2005. Pursuant to the Agreement, the parties wish to
establish a Sino-foreign cooperative joint venture company ("CJV") for the
purpose of applying for and holding required approvals, permits and licenses
with respect to the development of the Dangxiongcuo Salt Lake property (the
"Property") located in Tibet of China.

Zhong Chuan is a Chinese mining company with connections and
mineral properties in Tibet, China. Zhong Chuan is interested in expanding into
lithium business. Zhong Chuan has also acquired interests in certain other salt
lakes in Tibet ("Other Interests"). Monte Sea Shareholders are the shareholders
holding all the issued and outstanding shares in the stock of Monte Sea Holdings
Ltd. ("Monte Sea"), a company incorporated in Hong Kong.

Under the Agreement, the Mianping Agreement between Mianping
and the Company shall be replaced and superseded by this Agreement upon this
Agreement becoming effective. Upon this Agreement being effective and
termination of the Mianping Agreement, Zhong Chuan shall cause Mianping to repay
to the Company RMB 6,000,000 ($875,000) by depositing the said amount into an
account designated by the Company. Mianping has not paid the Company the
required amount anticipated from the termination of the agreement.

The Parties agree that Zhong Chuan shall cause an operating
company ("Opco") to be established in Tibet prior to the establishment of the
CJV for the purpose of applying for and holding required approvals, permits and
licenses with respect to the development of the Property. The Opco shall hold
all such approvals, permits and licenses in trust for the CJV, and pursuant to
the letters and spirit of this Agreement.

Under the Agreement, Monte Sea Shareholders and Zhong Chuan
shall cause the CJV to be established within 90 days from date of this
Agreement, subject to required regulatory approval and based on a joint venture
agreement by way of acquisition of interest in the Opco by Monte Sea, or by way
of incorporation under the Chinese laws. Monte Sea shall hold up to 65% but no
less than 51% of shares in the CJV. CJV shall own and hold all Mianping's
(and/or Opco's) title to and interest in any exploration or mining licenses in
lithium resources in Tibet including the Exploration license and Other
Interests.

If for any Chinese regulatory or policy reasons, Monte Sea is
not permitted to have more than fifty-one percent (51%) interest in the CJV,
then Monte Sea and Zhong Chuan shall cause the JV Agreement to be revised such
that:

(a) Mont Sea shall have a forty-nine percent (49%) interest in
the CJV;

(b) Mont Sea shall be entitled to receive returns on its
investment in the CJV on a priority and accelerated basis until its investment
in the CJV and the Property is fully recovered; and

(c) Mont Sea shall be permitted to manage the daily operation
of the CJV pursuant to a management agreement to be entered into between Mont
Sea and Zhong Chuan, on terms and conditions satisfactory to Sterling.

The Parties shall cause all necessary corporate actions to be
taken to approve and effect the transactions contemplated above, and to make any
adjustment, registration or filings necessary to meet applicable regulatory
requirements.

Upon signing of this Agreement and subject to applicable
regulatory approval, Monte Sea Shareholders shall subscribe for 5,000,000 units
(the "Units") to be issued by the Company at $0.15 per unit. Each Unit shall
consist of One (1) common share in

5

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the stock of the Company, and One (1) warrant which shall
entitle Monte Sea Shareholders to purchase One (1) common share in the stock of
the Company at $0.16 per share within two (2) years from the date of the
issuance of the Units.

Subject to applicable regulatory approval, the Company shall
cause 200,000,000 shares to be issued to Monte Sea Shareholders within ten (10)
working days from the date transfer of the Exploration License to the CJV is
approved by the Chinese regulators, in exchange for all the shares then issued
and outstanding in the stock of Monte Sea and held by Monte Sea shareholders
(the "Share Exchange"). The Share Exchange may be conducted and completed at an
earlier date so long as the Company and Monte Sea Shareholders may agree in
writing.

Subject to applicable regulatory approval, the Company shall
cause 87,910,000 shares in the capital of the Company to be issued to Monte Sea
Shareholders at no additional cost, upon receipt by the CJV of a mining license
and such other permits or approvals for the Property, permitting the full
exploitation and development of the Property.

The Company shall use its best efforts to secure business
relationships with selected major companies outside China in the form of equity
participation or off-take arrangement for lithium products from the CJV.

The Company intends to, when and as required by the CJV,
arrange and complete financing for the operation of the CJV. There are no
assurances that the Company will be able to obtain such financing.

Zhong Chuan shall, together with Monte Sea Shareholders,
provide funds no less than RMB 100,000,000 (or US dollar equivalent thereof) for
the purpose of meeting registered capital payment requirements in the
registration and operation of the CJV. Zhong Chuan shall keep other Parties
informed of any development in the registration of the CJV and transfer of the
Exploration License.

Monte Sea Shareholders shall, together with Zhong Chuan, make
funds available for the purpose of acquisition and meeting registered capital
payment requirements in the registration and operation of the CJV.

CJV will be located in Tibet, China and will develop
Dangxiongcuo lithium property, extract and process commercially lithium
carbonate using internationally advanced technologies.

Subsequent to May 31, 2009, the Company received verbal
termination of the Agreement with Zhong Chuan, as advised by third party legal
counsel, at a meeting in Beijing, China in July 2009. Formal written notice has
not been received from Zhong Chuan. The Agreement in effect, allows Zhong Chuan
to terminate the Agreement if it pays the Company double the amount of funds
paid by the Company to date to secure and develop the DXC Project. Zhong Chuan
has not repaid the required amount as anticipated by the Agreement to date. This
unfortunate delay on the part of Zhong Chuan places the termination it gave the
Company in dispute as the termination is conditional upon repayment of the
required funds. At this point then, the termination is incomplete. The Company
is pursuing Zhong Chuan to complete the termination, as the Company deems, is
mandated by the Agreement.

Jiajika Project

On September 16, 2003, the Company, through its wholly owned
subsidiary, Micro Express Ltd. (Micro), entered into an agreement (the
Agreement) with Sichuan Province Mining Ltd. to acquire a 75% interest in a
30-year mining joint venture company. The joint venture company would hold the
mining licenses to develop the Jiajika spodumene property located in Sichuan
Province, China for the extraction of lithium and lithium salts. Pursuant to the
Agreement, the total investment required was estimated at 88.5 million RMB
(US$10.8 million) for the initial capacity of 240,000 tonnes/annum. The initial
registered capital was 56 million RMB (US$6.8 million). Sichuan Province Mining
Ltd. would contribute 14 million RMB (US$1.7 million) including the mining
permits to hold 25% of the JV Company. Micro would contribute 42 million RMB
(US$ 5.1 million) to hold 75% of the JV Company.

On April 5, 2005, the Company through Micro, signed a joint
venture contract (JV Contract) with Sichuan Province Mining Ltd. for setting
up a joint venture company, Jihai Lithium Ltd. , and the development of the
Jiajika lithium deposit. The Contract follows an agreement signed between the
parties on September 16, 2003.

Sichuan Province Mining Ltd. (SPM) which is a private Chinese
company holds the mining permit on the Jiajika spodumene property in Kangding,
Sichuan province, China issued by the Sichuan Bureau of Land and Resources of
China. The property is an albite  spodumene pegmatite deposit. The number of
mining permit is 5100000410234. The area is 0.88 km2 (88 hectares) and it was
valid until November 11, 2006. The recording date is May 24, 2004. Sterling was
required to contribute 42 million RMB in order to earn 75% of the Joint Venture
to be set up by Sterling and SPM to build an initial capacity of 240,000 tonnes
per year mining and processing plant.

6

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On March 3, 2006, the Company, through its wholly owned
subsidiary, Micro, signed an agreement (the Termination Agreement) with
Sichuan Province Mining Ltd. (SPM) with respect to Micros early investment in
the Sichuan Jiajika Spodumene project.

Pursuant to the Termination Agreement, the parties agreed to
terminate the joint venture and confirmed that Micros early investment of 2.48
million RMB to the Sichuan Jiajika Spodumene project should be paid back at a
rate of 1.2 million RMB before April 15, 2006 and 1.28 million RMB before March
30, 2007. Payment should be made directly to Micro by SPM. Neither party shall
have any other liabilities to the other party and the Agreement shall replace
all previously signed agreements, contracts and MOU between Micro and SPM. As of
May 31, 2009, the Company had received the full amount of RMB 2.48 million
($309,058) from SPM.

ITEM 1A. RISK FACTORS

We have sought to identify what we believe to be the most
significant risks to our business. However, we cannot predict whether, or to
what extent, any of such risks may be realized nor can we guarantee that we have
identified all possible risks that might arise. Investors should carefully
consider all of such risk factors before making an investment decision with
respect to our Common Stock. We provide the following cautionary discussion of
risks, uncertainties and possible inaccurate assumptions relevant to our
business. These are factors that we think could cause our actual results to
differ materially from expected results. Other factors besides those listed here
could adversely affect us.

Factors That May Affect Future Results and Market Price
of Stock

The business of the Company involves a number of risks and
uncertainties that could cause actual results to differ materially from results
projected in any forward-looking statement, or statements, made in this report.
These risks and uncertainties include, but are not necessarily limited to the
risks set forth below. The Company's securities are speculative and investment
in the Company's securities involves a high degree of risk and the possibility
that the investor will suffer the loss of the entire amount invested.

There is Substantial Doubt About the Companys Ability to
Continue as a Going Concern

Sterling is in the exploration stage. The Company has entered
into joint venture agreements to explore and develop mineral properties located
in China and has not yet determined whether these properties contain reserves
that are economically recoverable. The Company has not yet achieved profitable
operations and is dependent on its ability to raise capital from shareholders or
other sources to meet its obligations and repay its liabilities arising from
normal business operations when they come due. These factors raise substantial
doubt that the Company will be able to continue as a going concern.

Lack of Technical Training of Management

The Management of our Company has academic and scientific
experience related to mining issues but lacks technical training and experience
exploring for, commissioning and operating a mine. With no direct training or
experience in these areas, management may not be fully aware of many of the
specific requirements related to working within this industry. The decisions and
choices may not take into account standard engineering or managerial approaches
mineral exploration companies commonly use. Consequently, operations, earnings
and the ultimate financial success of the Company could suffer irreparable harm
due to managements lack of experience in this industry.

Exploration Risk

Development of mineral properties is contingent upon obtaining
satisfactory exploration results. Mineral exploration and development involves
substantial expenses and a high degree of risk, which even a combination of
experience, knowledge and careful evaluation may not be able to adequately
mitigate.

The companys exploration properties have not been examined in
the field by professional geologists or mining engineers. There is no assurance
that commercial quantities of ore will be discovered on any of the Companys
exploration properties. There is also no assurance that, even if commercial
quantities of ore are discovered, a mineral property will be brought into
commercial production. The discovery of mineral deposits is dependent upon a
number of factors not the least of which is the technical skill of the
exploration personnel involved. The commercial viability of a mineral deposit,
once discovered, is also dependent upon a number of factors, some of which are
the particular attributes of the deposit, such as size, grade and proximity to
infrastructure, metal prices and government regulations, including regulations
relating to royalties, allowable production, importing and exporting of
minerals, and environmental protection. In addition, assuming discovery of a
commercial ore body, depending on

7

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the type of mining operation involved, several years can elapse
from the initial phase of drilling until commercial operations are commenced.
Most of the above factors are beyond the control of the Company.

The exploration process is conducted in phases. When each phase
of a project is completed, and upon analysis of the results of that phase, the
Company will make a decision whether to proceed with each successive phase of
the exploration program. There is no assurance that projects will be carried to
completion.

Limited Management Resource Development
Experience

The Company does not have a track record of exploration and
mining operation history. The Company's management has limited experience in
mineral resource development and exploitation, and has relied on and may
continue to rely upon consultants and others for development and operation
expertise.

Limited Financial Resources

Furthermore, the Company has limited financial resources with
no assurance that sufficient funding will be available to it for future
exploration and development or to fulfill its obligations under current
agreements. There is no assurance that the Company will be able to obtain
adequate financing in the future or that the terms of such financing will be
favorable. Failure to obtain such additional financing could result in delay or
indefinite postponement of further exploration and development of its projects.

Limited Public Market, Possible Volatility of Share
Price

The Company's Common Stock is currently quoted on the NASD OTC
Bulletin Board under the ticker symbol SGGV and is listed on Berlin Bremen Stock
Exchange under the symbol GD7. As of May 31, 2009, there were approximately
43,826,175 shares of common stock outstanding. There can be no assurance that a
trading market will be sustained in the future.

Dependence on Executive Officers and Technical
Personnel

The success of our business plan depends on attracting
qualified personnel, and failure to retain the necessary personnel could
adversely affect our business. Competition for qualified personnel is intense,
and we may need to pay premium wages to attract and retain personnel. Attracting
and retaining qualified personnel is critical to our business. Inability to
attract and retain the qualified personnel necessary would limit our ability to
implement our business plan successfully.

Need for Additional Financing

The Company believes it has sufficient capital to meet its
short-term cash needs, including the costs of compliance with the continuing
reporting requirements of the Securities Exchange Act of 1934. However, if
losses continue, it may have to seek loans or equity placements to cover
longer-term cash needs to continue operations and expansion.

No commitments to provide additional funds have been made by
management or other stockholders. Accordingly, there can be no assurance that
any additional funds will be available to the Company to allow it to cover
operation expenses.

If future operations are unprofitable, it will be forced to
develop another line of business, or to finance its operations through the sale
of assets it has, or enter into the sale of stock for additional capital, none
of which may be feasible when needed. The Company has no specific management
ability or financial resources or plans to enter any other business as of this
date.

Dilution to the Existing Shareholders

The Company has no other capital resources other than the
ability to use its common stock to raise additional capital or the exercise of
the warrants by the unit holders. Pursuant to the agreement signed on July 8,
2008 with Zhong Chuan, the Company shall cause total 292,9100,000 shares to be
issued to Monte Sea Shareholders for the DXC Salt Lake project, which will
significantly dilute the Company's stockholders.

Political Risks

The market in China is monitored by the government, which could
impose taxes or restrictions at any time which would make operations
unprofitable and infeasible and cause a write-off of investment in the mineral
properties. Other factors include

8

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political policy on foreign ownership, political policy to open
the doors to foreign investors, and political policy on mineral claims and metal
prices.

Circumstances related to Tibet political activities and
resulting political upheaval are beyond the control of the Company and
constitute a risk to investors.

Market Risk

The Company does not hold any derivatives or other investments
that are subject to market risk. The carrying values of any financial
instruments, approximate fair value as of those dates because of the relatively
short-term maturity of these instruments, which eliminates any potential market
risk associated with such instruments.

Other Risks and Uncertainties

The business of mineral deposit exploration and development
involves a high degree of risk. Few properties that are explored are ultimately
developed into production. Other risks facing the Company include competition,
reliance on third parties and joint-venture partners, environmental and
insurance risks, political and environmental instability, statutory and
regulatory requirements, fluctuations in mineral prices and foreign currency,
share price volatility, title risks, and uncertainty of additional financing.

Since October 2008, a severe general downturn in the U. S.
economy and global economy slowdown which already affected the securities
markets took place. Such a deleterious turn of events has made it much more
difficult for the Company to access financing should it be required to do
so.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTY

DXC Salt Lake Property

Dangxiongcuo Salt Lake (DXC) is located in the south-western
part of Xizang plateau in Nima County, Tibet of China. The geographic
co-ordinates are between 86°38'00" and 86°49'00" east and 31°30'00" to 31°40'00"
north.

The location of the property is shown in following map.



9

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Access to Tibet is through Lhasa which has a good efficient
international airport. Road access into the property area is difficult at best.
The road heads northwest from Lhasa to the town of Zamsar then northeast. This
first 200 km is good paved road. Then down into the valley turning right onto a
rough gravel road near the Nam Tsho Salt Lake. Thence around the eastern and
northern side of the Nam Tsho lake and on 300 kilometers to the isolated village
of Pankgo. Thence proceed 400 kilometers to the City of Nima. Thence proceed
another 90 kilometers of very rough road down to the DXC. The trip takes 26
hours of difficult 4X4 driving from Lhasa.

The deposit is a large salt lake 55.53 km2 (5,553 hectares) in
area with a maximum depth of 14 m. Brines are a common source of lithium and the
DXC Salt Lake is a classic surface brine type deposit as compared with
subsurface brine deposit in South America. This type of deposit is known
throughout the world where ever desert climates allow evaporite deposits to
form. Mineralization in the lake is in the form of dissolved salts of sodium,
potassium, lithium and boron, as chlorides, oxides, sulfates and carbonates.
These can be recovered through fractional precipitation of the various salts by
the evaporation of the water. Variations in salinity, pH and temperature
determine which compound will form crystals and precipitate from the brine.

In 1980s, 1 : 1,000,000 regional geology was conducted by the
Tibet Regional Geology Brigade. 1 : 250,000 regional geology was conducted by
the Jiangxi Regional Geology Brigade in 2004. In 1999, two Chinese geologists
conducted preliminary study in the area. In 2002, Mianping started exploration
work in the area. 1:50,000 geology investigation and hydrogeology was
conducted.1:2,000 salt field site engineering geology and topography mapping was
conducted. 20,000 square meters salt field was built in 2003. In 2004, 10,000
square meters of the salt field was revamped. In December 2005, Sterling and
Mianping commissioned the Tibet Geothermal brigade to conduct measurements for
the 20 km2 salt field (1:2,000 and 1:5,000). In March 2006, Sterling and
Mianping commissioned the Zhengzhou Comprehensive Utilization Institute of China
Academy of Geology to conduct the purification test for the DXC salt lake rough
concentrate. In 2006, the Tibet Geothermal Brigade conducted the geothermal
exploration work. In May 2006, a Canadian standard NI 43-101 report was
conducted by a qualified geologist. In June 2006, Mianping finished Chinese
geology report and the report has passed the auditing of Ministry of Land and
Resources of China. Since 2005, a technical team from Mianping has been working
on the DXC Salt Lake site to conduct salt field technical test, weather
monitoring and related tests and monitoring according to the plan designed by
Sterling and Mianping.

There is almost no local infrastructure. The only solar power,
water, and roads are those installed by the Mianping. Beicun village at the head
of the lake appeared to have perhaps 300 people, local Tibetan herdsman of the
Han ethnic group. They are mainly occupied with herding yaks, sheep, goats, and
a few horses. They plant small gardens of barley and vegetables but are not self
sufficient and import food stuffs from outside. Although people would be
available from this village to work on a project in this area the skill level
would be very low. Communication with the outside world is by satellite
telephone. The nearest land line is at Nima a distance of 90 km away. Shipment
of product does not seem to be a problem as numerous heavy trucks were noted all
along the road to the property. National rail service is available from Naqu
about 700 km distance to the east.

Generally, the physiography could be termed basin and range
with broad valleys between sharp ridges and arretes. The valleys are generally
gentle in profile both laterally and longitudinally with small to medium rivers
coursing through the bottoms of the valleys. Few of the rivers are bridged and
most of the crossings are by shallow fords. Along these tracks for much of the
route were seen numerous large trucks of 30  40 tonnes. Most were freighting
bagged material, probably salt from one of the salt lake operations. There are
no services along the route except for Pankgo and Nima. The DXC Salt Lake sits
in a rather confined basin between high rugged ridges. There are numerous
benches or beaches around the lake indicating lake levels at one time were 200
meters above the present levels of the lake, as the last glaciation receded.

Vegetation throughout the plateau is sparse grasses which have
been grazed down to the root level. Sheep, goats and yaks graze in large herds
on what appeared to be very lean fodder. Herdsmen and herdswomen tend these
flocks with no visible support and often many miles from the nearest shelter.
Some of the herdsman seem to rely on the 125cc motor bike for transportation.
The women appeared mainly to walk. Occasional five tonne trucks were seen
hauling personal belongings grossly overloaded with household items and
people.

In June 2006, Mianping finished a Chinese geology report
(Chinese reserve report) and the report passed the auditing of the Ministry of
Land and Resources of China on September 13, 2006 which is the basis for
converting the exploration permit into a mining permit. Mianping led by
Professor Mianping Zheng, an academician of Chinese Academy of Engineering, is
still collecting information such as yearly weather information, wind
information and brine chemistry using a test pond system. Development plans are
being studied.

Mianping has installed solar power, water, and roads on the
site. Water comes from mountain springs. There are several rivers which flow
into the lake area.

10

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DXC salt lake Sampling by Mianping was done on a 2 km X 2 km
grid with 106 samples taken at 16 sample points at various depths. Location
control was provided by GPS. If the water depth was less than 2 meters deep, one
sample was taken; if the water depth was between 2 and 10 meters, then two
samples were taken at 3 and 8 meters and if the water was deeper than 10 meters
then three samples were taken. Each sample consisted of two 500 ml. bottles of
brine.

The sampling method used a standard water sampling technique
where a bottle is lowered into the lake to the required depth, the stopper
removed, and the bottle allowed to fill. AAS analytical techniques were used to
determine the composition of the brine sample. This sampling program was
repeated several times during the various seasons of the year. Several hundred
samples have been collected in this way and analyzed by Mianping at their AAS
laboratory on site.

Two samples were collected by Norm Tribe, an independent
geologist, for the confirmation of Mianpings assay and analyzed by an
independent laboratory, ALS Canada Ltd., in Vancouver, BC, Canada in June 2006.
The results indicate that the concentration of salts is comparable with the
results provided by Mianping. The lake water returned values of 376 ppm lithium,
893 ppm boron and 11,300 ppm potassium. This sample was collected from DXC lake
at a depth of 1.0 meter.

Mianpings analytical procedures were also reviewed by the
Resources & Reserve Audit Center of Ministry of Land and Resources of
China.

During the year ended May 31, 2009, the Company was seeking the
joint venture company approval from Tibet Government for the DXC Salt Lake
project and did not proceed with the exploration and engineering study.

As of the date of this report, the application to establish a
joint venture has not yet been approved by the regulators in Tibet, China

As at May 31, 2009, the Company incurred expenses of $1,042,167
related to the DXC Salt Lake Property.

For further discussion of our interests in DXC Salt Lake
Property, see the discussion of the agreements under "DXC Salt Lake Project"
contained in Item 1, Business.

ITEM 3. LEGAL PROCEEDINGS

We have no knowledge of any pending or threatened material
litigation, settlement of litigation, or other material claim involving us.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS

None.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Common Stock

Our common stock is traded on the OTC Bulletin Board under the
symbol SGGV. The table below sets forth the high and low sales prices for the
Companys common stock for the fiscal years ended May 31, 2008 and 2009. The
quotations below reflect inter-dealer prices, without retail markup, markdown or
commission and may not represent actual transactions.

Year
    Quarter
    High ($)
    Low ($)2008
    First
    0.10
    0.07Second
    0.12
    0.05Third
    0.15
    0.03


11

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Fourth
    0.15
    0.042009
    First
    0.16
    0.04Second
    0.10
    0.01Third
    0.04
    0.01Fourth
    0.04
    0.003


Pacific Stock Transfer Company is the registrar and transfer
agent for our common shares, and is located at Suite 240, 500 East Warms Springs
Road, Las Vegas, Nevada 89119 (Telephone: (702) 361-3033; Facsimile: (702)
433-1979).

On May 31, 2009, we had 43,826,175 shares of common stock
outstanding and we had approximately 40 stockholders of record as of May 31,
2009. There are an estimated 150 beneficial owners of our common stock.

We currently intend to retain all future earnings to fund the
development and growth of our business. We have not paid dividends on our common
stock and do not anticipate paying cash dividends in the immediate future. We
did not repurchase any of our equity securities and have not adopted a stock
repurchase program.

Recent Sales of Unregistered Securities

None.

Equity Compensation Plan Information

On February 3, 2004, the Board of Directors of the Company
approved the 2004 Stock Option Plan which allows the Company to grant up to
3,636,000 stock options as an incentive to directors, officers, employees and
consultants.

On May 12, 2004, the Company registered a 2004 incentive stock
option plan consisting of 3,636,000 common shares. Pursuant to the stock option
plan, the number of shares that may be issued under the plan may not exceed 15%
of the issued and outstanding shares of the company. 15% of the issued and
outstanding shares of the Company is 6,573,926 as of May 31, 2009.

During the years ended May 31, 2009 and 2008, no stock options
were granted or exercised. On February 3, 2009, a total of 3,636,000 stock
options with an exercise price of $0.50 per share expired unexercised.

At May 31, 2009, there were no outstanding stock options

Share Purchase Warrants

During the year ended May 31, 2009, no warrant was exercised or
cancelled.

As at May 31, 2009 the Company has a total of 3,817,500 and
2,873,990 Series A and C share purchase warrants outstanding, respectively.

On February 14, 2006, the Company reduced the exercise price of
the 3,817,500 Series A Share Purchase Warrants from $0.75 to $0.50 each and
extended the terms of Series A Share Purchase Warrants for two years to the
earlier of:

|(i)  | February 16, 2008; or                                                                                                                                             
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(ii) | The 90th day after the day on which the weighted average
      trading price of the Companys shares exceed $0.85 per share for 30
      consecutive trading days.

Upon exercise of the Series A Share Purchase Warrants at
$0.50 each, the holder will receive one Common Share of the Company and a Series
B Share Purchase Warrant exercisable at $1.00 expiring one year after the
occurrence of either (i) or (ii) as described above.

On December 22, 2006, the Company extended the expiry date of
the 2,873,990 Series C Share Purchase Warrants from December 29, 2006 to
February 29, 2008. The exercise price of the warrants remains unchanged at $0.18
per share.

12

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On February 7, 2008, the Company extended the expiry date of
the 3,817,500 Series A Share Purchase Warrants from February 16, 2008 to
February 16, 2009. The exercise price of the warrants remains unchanged at $0.50
per share. The Company also extended the expiry date of the 2,873,990 Series C
Share Purchase Warrants from February 29, 2008 to February 27, 2009. The
exercise price of the warrants remains unchanged at $0.18 per share.

On February 6, 2009, the Company re-extended the expiry date of
3,817,500 Series "A" Share Purchase Warrants from February 16, 2009 to February
16, 2010. The exercise price of the warrants remains unchanged at $0.50 per
share. The Company also re-extended the expiry date of 2,873,990 Series "C"
Share Purchase Warrants from February 27, 2009 to February 26, 2010. The
exercise price of the warrants remains unchanged at $0.18 per share

ITEM 6. SELECTED FINANCIAL DATA

Not applicable.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Introduction

The information presented here should be read in conjunction
with Sterling Group Venture Inc.'s financial statements and other information
included in this Form 10-K. When used in this Form 10-K, the words "expects,"
"anticipates," "estimates" and similar expressions are intended to identify
forward-looking statements. Such statements are subject to risks and
uncertainties, including those set forth below under "Risks and Uncertainties,"
that could cause actual results to differ materially from those projected. These
forward-looking statements speak only as of the date hereof. The Company
expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained herein to
reflect any change in the Company's expectations with regard thereto or any
change in events, conditions or circumstances on which any statement is based.

Overview

Sterling is a exploration stage company, and its objective is
to become a recognized leader in mineral property acquisition, exploration,
development and production.

On September 16, 2005, the Company through its wholly owned
subsidiary, Micro Express Holdings Inc. (MEH), signed an agreement (the
Mianping Agreement) with Beijing Mianping Salt Lake Research Institute
(Mianping) for the development of Dangxiongcuo(DXC) salt lake property in Nima
county of Naqu district in Tibet, China.

On July 8, 2008, the Company signed an agreement (the
"Agreement") with Zhong Chuan International Mining Holding Co., Ltd. ("Zhong
Chuan"), Ximing Sun and Charles Yan - shareholders of Monte Sea Holdings Ltd.
(collectively hereinafter "Monte Sea Shareholders") to complete an equity
financing, to accelerate the development of the DXC salt lake deposits in China
and to restructure the transactions contemplated under the Mianping Agreement
signed by Beijing Mianping Salt Lake Research Institute ("Mianping") and Micro
Express Holdings Inc. ("MEH") on September 16, 2005. Pursuant to the Agreement,
the parties wish to establish a Sino-foreign cooperative joint venture company
("CJV") for the purpose of applying for and holding required approvals, permits
and licenses with respect to the development of the DXC Salt Lake property (the
"Property") located in Tibet of China.

During the year ended May 31, 2009, our efforts continued
towards the implementation of the Agreement with Zhong Chuan described earlier.

Results of Operations

The Company had no operating revenue except interest income of
$3,678 for the year ended May 31, 2009 and interest income of $5,559 for the
year ended May 31, 2008. The Company incurred expenses of $249,083 stemming from
accounting audit and legal fees, consulting fees, mineral property costs ,
travel, stock based compensation, and general and administrative expenditures as
compared to $521,999 for the same period last year. The decrease of $272,916 was
mainly due to the reduction in mineral property costs and the stock based
compensation charge of $83,852 in 2009 and $409,525 in 2008, with respect to the
revalued warrants relating to the extension of the expiry date.

13

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The following table shows the companys mineral property costs
in 2009 and 2008. The decrease of mineral property cost was mainly due to the
reduction in consulting fees in 2009 compared to 2008:

DXCSalt LakePropertyYear ended May 31, 2009Administrative
    $
    867Consulting fees
    
    27,890Travel
    
    16,959Legal fees
    
    7,008$
    52,724Year ended May 31, 2008Administrative
    $
    706Consulting fees
    
    60,548Travel
    
    5,456Legal fees
    
    11,566$
    78,276


The Company also incurred expenses on the following related
party transactions during the year ended May 31, 2009:

| | (a) | The Company was charged consulting fees for
      administrative, corporate, financial, engineering, and management services
      during the year ended May 31, 2009 totalling $123,726 (2008 - $117,284) by
      companies controlled by two directors of the Company.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                          
| | (b) | The Company was charged rental fees included in General
      and Administrative during the year ended May 31, 2009 totalling $17,072
      (2008 - $22,656) by a company controlled by a director of the
    Company.                                                   
| |     |                                                                                                                                                                                                                                                                          
| | (c) | The Company was charged consulting fees included in
      mineral property costs during the year ended May 31, 2009 in the amount of
      $22,042 (2008 - $50,050) by a company controlled by a director of the
      Company.                                          
| |     |                                                                                                                                                                                                                                                                          
| | (d) | Included in accounts payable and accrued liabilities is
      $459,043 (2008 - $414,235) which was due to companies controlled by the
      directors of the Company for their services provided.                                                                        
| |     |                                                                                                                                                                                                                                                                          
| | (e) | The Company was charged consulting fees included in
      mineral property costs during the year ended May 31, 2009 totalling $4,094
      (2008 - $6,561) by the Vice President of Micro                                                                                
| |     |                                                                                                                                                                                                                                                                          
| | (f) | Cash and cash equivalents at May 31, 2009 include $55,320
      (2008 - $225,700) held in trust by a director of the
  Company.                                                                                                                                          

The Company expects the trend of losses to continue at an
increasing rate until we can achieve commercial production on some of the
mineral properties. However, there can be no assurance that commercial
production will be possible on any of the properties in the near or distant
future.

Liquidity and Working Capital

As of May 31, 2009, the Company had total current assets of
$257,169, and total liabilities of $461,545. As of May 31, 2009, the Company had
cash and cash held in trust of $247,322 and negative working capital of
$204,376.

Cash used in operating activities for the year ended May 31,
2009 was $126,805 as compared to cash gained in operating activities for the
year ended May 31, 2008 of $85,361. The increase in cash used in operating
activities was primarily due to the decrease in recovery of doubtful collection
as well as a decline in payable and accrued liabilities.

According to the agreement signed with Zhong Chuan on July 8,
2008, Mianping will repay the Company RMB 6,000,000 ($875,000) and Monte Sea
Shareholders shall subscribe for 5,000,000 units (the "Units") to be issued by
the Company at $0.15

14

---

per unit so the Company will raise working capital in the
amount of $750,000 to meet its short term working capital requirements.

Subsequent to May 31, 2009, the Company received verbal
termination of the Agreement with Zhong Chuan, as advised by third party legal
counsel, at a meeting in Beijing, China in July 2009. Formal written notice has
not been received from Zhong Chuan. The Agreement in effect, allows Zhong Chuan
to terminate the Agreement if it pays the Company double the amount of funds
paid by the Company to date to secure and develop the DXC Project. Zhong Chuan
has not repaid the required amount as anticipated by the Agreement to date. This
unfortunate delay on the part of Zhong Chuan places the termination it gave the
Company in dispute as the termination is conditional upon repayment of the
required funds. At this point then, the termination is incomplete. The Company
is pursuing Zhong Chuan to complete the termination, as the Company deems, is
mandated by the Agreement.

The Company has no other capital resources other than the
ability to use its common stock to raise additional capital or the exercise of
the warrants by the unit holders. The Companys current cash can provide the
Company with working capital for over one year since consulting fees are being
accrued. Estimated cash needed for next 12 months is about $80,000. The cash
will be mainly used for general administrative, corporate (legal, accounting and
audit), financing and management.

No commitments to provide additional funds have been made by
management or other stockholders except as set forth above. Accordingly, there
can be no assurance that any additional funds will be available to the Company
to allow it to cover operation expenses except as set forth in the agreement
dated July 8, 2008 where under, Zhong Chuan and Monte Sea Shareholders will
provide RMB 100,000,000 (US$14,584,000) to put the DXC property into production.
As a result of the Companys financial condition , this raises substantial doubt
that the Company will be able to continue as a going concern unless additional
capital is raised.

Off-Balance Sheet Arrangements

As of May 31, 2009, we were not involved in any form of
off-balance sheet arrangement.

Application of Critical Accounting Policies

Our consolidated financial statements and accompanying notes
are prepared in accordance with generally accepted accounting principles in the
United States. Preparing financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are affected
by management's application of accounting policies. We believe that
understanding the basis and nature of the estimates and assumptions involved
with the following aspects of our consolidated financial statements is critical
to an understanding of our financial statements.

Impairment of Long-lived Assets

In accordance with Financial Accounting Standards Board
(FASB) Statement of Financial Accounting Standards (SFAS) No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, the carrying
value of intangible assets and other long-lived assets is reviewed on a regular
basis for the existence of facts or circumstances that may suggest impairment.
The Company recognizes impairment when the sum of the expected undiscounted
future cash flows is less than the carrying amount of the asset. Impairment
losses, if any, are measured as the excess of the carrying amount of the asset
over its estimated fair value.

Mineral Properties

Costs of acquiring mineral properties are capitalized by the
project area unless the mineral properties do not have proven reserves. Costs to
maintain mineral rights and leases are expensed as incurred. When a property
reaches the production state, the related capitalized costs are amortized using
the unit of production method on the basis of annual estimates of ore reserves.
Management reviews the carrying value of mineral properties at least annually
and will recognize impairment in value based upon current exploration results,
and any impairment or subsequent losses are charged to operations at the time of
impairment. If a property is abandoned or sold, its capitalized costs are
charged to operations. Mineral property exploration costs are expensed as
incurred. Exploration activities conducted jointly with others are reflected at
the Companys proportionate interest in such activities. As at May 31, 2009 and
2008, the Company did not have proven or probable ore reserves.

Stock-based Compensation

15

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On June 1, 2006, the Company adopted the fair value recognition
provisions of SFAS No. 123(R), Share-Based Payment. Prior to June 1, 2006, the
Company accounted for stock-based payments under the recognition and measurement
provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees (APB
25), and related Interpretations, as permitted by SFAS No. 123, Accounting for
Stock-Based Compensation. In accordance with APB 25, no compensation cost was
required to be recognized for options granted that had an exercise price equal
to the market value of the underlying common stock on the date of grant.

The Company adopted SFAS No. 123R using the
modified-prospective transition method. Under that transition method,
compensation cost recognized for the year ended May 31, 2007 and thereafter will
include: (a) compensation costs for all share-based payments granted prior to,
but not yet vested as of June 1, 2006, based on the grant-date fair value
estimated in accordance with the original provisions of SFAS No. 123, and (b)
compensation cost for all share-based payments granted subsequent to June 1,
2006, based on the grant-date fair value estimated in accordance with the
provisions of SFAS No. 123R. The financial results for the prior periods have
not been restated. The Company will amortize stock compensation cost rateable
over the requisite service period. Adoption of SFAS No. 123R had no impact on
the consolidated financial statements of the Company.

Going Concern

These consolidated financial statements have been prepared on a
going concern basis which assumes that adequate sources of financing will be
obtained as required, and that our assets will be realized and liabilities
settled in the ordinary course of business. These consolidated financial
statements do not include any adjustments related to the recoverability of
assets and classification of assets and liabilities that might be necessary if
we are unable to continue as a going concern.

In order to continue as a going concern, we require additional
financing. There can be no assurance that additional financing will be available
to us when needed or, if available, that it can be obtained on commercially
reasonable terms. If we are not able to continue as a going concern, we would
likely be unable to realize the carrying value of our assets reflected in the
balances set out in the preparation of the consolidated financial statements.

The Company is in the exploration stage, has not yet achieved
profitable operations and is dependent on its ability to raise capital from
shareholders or other sources to meet its obligations and repay its liabilities
arising from normal business operations when they come due. These factors raise
substantial doubt that the Company will be able to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of these uncertainties.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

In addition to the U.S. Dollar, we conduct our business in
Chinese Yuan (RMB) and Canadian Dollar and, therefore, are subject to foreign
currency exchange risk on cash flows related to expenses and investing
transactions. In July 2005, the Chinese government began to permit the Chinese
Yuan to float against the U.S. Dollar. All of our costs to operate our Chinese
project are paid in Chinese Yuan and all of our costs to operate our principal
executive office in Canada are paid in Canadian dollar. Our exploration costs in
China may be incurred under contracts denominated in Chinese Yuan or U.S.
Dollars. If the Chinese Yuan continues to appreciate with respect to the U.S.
Dollar, our costs in China may increase. If the Canadian Dollar continues to
appreciate with respect to the U.S. Dollar, our costs in Canada may increase. To
date we have not engaged in hedging activities to hedge our foreign currency
exposure. In the future, we may enter into hedging instruments to manage our
foreign currency exchange risk or continue to be subject to exchange rate
risk.

Although inflation has not materially impacted our operations
in the recent past, increased inflation in China or Canada could have a negative
impact on our operating and general and administrative expenses, as these costs
could increase. China has recently experienced inflationary pressures, which
could increase our costs associated with our operations in China. If there are
material changes in our costs, we may seek to raise additional funds earlier
than anticipated.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

| |                                                                                    | Page 
| | ---------------------------------------------------------------------------------- | -----
| | Report of Independent Registered
      Public Accounting Firm                      | 17   
| | Consolidated Balance Sheets                                                        | 18   
| | Consolidated Statements
      of Operations                                        | 19   
| | Consolidated Statements of Cash Flows                                              | 20   
| | Consolidated Statements
      of Changes in Stockholders' Equity (Capital Deficit) | 21   
| | Notes to the Consolidated Financial Statements                                     | 22-38

16

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|                      | BDO DunwoodyLLP               | 600 Cathedral Place
|--------------------- | ----------------------------- | -------------------
|Chartered Accountants | 925 West Georgia Street      
|                      | Vancouver, BC, Canada V6C 3L2
|                      | Telephone: (604) 688-5421    
|                      | Telefax: (604) 688-5132      
|                      | E-mail: vancouver@bdo.ca     
|                      | www.bdo.ca                   

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders, 
  Sterling Group Ventures, Inc. 
  (An Exploration Stage Company)

We have audited the accompanying consolidated balance sheets
  of Sterling Group Ventures Inc. (the Company) (A Development Stage
  Company) and its subsidiaries as of May 31, 2009 and 2008 and the related consolidated
  statements of operations, cash flows and changes in stockholders' equity (capital
  deficit) for the years then ended and for the period from July 27, 1994 (Date
  of Inception) to May 31, 2009. These financial statements are the responsibility
  of the Company's management. Our responsibility is to express an opinion on
  these financial statements based on our audits.

We conducted our audits in accordance with the standards of the
  Public Company Accounting Oversight Board (United States of America). Those
  standards require that we plan and perform the audit to obtain reasonable assurance
  about whether the financial statements are free of material misstatement. The
  Company is not required to have, nor were we engaged to perform, an audit of
  its internal control over financial reporting. Our audit included consideration
  of internal control over financial reporting as a basis for designing audit
  procedures that are appropriate in the circumstances, but not for the purpose
  of expressing an opinion on the effectiveness of the Companys internal
  control over financial reporting. Accordingly, we express no such opinion. An
  audit also includes examining, on a test basis, evidence supporting the amounts
  and disclosures in the financial statements, assessing the accounting principles
  used and significant estimates made by management, as well as evaluating the
  overall financial statement presentation. We believe that our audits provide
  a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  Sterling Group Ventures, Inc. and its subsidiaries as of May 31, 2009 and 2008
  and the results of their operations and their cash flows for the years then
  ended and for the period from July 27, 1994 (Date of Inception) to May 31, 2009,
  in conformity with accounting principles generally accepted in the United States
  of America.

The accompanying financial statements referred to above have
  been prepared assuming that the Company will continue as a going concern. As
  discussed in Note 1 to the financial statements, the Company is in the exploration
  stage, has not yet achieved profitable operations and is dependent on its ability
  to raise capital from shareholders or other sources to meet its obligations
  and repay its liabilities arising from normal business operations when they
  come due. These factors, along with other matters as set forth in Note 1, raise
  substantial doubt that the Company will be able to continue as a going concern.
  The financial statements do not include any adjustments that might result from
  the outcome of these uncertainties.

(signed) BDO Dunwoody LLP

Chartered Accountants

Vancouver, Canada 
  August 27, 2009

BDODunwoodyLLPisa LimitedLiabilityPartnershipregisteredinOntario

17



---



|STERLING GROUP VENTURES, INC. 
|------------------------------
|(An Exploration Stage Company)
|CONSOLIDATED BALANCE SHEETS   
|May 31, 2009 and 2008         

|Stated in U.S.
      dollars                                  |   | 2009       |   |   | 2008       |  
|------------------------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                                              |   |            |   |   |            |  
|ASSETS                                                        |   |            |   |   |            |  
|                                                              |   |            |   |   |            |  
|Current Assets                                                |   |            |   |   |            |  
|Cash and cash equivalents                                     | $ | 192,002    |   | $ | 148,427    |  
|Cash held in trust - Note 4                                   |   | 55,320     |   |   | 225,700    |  
|GST refundable                                                |   | 9,577      |   |   | 5,407      |  
|Prepaid expenses                                              |   | 270        |   |   | 11         |  
|Exploration advance - Note 4                                  |   | -          |   |   | 8,850      |  
|Total current assets                                          |   | 257,169    |   |   | 388,395    |  
|                                                              |   |            |   |   |            |  
|Equipment                                                     |   | 454        |   |   | 1,741      |  
|Total Assets                                                  | $ | 257,623    |   | $ | 390,136    |  
|                                                              |   |            |   |   |            |  
|LIABILITIES AND CAPTIAL DEFICIT                               |   |            |   |   |            |  
|                                                              |   |            |   |   |            |  
|Current Liabilities                                           |   |            |   |   |            |  
|Accounts payable and accrued liabilities
      - Note 4       | $ | 461,545    |   | $ | 432,505    |  
|                                                              |   |            |   |   |            |  
|Capital Deficit                                               |   |            |   |   |            |  
|Common Stock : $0.001 Par Value - Note 5                      |   |            |   |   |            |  
|Authorized : 500,000,000                                      |   |            |   |   |            |  
|Issued and Outstanding : 43,826,175
      (2008 - 43,826,175) |   | 43,826     |   |   | 43,826     |  
|Additional Paid In Capital                                    |   | 2,652,924  |   |   | 2,652,924  |  
|Warrants - Note 5                                             |   | 544,964    |   |   | 461,112    |  
|Accumulated Other Comprehensive
      Loss                    |   | (583       | ) |   | (583       | )
|Deficit accumulated during the exploration stage              |   | (3,445,053 | ) |   | (3,199,648 | )
|Total Capital Deficit                                         |   | (203,922   | ) |   | (42,369    | )
|Total Liabilities and Capital Deficit                         | $ | 257,623    |   | $ | 390,136    |  

See accompanying notes to consolidated financial statements

18

---

|STERLING GROUP VENTURES, INC.                                              
|---------------------------------------------------------------------------
|(An Exploration Stage Company)                                             
|CONSOLIDATED STATEMENTS OF OPERATIONS                                      
|For the years ended May 31, 2009 and 2008 and                              
|for the period from July 27, 1994 (date of inception)
      to May 31, 2009

|                                                     |   |            |   |   |            |   |   | July 27, 1994 |  
|---------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ------------- | -
|                                                     |   |            |   |   |            |   |   | (Date of      |  
|                                                     |   |            |   |   |            |   |   | inception)    |  
|                                                     |   |            |   |   |            |   |   | to May 31,    |  
|Stated in U.S.
      dollars                         |   | 2009       |   |   | 2008       |   |   | 2009          |  
|                                                     |   |            |   |   |            |   |   |               |  
|Expenses                                             |   |            |   |   |            |   |   |               |  
|Accounting, audit and legal fees                     | $ | 53,877     |   | $ | 40,239     |   | $ | 370,308       |  
|Bank charges                                         |   | 168        |   |   | 215        |   |   | 1,686         |  
|Consulting fees - Note 4                             |   | 124,164    |   |   | 118,268    |   |   | 689,003       |  
|Depreciation                                         |   | 1,287      |   |   | 1,734      |   |   | 8,892         |  
|Filing fees and transfer agent                       |   | 2,027      |   |   | 1,656      |   |   | 36,546        |  
|Foreign exchange gain                                |   | (6,197     | ) |   | (9,929     | ) |   | (29,509       | )
|General and administrative - Note 4                  |   | 19,440     |   |   | 26,855     |   |   | 98,542        |  
|Mineral property costs - Notes 3 and
      4         |   | 52,724     |   |   | 78,276     |   |   | 1,264,394     |  
|Printing and mailing                                 |   | -          |   |   | -          |   |   | 16,883        |  
|Shareholder information and investor
      relations |   | 1,530      |   |   | -          |   |   | 61,230        |  
|Stock-based compensation - Note 5                    |   | 83,852     |   |   | 409,525    |   |   | 862,018       |  
|Travel and entertainment                             |   | 1,034      |   |   | 2,314      |   |   | 122,432       |  
|Recovery of doubtful collection - Note 3(b)          |   | (84,823    | ) |   | (147,154   | ) |   | (272,358      | )
|Allowance for doubtful collection - Note
      3(b)  |   | -          |   |   | -          |   |   | 246,708       |  
|                                                     |   | (249,083   | ) |   | (521,999   | ) |   | (3,476,775    | )
|Other item                                           |   |            |   |   |            |   |   |               |  
|Interest income                                      |   | 3,678      |   |   | 5,559      |   |   | 31,722        |  
|                                                     |   |            |   |   |            |   |   |               |  
|Net loss for the period                              | $ | (245,405   | ) | $ | (516,440   | ) | $ | (3,445,053    | )
|                                                     |   |            |   |   |            |   |   |               |  
|Basic and diluted loss per share                     | $ | (0.01      | ) | $ | (0.01      | ) |   |               |  
|                                                     |   |            |   |   |            |   |   |               |  
|Weighted average number of shares outstanding        |   | 43,826,175 |   |   | 43,715,871 |   |   |               |  

See accompanying notes to consolidated financial statements

19

---

|STERLING GROUP VENTURES, INC.                                              
|---------------------------------------------------------------------------
|(An Exploration Stage Company)                                             
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                      
|For the year ended May 31, 2009 and 2008 and                               
|for the period from July 27, 1994 (date of inception) to
      May 31, 2009

|                                                                |   |          |   |   |          |   |   | July 27, 1994 |  
|--------------------------------------------------------------- | - | -------- | - | - | -------- | - | - | ------------- | -
|                                                                |   |          |   |   |          |   |   | (Date of      |  
|                                                                |   |          |   |   |          |   |   | inception)    |  
|                                                                |   |          |   |   |          |   |   | to May 31,    |  
|Stated in U.S. dollars                                          |   | 2009     |   |   | 2008     |   |   | 2009          |  
|Cash flows from operating activities                            |   |          |   |   |          |   |   |               |  
|Net loss for the period                                         | $ | (245,405 | ) | $ | (516,440 | ) | $ | (3,445,053    | )
|Adjustments to reconcile net loss
      to net cash             |   |          |   |   |          |   |   |               |  
|provided by (used in) operating
      activities                |   |          |   |   |          |   |   |               |  
|Stock based compensation expense                                |   | 83,852   |   |   | 409,525  |   |   | 862,018       |  
|Depreciation                                                    |   | 1,287    |   |   | 1,734    |   |   | 8,892         |  
|Permit and engineering studies                                  |   | -        |   |   | -        |   |   | 150,000       |  
|Shareholder information and investor relations                  |   | -        |   |   | -        |   |   | 20,447        |  
|Accounting, audit and legal fees                                |   | -        |   |   | -        |   |   | 49,000        |  
|Translation adjustment                                          |   | -        |   |   | -        |   |   | (106          | )
|Changes in non-cash working capital items                       |   |          |   |   |          |   |   |               |  
|related to operations                                           |   |          |   |   |          |   |   |               |  
|GST refundable                                                  |   | (4,170   | ) |   | 3,721    |   |   | (9,577        | )
|Prepaid expenses                                                |   | (259     | ) |   | 1,953    |   |   | 21,283        |  
|Advance receivable                                              |   | 8,850    |   |   | 5,339    |   |   | -             |  
|Accounts payable and accrued liabilities                        |   | 29,040   |   |   | 179,529  |   |   | 481,025       |  
|Net cash provided by (used in) operating activities             |   | (126,805 | ) |   | 85,361   |   |   | (1,862,071    | )
|                                                                |   |          |   |   |          |   |   |               |  
|Cash flows from investing activities                            |   |          |   |   |          |   |   |               |  
|Advance on investment                                           |   | -        |   |   | -        |   |   | (150,000      | )
|Additions to equipment                                          |   | -        |   |   | (564     | ) |   | (9,346        | )
|Net change in cash held in trust                                |   | 170,380  |   |   | (159,564 | ) |   | (55,320       | )
|Net cash flows provided by (used in) investing
      activities |   | 170,380  |   |   | (160,128 | ) |   | (214,666      | )
|                                                                |   |          |   |   |          |   |   |               |  
|Cash flows from financing activities                            |   |          |   |   |          |   |   |               |  
|Net proceeds on issuance of common stock                        |   | -        |   |   | -        |   |   | 2,266,858     |  
|Amounts contributed by director                                 |   | -        |   |   | -        |   |   | 1,881         |  
|Net cash flows provided by financing activities                 |   | -        |   |   | -        |   |   | 2,268,739     |  
|                                                                |   |          |   |   |          |   |   |               |  
|Net increase (decrease) in cash and cash equivalents            |   | 43,575   |   |   | (74,767  | ) |   | 192,002       |  
|Cash and cash equivalents - beginning of year                   |   | 148,427  |   |   | 223,194  |   |   | -             |  
|Cash and cash equivalents - end of year                         | $ | 192,002  |   | $ | 148,427  |   | $ | 192,002       |  
|                                                                |   |          |   |   |          |   |   |               |  
|Cash and cash equivalents consist of:                           |   |          |   |   |          |   |   |               |  
|Cash                                                            | $ | 192,002  |   | $ | 47,512   |   | $ | 192,002       |  
|Term deposits                                                   |   | -        |   |   | 100,915  |   |   | -             |  
|                                                                | $ | 192,002  |   | $ | 148,427  |   | $ | 192,002       |  
|Supplemental Information:                                       |   |          |   |   |          |   |   |               |  
|Cash paid for :                                                 |   |          |   |   |          |   |   |               |  
|Interest                                                        | $ | -        |   | $ | -        |   | $ | -             |  
|Income taxes                                                    | $ | -        |   | $ | -        |   | $ | -             |  
|Non-cash Transactions:                                          |   |          |   |   |          |   |   |               |  
|Issuance of shares for commission
      paid to broker for      |   |          |   |   |          |   |   |               |  
|private placement                                               | $ | -        |   | $ | -        |   | $ | 72,396        |  
|Issuance of shares for services
      rendered                  | $ | -        |   | $ | 19,480   |   | $ | 91,000        |  
|Issuance of shares for settlement of accounts
      payable     | $ | -        |   | $ | -        |   | $ | 19,480        |  
|Issuance of share purchase warrants
      for finder's fee      |   |          |   |   |          |   |   |               |  
|paid to broker for private placement                            | $ | -        |   | $ | -        |   | $ | 11,477        |  

See accompanying notes to consolidated financial statements

20

---

|STERLING GROUP VENTURES, INC.                                                    
|---------------------------------------------------------------------------------
|(An Exploration Stage Company)                                                   
|CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
      (CAPITAL DEFICIT)
|For the period from July 27, 1994 (date of inception)
      to May 31, 2009      

|                                                                 |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   | Deficit     |   |   |          |  
|---------------------------------------------------------------- |  | ---------- | - | - | --------- | - | - | ---------- | - | - | -------- |  | - | ------------- | - | - | ----------- | - | - | -------- | -
|                                                                 |  |            |   |   |           |   |   |            |   |   |          |  |   | Accumulated   |   |   | Accumulated |   |   |          |  
|                                                                 |  |            |   |   | Stock     |   |   | Additional |   |   |          |  |   | Other         |   |   | During The  |   |   |          |  
|                                                                 |  | Common     |   |   | Amount At |   |   | Paid In    |   |   |          |  |   | Comprehensive |   |   | Exploration |   |   |          |  
|Stated in U.S.
      dollars                                     |  | Shares     |   |   | Par Value |   |   | Capital    |   |   | Warrants |  |   | Loss          |   |   | Stage       |   |   | Total    |  
|                                                                 |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Balance, July 27, 1994 (Date of inception)                       |  | -          |   | $ | -         |   | $ | -          |   | $ | -        |  | $ | -             |   | $ | -           |   | $ | -        |  
|Common stock                                                     |  | 1          |   |   | 1         |   |   | -          |   |   | -        |  |   | -             |   |   | -           |   |   | 1        |  
|Amount contributed by director                                   |  | -          |   |   | -         |   |   | 1,881      |   |   | -        |  |   | -             |   |   | -           |   |   | 1,881    |  
|Net loss for the periods                                         |  | -          |   |   | -         |   |   | -          |   |   | -        |  |   | -             |   |   | (7,902      | ) |   | (7,902   | )
|                                                                 |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Balance, May 31, 2001                                            |  | 1          |   | $ | 1         |   | $ | 1,881      |   | $ | -        |  | $ | -             |   | $ | (7,902      | ) | $ | (6,020   | )
|Net loss of the year                                             |  | -          |   |   | -         |   |   | -          |   |   | -        |  |   | -             |   |   | (1,860      | ) |   | (1,860   | )
|                                                                 |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Balance, May 31, 2002                                            |  | 1          |   | $ | 1         |   | $ | 1,881      |   | $ | -        |  | $ | -             |   | $ | (9,762      | ) | $ | (7,880   | )
|Net loss of the year                                             |  | -          |   |   | -         |   |   | -          |   |   | -        |  |   | -             |   |   | (1,360      | ) |   | (1,360   | )
|                                                                 |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Balance, May 31, 2003                                            |  | 1          |   | $ | 1         |   | $ | 1,881      |   | $ | -        |  | $ | -             |   | $ | (11,122     | ) | $ | (9,240   | )
|Reverse acquisition                                              |  | (1         | ) |   | (1        | ) |   | (1,881     | ) |   | -        |  |   | -             |   |   | -           |   |   | (1,882   | )
|Issuance of common shares for reverse acquisition                |  | 25,000,000 |   |   | 25,000    |   |   | (23,119    | ) |   | -        |  |   | -             |   |   | -           |   |   | 1,881    |  
|Outstanding common shares of Company prior
      to              |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|acquisition                                                      |  | 11,360,000 |   |   | 11,360    |   |   | (10,883    | ) |   | -        |  |   | (583          | ) |   | -           |   |   | (106     | )
|Issuance of shares for cash pursuant to a private                |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|placement - at $0.50                                             |  | 1,766,000  |   |   | 1,766     |   |   | 881,234    |   |   | -        |  |   | -             |   |   | -           |   |   | 883,000  |  
|Stock-based compensation                                         |  | -          |   |   | -         |   |   | 368,641    |   |   | -        |  |   | -             |   |   | -           |   |   | 368,641  |  
|Net loss of the year                                             |  | -          |   |   | -         |   |   | -          |   |   | -        |  |   | -             |   |   | (527,446    | ) |   | (527,446 | )
|                                                                 |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Balance, May 31, 2004                                            |  | 38,126,000 |   | $ | 38,126    |   | $ | 1,215,873  |   | $ | -        |  | $ | (583          | ) | $ | (538,568    | ) | $ | 714,848  |  
|Issuance of shares for cash pursuant to a private                |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|placement - at $0.50                                             |  | 1,950,000  |   |   | 1,950     |   |   | 973,050    |   |   | -        |  |   | -             |   |   | -           |   |   | 975,000  |  
|Issuance of shares for finder's fee of                           |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|private placement                                                |  | 101,500    |   |   | 102       |   |   | 50,648     |   |   | -        |  |   | -             |   |   | -           |   |   | 50,750   |  
|Finders' fees                                                    |  | -          |   |   | -         |   |   | (50,750    | ) |   |          |  |   |               |   |   |             |   |   | (50,750  | )
|Fair value of share purchase warrants (finders' fees)            |  | -          |   |   | -         |   |   | (40,110    | ) |   | 40,110   |  |   | -             |   |   | -           |   |   | -        |  
|Issuance of shares for services rendered                         |  | 100,000    |   |   | 100       |   |   | 41,900     |   |   | -        |  |   | -             |   |   | -           |   |   | 42,000   |  
|Net loss of the year                                             |  | -          |   |   | -         |   |   | -          |   |   | -        |  |   | -             |   |   | (818,954    | ) |   | (818,954 | )
|                                                                 |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Balance, May 31, 2005                                            |  | 40,277,500 |   | $ | 40,278    |   | $ | 2,190,611  |   | $ | 40,110   |  | $ | (583          | ) | $ | (1,357,522  | ) | $ | 912,894  |  
|                                                                 |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Net loss for the year                                            |  | -          |   |   | -         |   |   | -          |   |   | -        |  |   | -             |   |   | (461,201    | ) |   | (461,201 | )
|                                                                 |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Balance, May 31, 2006                                            |  | 40,277,500 |   | $ | 40,278    |   | $ | 2,190,611  |   | $ | 40,110   |  | $ | (583          | ) | $ | (1,818,723  | ) | $ | 451,693  |  
|                                                                 |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Issuance of shares for cash pursuant to a private                |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|placement - at $0.15                                             |  | 2,750,300  |   |   | 2,750     |   |   | 409,795    |   |   | -        |  |   | -             |   |   | -           |   |   | 412,545  |  
|Issuance of shares for finder's fee of                           |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|private placement                                                |  | 123,690    |   |   | 124       |   |   | 21,522     |   |   | -        |  |   | -             |   |   | -           |   |   | 21,646   |  
|Finders' fees                                                    |  | -          |   |   | -         |   |   | (21,646    | ) |   |          |  |   |               |   |   |             |   |   | (21,646  | )
|Share issuance costs                                             |  | -          |   |   | -         |   |   | (3,687     | ) |   | -        |  |   | -             |   |   | -           |   |   | (3,687   | )
|Fair value of share purchase warrants (finders' fees)            |  | -          |   |   | -         |   |   | (9,895     | ) |   | 9,895    |  |   | -             |   |   | -           |   |   | -        |  
|Revaluation of share purchase warrants                           |  | -          |   |   | -         |   |   | (1,582     | ) |   | 1,582    |  |   | -             |   |   | -           |   |   | -        |  
|Issuance of shares for services rendered                         |  | 350,000    |   |   | 350       |   |   | 48,650     |   |   | -        |  |   | -             |   |   | -           |   |   | 49,000   |  
|Net loss for the year                                            |  | -          |   |   | -         |   |   | -          |   |   | -        |  |   | -             |   |   | (864,485    | ) |   | (864,485 | )
|                                                                 |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Balance, May 31, 2007                                            |  | 43,501,490 |   | $ | 43,502    |   | $ | 2,633,768  |   | $ | 51,587   |  | $ | (583          | ) | $ | (2,683,208  | ) | $ | 45,066   |  
|                                                                 |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Issuance of shares for services rendered at
      $0.06 - Note 5 |  | 324,685    |   |   | 324       |   |   | 19,156     |   |   | -        |  |   | -             |   |   | -           |   |   | 19,480   |  
|Revaluation of share purchase warrants - Note 5                  |  |            |   |   | -         |   |   | -          |   |   | 409,525  |  |   | -             |   |   | -           |   |   | 409,525  |  
|Net loss for the year                                            |  | -          |   |   | -         |   |   | -          |   |   | -        |  |   | -             |   |   | (516,440    | ) |   | (516,440 | )
|                                                                 |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Balance, May 31, 2008                                            |  | 43,826,175 |   | $ | 43,826    |   | $ | 2,652,924  |   | $ | 461,112  |  | $ | (583          | ) | $ | (3,199,648  | ) | $ | (42,369  | )
|                                                                 |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Revaluation of share purchase warrants - Note
      5            |  | -          |   |   | -         |   |   | -          |   |   | 83,852   |  |   | -             |   |   | -           |   |   | 83,852   |  
|Net loss for the year                                            |  | -          |   |   | -         |   |   | -          |   |   | -        |  |   | -             |   |   | (245,405    | ) |   | (245,405 | )
|                                                                 |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Balance, May 31, 2009                                            |  | 43,826,175 |   | $ | 43,826    |   | $ | 2,652,924  |   | $ | 544,964  |  | $ | (583          | ) | $ | (3,445,053  | ) | $ | (203,922 | )

See accompanying notes to consolidated financial statements

21

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|STERLING GROUP VENTURES, INC.                 
|----------------------------------------------
|(An Exploration Stage Company)                
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|May 31, 2009 and 2008                         
|(Stated in US Dollars)                        

|Note 1 | Nature of Operations and Ability to Continue
      as a Going Concern
|------ | ---------------------------------------------------------------------

Sterling Group Ventures Inc. was incorporated
  in the State of Nevada on September 13, 2001 and its fiscal year-end is May
  31. On January 20, 2004, the Company acquired all of the issued and outstanding
  shares of Micro Express Ltd. (Micro), which was incorporated on
  July 27, 1994. The business combination was accounted for as a reverse acquisition
  whereby the purchase method of accounting was used with Micro being the accounting
  acquirer and the Company being the accounting subsidiary. The cumulative figures
  are shown on a reverse acquisition basis with respect to the accounting acquirers
  date of inception, July 27, 1994.

Sterling Group Ventures Inc. (the Company)
  is in the exploration stage. The Company has entered into joint venture agreements
  to explore and develop mineral properties located in China and has not yet determined
  whether these properties contain reserves that are economically recoverable.
  The recoverability of amounts from these properties will be dependent upon the
  discovery of economically recoverable reserves, confirmation of the Companys
  interest in the underlying properties, the ability of the Company to obtain
  necessary financing to satisfy the expenditure requirements under the joint
  venture agreements and to complete the development of the properties and upon
  future profitable production or proceeds from the sale thereof.

These consolidated financial statements
  have been prepared in accordance with generally accepted accounting principles
  applicable to a going concern, which assumes that the Company will be able to
  meet its obligations and continue its operations for its next fiscal year. Realization
  values may be substantially different from carrying values as shown and these
  financial statements do not give effect to adjustments that would be necessary
  to the carrying values and classification of assets and liabilities should the
  Company be unable to continue as a going concern. At May 31, 2009, the Company
  had not yet achieved profitable operations, has a working capital deficiency
  of $204,376, has accumulated losses of $3,445,053 since its inception and expects
  to incur further losses in the development of its business, all of which casts
  substantial doubt about the Companys ability to continue as a going concern.
  The Companys ability to continue as a going concern is dependent upon
  its ability to generate future profitable operations and/or to obtain the necessary
  financing to meet its obligations and repay its liabilities arising from normal
  business operations when they come due. Management has no formal plan in place
  to address this concern but considers that the Company will be able to obtain
  additional funds by equity financing and/or related party advances, however
  there is no assurance of additional funding being available.

|Note 2 | Summary of Significant Accounting Policies
|------ | ------------------------------------------

The consolidated financial statements
  of the Company have been prepared in accordance with generally accepted accounting
  principles in the United States of America. Because a precise determination
  of many assets and liabilities is dependent upon future events, the preparation
  of consolidated financial statements for a period necessarily involves the use
  of estimates, which have been made using careful judgement. Actual results may
  vary from these estimates.

The consolidated financial statements
  have, in managements opinion, been properly prepared within the framework
  of the significant accounting policies summarized below:

22

---

|Sterling Group Ventures, Inc.             
|------------------------------------------
|(An Exploration Stage Company)            
|Notes to Consolidated Financial Statements
|May 31, 2009 and 2008                     
|(Stated in US Dollars)                    
|Page 23                                   

|Note 2 | Summary of Significant Accounting Policies 
      (contd)
|------ | -----------------------------------------------------------

Exploration Stage Company

The Company complies with Financial
  Accounting Standard Board Statement No. 7 and Securities and Exchange Commission
  Act Guide 7 for its characterization of the Company as an exploration stage
  company.

Principles of Consolidation

These consolidated financial statements
  include the accounts of the Company and its wholly-owned subsidiaries, Micro
  Express Holdings Inc., Micro Express Ltd., Huyana Ventures Limited., Makaelo
  Holdings Inc. and Makaelo Limited. All inter-company transactions and account
  balances have been eliminated. The Companys subsidiaries were all incorporated
  under the laws of the Territory of the British Virgin Islands on the following
  dates: Micro Express Holdings Inc. was incorporated on February 25, 2004; Micro
  Express Ltd. was incorporated on July 27, 1994; Huyana Ventures Limited was
  incorporated on August 18, 2004; Makaelo Holdings Inc. was incorporated on March
  21, 2005 and Makaelo Limited was incorporated on February 14, 2005.

Cash and Cash Equivalents

For the purposes of the statements of
  cash flows, the Company considers all highly liquid investments with original
  maturities of three months or less to be cash equivalents.

Mineral Properties

Costs of acquiring mineral properties
  are capitalized by the project area unless the mineral properties do not have
  proven reserves. Costs to maintain mineral rights and leases are expensed as
  incurred. When a property reaches the production state, the related capitalized
  costs are amortized using the unit of production method on the basis of annual
  estimates of ore reserves. Management reviews the carrying value of mineral
  properties at least annually and will recognize impairment in value based upon
  current exploration results, and any impairment or subsequent losses are charged
  to operations at the time of impairment. If a property is abandoned or sold,
  its capitalized costs are charged to operations. Mineral property exploration
  costs are expensed as incurred. Exploration activities conducted jointly with
  others are reflected at the Companys proportionate interest in such activities.
  As at May 31, 2009 and 2008, the Company did not have proven or probable ore
  reserves.

Impairment of Long-lived Assets

In accordance with Financial Accounting
  Standards Board (FASB) Statement of Financial Accounting Standards
  (SFAS) No. 144, Accounting for the Impairment or Disposal
  of Long-Lived Assets, the carrying value of intangible assets and other
  long-lived assets is reviewed on a regular basis for the existence of facts
  or circumstances that may suggest impairment. The Company recognizes impairment
  when the sum of the expected undiscounted future cash flows is less than the
  carrying amount of the asset. Impairment losses, if any, are measured as the
  excess of the carrying amount of the asset over its estimated fair value.

23

---

|Sterling Group Ventures, Inc.             
|------------------------------------------
|(An Exploration Stage Company)            
|Notes to Consolidated Financial Statements
|May 31, 2009 and 2008                     
|(Stated in US Dollars)                    
|Page 24                                   

|Note 2 | Summary of Significant Accounting Policies
      (contd)
|------ | ----------------------------------------------------------

Asset Retirement Obligations

The Company recognizes the fair value
  of a liability for an asset retirement obligation in the year in which it is
  incurred when a reasonable estimate of fair value can be made. The carrying
  amount of the related long-lived asset is increased by the same amount as the
  liability.

Changes in the liability for an asset
  retirement obligation due to the passage of time will be measured by applying
  an interest method of allocation. The amount will be recognized as an increase
  in the liability and an accretion expense in the statement of operations. Changes
  resulting from revisions to the timing or the amount of the original estimate
  of undiscounted cash flows are recognized as an increase or a decrease in the
  carrying amount of the liability for an asset retirement obligation and the
  related asset retirement cost capitalized as part of the carrying amount of
  the related long-lived asset. No asset retirement obligation was recognized
  at May 31, 2009 and 2008.

Equipment

Equipment is carried at cost and consists
  of computer equipment. Depreciation is provided on a straight-line basis over
  the useful life of the equipment being 3 years.

Income Taxes

The Company uses the assets and liability
  method of accounting for income taxes pursuant to SFAS No. 109 Accounting
  for Income Taxes. Under the asset and liability method of SFAS No. 109,
  deferred tax assets and liabilities are recognized for the future tax consequences
  attributable to temporary differences between the financial statements carrying
  amounts of existing assets and liabilities and their respective tax bases. Deferred
  tax assets and liabilities are measured using enacted tax rates expected to
  apply to taxable income in the years in which those temporary differences are
  expected to be recovered or settled.

In June 2006, the Financial Accounting
  Standards Board (FASB) issued FASB Interpretation No. 48, Accounting
  for Uncertainty in Income Taxes. The interpretation clarifies the accounting
  for uncertainty in income taxes recognized in a companys financial statements
  in accordance with SFAS No. 109, Accounting for Income Taxes. Specifically,
  the pronouncement prescribes a recognition threshold and a measurement attribute
  for the financial statement recognition and measurement of a tax position taken
  or expected to be taken in a tax return. The interpretation also provides guidance
  on the related derecognition, classification, interest and penalties, accounting
  for interim periods, disclosure and transition of uncertain tax positions. The
  interpretation is effective for fiscal years beginning after December 15, 2006.
  The adoption of FIN 48 did not have a material impact on the Companys
  financial position, results of operations or cash flows.

Fair Value of Financial Instruments

The carrying value of cash and cash
  equivalents, cash held in trust and accounts payable and accrued liabilities
  approximates fair value because of the short maturity of these instruments.
  Unless otherwise noted, it is managements opinion that the Company is
  not exposed to significant interest, currency or credit risks arising from these
  financial instruments.

24

---

|Sterling Group Ventures, Inc.             
|------------------------------------------
|(An Exploration Stage Company)            
|Notes to Consolidated Financial Statements
|May 31, 2009 and 2008                     
|(Stated in US Dollars)                    
|Page 25                                   

|Note 2 | Summary of Significant Accounting Policies
      (contd)
|------ | ----------------------------------------------------------

Concentration of Credit Risk

The Company places its cash and cash
  equivalents with high credit quality financial institutions. As of May 31, 2009,
  the Company had no deposit in a bank beyond insured limits.

Basic Loss per Share

The Company reports basic loss per share
  in accordance with the SFAS No. 128, Earnings Per Share. Basic loss
  per share is computed using the weighted average number of shares outstanding
  during the period. Diluted loss per share is computed similar to basic loss
  per share except that the denominator is increased to include the number of
  additional common shares that would have been outstanding if the dilutive potential
  common shares had been issued. In addition, in computing the dilutive effect
  of convertible securities, the numerator is adjusted to add back any convertible
  preferred dividend and the after-tax amount of interest in the period associated
  with any convertible debt. The numerator is also adjusted for any other changes
  in income or loss that would result from the assumed conversion of these potential
  common shares. Common share equivalents represent the dilutive effect of the
  assumed exercise of the outstanding stock options and warrants, using the treasury
  stock method, at either the beginning of the respective period presented or
  the date of issuance, whichever is later, and only if the common stock equivalents
  are considered dilutive based upon the Companys net loss position at the
  calculation date. At May 31, 2009, the Company had 6,691,490 (2008 10,327,490)
  common share equivalents in respect to options and warrants. Because the Company
  incurred a loss, diluted loss per share is the same as basic loss per share.

Comprehensive Loss

The Company reports comprehensive income
  (loss) in accordance with SFAS No. 130, Reporting Comprehensive Income.
  Comprehensive loss is comprised of foreign currency translation adjustments.

Foreign Currency Translation

Foreign currency transactions are translated
  into US dollars, the functional and reporting currency, by the use of the exchange
  rate in effect at the date of the transaction, in accordance with SFAS No. 52,
  Foreign Currency Translation.

Assets and liabilities denominated in
  a foreign currency are translated at the exchange rate in effect at the period
  end and capital accounts are translated at historical rates. Income statement
  accounts are translated at the average rates of exchange prevailing during the
  period which approximates the exchange rate in effect at the date of the transaction.
  Translation adjustments from the use of different exchange rates from period
  to period are included in the Comprehensive Income account in Stockholders
  Equity, if applicable.

Transactions undertaken in currencies
  other than the functional currency of the entity are translated using the exchange
  rate in effect as of the transaction date. Any exchange gains and losses are
  included in the Statement of Operations.

25

---

|Sterling Group Ventures, Inc.             
|------------------------------------------
|(An Exploration Stage Company)            
|Notes to Consolidated Financial Statements
|May 31, 2009 and 2008                     
|(Stated in US Dollars)                    
|Page 26                                   

|Note 2 | Summary of Significant Accounting Policies
      (contd)
|------ | ----------------------------------------------------------

Stock-based Compensation

On June 1, 2006, the Company adopted
  the fair value recognition provisions of SFAS No. 123(R), Share-Based Payment.
  Prior to June 1, 2006, the Company accounted for stock-based payments under
  the recognition and measurement provisions of APB Opinion No. 25, Accounting
  for Stock Issued to Employees (APB 25), and related Interpretations,
  as permitted by SFAS No. 123, Accounting for Stock-Based Compensation. In accordance
  with APB 25, no compensation cost was required to be recognized for options
  granted that had an exercise price equal to the market value of the underlying
  common stock on the date of grant.

The Company adopted SFAS No. 123R using
  the modified-prospective transition method. Under that transition method, compensation
  cost recognized for the year ended May 31, 2007 and thereafter will include:
  (a) compensation costs for all share-based payments granted prior to, but not
  yet vested as of June 1, 2006, based on the grant-date fair value estimated
  in accordance with the original provisions of SFAS No. 123, and (b) compensation
  cost for all share-based payments granted subsequent to June 1, 2006, based
  on the grant-date fair value estimated in accordance with the provisions of
  SFAS No. 123R. The financial results for the prior periods have not been restated.
  The Company will amortize stock compensation cost rateable over the requisite
  service period. Adoption of SFAS No. 123R had no impact on the consolidated
  financial statements of the Company.

New Accounting Pronouncements

In September 2006, the FASB issued SFAS
  No. 157, Fair Value Measurements (SFAS 157), which defines
  fair value, establishes a framework for measuring fair value in GAAP, and expands
  disclosures about fair value measurements. SFAS 157 does not require any new
  fair value measurements, but provides guidance on how to measure fair value
  by providing a fair value hierarchy used to classify the source of the information.
  In February 2008, the FASB deferred the effective date of SFAS 157 by one year
  for certain non-financial assets and non-financial liabilities, except those
  that are recognized or disclosed at fair value in the financial statements on
  a recurring basis (at least annually). On June 1, 2008, the Company adopted
  the provisions of SFAS 157, except as it applies to those non-financial assets
  and non-financial liabilities for which the effective date has been delayed
  by one year, which the Company will adopt on June 1, 2009.

The fair value hierarchy distinguishes
  between assumptions based on market data (observable inputs) and an entitys
  own assumptions (unobservable inputs). The hierarchy consists of three levels:

- Level one  Quoted market prices in active
      markets for identical assets or liabilities;
- Level two  Inputs other than level one inputs
      that are either directly or indirectly observable; and
- Level three  Unobservable inputs developed
      using estimates and assumptions, which are developed by the reporting entity
      and reflect those assumptions that a market participant would use.

The adoption of SFAS 157 did not have
  a material effect on the Companys financial position or results of operations.
  The book values of cash and cash equivalents, cash held in trust, accounts payable
  and accrued liabilities approximate their respective fair values due to the
  short-term nature of these instruments. The Company has no assets or liabilities
  that are measured at fair value on a recurring basis. There were no assets or
  liabilities measured at fair value on a non-recurring basis during the year
  ended May 31, 2009.

26

---

|Sterling Group Ventures, Inc.             
|------------------------------------------
|(An Exploration Stage Company)            
|Notes to Consolidated Financial Statements
|May 31, 2009 and 2008                     
|(Stated in US Dollars)                    
|Page 27                                   

|Note 2 | Summary of Significant Accounting Policies
      (contd)
|------ | ----------------------------------------------------------

New Accounting Pronouncements 
  (contd)

In February 2007, the FASB issued SFAS
  No. 159, The Fair Value Option for Financial Assets and Financial Liabilities.
  SFAS 159 provides companies with an option to report selected financial assets
  and liabilities at fair value. SFAS 159 will be adopted on June 1, 2009 and,
  the Company does not expect the adoption of SFAS 159 to have a material effect
  on its consolidated financial statements.

In December 2007, the SEC issued Staff
  Accounting Bulletin (SAB) No. 110 regarding the use of a simplified
  method, as discussed in SAB No. 107 (SAB 107), in developing an estimate of
  expected term of plain vanilla share options in accordance with
  SFAS No. 123 (R), Share-Based Payment. In particular, the staff indicated in
  SAB 107 that it will accept a companys election to use the simplified
  method, regardless of whether the company has sufficient information to make
  more refined estimates of expected term. At the time SAB 107 was issued, the
  staff believed that more detailed external information about employee exercise
  behavior (e.g., employee exercise patterns by industry and/or other categories
  of companies) would, over time, become readily available to companies. Therefore,
  the staff stated in SAB 107 that it would not expect a company to use the simplified
  method for share option grants after December 31, 2007. The staff understands
  that such detailed information about employee exercise behavior may not be widely
  available by December 31, 2007. Accordingly, the staff will continue to accept,
  under certain circumstances, the use of the simplified method beyond December
  31, 2007. The Company will continue to assess the impact of SAB 110. It is not
  believed that this will have an impact on the Companys consolidated financial
  statements.

In December 2007, the FASB ratified
  EITF No. 07-1, Accounting for Collaborative Arrangements,that discusses
  how parties to a collaborative arrangement (which does not establish a legal
  entity within such arrangement) should account for various activities. The consensus
  indicates that costs incurred and revenues generated from transactions with
  third parties (i.e. parties outside of the collaborative arrangement) should
  be reported by the collaborators on the respective line items in their income
  statements pursuant to EITF Issue No. 99-19, Reporting Revenue Gross as a
  Principal Versus Net as an Agent.,Additionally, the consensus provides
  that income statement characterization of payments between the participants
  in a collaborative arrangement should be based upon existing authoritative pronouncements;
  analogy to such pronouncements if not within their scope; or a reasonable, rational,
  and consistently applied accounting policy election. EITF Issue No. 07-1 is
  effective for financial statements beginning after December 15, 2008 and is
  to be applied retrospectively to all periods presented for collaborative arrangements
  existing as of the date of adoption. The Company is evaluating the impact, if
  any, the adoption of this consensus will have on its consolidated financial
  statements.

In April 2008, the FASB issued FASB
  Staff Position No. 142-3, Determination of the Useful Life of Intangible
  Assets(FSP 142-3). FSP 142-3 amends the factors that should
  be considered in developing assumptions about renewal or extension used in estimating
  the useful life of a recognized intangible asset under SFAS No. 142, Goodwill
  and Other Intangible Assets(SFAS 142). This standard is intended
  to improve the consistency between the useful life of a recognized intangible
  asset under SFAS 142 and the period of expected cash flows used to measure the
  fair value of the asset under SFAS No. 141 (revised 2007), Business Combinations(SFAS 141(R)) and other GAAP. FSP 142-3 is effective for financial
  statements issued for fiscal years beginning after December 15, 2008 and the
  Company will adopt the provisions of FSP 142-3 effective June 1, 2009. The Company
  is evaluating the impact, if any, the adoption of this consensus will have on
  its consolidated financial statements.

27

---

|Sterling Group Ventures, Inc.             
|------------------------------------------
|(An Exploration Stage Company)            
|Notes to Consolidated Financial Statements
|May 31, 2009 and 2008                     
|(Stated in US Dollars)                    
|Page 28                                   

|Note 2 | Summary of Significant Accounting Policies
      (contd)
|------ | ----------------------------------------------------------

New Accounting Pronouncements 
  (contd)

In May 2008, the FASB issued FASB Staff
  Position (FSP) No. APB 14-1 Accounting for Convertible Debt
  Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash
  Settlements) (previously FSP APB 14-a), which will change the accounting
  treatment for convertible securities which the issuer may settle fully or partially
  in cash. Under the final FSP, cash settled convertible securities will be separated
  into their debt and equity components. The value assigned to the debt component
  will be the estimated fair value, as of the issuance date, of a similar debt
  instrument without the conversion feature, and the difference between the proceeds
  for the convertible debt and the amount reflected as a debt liability will be
  recorded as additional paid-in capital. As a result, the debt will be recorded
  at a discount reflecting its below market coupon interest rate. The debt will
  subsequently be accreted to its par value over its expected life, with the rate
  of interest that reflects the market rate at issuance being reflected on the
  income statement. This change in methodology will affect the calculations of
  net income and earnings per share for many issuers of cash settled convertible
  securities. The FSP is effective for financial statements issued for fiscal
  years beginning after December 15, 2008, and interim periods within those fiscal
  years. The adoption will not have a material effect on the Companys consolidated
  financial statements.

In May 2008, the FASB issued SFAS statement
  No. 162, The Hierarchy of Generally Accepted Accounting Principles
  (SFAS 162). SFAS 162 identifies the sources of accounting principles
  and the framework for selecting the principles used in the preparation of financial
  statements of nongovernmental entities that are presented in conformity with
  GAAP in the United States. Any effect of applying the provisions of this Statement
  shall be reported as a change in accounting principle in accordance with FASB
  statement No. 154, Accounting Changes and Error Corrections. The
  adoption of FSAS No. 162 will not have an impact on the Companys consolidated
  financial statements.

In June 2008, the Financial Accounting
  Standards Board (FASB) issued FSP EITF 03-6-1, Determining
  Whether Instruments Granted in Share-Based Payment Transactions are Participating
  Securities. FSP EITF 03-6-1 addresses whether instruments granted in share-based
  payment transactions are participating securities prior to vesting and affects
  entities that accrue cash dividends on share-based payment awards during the
  awards service period when the dividends do not need to be returned if
  the employees forfeit the awards. FSP EITF 03-6-1 states that all outstanding
  unvested share-based payment awards that contain rights to nonforfeitable dividends
  participate in undistributed earnings with common shareholders and, therefore,
  need to be included in the earnings allocation in computing earnings per share
  under the two-class method. FSP EITF 03-6-1 is effective for fiscal years beginning
  after December 15, 2008, and interim periods within those fiscal years. The
  Company does not expect the adoption of FSP EITF 03-6-1 to have a material impact
  on its consolidated financial statements.

In October 2008, the FASB issued FSP
  FAS 157-3, Determining the Fair Value of a Financial Asset When the Market
  for That Asset Is Not Active,which addresses the application of Statement
  of Financial Accounting Standards (SFAS) No.157 for illiquid financial
  instruments. FSP FAS 157-3 clarifies that approaches to determining fair value
  other than the market approach may be appropriate when the market for a financial
  asset is not active. The Company does not expect the adoption of FSP FAS 157-3
  to have a material effect on its consolidated financial statements.

28

---

|Sterling Group Ventures, Inc.             
|------------------------------------------
|(An Exploration Stage Company)            
|Notes to Consolidated Financial Statements
|May 31, 2009 and 2008                     
|(Stated in US Dollars)                    
|Page 29                                   

|Note 2 | Summary of Significant Accounting Policies
      (contd)
|------ | ----------------------------------------------------------

New Accounting Pronouncements 
  (contd)

In June 2008, the FASB reached consensus
  on EITF Issue No. 07-05 (EITF 07-05), Determining Whether
  an Instrument (or embedded feature) Is Indexed to an Entitys Own Stock..
  EITF 07-05 clarifies the determination of whether an instrument (or an embedded
  feature) is indexed to an entitys own stock, which would qualify as a
  scope exception under SFAS 133. EITF 07-05 is effective for financial statements
  issued for fiscal years beginning after December 15, 2008. Early adoption of
  EITF 07-05 is not permitted. The Company is evaluating the impact the adoption
  of EITF 07-05 will have on its financial position, results of operations and
  cash flows.

In April 2009, the FASB issued FASB
  Staff Position No. FAS 107-1 and APB 28-1 ("FSP FAS 107-1 and APB 28-1"), "Interim
  Disclosures about Fair Value of Financial Instruments". The FSP amends SFAS
  107, "Disclosure about Fair Value of Financial Instruments," and Accounting
  Principles Board Opinion No. 28, "Interim Financial Reporting", to require disclosures
  about fair value of financial instruments for interim reporting periods of publicly
  traded companies as well as in annual financial statements. The Company is required
  to adopt FSP FAS 107-1 and APB 28-1 in the quarter ended August 31, 2009. The
  Company does not currently believe that adopting this FSP will have a material
  impact on the Companys consolidated financial statements.

In April 2009, the FASB issued FASB
  Staff Position No. FSP FAS 115-2 and FAS 124-2 ("FSP FAS 115-2 and FAS 124-2"),
  "Recognition and Presentation of Other-Than-Temporary Impairments". The FSP
  amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities
  to make the guidance more operational and to improve the presentation and disclosure
  of other-than-temporary impairments on debt and equity securities in the financial
  statements. This FSP does not amend existing recognition and measurement guidance
  related to other-than-temporary impairments of equity securities. The Company
  is required to adopt FSP FAS 115-2 and FAS 124-2 in the quarter ended August
  31, 2009. The Company does not currently believe that adopting this FSP will
  have a material impact on the Companys consolidated financial statements.

In April 2009, the FASB issued FASB
  Staff Position No. FAS 157-4 ("FSP FAS 157-4"), "Determining Fair Value When
  the Volume and Level of Activity for the Asset or Liability Have Significantly
  Decreased and Identifying Transactions That Are Not Orderly". The FSP provides
  additional guidance for estimating fair value in accordance with FASB Statement
  No. 157, "Fair Value Measurements", when the volume and level of activity for
  the asset or liability have significantly decreased. This FSP also includes
  guidance on identifying circumstances that indicate a transaction is not orderly.
  The Company is required to adopt FSP FAS 157-4 in the quarter ended August 31,
  2009. The Company does not currently believe that adopting this FSP will have
  a material impact on the Companys consolidated financial statements.

In December 2007, the FASB issued SFAS
  141R Business Combinations which is effective for fiscal years beginning
  after December 15, 2008. SFAS 141R, which will replace FAS 141, is applicable
  to business combinations consummated after the effective date of December 15,
  2008. The Company is currently evaluating the impact that the adoption of SFAS
  No. 141R might have on its financial position or results of operations.

In December 2007, the FASB also issued
  SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements,
  an amendment of ARB 51. SFAS No. 160 will change the accounting and reporting
  for minority interests, which will be re-characterized as non-controlling interests
  and classified as a component of equity. SFAS No. 160 requires retroactive adoption
  of the presentation and disclosure requirements for existing minority interests.
  SFAS No. 160 is effective for fiscal years beginning on or after December 15,
  2008 and interim periods within those fiscal years. The Company

29

---

|Sterling Group Ventures, Inc.             
|------------------------------------------
|(An Exploration Stage Company)            
|Notes to Consolidated Financial Statements
|May 31, 2009 and 2008                     
|(Stated in US Dollars)                    
|Page 30                                   

|Note 2 | Summary of Significant Accounting Policies
      (contd)
|------ | ----------------------------------------------------------

New Accounting Pronouncements 
  (contd)

is currently evaluating the impact that
  the adoption of SFAS 160 might have on its financial position or results of
  operations.

In March 2008, the FASB issued SFAS
  161 Disclosures about Derivative Instruments and Hedging Activities 
  an amendment of SFAS 133. This Statement requires enhanced disclosures about
  an entitys derivative and hedging activities and thereby improves the
  transparency of financial reporting. This Statement is effective for financial
  statements issued for fiscal years and interim periods beginning after November
  15, 2008, with early application encouraged. This Statement encourages, but
  does not require, comparative disclosures for earlier periods at initial adoption.
  The Company is currently evaluating the impact that the adoption of SFAS 161
  might have on its financial position or results of operations.

In May 2009, the FASB issued SFAS No.
  165, Subsequent Events,which establishes general standards
  of accounting for and disclosure of events that occur after the balance sheet
  date but before financial statements are issued or are available to be issued.
  SFAS No. 165 is effective for financial statements issued for interim and annual
  reporting periods ending after June 15, 2009. The Company is currently evaluating
  the impact that the adoption of SFAS No. 165 might have on its financial position
  or results of operations.

|Note 3 | Mineral Properties
|------ | ------------------

Summary of mineral properties expenses
  for the years ended May 31, 2009 and 2008 and for the cumulative period from
  date of inception (July 27, 1994) to May 31, 2009:

| |                         |   | DXC       | 
| | ----------------------- | - | --------- | 
| |                         |   | Salt Lake | 
| |                         |   | Property  | 
| |                         |   |           | 
| | Year ended May 31, 2009 |   |           | 
| | Administrative          | $ | 867       | 
| | Consulting fees         |   | 27,890    | 
| | Travel                  |   | 16,959    | 
| | Legal fees              |   | 7,008     | 
| |                         | $ | 52,724    | 
| |                         |   |           | 
| | Year ended May 31, 2008 |   |           | 
| | Administrative          | $ | 706       | 
| | Consulting fees         |   | 60,548    | 
| | Travel                  |   | 5,456     | 
| | Legal fees              |   | 11,566    | 
| |                         | $ | 78,276    | 

30

---

|Sterling Group Ventures, Inc.             
|------------------------------------------
|(An Exploration Stage Company)            
|Notes to Consolidated Financial Statements
|May 31, 2009 and 2008                     
|(Stated in US Dollars)                    
|Page 31                                   

|Note 3 | Mineral Properties (contd)
|------ | -----------------------------

|                                                             |   | DXC       |  |   | Jiajika   |  
|------------------------------------------------------------ | - | --------- |  | - | --------- | -
|                                                             |   | Salt Lake |  |   | Spodumene |  
|Summary of mineral
      property expenditures               |   | Property  |  |   | Property  |  
|                                                             |   |           |  |   |           |  
|From Date of Inception (July 27, 1994) to
      May 31, 2009 |   |           |  |   |           |  
|Balance, May 31, 2003                                        | $ | -         |  | $ | -         |  
|Administrative                                               |   | -         |  |   | 471       |  
|Consulting fees                                              |   | -         |  |   | 9,263     |  
|Travel                                                       |   | -         |  |   | 2,763     |  
|Balance, May 31, 2004                                        |   | -         |  |   | 12,497    |  
|Administrative                                               |   | -         |  |   | 6,598     |  
|Consulting fees                                              |   | -         |  |   | 33,799    |  
|Feasibility study                                            |   | -         |  |   | 157,769   |  
|Permit costs                                                 |   | -         |  |   | 150,000   |  
|Travel                                                       |   | -         |  |   | 15,085    |  
|Balance, May 31, 2005                                        |   | -         |  |   | 375,748   |  
|Administrative                                               |   | 5,560     |  |   | 2,100     |  
|Consulting fees                                              |   | 46,629    |  |   | 12,062    |  
|Engineering studies                                          |   | 26,933    |  |   | -         |  
|Feasibility study                                            |   | 29,080    |  |   | -         |  
|Geophysical study                                            |   | 31,114    |  |   | -         |  
|Legal fees                                                   |   | 623       |  |   | -         |  
|Topography measurement                                       |   | 32,266    |  |   | -         |  
|Travel                                                       |   | 30,953    |  |   | 8,009     |  
|Wages and benefits                                           |   | 33,601    |  |   | -         |  
|Cost recovery                                                |   | -         |  |   | (309,058  | )
|Balance, May 31, 2006                                        |   | 236,759   |  |   | 88,861    |  
|Administrative                                               |   | 5,200     |  |   | -         |  
|Consulting fees                                              |   | 134,580   |  |   | -         |  
|Engineering studies                                          |   | 38,063    |  |   | -         |  
|Mining permit                                                |   | 382,920   |  |   | -         |  
|Topography measurement                                       |   | 15,001    |  |   | -         |  
|Legal fees                                                   |   | 9,695     |  |   | -         |  
|Travel                                                       |   | 53,262    |  |   | 488       |  
|Wages and benefits                                           |   | 35,687    |  |   | -         |  
|Balance, May 31, 2007                                        |   | 911,167   |  |   | 89,349    |  
|Administrative                                               |   | 706       |  |   | -         |  
|Consulting fees                                              |   | 60,548    |  |   | -         |  
|Travel                                                       |   | 5,456     |  |   | -         |  
|Legal fees                                                   |   | 11,566    |  |   | -         |  
|Balance, May 31, 2008                                        |   | 989,443   |  |   | 89,349    |  
|Administrative                                               |   | 867       |  |   | -         |  
|Consulting fees                                              |   | 27,890    |  |   | -         |  
|Travel                                                       |   | 16,959    |  |   | -         |  
|Legal fees                                                   |   | 7,008     |  |   | -         |  
|Balance, May 31, 2009                                        | $ | 1,042,167 |  | $ | 89,349    |  

31

---

|Sterling Group Ventures, Inc.             
|------------------------------------------
|(An Exploration Stage Company)            
|Notes to Consolidated Financial Statements
|May 31, 2009 and 2008                     
|(Stated in US Dollars)                    
|Page 32                                   

|Note 3 | Mineral Properties (contd)
|------ | ----------------------------

| | a) | Dangxiongcuo Salt Lake Project                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | On September 16, 2005, the Company, through its wholly
        owned subsidiary, Micro Express Holdings Inc. (Micro), signed
        an agreement (the Mianping Agreement) for the development
        of Dangxiongcuo salt lake property (DXC Salt Lake) in Nima
        county of Naqu district in Tibet, China. The Agreement follows a Letter
        of Intent signed between the parties on July 11, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | Pursuant to the Mianping Agreement, the parties agreed
        to set up a Cooperative Company, (the Cooperative) to develop
        the DXC Salt Lake. The objective of the Cooperative was to use the funds
        provided by the Company and the skills and technology provided by the
        other party to produce lithium carbonate and borate from brine. The Company,
        through Micro, was to own 65% of the Cooperative. It was anticipated that
        the total investment in the Cooperative would be approximately 240 million
        RMB (or approximately US$35 million). The Cooperative Company was never
        set up. On July 3, 2007, Micro received a letter from the other party
        to the Mianping Agreement stating that the agreement between Micro and
        the other party should be deemed terminated as a result of lack of progress
        in the approval for the establishment of the joint venture company and
        is considering a lawsuit against the Company and Micro. Micro has responded
        that the other partys claim has no legal grounds as the lack of
        progress is not caused by Micro. There has been no legal action to date
        and none is expected. By letter dated August 25, 2008, Beijing Mianping
        Salt Lake Research Institute (Mianping) has confirmed that
        the agreement dated Sept. 16, 2005 was terminated effective July 8, 2008.
        This agreement was replaced by the agreement with Zhong Chuan International
        Mining Holdings Co. Ltd. dated July 8, 2008.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | On July 8, 2008, the Company signed an agreement (the
        "Agreement") with the shareholders of Monte Sea Holdings Ltd. ("Monte
        Sea Shareholders") and a third party to restructure the transactions contemplated
        under the September 16, 2005 agreement. The parties wish to jointly develop
        the DXC Salt Lake property and lithium resources in Tibet including an
        exploration license, and elsewhere (the Property), by way
        of a cooperative joint venture. Monte Sea Shareholders and the third party
        are to provide RMB 100,000,000 ($14,584,000) to finance the DXC property
        to production.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | Pursuant to the Agreement, the parties wish to establish
        a Sino-foreign cooperative joint venture company ("CJV") for the purpose
        of applying for and holding required approvals, permits and licenses with
        respect to the development of the Property.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | The Parties agree that an operating company ("Opco")
        will be established in Tibet prior to the establishment of the CJV for
        the purpose of applying for and holding required approvals, permits and
        licenses with respect to the development of the Property. The Opco shall
        hold all such approvals, permits and licenses in trust for the CJV.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | Under the Agreement, the CJV will be established within
        90 days, subject to required regulatory approval and based on a joint
        venture agreement by way of acquisition of interest in the Opco by Monte
        Sea Holdings Ltd. (Monte Sea), or by way of incorporation
        under the Chinese laws. Monte Sea shall hold up to 65% but no less than
        51% of shares in the CJV. CJV shall own and hold all the Property.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | If for any Chinese regulatory or policy reasons, Monte
        Sea is not permitted to have more than fifty-one percent (51%) interest
        in the CJV, then the CJV agreement will be revised such that:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

32

---

|Sterling Group Ventures, Inc.             
|------------------------------------------
|(An Exploration Stage Company)            
|Notes to Consolidated Financial Statements
|May 31, 2009 and 2008                     
|(Stated in US Dollars)                    
|Page 33                                   

|Note 3 | Mineral Properties (contd)
|------ | ----------------------------

| | a) | Dangxiongcuo Salt Lake Project  (contd)
| | -- | -----------------------------------------
| |    |                                          
| |    | (i)                                      
| |    |                                          
| |    | (ii)                                     
| |    |                                          
| |    | (iii)                                    

Upon the Agreement being effective and
  termination of the agreement dated September 16, 2005, the Company will be repaid
  RMB 6,000,000 (approximately $875,000). As of May 31, 2009 the Company has received
  $nil in regards to this agreement.

Upon signing of this Agreement and subject
  to applicable regulatory approval, Monte Sea Shareholders shall subscribe for
  5,000,000 units (the "Units") to be issued by the Company at $0.15 per Unit.
  Each Unit shall consist of one common share in the stock of the Company, and
  one warrant which shall entitle the Monte Sea shareholders to purchase one common
  share in the stock of the Company at $0.16 per share within two years from the
  date of the issuance of the Units.

Subject to applicable regulatory approval,
  the Company shall cause 200,000,000 shares to be issued to the Monte Sea Shareholders
  within ten working days from the date transfer of the exploration license to
  the CJV is approved by the Chinese regulators, in exchange for all the shares
  then issued and outstanding in the stock of Monte Sea and held by Monte Sea
  Shareholders (the "Share Exchange"). The Share Exchange may be conducted and
  completed at an earlier date as long as the Company and Monte Sea Shareholders
  may agree in writing. This transaction would be accounted for as a reverse acquisition.

Subject to applicable regulatory approval,
  the Company shall cause 87,910,000 shares in the capital of the Company to be
  issued to the Monte Sea Shareholders at no additional cost, upon receipt by
  the CJV of a mining license and such other permits or approvals for the Property,
  permitting the full exploitation and development of the Property.

The Company intends to, when and as
  required by the CJV, arrange and complete financing for the operation of the
  CJV.

Zhong Chuan shall, together with Monte
  Sea Shareholders, provide funds no less than RMB 100,000,000 (or US dollar equivalent
  thereof) for the purpose of meeting registered capital payment requirements
  in the registration and operation of the CJV. Zhong Chuan shall keep other Parties
  informed of any development in the registration of the CJV and transfer of the
  Exploration License.

The application to establish a joint
  venture has not yet been approved by the regulators in Tibet, China.

As of May 31, 2009, the Company has
  incurred a total of $1,042,167 in mineral property costs on this property.

Susequent to May 31, 2009, the Company
  received verbal termination of the Agreement with Zhong Chuan in July 2009,
  as advised by third party legal counsel, at a meeting in Beijing, China. The
  Agreement, in effect, allows Zhong Chuan to terminate the Agreement if it pays
  the Company

33

---

|Sterling Group Ventures, Inc.             
|------------------------------------------
|(An Exploration Stage Company)            
|Notes to Consolidated Financial Statements
|May 31, 2009 and 2008                     
|(Stated in US Dollars)                    
|Page 34                                   

|Mineral Properties (contd)
|----------------------------

| | a) | Dangxiongcuo Salt Lake Project  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | double the amount of funds paid by the Company to date
        to secure and develop the DXC Project. Zhong Chuan has not paid the required
        amount anticipated by the agreement to date. The delay in payment has
        delayed the termination process and the Company is pursuing Zhong Chuan
        to complete the termination, as the Company deems, is mandated by the
        Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | b) | Jiajika Spodumene Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | On September 16, 2003, the Company, through its wholly
        owned subsidiary, Micro Express Ltd. (Micro), entered into
        an agreement (the Agreement) with Sichuan Province Mining
        Ltd. to acquire a 75% interest in a 30-year mining joint venture company.
        The joint venture company would hold the mining licenses to develop the
        Jiajika spodumene property located in Sichuan Province, China for the
        extraction of lithium and lithium salts. Pursuant to the Agreement, the
        total investment required was estimated at 88.5 million RMB (US$10.8 million)
        for the initial capacity of 240,000 tonnes/annum. The initial registered
        capital was 56 million RMB (US$6.8 million). Sichuan Province Mining Ltd.
        would contribute 14 million RMB (US$1.7 million) including the mining
        permits to hold 25% of the JV Company. Micro would contribute 42 million
        RMB (US$ 5.1 million) to hold 75% of the JV Company.                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | On April 5, 2005, the Company, through its wholly-owned
        subsidiary Micro Express Ltd. (MEL), signed a joint venture
        contract with a Chinese partner for the establishment of a joint venture
        company, Jihai Lithium Ltd. and the development of the Jiajika lithium
        deposit in Kangding District, Sichuan Province, China. On March 3, 2006,
        both parties agreed to terminate the joint venture and the Chinese partner
        agreed to pay back RMB2,480,000 ($309,058) incurred by MEL on the project.
        The Chinese partner agreed to pay RMB1,200,000 ($149,520) and RMB1,280,000
        ($159,538) before April 15, 2006 and March 30, 2007, respectively. If
        the Chinese partner does not pay the RMB1,280,000, the amount will be
        converted into an interest in the Jiajika project based on the percentage
        of MELs investment as to the registered capital contribution in
        Jiajika project by the Chinese partner. As at May 31, 2006, the Company
        had received RMB500,000 ($62,350) and a receivable of RMB1,980,000 ($246,708)
        was recorded. As of May 31, 2009, the Company had received the full amount
        of RMB2,480,000 ($334,707) from the Chinese partner.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | As the Chinese partner had not paid the remaining RMB700,000
        ($87,170) and the recoverability of the RMB1,280,000 ($159,538) was uncertain,
        the Company recorded an allowance for doubtful collection totalling $246,708
        for the year ended May 31, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | During the year ended May 31, 2009, the Company received
        RMB580,000 ($84,823) (2008 - RMB1,100,000 ($147,154)) from the Chinese
        partner and this was recorded as a recovery of doubtful collection on
        the statement of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | At May 31, 2009, the Company had incurred a total of
        $398,407 in the Jiajika Spodumene Property before the cumulative cost
        recovery of RMB2,480,000 ($309,058) up to May 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

|Note 4 | Related Party Transactions
|------ | --------------------------

The Company was charged consulting fees
  for administrative, corporate, financial, engineering, and management services
  during the year ended May 31, 2009 totalling $123,726 (2008 - $117,284) by companies
  controlled by two directors of the Company.

34

---

|Sterling Group Ventures, Inc.             
|------------------------------------------
|(An Exploration Stage Company)            
|Notes to Consolidated Financial Statements
|May 31, 2009 and 2008                     
|(Stated in US Dollars)                    
|Page 35                                   

|Note 4 | Related Party Transactions  (contd)
|------ | -------------------------------------

The Company was charged rental fees
  included in General and Administrative expense during the year ended May 31,
  2009 totalling $17,072 (2008 - $22,656) by a company controlled by a director
  of the Company.

The Company was charged consulting fees
  included in mineral property costs during the year ended May 31, 2009 totalling
  $4,094 (2008 - $6,561) by the Vice President of Micro.

The Company was charged consulting fees
  included in mineral property costs during the year ended May 31, 2009 in the
  amount of $22,042 (2008 - $50,050) by a company controlled by a director of
  the Company.

Cash and cash equivalents at May 31,
  2009 include $55,320 (2008 - $225,700) held in trust by a director of the Company.

Included in exploration advance is $nil
  (2008 - $8,850) advanced to the Vice-President of Micro. This was utilized against
  expenses in the year ended May 31, 2009.

Included in accounts payable and accrued
  liabilities is $459,043 (2008 - $414,235) which was due to companies controlled
  by the directors of the Company for their services provided.

|Note 5 | Capital Stock
|------ | -------------

| | a) | Capital Stock                                                                                                                                                                                                                                            
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                          
| |    | On October 2, 2007 the Company issued 324,685 common
        shares at $0.06 per share to settle accounts payable of $19,480.                                                                                                                            
| |    |                                                                                                                                                                                                                                                          
| | b) | Stock Options                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                          
| |    | On February 3, 2004, the Board of Directors of the Company
        approved the 2004 Stock Option Plan which allows the Company to grant
        up to 3,636,000 stock options as an incentive to directors, officers,
        employees and consultants.
| |    |                                                                                                                                                                                                                                                          
| |    | During the years ended May 31, 2009 and 2008, no stock
        options were granted or exercised. On February 3, 2009, 3,636,000 stock
        options with an exercise price of $0.50 per share expired unexercised.                                    
| |    |                                                                                                                                                                                                                                                          
| |    | At May 31, 2009, there were no outstanding stock options
        (2008  3,636,000).                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                          
| | c) | Share Purchase Warrants                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                          
| |    | Share purchase warrants outstanding at May 31, 2009
        were as follows:                                                                                                                                                                             

Number
      Price
      Expiry3,817,500
      $0.50
      February 16, 20102,873,990
      $0.18
      February 26, 20106,691,490


35

---

|Sterling Group Ventures, Inc.             
|------------------------------------------
|(An Exploration Stage Company)            
|Notes to Consolidated Financial Statements
|May 31, 2009 and 2008                     
|(Stated in US Dollars)                    
|Page 36                                   

|Note 5 | Capital Stock  (contd)
|------ | ------------------------

| | c) | Share Purchase Warrants  (contd)                                                                                                                                                                                                                              
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                 
| |    | During the year ended May 31, 2009 and 2008,
        no warrants were exercised, cancelled or expired. Each Series A
        warrant entitles the holder thereof the right to purchase one common share
        at $0.50 per share expiring on the earlier of:
| |    |                                                                                                                                                                                                                                                                 
| |    | 1)                                                                                                                                                                                                                                                              
| |    | 2)                                                                                                                                                                                                                                                              

Upon exercise of the Series "A" Share
  Purchase Warrant at $0.50 each, the holder will receive one Common Share of
  the Company and a Series "B" Share Purchase Warrant exercisable at $1.00 expiring
  one year after the occurrence of either (i) or (ii) as described above. The
  Series "A" Share Purchase Warrants were originally issued in 2004 pursuant to
  a private placement commenced in February 2004.

On February 7, 2008, the Company extended
  the expiry date of the 3,817,500 Series A Share Purchase Warrants
  from February 16, 2008 to February 16, 2009. The exercise price of the warrants
  remains unchanged at $0.50 per share. The additional fair value of the 3,817,500
  extended life Series A Share Purchase Warrants was estimated at
  $252,989, by using the Black-Scholes Option Pricing Model with the following
  weighted average assumptions: dividend yield of 0%, expected volatility of 218.52%,
  risk free interest rates of 2.08%, and expected life of 1 year.

On February 6, 2009, the Company re-extended
  the expiry date of 3,817,500 Share Purchase Warrants (the Series "A" Share Purchase
  Warrants) from February 16, 2009 to February 16, 2010. The exercise price of
  the warrants remains unchanged at $0.50 per share. The additional fair value
  of the 3,817,500 extended life Series A Share Purchase Warrants
  was estimated at $35,593 using the Black-Scholes Option Pricing Model with the
  following weighted average assumptions: dividend yield of 0%, expected volatility
  of 223.36%, risk free interest rates of 0.82%, and expected life of 1 year.

On February 7, 2008, the Company extended
  the expiry date of the 2,873,990 Series C Share Purchase Warrants
  from February 29, 2008 to February 27, 2009. The exercise price of the warrants
  remained unchanged at $0.18 per share. The additional fair value of the 2,873,990
  extended life Series C Share Purchase Warrants was estimated at
  $156,536, by using the Black-Scholes Option Pricing Model with the following
  weighted average assumptions: dividend yield of 0% expected volatility of 222.09%,
  risk-free interest rates of 2.08% and expected life of 1 year.

The Company also re-extended the expiry
  date of 2,873,990 Share Purchase Warrants (the Series "C" share purchase Warrants)
  from February 27, 2009 to February 26, 2010. The exercise price of the warrants
  remains unchanged at $0.18 per share. The Series "C" Share Purchase Warrants
  were originally issued in September 2006 pursuant to a private placement commenced
  in August 2006. The additional fair value of the 2,873,990 extended life Series
  C Share Purchase Warrants was estimated at $48,259 using the Black-Scholes
  Option Pricing Model with the following weighted average assumptions: dividend
  yield of 0% expected volatility of 244.01%, risk-free interest rates of 0.82%
  and expected life of 1 year.

At May 31, 2009, the Company has a total
  of 3,817,500 and 2,873,990 Series A and C share purchase
  warrants outstanding, respectively.

The additional fair value totalling
  $83,852 (2008 - $409,525) has been recorded as stock-based compensation in the
  consolidated statement of operations.

36

---

|Sterling Group Ventures, Inc.             
|------------------------------------------
|(An Exploration Stage Company)            
|Notes to Consolidated Financial Statements
|May 31, 2009 and 2008                     
|(Stated in US Dollars)                    
|Page 37                                   

|Note 6 | Foreign Currency Risk                                                                                                            
|------ | ---------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                  
|       | The Company is exposed to fluctuations in foreign
      currencies through amounts held in China in RMB:                         
|       |                                                                                                                                  
|       | -                                                                                                                                
|       | -                                                                                                                                
|       |                                                                                                                                  
|Note 7 | Deferred Tax Assets                                                                                                              
|       |                                                                                                                                  
|       | The Company's income tax expense for the years ended
      May 31, 2009 and 2008 differed from the United States statutory rates:

| |                                                          |   | 2009    |   |   | 2008    |  
| | -------------------------------------------------------- | - | ------- | - | - | ------- | -
| |                                                          |   |         |   |   |         |  
| | Effective tax rate                                       |   | 35%     |   |   | 35%     |  
| |                                                          |   |         |   |   |         |  
| | Statutory rate applied to loss before income
      taxes | $ | (85,800 | ) | $ | (44,400 | )
| | Increase in income taxes resulting from:                 |   |         |   |   |         |  
| | Non-deductible expenses                                  |   | 29,400  |   |   | 500     |  
| | Change in valuation allowance                            |   | 56,400  |   |   | 43,900  |  
| | Income tax expense                                       | $ | -       |   | $ | -       |  

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

| |                                                         |   | 2009     |   |   | 2008     |  
| | ------------------------------------------------------- | - | -------- | - | - | -------- | -
| | Future income tax assets (liability)                    |   |          |   |   |          |  
| | Share issuance cost                                     | $ | 5,200    |   | $ | 10,400   |  
| | Equipment                                               |   | 3,700    |   |   | 3,300    |  
| | Mineral property and related deferred
      exploration |   | 500,000  |   |   | 481,500  |  
| | Non-capital losses                                      |   | 374,900  |   |   | 332,200  |  
| |                                                         |   | 883,800  |   |   | 827,400  |  
| | Valuation allowance                                     |   | (883,800 | ) |   | (827,400 | )
| |                                                         | $ | -        |   | $ | -        |  

At May 31, 2009, the Company has incurred
  accumulated net operating losses totalling approximately $1,350,000 which are
  available to reduce taxable income in future taxation years.

37

---

|Sterling Group Ventures, Inc.             
|------------------------------------------
|(An Exploration Stage Company)            
|Notes to Consolidated Financial Statements
|May 31, 2009 and 2008                     
|(Stated in US Dollars)                    
|Page 38                                   

|Note 7 | Deferred Tax Assets (contd)
|------ | -----------------------------

These losses expire as follows:

| | Year of Expiry |   |           | 
| | -------------- | - | --------- | 
| |                |   | Amount    | 
| |                |   |           | 
| | 2025           | $ | 359,680   | 
| | 2026           |   | 213,619   | 
| | 2027           |   | 256,068   | 
| | 2028           |   | 119,731   | 
| | 2029           |   | 121,986   | 
| |                | $ | 1,071,084 | 

The amount taken into income as deferred
  tax assets must reflect that portion of the income tax loss carryforwards that
  is more likely-than-not to be realized from future operations. The Company has
  chosen to provide an allowance of 100% against all available income tax loss
  carryforwards, regardless of their time of expiry.

As at May 31, 2009, the Company is in
  arrears on filing its statutory income tax returns and the amounts presented
  above are based on estimates. The actual losses available could differ from
  these estimates. In addition, the Company could be subject to penalties for
  these unfiled tax returns.

|Note 8 | Comparative Figures
|------ | -------------------

Certain comparative figures have been
  reclassified to conform to current years presentation.

38

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

a.      Evaluation of Disclosure
Controls and Procedures:

The management of the Company has evaluated the effectiveness
of the Company's disclosure controls and procedures as of the end of the period
of the report, May 31, 2009 and has concluded that the disclosure controls, and
procedures was effective based upon their evaluation as of the evaluation
date.

b.      Management's Report on
Internal Control over Financial Reporting

The Companys management, including its chief executive officer
and chief financial officer, is responsible for establishing and maintaining
adequate internal control over our financial reporting. Internal control over
financial reporting is a process designed by, or under the supervision of, our
chief executive and chief financial officers and implemented by our board of
directors, management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles and includes those policies and procedures that: (i)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of our assets; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being made
only in accordance with authorizations of our management and directors; and
(iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a
material effect on the financial statements. Because of their inherent
limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

An evaluation was performed under the supervision and with the
participation of the Companys management, including the chief executive officer
and the chief financial officer, of the effectiveness of the design and
operation of the Company's internal controls over financial reporting as defined
in Rules 13a-15(e) or 240.15d -15(e) of the Securities Exchange Act of 1934, as
amended, as of May 31, 2009. Based on that evaluation, our management, including
the Chief Executive Officer and Chief Financial Officer, concluded that the
Company's internal controls over financial reporting are effective.

This annual report does not include an attestation report of
our registered public accounting firm regarding internal control over financial
reporting. Managements report was not subject to attestation by our registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit our company to provide only managements report
in this annual report.

c. Changes in Internal Control over Financial Reporting:

There were no significant changes in the small business issuers
internal control over financial reporting identified in connection with the
Company evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under
the Exchange act that during the Company's last fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE

39

---

All directors of the Company hold office until the next annual
general meeting of the shareholders or until their successors are duly elected
and qualified. The officers of our company are appointed by our board of
directors and hold office until the earlier of death, retirement, resignation or
removal.

Our directors, executive officers and other significant
employees, their ages, positions held and duration each person has held that
position, are as follows:

Name
    Position Held with the
      Company
    Age
    Date First Elected / AppointedRichard Shao
    President, Director, CFO
    46
    January 21, 2004Raoul Tsakok
    Chairman of the Board, CEO
    59
    January 21, 2004Gerald Runolfson
    Director
    67
    April
      5, 2004Robert Smiley
    Director
    65
    June
      6, 2007


Business Experience

The following sets forth the business experience of each of the
Registrant's directors and executive officers:

Raoul N. Tsakok, Chairman

Mr. Tsakok has worked in the Investment Management business for
over 30 years. He has been Chairman of Sagit Investment Management Ltd. since
1987. He has been Chairman and director of Richco Investors Inc. and
Constitution Insurance Company of Canada. He holds an MBA degree and is a
Chartered Financial Analyst (CFA).

Xuxin (Richard) Shao, President and Director

Mr. Shao was born and educated in China. He received his
degrees from engineering schools in China, specializing in mineral processing.
Between his Bachelor and Ph.D. degrees, he held a research engineer position
with the Chemical Mines Design and Research Institute of the Ministry of
Chemical Industry in Lianyun Harbour, Jiangsu, China. During his graduate
studies at the China University of Mining and Technology, he conducted research
on phosphate flotation using interfacial, colloidal and solution chemical
theories and authored and coauthored more than 50 research reports and
publications on this and other related subjects. After receiving his Ph.D. in
1990 from China University of Mining and Technology, Mr. Shao taught as an
associate Professor and was acting Department Head in Mineral Processing at the
China University of Mining and Technology for six years.

In 1996, Mr. Shao accepted a position as Research Scientist for
the Center for Applied Energy Research at the University of Kentucky in
cooperation with the Department of Energy of the US Federal Government. Since
1998, Dr. Shao has worked as an advisor to a number of companies in the
evaluation and processing of minerals in North America and China.

Gerald Runolfson, Professional Engineer, Director

Mr. Runolfson is a professional engineer (P. Eng.) and has been
in the construction industry for over 35 years. He is currently President and
controlling shareholder of Elkon Products Inc., a company that has the exclusive
distribution rights for all silica fume produced in Canada. Silica fume is used
in oil well cementing operation and concrete construction. Major customers
include Halliburton and BJ Services. Mr. Runolfson has been a Director of a
number of public companies.

Robert G. Smiley, J. D, Director

Mr. Smiley is a business consultant working with junior
companies. He has been self-employed in this capacity for the past ten years. He
is a former lawyer who specialized in oil and gas and securities law for
twenty-five years. He is currently president of Richco Investors Inc. and
Drucker, Inc. and a director of Canadian Imperial Ventures Corp., Teuton
Resource Corp. and Silver Grail Resources Inc. He has served on the boards of a
number of junior and intermediate companies in the past.

40

---

Our directors, executive officers and control persons have not
been involved in any of the following events during the past five years:

| | 1. | any bankruptcy petition filed by or against any business
      of which such person was a general partner or executive officer either at
      the time of the bankruptcy or within two years prior to that
  time;                                                                                                            
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                
| | 2. | any conviction in a criminal proceeding or being subject
      to a pending criminal proceeding (excluding traffic violations and other
      minor offences);                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                
| | 3. | being subject to any order, judgment, or decree, not
      subsequently reversed, suspended or vacated, of any court of competent
      jurisdiction, permanently or temporarily enjoining, barring, suspending or
      otherwise limiting his involvement in any type of business, securities or
      banking activities; or
| |    |                                                                                                                                                                                                                                                                                                                                
| | 4. | being found by a court of competent jurisdiction (in a
      civil action), the Commission or the Commodity Futures Trading Commission
      to have violated a federal or state securities or commodities law, and the
      judgment has not been reversed, suspended, or
vacated.                                           

Employees

At present, we have no employees, other than our officers and
directors. Our officers and directors do not have employment agreements with us,
except consulting agreements which can be cancelled on 30-days notice.

Audit Committee and Charter

We have an audit committee and audit committee charter. Our
audit committee is comprised of Mr. Raoul Tsakok, Mr. Richard Shao and Mr.
Robert Smiley. During the year ended May 31, 2009, the audit committee met six
times. A copy of our audit committee charter is filed as an exhibit to this Form
10-K.

The Audit Committee's responsibilities
include:

- selecting and reviewing our independent registered public accounting firm
  and their services;
- reviewing and discussing the audited financial statements, related
  accounting and auditing principles, practices and disclosures with the
  appropriate members of management;
- reviewing and discussing our quarterly financial statements prior to the
  filing of those quarterly financial statements;
- establishing procedures for the receipt of, and response to, any complaints
  received regarding accounting, internal accounting controls, or auditing
  matters, including anonymous submissions by employees;
- reviewing the accounting principles and auditing practices and procedures
  to be used for the audit of our financial statements and reviewing the results
  of those audits; and
- monitoring the adequacy of our operating and internal controls as reported
  by management and the independent registered public accounting firm.

Code of Ethics

We have adopted a corporate code of ethics that applies to all
employees, including our directors and officers. A copy of the code of ethics is
filed as an exhibit to this Form 10-K. We believe our code of ethics is
reasonably designed to deter wrongdoing and promote honest and ethical conduct;
provide full, fair, accurate, timely and understandable disclosure in public
reports; comply with applicable laws; ensure prompt internal reporting of code
violations; and provide accountability for adherence to the code.

ITEM 11. EXECUTIVE COMPENSATION

(a) Officers' Compensation.

Compensation paid by the Company for all services provided up
to the fiscal year ended May 31, 2009 to each of the executive officers and to
all officers as a group is set forth below.

41

---

SUMMARY COMPENSATION TABLE OF EXECUTIVES

|              |  |         |  |  | Cash Compensation |  |  |       |  |  | Security Grants |  |  |            |  |  |            |  |  |              | 
|------------- |  | ------- |  |  | ----------------- |  |  | ----- |  |  | --------------- |  |  | ---------- |  |  | ---------- |  |  | ------------ | 
|Name and      |  | Year    |  |  | Salary            |  |  | Bonus |  |  | Annual          |  |  | Restricted |  |  | Securities |  |  | Long Term    | 
|Principal     |  | ended   |  |  | ( $)              |  |  |       |  |  | Compensation    |  |  | Stock      |  |  | Underlying |  |  | Compensation | 
|Position      |  | May 31, |  |  |                   |  |  |       |  |  | / Other         |  |  | Awards     |  |  | Options /  |  |  | / Options    | 
|              |  |         |  |  |                   |  |  |       |  |  | ( $)            |  |  |            |  |  | SARs (#)   |  |  |              | 
|              |  |         |  |  |                   |  |  |       |  |  |                 |  |  |            |  |  | (SHARES)   |  |  |              | 
|Richard Shao  |  | 2008    |  |  | 0                 |  |  | 0     |  |  | 71,501          |  |  | 0          |  |  | 0          |  |  | 0            | 
|President     |  | 2009    |  |  | 0                 |  |  | 0     |  |  | 62,076          |  |  | 0          |  |  | 0          |  |  | 0            | 
|Raoul Tsakok  |  | 2008    |  |  | 0                 |  |  | 0     |  |  | 72,000          |  |  | 0          |  |  | 0          |  |  | 0            | 
|Chairman      |  | 2009    |  |  | 0                 |  |  | 0     |  |  | 63,000          |  |  | 0          |  |  | 0          |  |  | 0            | 
|Kathy Wang    |  | 2008    |  |  | 0                 |  |  | 0     |  |  | 23,834          |  |  | 0          |  |  | 0          |  |  | 0            | 
|Secretary     |  | 2009    |  |  | 0                 |  |  | 0     |  |  | 20,692          |  |  | 0          |  |  | 0          |  |  | 0            | 
|Officers as A |  | 2008    |  |  | 0                 |  |  | 0     |  |  | 167,335         |  |  | 0          |  |  | 0          |  |  | 0            | 
|Group         |  | 2009    |  |  | 0                 |  |  | 0     |  |  | 145,768         |  |  | 0          |  |  | 0          |  |  | 0            | 

(b) Directors' Compensation

Directors who are also officers receive no cash compensation
for services as a director. However, the directors will be reimbursed for
out-of-pocket expenses incurred in connection with attendance at board and
committee meetings. The Company granted options to directors under its 2004
Incentive Stock Option Plan subsequently adopted.

SUMMARY COMPENSATION TABLE OF DIRECTORS(For fiscal
year ended May 31, 2008)

Cash Compensation
    Security GrantsName and Principal Position
    Year ended May 31,
    Annual Retainer Fees ($)
    Meeting Fees ($)
    Consulting Fees/ Other Fees ( $)
    Number of Shares (#)
    Securities Underlying Options /
      SARs (#) (SHARES)
    LTIP Payments
    All Other CompensationRaoul Tsakok Director
    2008
    0
    0
    0
    0
    0
    0
    02009
    0
    0
    0
    0
    0
    0
    0Richard Shao Director
    2008
    0
    0
    0
    0
    0
    0
    02009
    0
    0
    0
    0
    0
    0
    0Gerald Runolfson Director
    2008
    0
    0
    0
    0
    0
    0
    02009
    0
    0
    0
    0
    0
    0
    0Robert G. Smiley Director
    2008
    0
    0
    0
    0
    0
    0
    02009
    0
    0
    0
    0
    0
    0
    0Directors as a Group
    2008
    0
    0
    0
    0
    0
    0
    02009
    0
    0
    0
    0
    0
    0
    0


During the year ended May 31, 2004, we granted 2,100,000 stock
options to our directors or officers. The options were granted at an exercise
price of $0.50 per share and expired on February 3, 2009. During the year ended
May 31, 2009, no stock options were granted to our directors or officers.

Directors are entitled to reimbursement for reasonable travel
and other out-of-pocket expenses incurred in connection with attendance at
meetings of our board of directors. Our board of directors may award special
remuneration to any director undertaking any special services on our behalf
other than services ordinarily required of a director. No director received
and/or accrued any compensation for their services as a director, including
committee participation and/or special assignments.

There are no management agreements with our directors or
executive officers and we do not anticipate that written agreements will be put
in place in the foreseeable future.

42

---

We have no plans or arrangements in respect of remuneration
received or that may be received by our executive officers to compensate such
officers in the event of termination of employment (as a result of resignation,
retirement, change of control) or a change of responsibilities following a
change of control.

There are no plans or arrangements in which we provide pension,
retirement or similar benefits for directors or executive officers. We have no
material bonus or profit sharing plans pursuant to which cash or non-cash
compensation is or may be paid to our directors or executive officers, except
that stock options may be granted at the discretion of the Board of Directors or
a committee thereof.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth, as of August 27, 2009, certain
information with respect to the beneficial ownership of our common shares by
each shareholder known to us to be the beneficial owner of 5% of our common
shares, and by each of our officers and directors. Each person has sole voting
power with respect to the common shares, except as otherwise indicated.
Beneficial ownership consists of a direct interest in the common shares, except
as otherwise indicated. As of August 27, 2009, there were 43,826,175 common
shares issued and outstanding.

Title of Class
    Name and Address of Beneficial
      Owner (1)
    Amount and Nature of Beneficial
      Ownership
    Percentage of Class(2)Common stock
    Raoul
      Tsakok
    15,000,000 (3)
    34.23%Common stock
    Richard Shao
    4,000,000
    9.13%Common stock
    Gerald
      Runolfson
    1,500,000 (4)
    3.42%Common stock
    Robert
      Smiley
    0
    0TOTAL
    20,500,000
    46.78%


| | (1) | The address of each beneficial owner is 900  789 West
      Pender Street, Vancouver, BC V6C 1H2 Canada                                                                                                                                                                                                    
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Based on 43,826,175 shares outstanding as of August 27,
      2009 and, as to a specific person, shares issuable pursuant to the
      conversion or exercise, as the case may be, of currently exercisable or
      convertible debentures, share purchase warrants and stock options within
      60 days.
| | (3) | 15,000,000 common shares held through Cobilco
  Inc.                                                                                                                                                                                                                                                        
| | (4) | Includes 600,000 common shares and 300,000 A warrants,
      300,000 B warrants and 300,000 C warrants held through Elkon Products
      Inc.                                                                                                                                                         

Changes in Control

Pursuant to the agreement signed on July 8, 2008 with Zhong
Chuan, the Company will cause 287,910,000 shares in the capital of the Company
to be issued to Monte Sea Shareholders for the DXC Salt Lake project. This share
issuance will result in a change of control of the Company.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE

There have been no transactions, or proposed transactions,
which have materially affected or will materially affect us in which any
director, executive officer or beneficial holder of more than 10% of the
outstanding common stock, or any of their respective relatives, spouses,
associates or affiliates, has had or will have any direct or material indirect
interest.

As at the date of this annual report, we do not have any
policies in place with respect to whether we will enter into agreements with
related parties in the future.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

43

---

BDO Dunwoody (BDO) provided audit services to the Company in
connection with its annual report for the fiscal year ended May 31, 2009 and May
31, 2008. The aggregate fees billed by BDO for the May 31, 2009 year ended audit
and the fiscal year 2009 quarterly reviews of the Company was $42,284. The
aggregate fees billed by BDO for the May 31, 2008 year ended audit and the
fiscal year 2008 quarterly reviews of the Company was $29,247.

Audit Related Fees

No fees were billed by BDO to the Company for professional
services that are reasonably related to the audit or review of the Company's
financial statements that are not disclosed in "Audit Fees" above.

Tax Fees

No fees were billed by BDO to the Company in the years ended
May 31, 2009 and 2008 for professional tax services.

All Other Fees

No fees were billed by BDO to the Company for other
professional services rendered or any other services not disclosed above during
the years ended May 31, 2009 and 2008.

Audit Committee Pre-Approval

The Audit Committee has the sole authority to appoint,
terminate and replace our independent auditor and to approve the scope, fees and
terms of all audit engagements, as well as all permissible non-audit engagements
of our independent auditor.

All audit work was performed by the auditors' full time
employees.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as
part of this report:

| | 1. | Financial Statements.
| | -- | ---------------------

Our consolidated financial statements are included in Part
II, Item 8 of this report:

| |                                                                                    | Page 
| | ---------------------------------------------------------------------------------- | -----
| | Report of Independent Registered
      Public Accounting Firm                      | 17   
| | Consolidated Balance Sheets                                                        | 18   
| | Consolidated Statements
      of Operations                                        | 19   
| | Consolidated Statements
      of Cash Flows                                        | 20   
| | Consolidated Statements
      of Changes in Stockholders' Equity (Capital Deficit) | 21   
| | Notes to the Consolidated
      Financial Statements                               | 22-38

| | 2. | Financial statement schedules and supplementary
      information required to be submitted.
| | -- | -------------------------------------------------------------------------------------------
| |    |                                                                                            
| |    | Schedules other than that listed above are omitted
      because they are not applicable.  
| |    |                                                                                            
| | 3. | Exhibits                                                                                   

A list of the exhibits filed or furnished with this report on
Form 10-K (or incorporated by reference to exhibits previously filed or
furnished by us) is provided in the Exhibit Index beginning on page 46 of this
report. Those exhibits incorporated by reference herein are indicated as such by
the information supplied in the parenthetical thereafter. Otherwise, the
exhibits are filed herewith.

44

---

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

| |     | STERLING GROUP VENTURES, INC.                            
| | --- | ---------------------------------------------------------
| |     |                                                          
| |     | (Registrant)                                             
| |     |                                                          
| | By: | /s/ Richard Shao                                         
| |     |                                                          
| |     | Richard Shao, President and Chief Financial
      Officer
| |     | Date: August 27, 2009                                    
| |     |                                                          
| | By: | /s/ Raoul Tsakok                                         
| |     |                                                          
| |     | Raoul Tsakok, Chairman and Chief Executive
      Officer 
| |     | Date: August 27, 2009                                    

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

| | By: | /s/ Richard Shao                                         
| | --- | ---------------------------------------------------------
| |     |                                                          
| |     | Richard Shao, President and Chief Financial
      Officer
| |     | Date: August 27 2009                                     
| |     |                                                          
| | By: | /s/ Raoul Tsakok                                         
| |     |                                                          
| |     | Raoul Tsakok, Chairman and Chief Executive
      Officer 
| |     | Date: August 27, 2009                                    

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Index of Exhibits

|Exhibit |                                                                                                                                                                                                                                                                                                                                                                                      
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description                                                                                                                                                                                                                                                                                                                                                                          
|        |                                                                                                                                                                                                                                                                                                                                                                                      
|3.1     | Articles of Incorporation
        of the Company, (filed as Exhibit 3.1 to the Company's Registration Statement
        on Form SB-2 filed on July 26, 2002, and incorporated herein by reference).                                                                                                                                                                                  
|3.2     | Bylaws of the Company (filed
        as Exhibit 3.2 to the Company's Registration Statement on Form SB-2 filed
        on July 26, 2002, and incorporated herein by reference).                                                                                                                                                                                                      
|4.1     | Specimen stock
        certificate (filed as Exhibit 4.1 to the Company's Registration Statement
        on Form SB-2 filed on July 26, 2002, and incorporated herein by reference).                                                                                                                                                                                                 
|10.1    | Acquisition Agreement between
        the Company and Micro Express Ltd., dated January 20, 2004. (Filed as
        Exhibit 10.1 to the Company's current report on Form 8-K filed on January
        29, 2004, and incorporated herein by reference).                                                                                                                               
|10.2    | Joint Venture
        Contract between Micro Express Ltd. .(the Companys wholly subsidiary)
        and Sichuan Province Mining Ltd., dated April 5, 2005 (Filed as Exhibit
        10.1 to the Company's current report on Form 8-K filed on April 11, 2005,
        and incorporated herein by reference).                                                                        
|10.3    | Agreement for Development of
        DXC Salt Lake Property between Micro Express Holdings Inc. .(the Companys
        wholly subsidiary) and Beijing Mianping Salt Lake Research Institute,
        dated September 16, 2005 (Filed as Exhibit 10.1 to the Company's current
        report on Form 8-K filed on September 21, 2005, and incorporated herein
        by reference).
|10.4    | Agreement for
        Termination of Joint Venture between Micro Express Ltd. and Sichuan Province
        Mining Ltd., dated March 3, 2006 (Filed as Exhibit 10.1 to the Company's
        current report on Form 8- K filed on March 6, 2006, and incorporated herein
        by reference).                                                                                       
|10.5    | Agreement between the Company,
        Zhong Chuan International Mining Holding Co., Ltd. , and shareholders
        of Monte Sea Holdings Ltd., dated July 8, 2008 (Filed as Exhibit 10.1
        to the Company's current report on Form 8-K filed on July 15, 2008, and
        incorporated herein by reference).                                                                
|14.1    | Code of Ethics
        . Filed herewith.                                                                                                                                                                                                                                                                                                                                             
|31.1    | Certification
        of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act
        of 2002. Filed herewith.                                                                                                                                                                                                                                                        
|31.2    | Certification
        of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act
        of 2002. Filed herewith.                                                                                                                                                                                                                                                        
|32.1    | Certification
        of Chief Executive Officer Pursuant to 18 U.S.C. Sec. 1350 as adopted
        pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.                                                                                                                                                                                                       
|32.2    | Certification
        of Chief Financial Officer Pursuant to 18 U.S.C. Sec. 1350 as adopted
        pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.                                                                                                                                                                                                       
|99.1    | Audit Committee Charter. Filed
        herewith.                                                                                                                                                                                                                                                                                                                                     

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