---

OMB APPROVAL OMB
      Number: Expires: 3235-0063 April 30, 2012


UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2009

or

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

For the transition period from _____________________________
to_____________________________

Commission file number: 0-49942

**STRATECO RESOURCES INC.**(Exact name of registrant as specified in its
charter)

|QUÉBEC, CANADA                 | N/A                
|------------------------------ | -------------------
|State or other jurisdiction of | (I.R.S. Employer   
|incorporation or organisation  | Identification No.)

**1****225 GAY-LUSSAC, BOUCHERVILLE,
QUÉBEC, CANADA, J4B 7K1**(Address of principal executive
offices) (Zip Code)

Registrants telephone number, including area code:
**(450) 641-0775**

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

|Title of each class      | Name of each exchange on which registered
|------------------------ | -----------------------------------------
|                         |                                          
|________________________ | Toronto Stock Exchange in Canada (RSC)   
|(Title of class)         | Frankfurt in Germany:(RF9)               

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

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

Note Checking the box above will not relieve any
registrant required to file reports pursuant to Section 13 or 15(d) of the
Exchange.

---

2

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 [X]Yes    [   ] No

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and
post such files).[X] No    [   ]Yes

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) 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 the definitions of large accelerated filer,
accelerated filer and smaller reportingcompany in Rule 12b-2 of the
Exchange Act.

|Large accelerated filer [   ] |                                                     | Accelerated
      filer                 
       [X]
|----------------------------- | --------------------------------------------------- | ---------------------------------------------------
|Non-accelerated filer   [   ] | (Do not check if
      a smaller reporting company) | Smaller reporting company [   ]                    

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

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at
which the common equity was last sold, or the average bid and asked price of
such common equity, as of the last business day of the registrants most
recently completed second fiscal quarter.

As of the last business day of the registrants most recently
completed second financial quarter as of June 30, 2009, the common share was
last sold at the price of CAN$0.92 per share for and aggregate market value with
119,266,462 common shares outstanding of CAN$109,725,117.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. [   ]Yes   [   ] No

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

---

3

Indicate the number of shares outstanding of each of the
registrants classes of common stock, as of the latest practicable date.

As of March 10, 2010, 122,695,906 common shares were outstanding

---

4

DOCUMENTS INCORPORATED BY REFERENCE

(1) Part

Item 8: Financial Statements of an exploration stage company

The Company, an exploration stage company, incorporates for
reference to the present document the Strateco Resources Inc. audited financial
statements for the fiscal year ending December 31, 2009 and audited financial
statements for the fiscal year ending December 31, 2008 that include the report
of U.S. GAAP reconciliation at Note 23. These financial statements follow
the signature page of the present document.

INDEX:

|PART
      I                                                                                                                      | 5  
|--------------------------------------------------------------------------------------------------------------------------------- | ---
|Item
      1. Business                                                                                                            | 5  
|All
      amounts mentioned in this following section are in Canadian dollars                                                     | 5  
|Item
      1A: Risk Factors.                                                                                                      | 7  
|Item
      1B: Unresolved Staff Comments                                                                                          | 8  
|Item
      2: Properties.                                                                                                         | 8  
|Item
      2: SUMMARY OF URANIUM EXPLORATION ANALYTICAL PROCEDURES                                                                | 11 
|Item
      2 A: MATOUSH PROJECT                                                                                                   | 12 
|Item
      2 B. MISTASSINI PROPERTY                                                                                               | 45 
|Item
      2 C. APPLE PROPERTY                                                                                                    | 48 
|Item
      2 D. MONT-LAURIER URANIUM PROPERTY                                                                                     | 52 
|Item
      2 E. QUÉNONISCA PROPERTY ZN, PB, CU, AG                                                                               | 54 
|Item
      2: NOTE Detailed uranium exploration analytical procedures                                                             | 55 
|Item
      3: Legal Proceedings.                                                                                                  | 59 
|Item
      4: Submission of Matters to a Vote of Security Holders.                                                                | 59 
|PART
      II                                                                                                                     | 59 
|Item
      5: Market for Registrants Common Equity, Related Stockholder Matters and
      Issuer Purchases of Equity Securities. | 59 
|Item
      6 Selected Financial Data.                                                                                             | 65 
|Item
      7. Managements Discussion and Analysis of Financial Condition and Results
      of Operations.                        | 66 
|Item
      7A. Quantitative and Qualitative Disclosures about Market Risk.                                                        | 84 
|Item
      8. Financial Statements and Supplementary Data.                                                                        | 85 
|Item
      9. Changes in and Disagreements with Accountants on Accounting and
      Financial Disclosure.                         | 86 
|Item
      9A. Controls and Procedures.                                                                                           | 86 
|PART
      III                                                                                                                    | 89 
|Item
      10. Directors, Executive Officers and Corporate Governance.                                                            | 89 
|Item
      11: Executive Compensation                                                                                             | 96 
|Item
      12: Security Ownership of Certain Beneficial Owners and Management Related
      Stockholder Matters.                  | 104
|Item
      13: Certain Relationships and Related Transactions, and Director
      Independence                                    | 106
|Item
      14: Principal Accounting Fees and Services in Canadian Dollars                                                         | 107
|Item
      15: Exhibits, Financial Statement Schedules                                                                            | 108
|SIGNATURES                                                                                                                        | 111
|Managements
      Responsibility for Financial Reporting                                                                         | 112
|Auditors Report                                                                                                                  |    
|Auditors Report to the Shareholders                                                                                              |    
|FINANCIAL STATEMENTS                                                                                                              |    

---

5

PART I

Item 1. Business

All amounts mentioned in this following section are in Canadian
dollars.

The Company was incorporated under the Canada Business
Corporations Actby articles of incorporation dated April 13, 2000.

The Company is primarily engaged in the exploration of mining
properties with a view to commercial production. It does not currently have any
mines in production. The Company has a portfolio of five wholly-owned mining
properties, as well as an interest in or options on three mining properties in
Quebec, Canada. These properties comprise 1,068 claims for a total area of
56,747 hectares (567 km2). The Companys activities are focused on
the development of the MATOUSH PROJECT, which consists of four uranium
properties.

Recovery of the cost of mining assets is subject to the
discovery of economically recoverable reserves, the Company's ability to obtain
the financing required to pursue exploration and development of its properties,
and profitable future production or the proceeds from the sale of its
properties. The Company must periodically obtain new funds in order to pursue
its activities. While it has always succeeded in doing so to date, there can be
no assurance that it will continue to do so in the future.

The Company is involved in exploration of uranium and to its
cognizance; there exists no competition between companies involved in that kind
of exploration. The main business of the Company is to discover by exploration
as much as possible of resources of uranium to eventually become a producer of
uranium and to sell this uranium at the market value. Most of the companies
cooperate with each other, exchange or trade equipment, consultant services and
knowledge regarding the complex requirements of health and safety standards,
permits and governmental authorizations, methods of exploration or production.
Since most companies in Canada involved in exploration or production of uranium
are public companies all technical information is publicly disclosed as
well.

However, in the mining industry in Canada in general, a certain
competition may exist when a company needs to retain and to hire geologists and
mining technicians which are difficult to find in Québec or in Canada The
Company was however able up to now to recruit in Europe and in Québec and to
retain qualified personnel and consultants.

Another aspect of competition for the whole mining industry in
general is the acquisition of claims and many factors may influence their value.
But once the interest in the claims of the property is acquired by the Company
or is subject to an agreement, the claims of the property and the adjacent
claims as well, are protected by the agreement as an interest area. For the
moment the Company holds sufficient mining claims to pursue its objectives.

The Company had initiated voluntarily an Environmental Impact
Study for the MATOUSH PROJECT through a specialized firm, Golder Associates in
2007, at approximate costs of $268,000 during the year 2007, that represented
less than 1.5% of the Companys expenses in exploration in the approximate
amount of $18.7M.

As of December 31, 2008, the Company has spent a sum of
$1,193,640 for environmental impact studies and had paid to a management company
the sum of $20,420 for the services on a permanent basis of an environmental
manager in the months of November and December 2008 to prepare the environmental
requirements in view of the underground exploration program. This total amount
of $1,214,060 represented only 5.40% of the Company's expenses in exploration in
the amount of $22,317,849.

---

6

For the fiscal year ended December 31, 2009, the Company has
spent an approximate amount of $976,000 to obtain environmental permits and
licenses, to comply with environmental obligations of different levels of government and to retain though a management company, the
services of the environmental manager throughout the year. This approximate
amount represents approximately 5.6% of the explorations expenses of the company
for that year. Compliance with Environmental Laws at the Federal, provincial and
local levels, for as long as the Company remains at the exploration stage for
uranium, does not require material capital expenditures for the Company.

The Company has no employees and only a few consultants since
it has a Services Agreement with BBH Géo-Management Inc. that provides employees
and consultants in management, secretarial, geology, operations, legal affairs,
investor relations, technical and environmental matters and professional
services as fully disclosed in Item 7 of Managements Discussion and Analysis of Financial
Condition and Results of Operation -Related-Party Transactions and Item
10-Executive Compensation.

Financing

On October 1st, 2008, the Company closed a
non-brokered private placement of flow-through common shares with two funds for
aggregate gross proceeds of $8,000,001.75. The private placement consists of
4,102,565 flow-through common shares issued at a price of $1.95 per share. The
flow-through proceeds have been used by the Company before December 31, 2009 to
incur eligible exploration expenses on its MATOUSH PROJECT located in Quebec,
Canada and described in details in Item 2. Properties

On December 8, 2009, the Company completed a flow-through
private placement of $2.5Million with one insider holding more than 10% of the
share capital of the Company, through one fund and one accredited investor that
are related, for an aggregate amount of $2.4M and another accredited investor
for an amount of $100,000 for a total flow-through financing of $2,500,000. This
private placement was made with two (3) subscribers from the Province of Ontario
in Canada. The Company issued in this private placement a total of 2,500,000
flow-through common shares at the price of $1.00 per share.

The flow-through proceeds will be used by the Company to incur
eligible exploration expenses on its MATOUSH PROJECT including MATOUSH, MATOUSH
EXTENSION, ECLAT and PACIFIC BAY-MATOUSH properties and also on the MISTASSINI
property, all located in Quebec, Canada and described in details in Item 2.
Properties.The Company paid an amount of $100,000 as Finders fees.

Subscribers of flow through common shares are entitled to tax
rebates in Canada and in the Province of Quebec when the holder is a resident of
Quebec because the Company renounce to the credits to which it would be entitled
in favor of the subscribers. The Company engages itself to spend the
flow-through financing amounts on exploration expenses eligible to tax credits
on or before December 31, 2010.

All the securities issued pursuant to the placement were
subject to a hold period of four months and one day from the date of closing.

On January 27, 2010, the Company closed a non-brokered private
placement for a total financing of $15 million. The financing was subscribed by
Sentient Executive GP III Limited on behalf of two funds from Cayman Islands
(Sentient), an equity fund that manages natural resource sector investments
(Sentient).

Pursuant to the private placement, Sentient subscribed for
100,000 units at a price of $0.95 per unit for an amount of $95,000. Each unit
consists of one common share (a "share") of the Company and one-half of one
warrant. Each warrant entitles its holder to purchase one share of the Company
for $1.00 during a 24-month period following the closing and for $1.05 during
the subsequent period of 24 to 36 months after the closing (warrant). On
closing, the Company issued a total of 100,000 shares and 50,000 warrants in
consideration of the subscription price of the units.

Sentient also subscribed for 14,905 convertible notes maturing
on February 27, 2015, for an amount of $14,905,000. Each tranche of $1,000 in
notes is accompanied by 527 warrants, for a total of 7,844,737 warrants with the
same exercise conditions as the warrants included in the units.

Until the maturity date of the notes, Sentient has the option
of converting the notes into 1,053 shares per tranche of $1,000 based on a
conversion price of $0.95 per share, for a total of 15,689,474 shares.

---

7

The Company paid Sentient transaction fees equal to 5% of the
gross proceeds of the private placement. These transaction fees in the amount of
$750,000 were paid through the issuance at closing of 789,474 units, being
789,474 shares and 394,737 warrants with the same exercise conditions as the
warrants included in the units.

The Company plans to use the net proceeds of the private
placement to finance exploration work, primarily for the acquisition of
materials and infrastructure for its MATOUSH uranium PROJECT, which comprises
THE MATOUSH, MATOUSH EXTENSION, ECLAT AND PACIFIC-BAY MATOUSH PROPERTIES in
Quebecs Otish Mountains in Canada located in Quebec, Canada and described in
details in Item 2: Properties.

All the securities issued pursuant to the placement were
subject to a hold period of four months and one day from the date of closing.

Item 1A: Risk Factors.

Exploration and Mining

The Company is at an exploration stage.Exploration and
mining activities are subject to a high level of risk. Few exploration
properties reach the production stage. Unusual or unexpected formations, fires,
power failures, labour conflicts, floods, rockbursts, subsidence, landslides and
the inability to locate the appropriate or adequate manpower, machinery or
equipment are all risks associated with mining activities and the execution of
exploration programs.

The development of resource properties is subject to many
factors, including the cost of mining, variations in the material mined,
fluctuations in the commodities and exchange markets, the cost of processing
equipment and other factors such as aboriginal claims, government regulations
including in particular regulations on royalties, authorized production,
importation and exportation of natural resources and environmental protection.
Depending on the price of the natural resources produced, the Company may decide
not to undertake or continue commercial production. Most exploration projects do
not result in the discovery of ore.

The probability of an individual prospect ever having reserves
that meet the requirements of Industry Guide 7 is extremely remote. In all
probabilities, the majority of the properties do not contain any reserves and
any funds spent on exploration will probably be lost.

Even if the Company completes the current exploration program
and it is successful in identifying a mineral deposit, the Company will have to
spend substantial funds on further drilling and engineering studies before the
Company knows if it has a commercially viable mineral deposit, a reserve.

Environmental and Other Regulations

Current, possible or future environmental legislation,
regulations and measures may entail unforeseeable additional costs, capital
expenditures, restrictions or delays in the Company's activities. The
requirements of the environmental regulations and standards are constantly
re-evaluated and may be considerably increased, which could seriously hamper the
Company or its ability to develop its properties economically. Before a property
can enter into production, the Company must obtain regulatory and environmental
approvals. There can be no assurance that such approvals will be obtained or
that they will be obtained in a timely manner. The cost related to assessing
changes in government regulations may reduce the profitability of the operation
or altogether prevent a property from being developed. The Company considers
that it is in material compliance with the existing environmental
legislation.

Financing and Development

The Company has incurred losses to date and does not presently
have the financial resources required to finance all of its planned exploration
and development programs. Development of the Company's properties therefore
depends on its ability to obtain the additional financing required. There can be
no assurance that

---

8

the Company will succeed in obtaining the required funding.
Failure to do so may lead to substantial dilution of its interests (existing or
proposed) in its properties. Furthermore, the Company has limited experience in
developing a resource property, and its ability to do so depends on the services
of experienced people or in the signature of agreements with major resource
companies that can produce such expertise.

Commodities Prices

The market for uranium, gold, diamond, base metals or other
mineral discovered can be affected by factors beyond the Company's control.
Commodities prices have fluctuated widely, particularly in recent years. The
impact of these factors cannot be accurately predicted.

Uninsured Risks

The Company could become liable for subsidence, pollution and
other risks against which it cannot insure itself or chooses not to insure
itself due to the high cost of premiums or for some other reason. Payment of
such liabilities could decrease or even eliminate the funds available for
exploration and mining activities.

Item 1B: Unresolved Staff Comments

The Company did not receive any comments from the U.S.
Securities and Exchange Commission during the fiscal year to which the present
report relates.

Item 2: Properties. All amounts mentioned in this following
  section are in Canadian dollars.

The following technical data has been read and revised by
Jean-Pierre Lachance, Geo., Executive Vice President of Strateco Resources Inc.,
and David A. Ross, P.Geo., Senior geologist at Scott Wilson Roscoe Postle
Associates Inc. (Scott Wislon RPA) who are qualified persons as defined under
Canadian National Instrument 43-101 (NI 43-101).

At December 31, 2009, the Company had a portfolio of five
wholly owned mining properties and interests or options on three mining
properties in Quebec covering more than 56,747 hectares. Of these eight (8)
properties, the Company explores actively for uranium on five (5) of them.

The table below represents the number of claims, the surface
area for each property held by the Company as of December 31, 2009, the kind of
minerals subject to exploration on this property, the interests of the Company
in each property and applicable royalties:

Numberof claims
      SurfaceArea inHectares
      CompanysInterest (I)andOptions(O)
      **Percentage**
      Exploration(1)
      **Royalties**MATOUSH
        PROJECTMatoush
      25
      1,328.46
      I
      100%
      U3O8
      2% NSR Yellow Cake (2)MatoushExtension
      198
      10,503.85
      I
      100%
      U3O8
      -Eclat
      90
      4,786.90
      I(3)
      100%
      U3O8
      2% NSR (3)Pacific-Bay-Matoush
      277
      14,576.33
      O(4)
      60%
      U3O8
      2% Yellow Cake (4)MISTASSINI
      171
      9,114.47
      O(5)
      60%
      U3O8
      2% Yellow Cake(5)APPLE
      194
      9,928.13
      I
      100%
      U3O8
      2% NSR (6)MONT-LAURIERURANIUM
      80
      4,710.35
      I
      100%
      U3O8QUÉNONISCA
      33
      1,798.77
      I (7)
      50%
      ZN,PB,CU,AGTOTAL
      1,068
      56,747.26


---

9

|(1) | Exploration for uranium: U O and base metals exploration:
      ZN, PB, CU and AG;3 8                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(2) | This Royalty will be payable by the Company to Ditem
      Explorations Inc.; upon production;                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(3) | The Company holds a 100% interest in all minerals other
      than diamonds in the ECLAT PROPERTY since June 15, 2009. This Royalty will
      be payable, upon production, in favour of the Vija Ventures Corporation on
      all minerals other than diamonds and 2% portion in favour of Vija Ventures
      Corporation of all gross proceeds from the sale or disposition of carbon
      emission rights tied to the production of uranium from the
  property;
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(4) | The Company detains an option to acquire a 60% interest
      in the PACIFIC BAY-MATOUSH PROPERTY over a period of 4 years ending in
      2011. Only Pacific Bay Minerals Ltd. its successors and assigns will be
      responsible to pay this Yellow Cake Royalty to Pierre Angers, upon
      production;                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(5) | The Company detains an option over a period of 3 years
      ending in 2011 to acquire an interest of 60% on uranium rights only, on
      the Mistassini Property. This Royalty will be payable upon production by
      the parties to the option and joint venture agreement in favour of
      Northern Superior Resources Inc;                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(6) | This Yellow Cake Royalty will be payable on all minerals,
      in favour of Virginia Mines Inc., upon production, subject to buyback
      right of the Company to purchase one percent (1%) NSR against a cash
      payment of one million dollars (CAN$1,000,000).                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(7) | The Company and SOQUEM, each holds a 50% interest in this
      property. Upon production, each partner is entitled to its share of the
      production but if the interest of one party is of 10% or less it must
      transfer its interest to the other party and will hold thereafter a 1% NSR
      royalty.                                                                                                                                                   

---

10

The map in Figure 1belowrepresentsthe
regional location of all properties and projects of the Company as of March 2010
in the Province of Québec, Canada:



Following is the order for the Companys discussion of its
eight (8) properties:

SUMMARY OF URANIUM EXPLORATION ANALYTICAL PROCEDURES

| | A. | MATOUSH PROJECT
| | -- | ---------------
| |    | A.1            




| | A.2 | MATOUSH EXTENSION PROPERTY  
| | --- | ----------------------------
| | A.3 | ECLAT PROPERTY              
| | A.4 | PACIFIC-BAY-MATOUSH PROPERTY
| | A.5 | PERMITS AND LICENSE         

| | B. | MISTASSINI PROPERTY  
| | -- | ---------------------
| | C. | APPLE PROPERTY       
| | D. | MONT-LAURIER PROPERTY
| | E. | QUÉNONISCA PROPERTY  

---

11

The Company is mainly involved in exploration work for uranium
on properties described in details in subsections Item 2: Properties
subsections AthroughD, so the Company will present at the outset, a
brief Summary ofUranium Exploration analytical proceduresin the following paragraphs and a detailed description of these procedures
at the end of this Item 2- Noteentitled: Detailed Uranium
Exploration Analytical procedures.

Item 2: SUMMARY OF URANIUM EXPLORATION ANALYTICAL
PROCEDURES:

Summary of Sampling Methods, Quality Assurance and Quality
Control

The sampling program at MATOUSH PROJECT, including all aspects
of Quality Assurance and Quality Control (QA/QC), is supervised by the
Companys Chief Geologist, Jonathan Lafontaine, P. Geo., who is a Qualified
Person as defined under Canadian National Instrument 43-101 (NI 43-101).

Drill core is hydraulically split on-site by dedicated
personnel and samples are collected over 30 cm to 3 m intervals based on
geology. All reported samples are split with hydraulic splitter. Samples are
individually bagged and tagged and shipped as per transportation protocols.
Blanks, duplicates, and standards are randomly inserted in the sample shipment
within the sample number sequence.

Prior to shipping, sealed sample bags are stored in a locked
facility. Samples are shipped via air to Témiscamie float plane base, trucked to
Chibougamau and from there sent by courier to the Geo-analytical Laboratories at
the Saskatchewan Research Council (SRC) in Saskatoon, in the Province of
Saskatchewan in Canada. The laboratory is accredited by the Standards Council of
Canada as an ISO/IEC 17025 Laboratory for Mineral Analysis Testing. On arrival
at SRC, samples are sorted into lots according to radioactivity level and
prepped and analyzed in that order. Samples are dried and jaw crushed to 60%
passing -2 mm and 100 g to 200 g sub sample split out using a riffler. The
sub-sample is pulverized to 90% passing 106 microns using a ring and puck
grinding mill. The mills are cleaned between samples using steel wool and
compressed air.

After sample preparation, SRC analyzes
for U3O8content by several means. ICP 4-3R (partial
digestion) and fluorimetry are used on samples with U3O8less than 100 PPM. ICP 4-3 (total digestion) is employed on samples with
normal to high radioactivity, hence for the majority of the samples submitted.
Samples with greater than 1,000 PPM U3O8are also
subjected to an Aqua Regia digestion before determination of wt%
U3O8also by ICP. The Company independently adds one blank
sample and one quarter split duplicate each with every 14 samples. Results are
reviewed on an ongoing basis.

In addition to chemical analysis, the Company employs a
down-hole gamma probe instrument to estimate uranium grades. Prior to probing,
the holes are washed to eliminate minor mineralization smearing or radon
effects. Probe results, in cps units, are converted to
eU3O8(equivalent U3O8) using well established
algorithms specifically calibrated to the Matoush deposit. A calibration hole
(MT-07-29), for which there are complete chemical analyses, is probed at least
once per month to ensure the probe is calibrated accurately and functioning
properly. Results are also compared with chemical analysis when received.
Discrepancies in results are immediately investigated and corrected.

Analytical results are received and imported into the Companys
data base. Laboratory replicates and laboratory standards are checked. Internal
duplicates, blanks and standards are checked. Analytical drift from expected
results triggers re-analysis.

Results are also compared with estimated Grade and Thickness
(GT) values from in-situ down-hole probing, and with counts per second (CPS)
values logged during initial core logging procedures.

In the following text covering in details exploration works on
  the Companys properties, the letter e in ***e**U3O8
  represents the estimatedorequivalentvalue of*U3O8*as determined by down-hole calibrated*geophysical probing.

---

12

Further information on the various technical subjects relating
  to exploration work for uranium, namely the **e**U3O8
  and CPS nomenclatures, exploration program analysis methods,
  sampling techniques, quality control for the results obtained by the gamma probe
  and laboratory chemical analyses is available on the Companys website
  at www.stratecoinc.comin section Investor Relations
  subsection Q/A and Q/C and in this annual report at Item
  2 Properties-intheNote: Detailed Uranium exploration analytical
  procedures.

Item 2 A: MATOUSH PROJECT

The map in Figure 2below represents the Company interests in different
  properties constituting the MATOUSH PROJECT including MATOUSH PROPERTY, MATOUSH
  EXTENSION PROPERTY, ECLAT PROPERTY and PACIFIC BAY-MATOUSH PROPERTY.



The MATOUSH PROJECT (See subsection A) is located in the
Otish Mountains in northern Quebec, Canada, about 275 kilometres north of
Chibougamau, and consists of the wholly-owned MATOUSH PROPERTY (See subsection
A.1), the wholly-owned MATOUSH EXTENSION PROPERTY (See subsection
A.2), the wholly-owned ECLAT PROPERTY (See subsection A.3) and
PACIFIC-BAY-MATOUSH PROPERTY in which the Company has an option to earn a 60%
interest (See subsection A.4). The MATOUSH PROJECT currently comprises
590 claims for a total area of 32,195.54 hectares (321 km2).

---

13

The project is accessible by air, and in winter by the Eastmain
winter road, which runs about seven kilometres to the west of the Project. The
winter road has been upgraded over a 142-km length to allow access to the camp
and transport of equipment and fuel required for 2009. The winter
road repair work was carried out as planned. The contract was awarded to
Entreprises CARSA Inc. for a second consecutive year. Repair work began
in mid-December 2008 and maintenance was ongoing until March 20, 2009. In
addition to various materials and a shovel excavator 700,000 litres of fuel and
four new 50,000-litre fuel tanks were transported to the site. The four drills
belonging to Major Drilling Group International Inc. that were on site were
taken away and replaced by two new drills.

The workers and consultants benefit from a 50 persons camp
completed in 2007, with all modern commodities.

The technical data in the following text is based on a report
entitled: Technical Report on the Mineral Resources Update for the Matoush
Uranium Project Central Quebec, Canada, dated September 16, 2008, prepared
in accordance with National Instrument 43-101 respecting standards of
disclosure for mineral projects (NI 43-101). This data has also
been reviewed by the authors of the report, David A. Ross, M. Sc. P. Geo. and R.
Barry Cook, P. Eng. of Scott Wilson RPA. The technical data in the following
text is also based on a memorandum entitled Matoush Mineral Resource
Update, dated September 18, 2009, and reviewed by David A. Ross, M. Sc. P.
Geo. of Scott Wilson RPA. The technical data based on recent information has
been reviewed by Jean-Pierre Lachance, Executive Vice President of the Company.
All three are qualified persons as defined in NI 43-101.

Cautionary Note to U.S. Investors
concerning estimates of Measured and Indicated Resources. This section
uses the terms measured and indicated resources.We advise U.S.
investors that while those terms are recognized and required by Canadian
regulations, the U.S. Securities and Exchange Commission does not recognize
them. U.S. investors are cautioned not to assume that any part or all of mineral
deposits in these categories will ever be converted into reserves.

Cautionary Note to U.S. Investors
concerning estimates of Inferred Resources. This section uses the term inferred
resources.We advise U.S. investors that while this term is recognized and
required by Canadian regulations, the U.S. Securities and Exchange Commission
does not recognize it. Inferred resources have a great amount of
uncertainty as to their existence, and great uncertainty as to their economic
and legal feasibility. It cannot be assumed that all or any part of an
Inferred Mineral Resourcewill ever be upgraded to a higher category.
Under Canadian rules, estimates of Inferred Mineral Resourcesmay not
form the basis of feasibility or pre-feasibility studies, except in rare cases.
U.S. investors are cautioned not to assume that part or all of an inferred
resource exists, or is economically or legally minable.

In 2008, the Company began a 40,000-metre drilling program on
the MATOUSH PROJECT and planned a budget of $22 million in exploration works.
The Company carried out an extensive drilling program on its wholly-owned
MATOUSH PROPERTY, located in the Otish Mountains, 275 km north of Chibougamau
and the Company obtained interesting drill results. The potential and size of
the new MT-22 mineralized zone was confirmed, as well as the extension of
the AM-15 zone at depth.

In the second quarter of 2008, drilling was primarily focused
on the new MT-34 mineralized zone that lies in the depth extension of the
AM-15 zone, as well as on the MT-22 mineralized zone.

Third quarter of 2008, exploration work on the MATOUSH PROJECT
essentially consisted of drilling and prospecting. A total of 16,837 metres were
drilled in 52 holes. Of this total, 15,327 metres (45 holes) were drilled on the
MATOUSH PROPERTY and the remaining 1,510 metres (7 holes) on the PACIFIC
BAY-MATOUSH PROPERTY.

The Company prospected in the Laurent Martin area, 5.0 km to
the east of the AM-15 lens, where a train of boulders including one that
returned nearly 60,000 counts per second had been identified during prospection
in summer 2007.

In the fourth quarter 2008, drilling continued on the MATOUSH
PROJECT in the northern and southern extensions of well defined lenses and also
along the Matoush fault with the objective to identify new mineralised lenses.

Twenty three drillings have been completed for a total of 9,517
metres during the fourth quarter 2008. These drillings explored at the North of
the MT-22 lens and the south of the MT-34 lens.

---

14

In 2008, a total of 119 holes were drilled on the MATOUSH
PROJECT for a total of 59,603 meters leading to**the delineation of
Indicated mineral resources of 3.73M pounds**U3O8**and Inferred mineral Resources
of 13.070 M**pounds U3O8as reported in Item 2:
Properties-Technical Reports of Form 10K for the year ended December 31,8.

All exploration drill holes results for the year 2009,
longitudinal sections as well as photos of the mineralized intersections can be
seen on the companys website at www.stratecoinc.com.

In 2009, the Company continued to focus its efforts on the
exploration and development of its uranium project, the MATOUSH PROJECT, using
advanced exploration methods. The Company drilled 75 holes on its various
properties for a total of 35,026 metres of drilling, including 34,240 metres on
the MATOUSH PROJECT. Most notably, the holes drilled on the MATOUSH PROJECT
resulted in the doubling of the indicated mineral resourceto 7.46
million pounds of U3O8at the high grade of 0.78%
U3O8.

The true width of the mineralized intersections of the holes
drilled in 2009 has not yet been determined.

In order to describe the exploration work in 2009 conducted on
  its uranium properties in details, the Company must include in this annual report
  a description of the techniques used and required for exploration work, namely:
  (i) analytical procedures used in the exploration program; (ii) sampling methods;
  (iii) quality assurance and control (including information on the use of the
  letter ein **eU3O8,****which represents the estimatedor equivalentU3O8value determined
  using a calibrated spectral or gamma probe); (iv) the methodology for the use
  of the gamma probe; and,**finally, (v) a comparison of eU3O8and
  U3O8 results.

This technical description can be found in the NOTEfollowing the Item 2: Propertiesand in the QA/QCsection
under the About Stratecotab on the Companys website, at www.stratecoinc.com.

In 2009, 68 holes totalling 34,240 metres were drilled on the
MATOUSH PROJECT as a whole. Drilling was distributed as follows: 26,144 metres
in 44 holes on the MATOUSH PROPERTY; 4,375 metres in 11 holes on the ECLAT
property, and 3,721 metres in 13 holes on the PACIFIC BAY-MATOUSH property. No
drilling was done on the MATOUSH EXTENSION property. In all, 160,216 metres (378
holes) have been drilled on the MATOUSH PROJECT since exploration began in 2006.

The 2009 drilling program began in early February on the
MATOUSH PROJECT, with two drills in operation. One drill was assigned to
drilling on the southern extension of the MT-34 zone, about 1 km away from that
zone, with the goal of identifying a new lens at a depth of between -400 and
-650 metres. The second drill was first mobilized on the PACIFIC BAY-MATOUSH
property to drill 1,500 metres in the Rabbit Ears South area, and was then moved
in early March to an area of the ECLAT property 9.5 km south of the MT-34 zone,
near Hole EC-08-01, which returned very interesting results in the winter of
2008.

Drilling was temporarily suspended during the spring thaw, from
April 27 to May 27. Drilling then resumed, with two drills operating on the
properties, as well as one helicopter-borne drill for holes drilled on the
MISTASSINI and PACIFIC BAY-MATOUSH properties. Besides the exploration holes,
five geotechnical holes totalling 526 metres were drilled as part of the
preparatory work for the underground exploration program. The 2009 drilling
program ended on November 26.

The MATOUSH PROJECT remains the Companys priority in the
pursuit of its objective to become the first Québec Company to advance a uranium
exploration project to the underground exploration stage.

Item 2: A1. MATOUSH PROPERTY

The Company owns a 100% interest in this uranium property representing
  for the moment the main focus of the MATOUSH PROJECT located about 275 km north
  of Chibougamau, in the Otish Mountains, in Québec, Canada (See Figure
  1for regional location of the MATOUSH PROPERTY).

---

15

Location and Access

This property is accessible by air, and in winter by the
Eastmain winter road, which runs about seven kilometres to the west of the
property.

Mining Claims

The property consists of 25 claims covering an area of 1,328.46
hectares.

A letter of intent dated May 12, 2005 provided for the Company
to earn a 51% interest from Ditem Explorations Inc. ("Ditem"), which owned then
a 100% interest in the MATOUSH PROPERTY, in consideration of payments totalling
$125,000 over two years, including $5,000 on signature of the agreement;
$750,000 in exploration work over three years, including $200,000 the first
year; and the issuance of 600,000 common shares of the Company over two years.
The Beaver Lake Area project, which lied approximately 20 kilometres to the
west, was also covered by this initial agreement.

A new letter of intent was signed with Ditem on February 21,
2006, giving the Company a 100% interest in the MATOUSH PROPERTY under the
following terms: The Company paid $10,000 at the execution of the letter of
intent and within five days following approval of the transaction by regulatory
authorities, the Company paid to Ditem $140,000 and issued to Ditem 400,000
common shares. The shares were subject to a resale restriction of four months
plus a day. Ditem became entitled upon production to a 2% NSR, as defined by
industry standards. The claims in the Beaver Lake area have not been renewed by
the Company upon acquisition of this 100% interest in the MATOUSH PROPERTY.

Uranium Potential

The Otish Mountains area is well known for its uranium
potential, particularly due to exploration conducted by Uranerz Exploration and
Mining (Uranerz) and Cogema in the late 1970s and early 1980s.

The results of exploration conducted by Uranerz in the early
1980s before uranium prices tumbled, as well as those obtained by the Company in
2006, 2007, 2008 and 2009, indicated that the MATOUSH PROPERTY had a very good
potential.

Uranerz only explored a 900-metre section of the Matoush
structure, which had been traced over 3,900 metres on this property. The Matoush
structure was discovered in the early 1980s by the German company. In 1984,
Uranerz drilled 23 holes, including Hole AM-15, which returned a 16-metre
intersection at a vertical depth of 200 metres grading
0.95%U3O8 or over 20 pounds of U3O8 per tonne of ore, a
very high grade by todays standards. Due to low uranium prices from 1985 to
2005, the uranium potential of the MATOUSH PROPERTY was not explored any
further. Uranerz exploration work results dated from the late 1970s and early
1980s and preceded the Canadian National Instrument 43-101 (NI 43-101)

Cautionary Note:A qualified person has not
done sufficient work to classify the historical estimate by Uranerz as current
mineral resources or mineral reserves. The Company does not consider resources
or reserves of an historical estimate to be mineral resources or mineral
reserves, as these categories are defined in articles 1.2 and 1.3 of the NI
43-101, as amended. The investor or reader should not rely upon this historical
estimate.

This exploration work by Uranerz served however as the
Company's point of departure for exploration of the MATOUSH
PROPERTY.

The holes drilled on the MATOUSH PROPERTY indicated that the
uranium mineralization was closely linked to the fuschite and tourmaline
alteration on both sides of a gabbros dike in the sediments. The alteration
envelope associated with the Matoush structure was symmetrical, with an average
thickness of 40 metres. Typically, adjacent to and moving outward from the dike
was first a tourmaline zone, then a chlorite-fuschite-muscovite zone and a
limonite-hematite zone.

In 2009, the Company carried out surface exploration on 26,144
metres in 44 holes of surface drilling on the property.

---

16

Given the structural context at MATOUSH PROPERTY, various zones
of varying grade and thickness were outlined using a smaller drill grid.

It should be noted that the southern extension of the AM-15zone was tested in the winter of 2006-2007 along the ACF unitthat
hosts the AM-15resources.

Detailed geological interpretation of the AM-15zone as
part of the NI 43-101 resource estimate in September 2007 revealed that the
AM-15zone dips about 200to the south and that the
mineralization appears to continue in the underlying CBF unit. Drilling carried
out on the lake ice showed clearly that the AM-15zone continues at depth
toward the south.

The five holes drilled in the less porous, 75-metre thick intermediate
  CBF unit all intersected the fault zone, with variable thicknesses and grades
  that **averaged 0.08% e**U3O8**over
  4.2metres**. The mineralization extends to the lower CBFcontact,
  and the goal was to explore the underlying ACFunit in the extension
  of the AM-15zone plunge.

The potential of this major mineralized zone was supported by
the marked presence of fuschite alteration and the absence of dykes in the three
most northern holes (MT-08-001, MT-08-003, MT-07-129),
which returned the best intersections. Drilling on the AM-15lens had
shown that the best intersections corresponded to the intensity of the fuschite
alteration and the absence of dykes.

The drill results resulted in an initial resource estimate for
the AM-15zone in September 2007, discovery of a new zone (MT-22)
and confirmation of the extension of the AM-15zone at depth. On
September 27, 2007, Scott Wilson Roscoe Postle Associates Inc. (Scott Wilson
RPA) completed a NI 43-101 technical report on the MATOUSH PROPERTY, including a
resource estimate on the AM-15core zone.

Scott Wilson RPA prepared the initial mineral resource estimate
for the AM-15core zone at MATOUSH PROPERTY using drill-hole data
available as of September 27, 2007. This technical report concluded that,
Indicated mineral resourceswere estimated to total **201,000
tonnes grading 0.79%**U3O8**containing 3.48million pounds of**U3O8**.
Inferred mineral resources were estimated to total 65,000 tonnes grading
0.43%**U3O8**containing****0.62**million pounds.

Results of this resource estimate have been described in
details in Form 10-KSB for the year ended December 31, 2007 at Item 2
Properties-MATOUSH PROPERTY.

Through geophysical surveys and several drill holes on the
MATOUSH PROPERTY, the Company also established the presence of the Matoush fault
and sedimentary horizons ACF-3(AM-15zone) and ACF-4(MT-22and MT-34zones) on a distance of over 15 km, including
a mineralized section located by Hole EC-08-01, 8.5 km south of the
AM-15zone. This hole intersected **0.15%
e**U3O8**over 2.1metres at a vertical
depth of 550 metres**in the ACF-4. These ACF horizons of coarse
sediments represent a favourable context for uranium precipitation.

Two holes drilled in the ACF-4(MT-08-019and
MT-08-027) proved encouraging, both in terms of geological context and
the potential size of the mineralized body and showed a fault offset that is a
prime site for uranium precipitation.

During the second quarter of 2008, the drill results confirmed
the potential in uranium sought by the Company, especially on the MT-34zone, which lies in the ACF-4, as does the MT-22zone.

Extensive surface exploration and airborne VLF geophysics were
carried out during the summer 2008 on MATOUSH PROPERTY.

During the third quarter of 2008, the exploration holes drilled
in the northern extension of the AM-15zone (600 m to the north) and the
MT-22zone (200 m to the north) resulted in the identification of a new
fault, the Coonishish fault. This fault lies about 200 m east of the Matoush
fault and is sub parallel to it. Two sections spaced at approximately 75 metres
were drilled to determine the faults strike and dip and assess its uranium
potential. The task proved relatively arduous, as the Coonishish fault is cut by
other siliceous, clayey faults. From an exploration perspective, the results

---

17

were compelling, as the genesis model allowed the confirmation
  of a second system detached from the Matoush fault. The Coonishish fault was
  intersected in almost all the layers: ACF 1, 2and 3and
  CBF 1, 2and 3. Only one hole has intercepted mineralization
  to date, with the notable presence of fuschite alteration, which remains a key
  element for exploration. Hole MT-08-084returned an intersection of **0.04%
  eU3O8****over 2.0metres**.

Exploration work

MT-22 ZONE

The new MT-22mineralized zone discovered by the Company
in 2007 on the MATOUSH PROPERTY lies under the AM-15zone and is parallel
to its plunge. The MT-22lens drilled on a grid of approximately 100 m,
lies at a vertical depth of between -300 m and -650 m and over a length of 450
m, between sections 31+50S and 27+00S and remained open to the north over its
full height (350 m) (see longitudinal section on the Companys website: www.stratecoinc.com). Given the known structural
context of MATOUSH PROPERTY, several lenses with various grades and thicknesses
were expected from drilling on a tighter grid and were also expected to return
significant grades at the intersection with the Matoush fault.

In comparison, the AM-15zone is 50 metres high and 300
metres long, contained an estimated resourceof 4.1million pounds of
U3O8according to the Technical Report on the Matoush
Uranium Project Central Quebec, CanadaNI 43-101of Scott Wilson RPA
dated September 27, 2007.

Between November 2007 and March 2008, more than 25 holes had
  been drilled on this new MT-22zone. Good results on the MT-22zone
  were obtained in the two last holes drilled in 2007, MT-07-129and MT-07-130,
  and were located 80 metres apart at the same depth, -350 metres. Hole MT-07-129,
  which intersected 8.3 metres at 0.24%**eU3O8,
  including 3.7metres at 0.51%eU3O8, was encouraging, particularly
  as the alteration****halo in this hole is**identical
  to that of the AM-15zone.

The holes drilled in the first quarter of 2008 on the MT-22zone proved positive, with impressive intersections that confirm the importance
  of this major new zone. The best intersections included Hole MT-08-003,
  with **2.86%e**U3O8**over 5.8
  metres including 4.48% eU3O8over 3.4metres and Hole MT-08-013
  with 0.52% eU3O8over 7.2metres.**

In February 2008
  the Company intersected a new high grade section at the North End of the MT-22lens and in March 2008, the Company realised that the MT-22mineralized
  zone on the MATOUSH PROPERTY, discovered at depth under the AM-15zone,
  was proving to be major and planned for 50,000 metres of drilling during the
  year 2008 on this property.

During the second quarter of 2008, drilling on the MT-22mineralized zone, continued on a 50-metre grid in preparation for the next
  resource estimate. The results for this zone were conclusive. The best results
  were obtained in holes MT-08-022, 028, 036and 043.
  Hole MT-08-022intersected **0.37% eU3O8
  over 18.4m, including 1.16% eU3O8 over 5.3m. Hole MT-08-027,
  drilled in early April 2008, returned an exceptionally wide mineralized section
  of 63 metres downhole, representing a true width of about 23 metres. The hole
  intersected 0.05% eU3O8 over 63.2 metres, including 0.13%
  eU3O8over 8.0metres showing a strong potential for this
  sector. Hole MT-08-028 intersected 0.47% eU3O8 over 41.6m,
  including 2.40% eU3O8 over 7.0m. Hole MT-08-036 intersected
  0.41% eU3O8over 7.5m, including 1.25%eU3O8 over 2.0m,
  and Hole MT-08-043 intersected 2.45% eU3O8 over 10.5 m,
  including an high-grade section of 2.0 m at 8.97% eU3O8.**

The most interesting holes drilled up to the end of the second
quarter of 2008 on the MT-22zone are indicated in bold in the following
table:

---

18

|          |        |        |     |       |       |       | Core   |       |        |         
|--------- | ------ | ------ | --- | ----- | ----- | ----- | ------ | ----- | ------ | --------
|          |        |        | Az. | Angle | From  | To    | length | %     | Max.   |         
|Hole      |        | Collar | (o) | (o)   | (m)   | (m)   | (m)    | eU3O8 | cps    | lb/tonne
|          | East   | North  |     |       |       |       |        |       |        |         
|MT-08-001 | 13+46E | 27+00S | 264 | -45   | 707.2 | 709.5 | 2.3    | 0.62  | 20,000 | 13.64   
|MT-08-003 | 12+40E | 26+50S | 273 | -45   | 573.5 | 580.3 | 6.8    | 2.43  | 65,000 | 53.46   
|Including |        |        |     |       | 576.6 | 580.0 | 3.4    | 4.48  |        | 98.56   
|MT-08-013 | 12+15E | 27+42S | 264 | -60   | 467.1 | 474.3 | 7.2    | 0.52  | 8,300  | 11.44   
|Including |        |        |     |       | 469.5 | 471.5 | 2.0    | 1.21  |        | 26.62   
|MT-08-015 | 12+78E | 26+52S | 276 | -63   | 565.8 | 567.1 | 1.3    | 0.85  | 10,000 | 18.70   
|          |        |        |     |       | 584.6 | 591.3 | 6.7    | 0.47  |        | 10.34   
|MT-08-018 | 12+75E | 26+50S | 262 | -65   | 636.9 | 638.1 | 1.2    | 0.90  | 25,000 | 19.80   
|MT-08-020 | 11+55E | 28+70S | 267 | -64   | 455.3 | 463.6 | 8.30   | 0.31  | 1,900  | 6.82    
|MT-08-022 | 11+70E | 28+05S | 267 | -62   | 450.5 | 468.9 | 18.40  | 0.37  | 14,200 | 8.14    
|Including |        |        |     |       | 451.9 | 457.2 | 5.30   | 1.16  |        | 25.52   
|MT-08-028 | 12+15E | 27+40S | 284 | -59   | 409.9 | 451.5 | 41.6   | 0.47  | 56,000 | 10.34   
|Including |        |        |     |       | 431.2 | 438.2 | 7.0    | 2.40  |        | 52.80   
|MT-08-035 | 13+12E | 25+46S | 264 | -55   | 520.6 | 523.4 | 2.8    | 0.63  |        | 12.6    
|MT-08-036 | 11+72E | 28+07S | 277 | -70   | 556.9 | 564.4 | 7.5    | 0.41  |        | 8.2     
|Including |        |        |     |       | 562.4 | 564.4 | 2.0    | 1.25  |        | 25.0    
|MT-08-043 | 12+13E | 27+39S | 272 | -61   | 475.0 | 485.0 | 10.5   | 2.45  |        | 49.0    
|Including |        |        |     |       | 481.5 | 483.5 | 2.0    | 8.97  |        | 179.4   
|MT-08-046 | 12+13E | 27+39S | 280 | -67   | 565.0 | 576.5 | 11.5   | 0.26  |        | 5.2     
|Including |        |        |     |       | 565.0 | 567.6 | 2.6    | 0.81  |        | 16.2    
|MT-07-022 | 13+25E | 31+50S | 273 | -53   | 769.3 | 769.9 | 0.6    | 1.18* | 8,600  | 25.96   
|          |        |        |     |       | 830.8 | 832.2 | 1.4    | 0.31* |        | 6.83    
|MT-07-101 | 12+40E | 30+60S | 275 | -48   | 524.1 | 526.6 | 2.5    | 0.25  | 5,900  | 5.50    
|MT-07-116 | 14+81E | 28+96S | 275 | -49   | 797.6 | 798.9 | 1.3    | 0.72  | 32,000 | 15.84   
|MT-07-120 | 15+64E | 28+03S | 275 | -45   | 840.2 | 840.8 | 0.6    | 0.36  | 5,000  | 7.92    
|MT-07-126 | 13+94E | 30+80S | 275 | -45   | 753.5 | 760.8 | 7.3    | 0.10  | 5,800  | 2.20    
|MT-07-129 | 11+93E | 28+65S | 269 | -47   | 491.6 | 499.9 | 8.3    | 0.24  | 6,400  | 5.28    
|Including |        |        |     |       | 496.2 | 499.9 | 3.7    | 0.51  |        | 11.22   
|MT-07-130 | 11+93E | 28+65S | 280 | -47   | 499.3 | 504.3 | 5.0    | 0.11  | 1,020  | 2.42    
|Including |        |        |     |       | 499.3 | 501.0 | 1.7    | 0.24  |        | 5.28    

* Grades determined by chemical analysis

The true width of the mineralized sections has not yet been
determined.

These equivalent uranium values were generated by the Gamma
probe.

During the third quarter of 2008, five holes (3,096 metres) were
  drilled for the definition of the MT-22zone on the MATOUSH PROPERTY.
  Two holes (MT-08-061and 064) were drilled in the MT-22zone
  to provide geological information within the mineral resource envelope. The
  three other holes (MT-08-077, 079and 080) were drilled
  within the envelope in the northern extension of the MT-22zone between
  the -400 m and -450 m levels. The hole MT-08-077 intersected **0.80%
  e**U3O8**over 7.0m, including 2.07% e**U3O8**over 2.2m.**

---

19

The holes in the northern part were drilled from 500 metres to
  1 km from the MT-22zone, between sections 18+00S and 22+00S, from near
  surface to -425 metres. These holes failed to intersect any new zones. However,
  three of the four holes drilled on section 20+00S intercepted very strong fuschite
  alteration, which represented a favourable environment for the deposition of
  uranium mineralization. The best result was obtained in Hole MT-08-098,
  which returned a grade of **0.06% eU3O8****over
  2.8**metres in the ACF 3.

These results were not part of the  resource estimate of
September 2008 since the cut-off date of this technical Report was July 25, 2008
(See Item 2:sub-section A-1,entitled: TECHNICAL
REPORTS).

All the results of MT-22zone can be viewed on the
longitudinal section on the Companys website, at www.stratecoinc.com.

MT-34 ZONE

During the winter of 2006-2007, the Southern Extensionof the AM-15zone was drilled along the ACFhorizon hosting
the AM-15estimated resources.

Detailed geological interpretation of the AM-15zone
revealed that the zone dipped about 200to the south, and that the
mineralization appeared to continue in the underlying CBFunit. Drilling
to be carried out on the lake ice began at the end of January 2008. The holes
drilled show clearly that the AM-15zone continues at depth toward the
south. The goal was then to explore the underlying ACFlayer, the same
unit that hosted the MT-22zone to the north.

In 2008, the Company explored and outlined the Southern
Extensionof the AM-15zone at depth. This new zone had returned
impressive core lengths with lower U3O88 grades than the
AM-15and MT-22zones. However, it should be noted that
exploration of this area had just begun, and based on the MT-22zone
model, there were likely high-grade zone in the ACFat depths of between
-300 and -650 metres.

Five holes were drilled in the CBFunit, and intersected
values similar to those seen in the same CBFunit above the MT-22zone.

This drilling on the Southern Extensionof AM-15led to the discovery of a new mineralized zone, the MT-34lens, on
the Companys MATOUSH PROPERTY at the end of April 2008.

Drilled in this new area at the end of the first quarter of
2008, holes MT-08-019and MT-08-027(see table above) revealed a
major displacement of the Matoush fault between the two holes. Hole MT-08-034was planned on the basis of this observation.

The understanding of the geology and mineralization obtained
from three years of work led to the discovery of this new, high-grade uranium
zone and could likely result in the discovery of other mineralized zones. In
fact, work by the Company has shown that the high-grade areas of the AM-15and MT-22uranium zones are associated with horizontal displacement
of the Matoush fault.

The new zone, named MT-34, was intersected by Hole
MT-08-034at a vertical depth of 370 metres, south of the AM-15and MT-22zones. The Hole MT-08-034was the most interesting
hole drilled by the Company at that time on the MATOUSH PROPERTY (the location
of Hole MT-08-034can be seen at www.stratecoinc.com).

Hole MT-08-034had intersected mineralization over a 54.4
  -metresection of drill core and graded an average of**0.69%eU3O8,
  including a 28.0 -metre section grading at an average of 1.32% eU3O8
  (29 lbs/tonne) and a 4.80 -metre section with a grade of 6.13% eU3O8
  (135 lbs/tonne). The true width of the mineralized sections had****not yet**been determined. The equivalent uranium values were generated
  by the Gamma probe.

Following Hole MT-08-034, 11 other holes were drilled
  in the MT-34area to test the extensions of this new mineralized zone.
  The results were conclusive, showing a high-grade core within the MT-34zone.
  Hole MT-08-047intersected a **10.0 -metre mineralized zone grading
  an average of 2.24% eU3O8, including****a 3.0 -metre section****grading 3.20% eU3O8
  at a vertical****depth of 454 metres, about 70 metres south
  of hole MT-08-034.**

---

20

The most interesting hole drilled on the MT-34 zonewere: Hole MT-08-047, at a vertical depth of 454 metres about
70 metres south of MT-08-034, which intersected a 10.0 -metremineralized section grading an average of 2.24%**eU3O8, including 3.0metres with a grade of
3.20% eU3O8.**

Two other holes drilled between holes MT-08-034and MT-08-047on a 40-metre gridin preparation for the next resource estimate
  confirmed the potential of this new zone. Hole MT-08-050intersected
  the mineralized zone **over 21.6 metres averaging 0.44% eU3O8,
  including****1.8metres grading 1.88% eU3O8,**while hole MT-08-053intersected an 11.4 -metremineralized
  section **averaging 2.02% eU3O8, including 5.2m
  grading 4.38% eU3O8.**

The most interesting
  results for holes drilled on the MT-34zone are indicated in bold in
  the following table:

Hole
      Collar
      Az.(o)
      Angle(o)
      From(m)
      To(m)
      CoreLength(m)
      %eU3O8
      lb/tonneEast
      NorthMT-08-034
      9+86E
      33+48S
      268
      -67
      383.5
      437.9
      54.4
      0.69
      13.8Including
      
      
      
      
      383.3
      411.3
      28.0
      1.32
      26.4Including
      
      
      
      
      397.8
      402.6
      4.8
      6.13
      122.6MT-08-037
      10+55E
      32+08S
      262
      -61
      380.2
      399.3
      19.1
      0.10
      2.0Including
      
      
      
      
      396.2
      399.3
      3.1
      0.22
      4.4MT-08-041
      11+48E
      34+75S
      277
      -51
      557.8
      564.8
      7.0
      0.13
      2.6MT-08-047
      12+42E
      32+97S
      259
      -46
      616.3
      626.3
      10.0
      2.24
      44.8Including
      
      
      
      
      619.3
      622.3
      3.0
      3.20
      64.0


The true width of the mineralized sections has not yet been
determined.

The equivalent uranium values were generated by the Gamma
probe.

Holes MT-08-062and MT-08-068, drilled to an approximate
  depth of -450 m about 190 m north of the heart of the MT-34zone, returned
  interesting results, with respective intersections of **1.86% eU3O8over 3.1m (including 2.3% eU3O8over 2.3m)**and
  0.05%eU3O8over 1.39m. In
  the depth extension, hole MT-08-058(-530 m) returned a notable intersection
  of **0.03% eU3O8 over 19.3m, including 0.13%
  U3O8****over 1.6m**. Hole MT-08-069(-580 m) returned **0.19% eU3O8 over****1.0m**. (The hole pierce points and results can be seen on longitudinal
  section on the Companys website at www.stratecoinc.com).

Hole MT-08-105intersected **0.06% eU3O8
  over****3.5metres**and Hole MT-08-107intersected
  **0.02% eU3O8 over****7.1 metres**,
  **including 0.10% eU3O8******over 0.9metres.

Finally, six holes were drilled in the MT-34zone extensions,
  particularly the southern extension. The best hole was **MT-08-083, which
  returned 0.16% eU3O8 over 7.7metres, including 0.37%
  eU3O8 over****1.2metres. Drilling ended
  on December 5, 2008.**

With the exception of Hole MT-08-062, these holes were
not part of the resource estimate as of July 25, 2008 (See following Item 2
A.1, sub-section entitled: TECHNICAL REPORTS).

As of April, 2009, the 30,000-metre exploration drilling
program which started in February 2009 had already resulted in the discovery of
two new mineralized zones on the Companys MATOUSH PROJECT.

Hole MT-006, drilled in April 2009, is located on
section 46+00S, 1.0 km south of the MT-34core zone. The new mineralized
zone was intersected by Hole MT-09-006, which returned an 8.9 -metre
intersection grading 0.21% eU3O8, including 1.1 metres at
0.96% eU3O8. This intersection is strongly altered in
fuschite with the presence of pitchblende and uranophanes, and is similar in
size, grade and alteration to intersections near the MT-34and MT-22core zones.

---

21

|Hole      | Collar | Az.    | Angle (o) | From (m)  | To    | Vertical | Length | eU3O8
|--------- | ------ | ------ | --------- | --------- | ----- | -------- | ------ | -----
|East      | North  | (o)    | (m)       | Depth (m) | (m)*  | (%)     
|MT-09-006 | 11+01E | 43+92S | 249       | -64       | 601.0 | 609.9    | 555    | 8.9  
|Including |        |        |           |           | 603.0 | 604.1    |        | 1.1  

*Core length

The true width of the mineralized sections has not yet been
determined.

The equivalent uranium grades are obtained using a spectral
probe.

As of the end of May 2009, the Company resumed exploration
drilling campaign that had been halted temporarily at the end of April 2009 for
the spring break-up. This campaign was part of the 30,000-metre exploration
drilling program which started in February 2009, on the Companys wholly-owned
MATOUSH PROPERTY.

MT-006 ZONE

Drilling continued with one of two drills, in Hole MT-09-011which was interrupted at a depth of 180 metres and is located on the new
  MT-006zone discovered in April 2009. The MT-006zone is located
  on section 46+00S, 1.0 km south of the MT-34core zone. Hole MT-09-006returned an **8.9 -metre intersection grading 0.21% eU3O8including****1.1
  metres at 0.96% eU3O8. This****intersection
  is strongly altered in fuschite with the presence of pitchblende and**uranophanes
  and is similar in size, grade and alteration to intersections near the MT-34and MT-22core zones.

As for the second drill mobilized for geotechnical drilling as
part of preliminary work for the underground drilling program, it went back to
exploration drilling in the first week of June 2009.

Before going back to the MT-006zone, the drill made a
  stop in the sector of the high grade MT-34lens, where hole MT-08-034had intersected **1.32% eU3O8 on****28.0metres**including **6.13% eU3O8 on****4.8metres**. Two strategic drill holes were carried out in order to expand
  already delineated mineral resources.

On the MT-34zone, indicatedmineral resourcesare estimated to total **88,000 tonnes grading 0.97%**U3O8containing **1,890,000 pounds**U3O8****and inferred resourcesthat were estimated to total **527,000
  tonnes grading 0.55%**U3O8****containing
  **6,350,000 pounds**U3O8These results
  came from the NI 43-101 resource estimateupdatedby Scott Wilson
  RPAin September 2008.

As of July 2009, one of the two drills in operation on the
MATOUSH PROPERTY, wholly-owned by the Company, had been assigned to the MT-34zone area. Due to the high grades obtained in Hole MT-34(1.36%
U3O8 over 27.50 m including 6.03%
U3O8 over 4.80 m) relative to the other grades and
thicknesses for the zone, the influence of Hole MT-34in the September
2008 resource estimate done by Scott Wilson RPA was voluntarily limited.
Furthermore, because a 50 m x 70 m drill grid was used in the area of Hole
MT-34in 2008, this resource could not be categorized as an indicated
resource.

The four holes drilled in June and the fifth hole allowed the
total MT-34zone resource to be increased and a portion of the resource
to be upgraded from inferredto indicated.

Scott Wilson RPA was retained to prepare an update of the
resource estimate for the MT-34zone. The memorandum is entitled:
Matoush Mineral Resources Update, dated September 18, 2009 prepared by
David A. Ross, M.Sc. P. Geo of Scott Wilson RPA and is further detailed in
Item 2 A.1, sub-section entitled: TECHNICAL REPORTS

Four holes
  (MT-09-012, 014, 016and 019) were drilled in the
  upper part of the MT-34zone in June 2009. Three of the four holes
  intersected high grades over considerable intervals.

Hole MT-09-019, with a pierce point in the upper part
  of the ACF-4near the contact with the CBF, 35 m north of Hole MT-08-051(0.40% eU3O8 over 5.1 m), intersected 0**.26%
  eU3O8****over 14.1metres**,
  including a section of **0.95% eU3O8 over****2.8m**. Hole MT-09-017was drilled on the same section, but was
  abandoned due to excessive deviation. Hole MT-09-014returned an intersection
  of **0.08% eU3O8ov****er 5.1m**.
  This hole lies at the lower limit of the MT-34zone. Hole MT-09-020was drilled to test the extension of Hole MT-08-034up dip from the
  MT-34zone

---

22

in the direction of the upper part of the ACF-4.Another
hole was planned on the MT-34zone at a vertical depth of -470 m between
holes MT-08-047and MT-08-055, alongside the MT-34zone in
an area where no resources were estimated.

|Hole      | Collar   | Az.(o) | Angle(o) | From(m) | To(m) | Vert. Depth(m) | Length(m)* | eU3O8(%)
|--------- | -------- | ------ | -------- | ------- | ----- | -------------- | ---------- | --------
|Easting   | Northing
|MT-09-012 | 12+18E   | 34+76S | 286.5    | -47.6   | 507.0 | 532.7          | 383.4      | 25.7    
|including |          |        |          |         | 509.9 | 517.3          | 383.4      | 7.4     
|MT-09-014 | 12+54E   | 33+72S | 273      | -48.2   | 554.5 | 559.6          | 405.8      | 5.1     
|MT-09-016 | 12+20E   | 34+76S | 287.5    | -45.9   | 506.0 | 532.9          | 376.8      | 26.9    
|including |          |        |          |         | 507.9 | 520.8          | 376.8      | 12.9    
|including |          |        |          |         | 508.2 | 509.5          | 376.8      | 1.3     
|MT-09-019 | 12+09E   | 34+76S | 287.5    | -45.6   | 486.9 | 501.0          | 345.4      | 14.1    
|including |          |        |          |         | 495.1 | 497.9          | 345.4      | 2.8     

*Core length

The true width of the mineralized sections has not yet been
determined.

The equivalent uranium grades are obtained using a spectral
probe.

All exploration drill holes results of 2009 and longitudinal
sections can be seen on the companys website at www.stratecoinc.com.

The drill results for the first quarter of 2009 were promising,
particularly south of the MT-34zone. Hole MT-09-006, drilled 1 km
away from the heart of the MT-34zone on Section 46 + 00S, intersected a
8.9 -metre zone strongly altered in fuschite with the presence of pitchblende
and uranophanes. This intersection graded **0.27% U3O8over 9.5 metres, including 0.97% U3O8over
1.2metres**.

The four completed holes (MT-09-011, 013, 015and 018)all intercepted the Matoush fault, with anomalous uranium
values.

In the second quarter, another eight holes were drilled in the
MT-006area on a 100-metre grid to test the continuity of the Hole
MT-09-006intersection. The best hole was MT-09-009, drilled to a
vertical depth of -600 metres along the presumed plunge of MT-09-006, 100
metres away. It intersected **0.11%**U3O8**over****2.4metres**at the level of the fault.

Early in June, one of the two drills in operation on the
MATOUSH PROPERTY was assigned to the MT-34zone area. Due to the high
grades obtained in Hole MT-08-034(1.36% U3O8 over
27.5 m including 6.03% U3O8 over 4.8 m) relative to the
other grades and thicknesses for the zone, the influence of Hole MT-08-034in the September 2008 resource estimate done by Scott Wilson RPA was
voluntarily limited.

Furthermore, because a 50 m x 70 m drill grid was used in the
area of MT-08-034in 2008, this resource could not be categorized as an
indicated resource.

Four holes were drilled in the upper part of the MT-34 
zone in June 2009. Three of the four holes intersected high grades over
considerable intervals.

Hole MT-09-012, whose pierce point lies just a few
metres from Hole MT-08-50due to strong deviation, returned an
intersection of 0.69% U3O8 over 25.5 metres, including
1.44% U3O8 over 7.2 metres.

Hole MT-09-016, whose pierce point lies midway between
holes MT-08-050 and MT-08-34, returned an intersection of 0.56%
U3O8 over 25.8 metres, including 0.94%
U3O8 over 12.5 metres, while Hole MT-08-050previously intersected 0.49% U3O8 over 21.3m,
including 1.99% U3O8over 2.0m.

---

23

On or about the end of July 2009, the Company discovered a
uranium high grade intersection in the extension of the MT-34lens.

In fact, hole MT-09-022has intersected 0.99%
eU3O8over 30.6 metres including 5.98%
eU3O8over 4.5 metres.

This drill hole, with a pierce point located on section 34+85S
at a vertical depth of 456 metres in the extension on the MT-34lens, is
one of the best holes drilled to date by the Company on its wholly-owned MATOUSH
PROPERTY.

The pierce point of MT-09-022is located outside of the
resources estimated by Scott Wilson RPA published in September 2008 and as such
its results are interesting.

Another drill hole was planned at the same elevation, 50 metres
south of MT-09-022, to fill in the gap between holes MT-09-022and
MT-08-062located 100 metres apart.

The true width of the mineralized sections has not yet been
determined.

Location of pierce point of Hole MT-09-022can be seen
on the MT-34longitudinal section available on the Companys website at
www.stratecoinc.com.

As of July, 2009, 20,000 metres of the planned 30,000 metres of
exploration drilling in 2009 had been completed.

At the end of September 2009, the Company increased its 2009
surface exploration program from 30,000 metres to 35,000 metres of drilling.

In the third quarter of 2009, drilling continued steadily on
the MATOUSH PROPERTY, with two drills in operation. One drill (1419) was
dedicated to definition drilling on the MT-34zone to improve data
quality in preparation for a new resource estimate. The second drill (1420) was
essentially used for exploration drilling on the southern extension of the
MT-34zone (widely-spaced holes).

The closely-spaced holes drilled on the MT-34zone
returned very good results overall, confirming and increasing confidence in the
geological continuity and high grades, as can be seen by the increase in the
indicated resourceand grades in the new September 2009 update of the
resource estimate.

The 2009 drilling program continued with two drills working on
the property. One of these was assigned to systematic drilling on a 200-metre
grid to locate new mineralized zones in the southern extension of the MT-34zone, in the upper part of the ACF-4stratigraphic unit.

The Company plans to carry out 60,000 metres of surface
drilling per year in 2010 and 2011, in parallel with underground exploration
work. The results of the surface drilling program should allow the maximum
capacity of the Matoush ore processing plant to be established.

In 2011, the Company plans to begin the environmental studies
required for mill and tailings pond construction. These studies are required to
obtain a mine construction permit.

In addition to the definition drilling, the results for the 12
  exploration holes drilled to the south of the AM-15zone in the ACF-3and south of the MT-34zone in the upper ACF-4confirmed the
  new-zone discovery potential. Of the three holes drilled approximately 400 metres
  south of the AM-15zone in the ACF-3(MT-09-30, 031, 032),
  Hole MT-09-030proved the most encouraging, with a mineralized intersection
  of **3.9 metres grading 0.26%**U3O8.
  The nine holes drilled in the ACF-4over a distance of 1,800 metres along
  strike, relatively loosely spaced at about 200 metres, all intersected the Matoush
  fault and an alteration halo typical of the one around the mineralized zones.
  The three last holes (MT-09-035to 038), drilled in virgin ground,
  proved the most interesting, with intersections of **0.17% U3O8
  over****2.0 metres**in Hole MT-09-035and 0**.48%**U3O8**over****4.2
  metres**in Hole MT-09-036.

---

24

The 2009 drilling program continued, with two drills working
  on the property. One of these is assigned to systematic drilling on a 200-metre
  grid to locate new mineralized zones in the southern extension of the MT-34zone, in the upper part of the ACF-4stratigraphic unit. The two
  most recent holes confirmed mineralization to the south. Hole MT-09-035,
  drilled 1.0 km south of the edge of the current mineral resources, intersected
  the mineralized zone over**2.9 metres grading 0.12% eU3O8,****lying
  characteristically at the contact of the Matoush fault. Hole MT-09-036 was**drilled
  200 metres further south from MT-09-035, and intersected a 4.7 -metre
  section of mineralization grading**0.26% eU3O8****(see
  longitudinal sections at www.stratecoinc.com).**

These results confirm the very important potential for
increasing the resource on the MATOUSH and ECLAT PROPERTIES over an 11.1 kmdistance along the Matoush fault, to the south of the mineralized envelope
hosting the resources. As previously reported, two holes drilled 200 metres
apart, last winter in the upper part of the ACF-4(EC-09-05 and EC-09-06)
more than 6 km south of Hole MT-09-036returned very good results (0.12%
eU3O8 over 2.6 metres and 0.11%
eU3O8 over 2.1 metres).

TECHNICAL REPORTS

Mineral Resource and Mineral Reserve Estimates

Cautionary Note to U.S. Investors concerning estimates of
Measured and Indicated Resources.This section uses the terms
measured and indicatedresources. We advise U.S.
investors that while those terms are recognized and required by Canadian
regulations, the U.S. Securities and Exchange Commission does not recognize
them. U.S. investors are cautioned not to assume that any part or all of mineral
deposits in these categories will ever be converted into reserves.

Cautionary Note to U.S. Investors concerning estimates of
Inferred Resources. This section uses the term inferred resources.We
advise U.S. investors that while this term is recognized and required by
Canadian regulations, the U.S. Securities and Exchange Commission does not
recognize it. Inferred resources have a great amount of uncertainty as
to their existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of an Inferred Mineral
Resource will ever be upgraded to a higher category. Under Canadian rules,
estimates of Inferred Mineral Resources may not form the basis of feasibility or
pre-feasibility studies, except in rare cases. U.S. investors are cautioned
not to assume that part or all of an inferred resource exists, or is
economically or legally minable.

1. Mineral Resource Classification, Category and Definition

The Canadian Institute of Mining, Metallurgy and Petroleum
(CIM) guideline for resource classification includes the following definitions
which are pertinent to the classification of the Matoush Property resource:

A Mineral Resourceis a concentration or
occurrence of natural, solid, inorganic or fossilized organic material in or on
the Earths crust in such form and quantity and of such a grade or quality that
it has reasonable prospects for economic extraction. The location, quantity,
grade, geological characteristics and continuity of a mineral resource are
known, estimated or interpreted from specific geological evidence and knowledge.

An Inferred Mineral Resourceis that part of a
mineral resource for which quantity and grade or quality can be estimated on the
basis of geological evidence and limited sampling and reasonably assumed, but
not verified, geological and grade continuity. The estimate is based on limited
information and sampling gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes.

An Indicated Mineral Resourceis that part of a
mineral resource for which quantity, grade or quality, densities, shape and
physical characteristics can be estimated with a level of confidence sufficient
to allow the appropriate application of technical and economic parameters, to
support mine planning and evaluation of the economic viability of the deposit.
The estimate is based on detailed and reliable exploration and testing
information gathered through

---

25

appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes that are spaced closely enough for
geological and grade continuity to be reasonably assumed.

The Technical Report on the Mineral Resources Update for the
Matoush Uranium Project Central Quebec, Canada, NI 43-101resource estimate
completed by Scott Wilson Roscoe Postle Associates Inc. ("Scott Wilson RPA") on
September 16, 2008, assessed the resources for the MATOUSH PROJECT of the
AM-15, MT-22and MT-34zones. On September 18, 2008, the
Company deposited on SEDAR, (www.sedar.com),
this technical report prepared by Mr. R. Barry Cook, P.Eng. and Mr. David A.
Ross, P.Geo.of Scott Wilson RPA, who are qualified persons pursuant to NI
43-101.

Scott Wilson RPA has updated the NI 43-101 Resource estimate
  for the MATOUSH PROJECT using drill hole data available as of July 25, 2008,
  at a cut-off grade of 0.05% U3O8, Indicated mineral
  resourceswere estimated to total **250 thousand tonnes grading 0.68%
  U3O8containing 3.73 million pounds U3O8.
   Inferred mineral resources were estimated to total1.3 million tonnes grading
  0.44% U3O8containing13.07 million pounds**U3O8**.****The
  Mineral**Resourcesare contained within three zones: AM-15,
  MT-22and MT-34.

This resource estimate showed, as of August 2008, with the data
as of July 25, 2008, an increase of 300% from the last technical report pursuant
to NI 43-101 dated September 27, 2007.

Scott Wilson RPA concluded that there is also potential for
unconformity-type uranium deposits on the MATOUSH PROPERTY.

There are no mineral reserves estimated at MATOUSH PROJECT. See
longitudinal section on www.stratecoinc.com.

Table 1 - Mineral Resource Estimate for Matoush, July 25,
2008

|                | Tonnes    | Grade    | Pounds U3O8
|--------------- | --------- | -------- | -----------
|                | (x 1,000) | (% U3O8) | (x 1,000)  
|Indicated       |           |          |            
|AM-15           | 162       | 0.52     | 1,840      
|MT-34           | 88        | 0.97     | 1,890      
|Total Indicated | 250       | 0.68     | 3,730      
|                |           |          |            
|Inferred        |           |          |            
|AM-15           | 16        | 0.14     | 50         
|MT-22           | 801       | 0.38     | 6,680      
|MT-34           | 527       | 0.55     | 6,350      
|Total Inferred  | 1,344     | 0.44     | 13,070     

Notes:

| | 1. | CIM Definitions were followed for Mineral
    Resources.                                                                      
| | -- | ------------------------------------------------------------------------------------------------------------------------------
| | 2. | The cut-off grade of 0.05% U3O8was estimated using a price of US$55/lb and assumed operating
      costs.                     
| | 3. | Wireframes at 0.05% U3O8and a
      minimum true thickness of 1.5 metres were used to constrain the grade
      interpolation.
| | 4. | High U3O8grades were cut to 9%
      prior to compositing to two metre lengths                                                
| | 5. | Several blocks less than 0.05% U3O8were included for continuity or to expand the lenses to the minimum
      thickness.       
| | 6. | Totals may not sum correctly due to
  rounding.                                                                               

The Matoush drill holes included 257 diamond core holes
totalling more than 98,000 m. A set of cross sections and plan views were
interpreted to construct three-dimensional wireframe models at a cut-off grade
of 0.05% U3O8, and a minimum true thickness of 1.5metres.
High U3O8 values were cut to 9% U3O8
prior to compositing to two metres. Variogram parameters were interpreted from
two metres composited U3O8 values. Block model
U3O8 grades within the wireframe models were estimated by
ordinary kriging. More than 98% of the U3O8 values in the
drill hole database used in the grade estimate were derived from chemical
analysis. The remaining values, from 27 of the most recent drill holes, were
derived from gamma-probe data.

---

26

Classification into the Indicatedand Inferredcategories was guided by the drill hole density, interpreted variogram
ranges and the apparent continuity of the mineralized zones.

The Inferredcategory had a general drilling grid of
approximately 50 metres by 50 metres up to 70 metres.

On September 18, 2009, Scott Wilson RPA has updated the NI 43-101-compliant
  resource estimate for the MATOUSH PROJECT based on drill results available as
  of September 1st, 2009 and using similar methods as applied in the
  previous estimate (Scott Wilson RPA, Sept. 2008). At a cut-off grade of 0.10%
  U3O8, the indicated mineral resources are now estimated
  at 436,000 tonnesgrading **0.78% U3O8containing
  7.46 million pounds U3O8**, and the **inferred
  mineral resources are estimated at 1.16 million tonnes grading 0.50% U3O8containing 12.78 million pounds**U3O8**.
  These****resources lie in the AM-15, MT-34 and MT-22 zones,
  and extend over a strike-length of 1.4 km. The Matoush structure has been traced
  11 km to the south and 2.5 km to the north.**

The increase in the indicated resourcesfrom 3.73 million
  poundsgrading **0.67% U3O8******(Scott Wilson RPA, Sept. 2008) **to 7.46 million pounds at 0.78%**U3O8****is significant.
  The indicated resourcesfor the MT-34zone, which lies in the
  upper part of the ACF-4stratigraphic unit, is now estimated at 174,000
  tonnesgrading **0.89%**U3O8****containing **3.42million pounds**U3O8**.****It should be noted that no indicated resources have yet been estimated for the
  MT-22**zone due to the current drill hole spacing, which is about 50
  metres by 50 metres. This zone will be drilled at a tighter spacing during the
  underground exploration program.

Mineral reserves have not been estimated for the MATOUSH
PROJECT.

Table 1 - Mineral Resource Estimate for Matoush - September
1, 2009

|                | Tonnes    | Grade    | Pounds U3O8
|--------------- | --------- | -------- | -----------
|                | (x 1,000) | (% U3O8) | (x 1,000)  
|Indicated       |           |          |            
|AM-15           | 262       | 0.70     | 4,039      
|MT-34           | 174       | 0.89     | 3,420      
|Total Indicated | 436       | 0.78     | 7,458      
|                |           |          |            
|Inferred        |           |          |            
|AM-15           | 33        | 0.34     | 249        
|MT-22           | 822       | 0.53     | 9,526      
|MT-34           | 302       | 0.45     | 3,003      
|Total Inferred  | 1,157     | 0.50     | 12,777     

Notes:

| | 1. | CIM Definition Standards have been followed for
      classification of Mineral Resources.                        
| | -- | ------------------------------------------------------------------------------------------------------------------
| | 2. | The cut-off grade of 0.1% U3O8was
      estimated using a U3O8price of US$75/lb and
      assumed operating costs.
| | 3. | High U3O8grades were cut to
      9%.                                                                             
| | 4. | The Mineral Resource estimate uses drill hole data
      available as of September 1, 2009.                       
| | 5. | Mineral Resources are not Mineral Reserves and do not
      have demonstrated economic viability.                 
| | 6. | Totals may not sum correctly due to
  rounding.                                                                   

The following table shows the new mineral estimate, which
confirms that MATOUSH PROPERTY is a robust deposit, relatively insensitive to
cut-off grades between 0.05% and 0.2% U3O8.

---

27

Table 2 - Mineral Resource Estimate for Matoush  Different
Cut-off Grades

Cut-off Grade
    Tonnes
    Grade
    Pounds U3O8(% U3O8)
    (x 1,000)
    (% U3O8)
    (x 1,000)IndicatedAM-15
    0.3
    190
    0.89
    3,7090.2
    230
    0.77
    3,9250.1
    262
    0.70
    4,0390.05
    264
    0.69
    4,043MT-34
    0.3
    139
    1.05
    3,2380.2
    168
    0.92
    3,3930.1
    174
    0.89
    3,4200.05
    174
    0.89
    3,420Total Indicated
    0.3
    329
    0.96
    6,9470.2
    398
    0.83
    7,3180.1
    436
    0.78
    7,4580.05
    438
    0.77
    7,463InferredAM-15
    0.3
    20
    0.48
    2090.2
    22
    0.46
    2210.1
    33
    0.34
    2490.05
    65
    0.24
    339MT-22
    0.3
    509
    0.72
    8,0820.2
    686
    0.60
    9,0670.1
    822
    0.53
    9,5260.05
    964
    0.47
    9,918MT-34
    0.3
    136
    0.80
    2,3950.2
    167
    0.70
    2,5700.1
    302
    0.45
    3,0030.05
    429
    0.34
    3,211Total Inferred
    0.3
    665
    0.73
    10,6860.2
    875
    0.61
    11,8580.1
    1,157
    0.50
    12,7770.05
    1,458
    0.42
    13,468


Beginning in late January 2010, three drills worked full time
to systematically explore the best targets identified during this first phase.
While only a small part of the first phase has been completed this far, new
targets have already been defined. The main targets are on the ECLAT PROPERTY
(Drill holes EC-09-05, 06 and 08) and the MATOUSH PROPERTY (Drill holes
MT-09-035, 036 and 038).

SCOPING STUDY DATED DECEMBER 17, 2008

Concurrently with the Technical Report dated September 16,
2008, discussed in the preceding subsection, the Company had also mandated Scott
Wilson RPA with the participation of Melis Engineering Ltd. for capital and
processing costs, Golder Associates for radiation, environment and reclamation
costs and SD Energy Associates Ltd. (SD Energy) for marketing and price
determination to prepare a Scoping Study.

The Scoping Study report entitled: Technical Report on the
preliminary assessment of the Matoush Project, Central Québec, Canada, NI
43-101 Report dated December 17, 2008 provided first economics assessment of the
Companys 100% owned MATOUSH PROPERTY.

---

28

The following technical data has been read and revised by
Jean-Pierre Lachance, Geo., Executive Vice President of the Company and Normand
L. Lecuyer, P.Eng, Principal Mining Engineer and David A. Ross, P.Geo., Senior
geologist at Scott Wilson RPA who are the qualified persons as defined under NI
43-101.

The Scoping Study was based on the NI 43-101 compliant,
indicated and inferred resource estimate, established by Scott
Wilson RPA in its Technical Report on the Mineral Resource Update for the
Matoush Uranium Project, dated September 16, 2008, based on drilling results
as of July 25, 2008 that does not include results of the subsequent drilling
program (see the preceding table entitled Mineral Resource Estimate for
Matoush, July 25, 2008 showing results of inferredand indicated
resources in preceding subsection TECHNICAL REPORTS).

Mineral resources that are not mineral reserves do not have
demonstrated economic viability. The Scoping Study is preliminary in nature. It
includes indicated and inferred mineral resources that are considered too
speculative geologically to have the economic consideration applied to them that
would enable them to be characterized as mineral reserves and there are no
certainties that the Scoping Study will be realized.

The following is a summary of the Scoping Study results. The
complete report was made available on the Companys website (www.stratecoinc.com) and on SEDAR (www.sedar.com) as of December 23, 2008 and were cited
cited  in detail  in Form 10K for the year ended December 31, 2008 in Item
2-A:MATOUSH PROPERTY-SCOPING STUDY DATED DECEMBER 17, 2008.

I        ORE PRODUCTION AND
RECOVERED METAL

The mining plan was developed on mineral resources
configuration. Recovered metal is based on metallurgical tests done at SGS
Lakefield Research Ltd. (Lakefield) in Lakefield, Ontario, Canada; an average of
97.6% recovery is used.

Year
    Mill Feed (x 1,000) Tonnes
    Grade % U3O8
    Recovered Metal 97.6% (x 1,000
      pounds) U3O81
    175.0
    0.633
    2,3822
    236.3
    0.454
    2,3063
    262.5
    0.362
    2,0464
    262.5
    0.553
    3,1245
    262.5
    0.439
    2,4796
    262.5
    0.372
    2,1007
    188.4
    0.267
    1,082TOTAL
    1,649.7
    0.437
    15,519


II       REVENUE

|- | The price scenario was
      established by SD Energy with a long term price from US$60.00 to US$90.00
      per pound U3O8over the life of the project with an
      evaluation price of US$75.00 per pound U3O8.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | The exchange rate US$/CAN$ is
      0.85.                                                                                                                                                                         
|- | Transport to smelter in North
      America is $0.10 per pound.                                                                                                                                                   
|- | Royalty 2%.                                                                                                                                                                                                       

(x 1,000) CAN$Gross Revenue
    1,369,515Transport to
      smelter
    1,552Royalty
    27,359NSR Gross
      Revenue after the Royalty
    1,340,604


---

29

III     
OPERATING COSTS

Mining
      $82.80/T
        milled
      Maintenance
      $24.84/T milledProcess
      $107.77/T
        milled
      Site
        services
      $28.96/T milledPower (generators)
      $35.75/T
        milled
      G&A
      $22.41/T milledAverage
        Operating Cost: $302.53/T milledCAN$32.15/pound
      US$27.33/pound


IV       OPERATING PROFIT

Year
      (x 1,000) CAN$
      Year
      (x 1,000) CAN$1
      133,894
      5
      142,0512
      128,177
      6
      109,9923
      105,145
      7
      23,8094
      198,453Total
        Operating Profit: CAN$841,522,000


V        CAPITAL COSTS

(x
      1,000) CAN$
    (x
      1,000) CAN$Direct Capital Costs
    
    193,443Mine
    28,159Process
    149,886Infrastructure
    15,398Indirect Capital Costs
    
    49,928Contingency
    
    53,305Capital Spare
    
    575Before Start Up
    
    297,251Sustaining Capital (6 years)
    
    15,564Closure
    
    30,000Mine Life Capital Costs
    
    342,815


VI       FINANCIAL

Internal Rate of Return before Tax: 37.1%

NET
      PRESENT VALUE (NPV) before TaxDiscount Rate
      %
    (x 1,000) CAN$5
    341,6108
    271,20010
    231,85015
    154,110


The Companys management concluded upon reading this Scoping
Study that even with significant inflation in operating costs in the mining
industry, the MATOUSH PROJECT indicates strong economics. Even with the dramatic
correction in the commodity prices in 2008, it was possible to see the Companys
economics improve despite the input prices decrease. The Company continues to
evaluate different engineering alternatives to enhance the project economics.
Results of this Scoping Study justify, according to the Companys management,
the underground exploration program as part of the feasibility study.

REVISION OF PRELIMINARY ASSESSMENT, FEBRUARY 2010

As of February 2010, based on the Scott Wilson RPA memorandum
entitled Update Mineral Resources Estimate for Matoush in September 2009
discussed above, a revision of the Preliminary Assessment was conducted by Scott
Wilson RPA with the participation of Melis Engineering Ltd. for capital and
processing costs. The updated report will be available on the Companys website
(www.stratecoinc.com) and on SEDAR (www.sedar.com) on or about April 9, 2010.

---

30

The Preliminary Assessment is based, in part, on inferred
resources, and is preliminary in nature. Inferred resourcesare
considered too geologically speculative to have mining and economic
considerations applied to them and to be categorized as mineral reserves.
There is no certainty that the reserves development, production and economic
forecasts on which this preliminary assessment is based will be realized.

I        PRODUCTION AND
RECOVERED METAL

The mining plan was based on mineral resourceswith factors
  applied for dilution and extraction. Recovered metal is based on metallurgical
  tests done at SGS Lakefield Research Ltd. in Lakefield, ON; an average of 97.6%
  recovery is used. Potential grade implied mining dilution at 15% at zero value.
  Mill design was modified to increase annual mill capacity from 2.0 M to 2.7M
  pounds U3O8.

|Year  | Mill Feed(x 1,000) Tonnes | Grade% U3O8 | Recovered Metal 97.6%(x 1,000
      pounds) U3O8
|----- | ------------------------- | ----------- | ------------------------------------------------
|1     | 169.8                     | 0.639       | 2,391.3                                         
|2     | 240.6                     | 0.400       | 2,124.2                                         
|3     | 262.7                     | 0.461       | 2,668.9                                         
|4     | 262.2                     | 0.522       | 3,018.9                                         
|5     | 249.5                     | 0.561       | 3,085.0                                         
|6     | 224.1                     | 0.496       | 2,451.2                                         
|7     | 239.6                     | 0.468       | 2,472.3                                         
|TOTAL | 1,648.6                   | 0.501       | 17,774.8                                        

II       REVENUE

|- | The price scenario was established by SD Energy in
      September 2008, in the initial scoping study, with a long term price from
      US$60.00 to US$90.00 per pound U3O8over the life of
      the project with an evaluation price of US$75.00 per pound U3O8.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | The exchange rate US$/CAN$
      is 0.85.                                                                                                                                                                                                                          
|- | Transport to smelter in North
      America is $0.10 per pound.                                                                                                                                                                                                    
|- | Royalty 2%.                                                                                                                                                                                                                                                        

(x 1,000) CAN$Gross Revenue
    1,568,363Transport to
      smelter
    1,777Royalty
    31,332NSR Gross
      Revenue after the Royalty
    1,535,253


III      OPERATING COSTS (CAN$)

Mining
      $91.64/T milled
      Maintenance
      $24.86/T milledProcess
      $92.74/T milled
      Site
        services
      $32.68/T milledPower (generators)
      $35.77/T milled
      G&A
      $22.43/T milledAverage
        Operating Cost: $300.12/T milledCAN$27.84/pound
      US$23.66/pound


IV       OPERATING PROFIT

Year
      CAN$
      Year
      CAN$1
      131,819,000
      5
      189,170,0002
      107,096,000
      6
      136,345,0003
      153,437,000
      7
      139,824,0004
      182,793,000Total
        Operating Profit: CAN$1,040,484,000


---

31

V        CAPITAL COSTS

|                             |  | **(x 1,000) CAN$** |  |  | (x 1,000) CAN$ | 
|---------------------------- |  | ------------------ |  |  | -------------- | 
|Direct Capital Costs         |  |                    |  |  | 191,009        | 
|Mine                         |  | 32,466             |  |  |                | 
|Process                      |  | 143,146            |  |  |                | 
|Infrastructure               |  | 15,398             |  |  |                | 
|                             |  |                    |  |  |                | 
|Indirect Capital Costs       |  |                    |  |  | 48,568         | 
|                             |  |                    |  |  |                | 
|Contingency                  |  |                    |  |  | 52,273         | 
|                             |  |                    |  |  |                | 
|Capital Spare                |  |                    |  |  | 980            | 
|Before Start Up              |  |                    |  |  | 292,830        | 
|                             |  |                    |  |  |                | 
|Sustaining Capital (6 years) |  |                    |  |  | 19,126         | 
|                             |  |                    |  |  |                | 
|Closure                      |  |                    |  |  | 30,000         | 
|Mine Life Capital Costs      |  |                    |  |  | 341,955        | 

**VI**       **FINANCIAL**
      
      
      
      
      **VII**     **SENSITIVITY TO
PRICE**Internal Rate of Return before Tax: 41.5%**NET PRESENT VALUE (NPV) before
        Tax**
      
      
      
      
      
      PRICE
      
      
      US$/lb
      
      
      NPV**Discount Rate %**
      
      (x 1,000) CAN$
      
      
      
      
      
      
      
      
      75.00
      
      $
      323,5305
      
      475,550
      
      
      
      
      
      0.67
      
      
      50.00
      
      $
      31,7008
      
      377,640
      
      
      
      
      
      0.80
      
      
      60.00
      
      $
      148,26010
      
      323,530
      
      
      
      
      
      1.00
      
      
      75.00
      
      $
      323,53015
      
      218,070
      
      
      
      
      
      1.07
      
      
      80.00
      
      $
      381,8901.14
      
      
      85.50
      
      $
      446,220


According to management of the Company, regardless of the
significant inflation in operating costs in the industry, the MATOUSH PROJECT
indicates stronger economics, compared to the initial scoping study. Despite a
possible price decrease, it is still possible to see the economics improve. The
Company continues to evaluate different engineering alternatives to enhance the
projects economics, such as the use of windmills to produce electricity. The
Company plans to expand mineral resources on the MATOUSH PROPERTY with an
aggressive drilling program of 120,000 meters over the next 24 months.

---

32

Item 2.A. 2:ECLAT PROPERTY

Location and Access

The ECLAT PROPERTY is located in the Otish Mountains of
northern Québec, immediately south of the MATOUSH PROPERTY. The property is
accessible by helicopter as well as by the winter road that links the Eastmain
mine to Témiscamie. Please see Figure 1 at page 7 for the general
location of ECLAT PROPERTY mining claims.

Mining Claims

The property consists of 90 mining claims covering 4,786.90
hectares. Strateco holds a 100% interest in this property. Please see the
General location map of the MATOUSH PROJECT Figure 2 at page 9 for the
location of the mining claims of ECLAT PROPERTY.

A letter of intent dated July 12, 2005, granted the Company an
option to acquire a 100% interest on all minerals except diamonds of the ECLAT
PROPERTY over a period of 4 years.

The agreement provides for the Company to earn its 100%
interest by making payments totalling $150,000 over four years, including (i)
$7,000 on signature of the agreement and (ii) $7,000 on the first anniversary,
$20,000 on the second and third and $96,000 on the fourth anniversary, (iii) by
carrying out $500,000 in exploration over four years and (iv) by issuing 600,000
common shares of the Company over three years.

The Company paid the last payment in the amount of $96,000 on
June 15, 2009 or on or before the fourth anniversary of the Agreement. The
property is subject upon production to a 2% NSR in favour of Vija on all
minerals other than diamonds and a 2% portion in favour of Vija of all gross
proceeds from the eventual sale or disposition of carbon emission rights tied to
the production of uranium on the property.

Uranium Potential

The property is strategically located in a relatively
unexplored area with known uranium potential. It is bordered to the north by the
MATOUSH PROPERTY, wholly-owned by the Company, and to the south by ground staked
by Cameco Corporation (Cameco).

The property lies in the southern extension of the Matoush
structure, which was traced by Uranerz over 3,900 metres using ground VLF
surveys conducted in the early 1980s. The holes drilled by Uranerz and the
Company clearly showed uranium potential.

The Matoush structure also appears to continue for at least two
kilometres on the ECLAT PROPERTY.

Exploration Work

Hole EC-06-01, drilled 5.8 kilometres south of Uranerz
Hole AM-15, primarily to maintain certain mining claims in the area,
confirmed the southern extension of the Matoush fault.

The results were compelling. The structure was intersected at
111 metres down the hole, at a vertical depth of 76 metres. While
un-mineralized, the typical tourmaline alteration of the structure was
intersected over a 10-metre section, with the fault appearing to be strongly
choritized. This hole therefore confirms the presence of the Matoush structure
over a distance of more than seven kilometres.

The radiometry and magnetometry survey carried out by Aeroquest
Limited in the fall of 2006 on the Matoush property also covered the entire
ECLAT PROPERTY.

---

33

On the southern portion of the MATOUSH PROJECT, on ECLAT
PROPERTY, 10 holes were completed (EC-07-01to 07-10) for a total
of 2,260 metres. These exploration holes drilled with the assistance of the
helicopter allowed the Matoush fault to be accurately located on the ECLAT
PROPERTY, with radiometry on the core showing a low cps.

More drilling was done in this area during winter 2008 at the
  border with the Cameco Corporation property, 11.5 km south of the AM-15zone.
  The first hole (EC-08-01) had to be abandoned at 759 metres because of
  large influxes of water and sand. However no influxes of water or sand had been
  encountered in AM-15 and MT-22 zones. It should be noted that the stratigraphy
  seen in the sediments was the same as that seen in the AM-15area 8.5
  km to the north. A clay brecchia appearing to correspond to the Matoush fault
  was intersected at a depth of 575 metres down-hole, followed by disseminated
  mineralization grading **0.15% eU3O8****over 2.1metres at 587 metres.**

The next hole, EC-08-02, was drilled on the same line at
a depth of 321 metres, with the pierce point 425 metres above the pierce point
of EC-08-01, and would appear to indicate that locally, the Matoush fault has an
inverse dip, being to the west. However, it should be noted that no anomalies
were found in this hole. Finally, Hole EC-08-03was drilled a few hundred
metres north of the border with Camecos property, and targeted the basement
rock. The basement was reached without any anomalous traces found in the
sediments. The basement rock intersected was mafic in nature, and very likely
represents the folded extension of the Camie River greenstone belt.

As of April 2009, the Company discovered on the ECLAT  PROPERTY, part of the MATOUSH PROJECT a second mineralized zone. Drilled 9.5 km  south of the MT-34 zone, Hole EC-09-05 intersected two mineralized  zones 20 metres apart in the Matoush fault, one intersected 1.5 metres at a grade of 0.08% eU3O8 and the other 2.6 metres at a  grade of 0.12% eU3O8. Furthermore, Hole EC-09-06 drilled 200 metres north  of EC-09-05 and at the same  elevation, intersected 2.1 metres at a  grade of 0.11% eU3O8.

|Hole     | Collar | Az.(o)  | Angle (o) | From (m) | To    | Vertical | Length | eU3O8
|-------- | ------ | ------- | --------- | -------- | ----- | -------- | ------ | -----
|East     | North  | (m)     | Depth (m) | (m)*     | (%)  
|EC-09-05 | 08+03E | 112+79S | 98        | -53      | 443.9 | 445.4    | 363    | 1.5  
|         |        |         |           |          | 465.0 | 467.6    |        | 2.6  
|EC-09-06 | 13+57E | 110+55S | 268       | -52      | 426.0 | 428.1    | 368    | 2.1  

*Core length

The true width of the mineralized sections has not yet been
determined.

The equivalent uranium grades are obtained using a spectral
probe.

Aside from Hole EC-09-04, which had to be abandoned due to
excessive deviation, four holes were drilled  on the Eclat property in the
first quarter. Hole EC-09-05 proved very revealing, both because it intersected
two mineralized zones with particularly strong tourmaline and fuschite
alteration, and because of the analytical results for the two zones, which lie
20 metres apart. The zones returned values of 0.16% U3O8over 2.4 metres and 0.11% U3O8over 1.5
metres. Hole EC-09-06 intersected a zone of 0.15% U3O8over 1.5 metres.

The results for holes MT-09-06 and EC-09-05, drilled 200 metres
apart with pierce points at the same elevation, clearly indicate the mineral
potential of the Matoush fault, which has been traced by drilling over a
distance of more than 15 km. This confirms that the deposition mechanisms for
the uranium mineralization are not limited to the area of the AM-15 zone.

The similarities between the two mineralized zones in terms of
degree of alteration, local presence of pitchblende mineralization in shear
zones and proximity to mafic intrusives in the Matoush fault, and the marked
similarities of the texture and nature of these mafic intrusives to those found
around the mineralized zones, are impressive.

The almost carbon-copy nature of these hydrothermic systems and
the reducing agents supports the presence of mineral potential along the entire
length of the Matoush fault, and confirms the potential for discovery of new
mineralized zones at the Matoush project.

---

34

Three holes were  drilled on the Eclat Nord property in the third quarter, but with mitigated  results. Holes ECN‐09-01, 02, 03,  drilled on a 150-metre grid about 1.5 km north of the AM-15 zone, intersected the Matoush fault but no mineralization  despite the presence of strong alteration.

In the fourth quarter, two  holes, EC-09-07 and EC-09-08, were drilled on the Eclat Sud  property. Measuring 600 metres and 570 metres long respectively for a total of  1,170 metres, the two holes intercepted the Matoush fault, as well as  interesting uranium values. Hole EC-09-07,  drilled on section 64+50 S, intersected 7.5 metres grading a weighted  average of 0.05% U3O8. Hole EC-09-08, drilled on section 66 + 50 S, intersected two zones,  the first 2.5 metres thick grading an average of 0.09% U3O8,  and the second 15.5 metres thick grading an average of 0.04% U3O8.  The pierce points for the two holes were located about 460 metres below  surface.

Item 2.A3: MATOUSH EXTENSION PROPERTY

Location and access

The MATOUSH EXTENSION PROPERTY is located north, west and east
of the MATOUSH PROPERTY in the Otish Mountains, in Northern Québec. The property
is accessible by helicopter as well as by the winter road that links the
Eastmain mine to Témiscamie. Please see Figure 1at page 7 for the
regional location of the property.

Mining Claims

Wholly-owned by the Company, the MATOUSH EXTENSION PROPERTY
consists of 198 claims covering 10,503.85 hectares. These mining claims were
acquired by the Company in the fall of 2005 and the winter and summer of 2006 to
protect the area in the vicinity of the MATOUSH and ECLAT properties. Please see
the map of the MATOUSH PROJECT in Figure 2at page9 for the location of
the MATOUSH EXTENSION PROPERTY mining claims.

The northern border of the property is very close to the
northern edge of the Otish Basin. The property is broken up by a row of mining
claims belonging to Pacific Bay Minerals Ltd.

With the addition of the MATOUSH EXTENSION PROPERTY, the
MATOUSH PROJECT as a whole covers 23 kilometres along its north-south axis,
intersected by a 900-metre section belonging to Pacific Bay Minerals Ltd (See
section Item 2. A.4 PACIFIC BAY-MATOUSH PROPERTYbelow).

Exploration Work and prospecting

During the year 2008, no significant exploration work was
conducted on the MATOUSH EXTENSION PROPERTY except for the radiometry and
magnetometry survey, which covered most of the property. On the northern portion
of the MATOUSH PROJECT, on MATOUSH EXTENSION PROPERTY, exploration work in 2007
consisted in prospection and limited drilling. Prospecting was successful with
the identification of an outcropping radioactive zone with 600 to 10,000 cps.
Four drill holes were completed in the area for a total of 1,290 metres. Mixed
results were obtained, the Matoush fault being laterally displaced.

Three holes were drilled on the same section on the MATOUSH
EXTENSION PROPERTY in 2008 for a total of 1,473 metres. The section lies a few
hundred metres north of the east-west string of Pacific Bay claims, on what
should be the extension of the Matoush fault. However, none of the holes
intersected the fault.

The first hole, MT-08-002, was extended to the basement
without hitting the Matoush fault. Discordance was seen at a depth of 685 metres
down hole. The basement rock consists of alternating granitic material and large
laminae of mafic units. Many marginal uranium anomalies were intersected in the
basement, the most important being 0.02%U3O8over
4.0metres. The subsequent holes, MT-08-006and
MN-08-01, were drilled on the same section and failed to detect the
extension of the Matoush fault. No radiometry anomalies were detected.

Exploration work in 2009 on the Matoush Extension property was
limited to prospecting in the summer.

---

35

Item 2A.4: PACIFIC BAY  MATOUSH PROPERTY

Location and access

The PACIFIC-BAY MATOUSH PROPERTY is located in the Otish
Mountains in northern Quebec, about 40 km south-west of the MATOUSH PROPERTY.
The Property comprises an area of 145 square kilometres (56 square miles) in the
Otish Mountains where the Company has been drilling the Matoush high-grade
uranium ore body. See Figure 2 for location of this property on the map of
the MATOUSH PROJECT.

Mining claims

On January 14, 2008, the Company and Consolidated Pacific Bay
Minerals Ltd. (now called Pacific Bay Minerals Ltd.) (Pacific Bay) executed a
definitive agreement with an effective date of October 29, 2007 whereby the
Company can earn a 60% interest in 277 Pacific Bay mineral claims representing
14,576.33 hectares located in the Matoush District of Québec's Otish
Mountains.

The agreement calls for the Company: (i) to pay to Pacific Bay
a total of $500,000; (ii) to issue 200,000 common shares of the Company over 4
years and (iii) to incur $3 million in exploration expenditures over 4 years,
including a minimum of 10,000 metres of drilling. As part of the transaction,
the Company has acquired one (1) million units of Pacific Bay at a price of
$0.30 per unit. Each unit consists of one common share of Pacific Bay and one
warrant to purchase one common share of Pacific Bay at $0.60 per share for a
period of 24 months. The shares and warrants were subject to a 12-month resale
restriction period that expired on January 14, 2009.

On October 22, 2009, the Company notified Pacific Bay Minerals
Ltd. (Pacific Bay) that it had incurred cumulative exploration expenses of
$1.5 million before the date of the second anniversary of the option and joint
venture agreement dated October 29, 2007, and completed more than the required
cumulative minimum of 5,000 metres of drilling on the Pacific-Bay Matoush
property.

Pursuant to the terms of the agreement, the Company also issued
40,000 common shares at $0.86 per share to Pacific Bay on that date, as well as
a cash payment of $100,000.

To acquire an undivided 60% interest in the Pacific Bay-Matoush
property, the Company must still issue a total of 120,000 common shares, make
cash payments totalling $300,000, incur an additional $1.5 million in
exploration expenses and complete an additional 5,000 metres of drilling before
the fourth anniversary of the date of the agreement.

Exploration work

Since October 29, 2007, the Company assumed direction of
exploration activities on the PACIFIC BAY -MATOUSH PROPERTY. The Company is
working closely with Pacific Bay field personnel to maximize the value of the
exploration programs.

Four holes were drilled with the help of a Versadrill
helicopter-borne drill (Major Drilling) between October 31 and November 25, 2007
for a total of 1,061 metres. These holes are all located in the southern block
of the Rabbit Ears claims about 10 km north-east of the MATOUSH PROPERTY camp.
These holes were drilled in an area of the property with favourable geophysical
anomalies such as magnetic lineaments and airborne radiometric anomalies, as
well as VLF/EM conductors. Uranium-bearing boulders have also been discovered in
the area during prospecting in the summer of 2007.

Drilling on the Rabbit Ears south block intersected the two same
  types of sedimentary facies seen in the Matoush sector. These correspond to
  the active channel facies (ACF) an arkosic to subarkosic conglomeritic coarse
  sandstone, and the channel-bar facies (CBF), a finely laminated subarkosic fine-to-medium
  sandstone, of the Indicator Formation. The vertical hole, PB-07-01, confirmed
  a sub-horizontal bedding in this area of the basin. The best hole was PB-07-05which intersected a 10 cm altered sandstone averaging **0.03% eU3O8.**

---

36

Early August 2008, the Company started diamond drilling of
uranium targets on the PACIFIC BAY - MATOUSH PROPERTY. The 1,500-metre program
followed intensive ground prospecting and geological work, focused on the South
Rabbit Ears claims, where outcrops, in situ radiometric anomalies, and
radioactive boulder trains strongly suggest the potential of Matoush-type
uranium mineralization.

Seven holes totalling 1,510 metres were drilled on the PACIFIC
BAY-MATOUSH PROPERTY. The holes were drilled between August 8 and September 7,
2008 using a helicopter-transportable drill (Versa drill). The holes were
drilled in the Rabbit Ears South sector, about 5 km east of the AM-15
zone. The targets were established for the purpose of identifying a Matoush-type
uranium mineralized zone, based on the results of prospecting done in 2007 and
2008, geophysical surveys and the geomorphology study done by Poly-Géo Inc. in
2008.

Two sectors were tested (see Companys website at www.stratecoinc.com for details). Five holes were
drilled on Sector 1 to trace a potentially-mineralized north-south fault similar
to Matoush. The holes covered an east-west lateral distance of 630 m to a
vertical depth of about 300 m. Sector 2, where two holes were drilled for a
total of 596 metres, lies about 700 metres directly south of Sector 1. The goal
was to test for the presence of a geophysical lineament interpreted as having a
similar slip to that of the Matoush fault.

No significant mineralization was intersected during this
drilling program. However, ACF and CBF layers with the same
alternation as those at MATOUSH PROPERTY were encountered. From a structural
perspective, no major faults comparable to the Matoush fault were intersected by
drilling. Nevertheless, several highly-fractured to sub-brecciated zones were
seen in five holes, and potential remains for the discovery of a uranium-bearing
structure. The fractured zones seen in the holes do not appear to be large
enough to explain the geophysical lineaments in the sectors drilled..

In the first quarter of 2009, five holes were drilled to test
for a major structure like the Matoush fault in the Rabbit Ears South area on
the PACIFIC BAY-MATOUSH PROPERTY. Hole PB-09-02 proved to be of particular
interest, intersecting a major clay-rich breccia structure several metres thick.
Despite the absence of mineralization and of the mafic dikes characteristic of
the Matoush fault, the presence of this strongly brecciated structure indicates
potential for the discovery of a structure similar to the Matoush fault. This
area lies 10 km east of the Matoush fault.

Following the completion of drilling on the Mistassini property
in late June 2009, the Company took advantage of the availability of the
helicopter-borne drill to drill a 200-metre hole on a section of the PACIFIC
BAY-MATOUSH PROPERTY, which consists of four mining claims in the possible
extension of the Matoush fault, 3 km south of the Eclat property. The presence
of the Matoush fault was confirmed by drilling in April 2008 less than 200
metres from the southern border of the Eclat property with a property belonging
to Cameco Corporation (Cameco).

In the third quarter of 2009, seven holes were drilled on the
PACIFIC BAY-MATOUSH PROPERTY, but the results were inconclusive. Four holes were
drilled to trace the Matoush fault, which becomes diffuse north of the Eclat
Nord property. No remarkable structures were identified. Three holes were
drilled to test a linear geophysical anomaly on the Rabbit Ears area, about 3
km east of the AM-15 zone, but failed to locate any structures of note. Work
ended on the property in September.

Report and recommendation preparation began in the fourth
quarter of 2009, to determine future work to be done on the PACIFIC BAY-MATOUSH
PROPERTY.

Item 2A.5: PERMITS AND LICENCE

In May 2007, the company retained Golder Associates to begin
various environmental baseline studies that were completed in the summer of
2008. Since November 2007, Melis Engineering is conducting at the Lakefield
laboratory in Ontario, Canada, metallurgical testing on the AM-15 zone
ore. Initial results indicated that 98% recovery can be achieved and that the
ore does not generate acid or contain arsenic. Scott Wilson Roscoe Postle
Associates Inc. (Scott Wilson RPA) has been retained for underground design
work. A call for tenders has been completed and a mining contractor has been
retained for the work once the authorizations have been obtained. About 100
people are currently assigned to the project on a permanent basis. The Company
invested about $25 million in the MATOUSH PROJECT in the year 2006-2007, the
budget for 2008 was of $22 million and of $15M for the year 2009.

---

37

In April 2008, the Company received permission to begin the
process of obtaining the authorizations required to proceed with underground
exploration at its MATOUSH uranium PROJECT. The Company notified theCanadian Nuclear Safety Commission ("CNSC") and Quebec Ministry of
Sustainable Development, Environment Parks (MSDEP) Ministère du
Développement durable, de lEnvironnement et des Parcs by written "letter of
intent" of its intention to begin the process of obtaining the permits required
for planned underground exploration work. In the context of a feasibility study,
this work will essentially consist of site preparation, excavation of an access
ramp to the -300-metre level, and the excavation of exploration drifts for
definition drilling.

Excavation will take place in waste rock and ore. The
exploration work will also allow assessment of the quantity and processing of
mine water, ventilation, mining methods and ore stockpiling.

The following tables demonstrate as of December 31, 2009, the
authorizations, licenses and permits either already obtained, pending or to be
obtained before the Company can start the underground exploration works:



---

38



By obtaining such authorizations, the Company will become the
first company in the Province of Quebec, Canada to advance a uranium exploration
project to the underground exploration stage, and the first so-called junior
company to do so in the present uranium price cycle, or in nearly 25 years.

With regard to the environmental impact study, the Company
received guidelines from the Evaluating Committee (COMEV), the Canadian
Environmental Assessment Agency and from the CNSC in March 2009 pursuant to the
filing of the Project Description in July 2008.

Following filing on November 5th, 2008, of the
Licence Application to the Canadian Nuclear Safety Commission (CNSC) for the
underground exploration program and following the comments received from the
CNSC in February 2009, the Company continued its detailed engineering plans and
field work related to the environmental impact study.

In addition to the mandates awarded to Scott Wilson Roscoe
Postle Associates Inc. for the underground pumping and ventilation studies and
to Melis Engineering Ltd. for finalization of the mine runoff treatment plan,
contracts were granted to Golder for various studies and health and safety
programs.

---

39

Golder carried out fieldwork in a number of disciplines in the
winter of 2009. Most of these activities were related to work plans approved in
2008. Field activities for animal counts were completed in January and February.

The winter surface water and sediment sampling program,
hydrology and geochemistry work were completed in March 2009.

The ramp stability rock mechanics study was started in the
first quarter of 2009. The study is aimed at meeting Québec regulatory
requirements for excavations within 100 metres of a body of water, and
responding to CNSC requirements.

In February 2009, GENIVAR carried out supervision work for the
construction of the new fuel storage area, as well as design work for a cement
base for a new communications antenna.

In March 2009, GENIVAR was awarded a contract for the detailed
engineering of the facilities required for exploration ramp construction. This
contract essentially consists of the detailed engineering for the treatment
plant for water from the exploration ramp, portal, power grid, power supply,
ventilation system, fuel and propane distribution system, camp expansion and
approval applications, all new surface facilities, civil works and a landing
strip.

As in the first quarter of 2009, the Company continued work on
the various studies in preparation for the underground exploration program,
which will begin once the Company has obtained all the required permits.

Two other consultants, SENES Consultants Limited (SENES) and
the Montreal office of GENIVAR, joined the list of the Companys many
consultants conducting the various detailed studies required to obtain the
various provincial and federal permits in Canada.

Following up on the comments received from the Canadian Nuclear
Safety Commission (CNSC) on February 16, 2009, in relation to the underground
exploration licence application, the Company began field works with the
assistance of Golder Associates Ltd. (Golder) for a geo-mechanical study on
the crown pillar. The Company will use the same study to comply with Quebec
provincial government requirements regarding an underground excavation under the
influence of a water body, meaning when an excavation is less than 100 m from a
water body. Field works consisted of the drilling of three holes and various
tests performed in the holes and on the drill core in an area totalling 526
metres.

GENIVAR of Val-dOr and Amos continued to work on the detailed
engineering of the surface facilities required for underground exploration.

Environmental work by Golder continues, with the drafting of
the terms of reference (baseline) for most of the study components, including
hydrogeology, surface and sediment water quality, fish and fish habitats and
wildlife. The writing of the geochemistry report, updating of the hydrogeology
report and drafting of the restoration plan were also among the activities that
took place during the quarter.

Phase 2 of the drafting of detailed procedures and manuals for
the radioprotection program is progressing as planned.

With the drafting of the base studies nearing completion,
Golder was able to begin studying the potential impact of the exploration
project on the physical and biological components on which they are working.

The Company awarded a new contract to Golder for the
preparation of an environmental emergency measures plan from April to June
2009.

SENES, an Ontario firm with extensive experience in the uranium
industry received the mandates to conduct Risk studies (ecological risk, risk on
human health and industrial risk) and the air and climate and radiometry
studies.

The field works carried out by Golder between April and June
2009 consisted of a spring sampling program of surface and sediment water and
geochemistry (work plan approved in 2008).

---

40

SENES provided training to Company personnel and set up air
sampling stations on site. They also carried out a surface radiometry survey for
the baseline radioactivity study.

Various health and safety programs were prepared, including
radioprotection, emergency measures, occupational safety and industrial hygiene,
which are only a few of the many programs required as demonstrated in the
following table. The Company completed all these programs by the end of
September 2009.





---

41

LICENCE

In April 2008, the Company received authorization to begin the
process of obtaining the approvals required for an underground exploration
program at its Matoush uranium project.

The Company advised the Canadian Nuclear Safety Commission
(CNSC) and the Quebec Ministry of Sustainable Development, Environment Parks
(MSDEP) by letter of intent of its intention to begin the process of obtaining
the permits required to begin underground exploration work. As described supra
in this section A5. PERMITS AND LICENCE,, in the context of a feasibility study,
this work would essentially consist of site preparation, excavation of an access
ramp to the -300 metre level, and the excavation of exploration drifts to carry
out definition drilling. Excavation would take place in waste rock and ore. The
exploration work would also allow assessment of the quantity and processing of
mine drainage, ventilation, mining methods and ore storage.

Once it receives the required authorizations, the Company will
become the first company in Quebec and the first so-called junior company in
Canada in this uranium cycle, or nearly 25 years, to advance a uranium
exploration project to the underground exploration stage.

On July 15, 2008, as part of the underground exploration via
ramp program, the Company presented its Preliminary Project Description to the
CNSC, the Canadian Environmental Assessment Agency and the MSDEP for comments.
The Preliminary Project Description for the underground exploration program
included: the project components, metallurgy, mine drainage, the health and safety program, and
15 separate appendices on environmental assessment, the water treatment plant,
metallurgical testing, the project timetable, etc.

---

42

Comments were received on August 21, 2008, from those in charge
of the file at the Canadian Environmental Assessment Agency, and the Company
provided the required information in mid-September 2008.

The Company was then told that instructions and comments would
be issued by the Evaluating Committee (COMEV), which is responsible for large
projects in the James Bay area of Quebec.

On November 5, 2008, the Company filed an application for an
underground exploration permit for its MATOUSH uranium PROPERTY with the CNSC.
This application is part of the project authorization process, which began on
July 15, 2008 with the filing of the Preliminary Project Description to the
CNSC, the Canadian Environmental Assessment Agency and the MSDEP. This document
describing the underground exploration program can be found on the Companys
website (www.stratecoinc.com) and on SEDAR (www.sedar.com).

The upgrading of the Eastmain winter road to an all-season road
became essential. Consequently, permit applications were filed in the fall of
2008 for construction of a permanent one-lane gravel road for year-round supply
of equipment and fuel to the MATOUSH PROJECT. This link will also substantially
reduce the costs associated with the underground exploration program.

In February 2009, the Company received comments from the
Canadian Nuclear Safety Commission (CNSC) regarding the licence application
filed on November 4th, 2008, for the underground exploration
work.

The Operations and Engineering department was very productive
in 2009. Multiple reports required for the underground exploration program were
completed and submitted to the regulatory authorities.

An important step was made toward obtaining the licence and
various permits in the first quarter of 2009. Comments were received from the
CNSC on February 16, 2009, in relation to the licence application filed on
November 5, 2008. The Company also received the COMEV directive on March 19,
2009, for the environmental impact study.

Following receipt of the COMEV directive and CNSC comments,
many activities were carried out by various consultants for the permits required
for the underground exploration program. In addition to the mandates awarded to
Scott Wilson RPA for the underground pumping and ventilation studies, and to
Melis Engineering Ltd. for finalization of the mine runoff treatment plan,
contracts were granted to Golder Associates (Golder) for various studies and
health and safety programs.

Golder carried out field work in a number of disciplines in the
winter of 2009. Most of these activities were related to work plans approved in
2008. Field activities for animal counts were completed in January and February
2009. The winter surface water and sediment sampling program, hydrology and
geochemistry work were completed in March 2009.

In February, the borrow pits (gravel, sand and till) on the
Matoush property were drilled by the Amos office of GENIVAR and Poly-Geo Inc. to
outline the sources of borrow material for the construction of surface
facilities required for the exploration ramp. The Amos office of GENIVAR also
carried out supervision work for the construction of the new fuel storage area,
as well as design work for a cement base for a new communications antenna.

The ramp stability rock mechanics study was also started in the
first quarter of 2009. The study is aimed at meeting Quebec regulatory
requirements for excavations within 100 metres of a body of water, at the
request of the CNSC.

In March 2009, GENIVAR was awarded a contract for the detailed
engineering of the facilities required for exploration ramp construction. This
contract essentially consists of the detailed engineering for the treatment
plant for exploration ramp runoff, portal, power grid, power supply, ventilation
system, fuel and propane distribution system, camp expansion and approval
applications for all new surface facilities, civil works and a landing
strip.

---

43

In the second quarter, two other consultants, SENES Consultants
Limited (SENES), an Ontario firm with extensive uranium industry experience,
and the Montreal office of GENIVAR, joined the list of the many consultants
conducting the various detailed studies required to obtain the various
provincial and federal permits.

Following up on the comments received from the CNSC on February
16, 2009, in relation to the underground exploration licence application, the
Company began field work with the assistance of Golder for a rock mechanics
study on the crown pillar. This study will also be used to meet provincial
government requirements regarding an underground excavation under the influence
of a water body, meaning when an excavation is less than 100 m from a water
body. Field work consisted of the drilling of three holes and various tests
performed in the holes and on the drill core. A total of 526 metres were
drilled.

In the second quarter, the Val-dOr and Amos offices of GENIVAR
continued to work on the detailed engineering of the surface facilities required
for the underground exploration program.

With the completion of the baseline studies, Golder was able to
begin studying the potential impact of the exploration project on the physical
and biological components on which they were working. Phase 2 of the drafting of
detailed procedures and manuals for the radioprotection program was also
completed. A new contract was also awarded to Golder for the preparation of an
environmental emergency measures plan. Field work carried out by Golder between
April and June 2009 consisted of a spring sampling program of surface and
sediment water and geochemistry (work plan approved in 2008).

In the second quarter, risk studies (ecological risk, risk on
human health and industrial risk) were also awarded to SENES, along with
mandates for the air and climate and radiometry studies. SENES provided training
to Company personnel and set up air sampling stations on site. They also carried
out a surface radiometry survey for the baseline radioactivity study.

Throughout the second quarter, the Company received a number of
provincial permits for the Matoush project, including the land use lease for the
camp and the petroleum equipment operating permit (renewal) in April, and in
June, the exemption of the landing strip from the impact study and the
environmental and social impact review.

In the third quarter, the environmental work done by Golder
continued, with the preparation of baseline assessments for most of the study
components, including hydrogeology based on the field rock mechanics results,
surface water and sediment quality, hydrology and wildlife. Activities for the
quarter also included the preparation and submission of the geochemistry and
rehabilitation reports and the environmental emergency response plan. The field
work carried out by Golder from July to September 2009 was part of the summer
program of surface water and sediments sampling and geotechnical drilling of the
crown pillar.

Meanwhile, SENES completed analysis and drafting of the risk
study (ecological, human health and industrial risk) in the third quarter, and
filed the preliminary report on the ecological and human health risks in
September for review. The drafting of the baseline assessment for air quality,
the climate and radiometry continued during the quarter, and the final report on
air quality and climate was completed in early October.

The crown pillar geotechnical study was completed and the final
report was received. Furthermore, most of the studies were completed, including
the radiation safety study, a high priority element for the permit
application.

In addition, the Val-dOr and Amos offices of GENIVAR completed
the detailed engineering work and started construction engineering.

In the third quarter, the Company received some of the permits
required for the Matoush project development, such as the land usage rights for
the landing strip and related access road, as well as the access roads to some
of the borrow pits. Timber cutting rights were also granted.

The last quarter of 2009 was very busy due to two major
applications. The environmental impact study was completed and sent to the
regulatory authorities in October 2009, and the application for a licence for
underground exploration work was filed with the CNSC on November 6. The latter
application contains a dozen programs and a significant number of sub-programs,
all related to occupational health and safety and the environment.

---

44

The Company also filed an updated preliminary rehabilitation
plan as requested by the Ministère des Ressources naturelles et de la
Faune (MRNF).

The Company filed two exemption requests in November with the
Ministère du Développement durable de lEnvironnement et des Parcs(MDDEP), one for the use of the winter road to the Matoush camp, and the
other for the exploitation of a sand pit smaller than 3 hectares (ha).

The Company filed a request for an authorization to mine
without a lease for eight borrow pits smaller than 3 ha on the property. The
material is required to pursue surface exploration work, repair the site access
and build the landing strip.

Finally, a request for an authorization certificate to mine six
borrow pits larger than 3 ha was filed with the regional MDDEP office in
Rouyn-Noranda. This material is required for future underground exploration
work.

Golder also finalised its limited impact study document. No
field work took place between October and December 2009. The final Golder and
SENES documents to be included in the overall underground exploration project
impact study were submitted.

Finally, numerous translation contracts were granted in the
last quarter of 2009 to comply with Quebec government requirements.

Community and Investor Relations

Throughout 2009, the Company continued to strengthen
communications with the First Nations to inform them on the various stages of
the MATOUSH PROJECT development. A technical presentation on mineral exploration
was made to five representatives of the Grand Council of the Crees and two
representatives of the Cree Mineral Exploration Board at the Companys head
office on February 10, 2009. This working session proved excellent, enabling
those present to be well informed and to obtain clear answers to their questions
and concerns.

An official meeting was held at the site on February 21, 2009.
Twenty-three of the 26 participants were Cree, including four tallymen
responsible of the trap lines in the Matoush project area. A similar meeting
took place at the same time last year. Because they are directly on site, these
meetings generate more dialogue.

Company management made two presentations, one to the
Ministère des Ressources naturelles et de la Faune and the other to the
deputy minister of mines and his entourage. A third presentation was made in
Chibougamau to the MNA for Ungava.

These presentations and exchanges had two specific goals: to
publicize the Matoush project overall, particularly its development stages, and
to inform the main stakeholders on the various aspects of uranium, particularly
potential concerns such as radioactivity, radon, health and safety and
environmental protection.

In early April, the Company was an active participant and a
major sponsor of the fourth annual Learning Together conference in Montreal,
which brings together aboriginal communities from across Canada. Among other
things, this conference aims to create strong links between First Nations
communities and the mining industry. It allowed the Company to address questions
from many participant on uranium projects. The presentations and the
participation of a Company representative in discussion groups that included
representatives from Cameco and the CNSC proved very beneficial.

On April 21, a meeting was held with the chief of the
Mistassini band council to discuss the progress of the Matoush project, as well
as the work remaining for the preparation of the underground exploration
program.

At the end of April, a Company representative also met with the
members of the Uranium Committee in Chibougamau to provide support in terms of
the planning process and strategy for public meetings. This new committee has
been set up by the board of directors of the regional committee of CREBJ for the
purpose of informing the public on all aspects of uranium in an open,
transparent process.

---

45

In addition to its various meetings, the Company retained the
services of consultants to optimize its website in 2009. The website provides
access to a broad range of information on the nature and characteristics of the
MATOUSH PROJECT, the health and safety of the local population and workers and
environmental protection. The website now also has pages on News to Investors
and News to the Communities that provide up to the minute news on the MATOUSH
PROJECT. Anyone interested can, for instance, consult the latest resource
estimate or be notified of the most recent information document uploads. The
site also provides new information files on interesting subjects related to
uranium, such as environmental protection, transport, site restoration and
health and safety programs. The site was updated out of a concern for
transparency, so that the public, investors and anyone else interested in the
project could find answers to questions they might have.

In the third and fourth quarter, to maintain direct contact
with investors, the president and chief executive officer travelled to Europe
three times and made several trips to Toronto and Montreal, where he attended
numerous meetings to maintain direct contact with investors. He also gave media
interviews, notably on Canal Argent, to inform investors and the public
on MATOUSH PROJECT developments.

These initiatives show that the Company is pursuing its efforts
to establish and maintain good relations and open, ongoing communications with
local communities, the Cree community, investors, regulatory authorities and the
general public.

In 2010, the Company plans to begin the environmental studies
required for mill and tailings pond construction. These studies are required to
obtain a mine construction permit.

Item 2 B. MISTASSINI PROPERTY

Location and access

The Mistassini property consists of 171 claims shown on the
NTS32P map for a total area of 9,114.47 hectares (91.15 km2). It is located in
the Otish Mountains approximately 40 km south-west of the Matoush property
wholly-owned by the Company. Please see Regional Location Map Figure 1 at
page 7 for the location of the property and Figure 3below for the
location of the claims:

---

46



Mining Claims

Pursuant to the letter of intent dated November 20, 2007 and
following receipt of analyses for three holes drilled by Majescor Resources Inc.
(Majescor) in December 2007 on the Lac Mantouchiche uranium prospect, the
Company decided on February 14, 2008, to exercise its option right to acquire an
option to earn an undivided 60% interest in Majescors uranium rights and
uranium only on the MISTASSINI PROPERTY.

The Option Agreement provides for the Company to acquire a 60%
interest in the uranium rights on the property by carrying out a total of $1.3
million in exploration expenditures over three years. The Company reimbursed
Majescor for the cost of the drilling program completed in December 2007 and
spent additional sums in exploration expenses on the property for a total firm
commitment of $500,000 in Year 1 of the option. The remaining $800,000 in
exploration expenses will be spent equally between Years 2 and 3.

During the option period, the Company will be the sole operator
for all uranium exploration and will have full access to the property. Northern
Superior Resources Inc., which holds 100% of the diamond rights and 50.5% of all
other mineral rights to the exception of diamonds and uranium rights, renounced
to conduct exploration and exploitation works for diamonds on the property
during the duration of the Agreement. Furthermore, Northern Superior Resources
Inc. is entitled to a 2.0% Yellow Cake Royalty on the uranium rights of the
property.

The MISTASSINI PROPERTY consisted originally at the time of the
letter of intent of 721 mining claims covering 391 km2. On November
3, 2008, the Company gave a 90 days notice to Majescor that it was no more
interested to pursue exploration on 550 claims. As of November 24, 2008,
Majescor and the Company executed a definitive agreement with an effective date of February 14, 2008. The
Company maintained its option to acquire a 60% interest in the remaining 171
claims covering an area of 9,114.71 hectares.

---

47

On or about February 14, 2009, the Company had met its obligations of the First Anniversary of the Option Agreeement in spending more than $500,000 on exploration expenses on the Mistassini Property

Exploration work

The discovery hole drilled in 2002 by Majescor (MIST 02-08) on
the MISTASSINI PROPERTY had intersected 0.20%
U3O8over 4.50 metres.

In December 2007, three holes were drilled by Majescor to
verify the extension down dip of Lac Mantouchiche uranium prospect. The best
intersection was obtained in Hole MIST-07-03, with 18.5 -metre grading 0.215%
U3O8near-surface.

The Company began late February 2008, a comprehensive
exploration program, which included drilling aimed at confirming the strike and
dip extensions of the Lac Mantouchiche uranium prospect, as well as detailed
ground mapping and prospecting.

The potential of the property as a whole was assessed primarily
on the basis of geophysical data. In this regard, magnetic susceptibility data
combined with systematic core radiometric data have shown a clear inverse
correlation between uranium grade and magnetism. These observations strongly
suggest that low magnetic zones could be used to target regional exploration on
the property. The use of other geophysical surveys, such as detailed gravity and
VLF-EM over the uranium discovery will also be evaluated.

As a precursor to the drilling program planned for 2009, the
Company started in December 2008 and completed on January 23, 2009, a 1,869
line-kilometre helicopter-borne geophysical survey over the Mistassini
property.

This technical data has been approved by Jean-Pierre Lachance, P.Geo., Executive Vice President of Strateco Resources Inc.,  a qualified person as defined by NI 43-101.

As of June 2009, the Companyand Majescor Resources Inc.("Majescor)
  began a drilling program at Majescors MISTASSINI PROPERTY. The MISTASSINI
  PROPERTY is host to the LacMantouchicheuranium showing where
  Majescor drilled an 18.5 -metreintersection grading **0.215%**U3O8****near-surface in Hole MIST-07-03. The property is located
  in the Otish Mountains, 50 km southwest of the Companys MATOUSH PROPERTY.

The principal objective of the 600 m drilling program, started
in early June 2009, was to begin testing the strike and dip extensions of the
Lac Mantouchiche uranium prospect. This drilling program was based on a target
zone identified from a 1,200 line-kilometre helicopter-borne geophysical survey
completed over the MISTASSINI PROPERTY for the Company in January 2009. Fugro
Airborne Surveys Corp. carried out the survey.

The high resolution magnetic and electromagnetic survey was
interpreted by Jeremy S. Brett of MPH Consulting Ltd, and identified an ESE-WNW
trending km-scale structural lineament, coincident with the Lac Mantouchiche
uranium showing. Drilling completed to date at the MISTASSINI PROPERTY, together
with recently outlined geophysical targets, confirm the uranium mineralisation
potential of the basement rocks near surface. The MISTASSINI PROPERTY lies along
the Otish sedimentary basins proposed SW extension axis to the Papaskwasati
basin, in the vicinity of a major basement fold axis. The Mantouchiche
sedimentary outlier is entirely confined within the limits of the property, near
the main uranium prospect.

As of July 2009 the Companyand Majescor obtainedthe preliminary
  results of a drill program recently completed on the Mistassini uranium property
  held by Majescor and located in the Otish Mountains of Quebec, 50 km southwest
  of the Companys MATOUSHPROPERTY.

A new uranium-bearing zone was intersected in the immediate
vicinity of the Lac Mantouchiche uranium showing (Mantouchiche showing). Drill
hole MIST-09-03, drilled at -45°, intersected 11.0 metres grading 0.13%
eU3O8, including 0.9 metre at a grade of 1.03%
eU3O8. This new uraniferous zone is located in the
hanging wall of the Mantouchiche showing, at a vertical depth of 32 metres. The
Mantouchiche showing discovery hole, MIST-07-03, drilled an angle of -70° along the same section as hole MIST-09-03, had intersected 18.5 metres grading 0.215%
U3O8, at a vertical depth of 47 metres.

---

48

A second drill hole, MIST-09-04, drilled along the same section
  at -70°, confirmed the vertical extension of the new uranium-bearing zone,
  with an intercept of 13.9 metresgrading **0.08% eU3O8******at a vertical depth of 40 metres, including a sub-intercept
  of 5.1 metresgrading **0.186% eU3O8**.
  The latter hole did not reach the extension of the Mantouchiche showing, inferred
  to be at about 170 metres vertical depth. The extension of the Mantouchiche
  showing was however intersected in drill hole MIST-09-03 at a vertical depth
  of 64 metres, with an intercept of 3.0 metresgrading **0.08%
   eU3O8******including
  **0.14% e**U3O8****over
  1.2metres.

The true width of the mineralized sections has not yet been
determined. The equivalent uranium grades are obtained using a spectral probe.
Analytical results are pending.

The drilling campaign on the MISTASSINI PROPERTY took place on
a period of 18 days in June 2009. Seven holes were completed for a total of 786
metres.

The drill holes tested three areas in the immediate vicinity of
the Mantouchiche showing, over a total strike length of 125 metres. Two drill
holes were completed per section to test the strike extensions namely 50 metres
to the west and 75 metres to the east of the Mantouchiche showing. Drill holes
MIST-09-01, 02, 05and 06, drilled to this end,
intersected anomalous eU3O8 values. Drill holes
MIST-09-03and 04were drilled along the same section as the
discovery hole MIST-07-03. The strike extension of the new zone could not
be confirmed by the last hole in the campaign, namely MIST-09-07, drilled
along the same section as MIST-09-05and 06.

Given the positive results of the drill campaign and following
a structural and geological interpretation, further exploration work will be
carried-out over the coming year. At first, a ground geophysical survey will be
conducted to test for the possible presence of high-grade uranium lenses
preferentially aligned along a north-south axis.

Item 2 C. APPLE PROPERTY

Location and access

The property is located at 80 km southeast of Radisson, in the
James Bay area in the Province of Quebec in Canada. The property is accessible
by a 40 km winter road from Km 510 on the paved James Bay road. In summer, the
property can be accessed by boat from the Trans-Taïga road. Float planes and
helicopters are readily available in the city of Radisson. Please see Figure
1at page 7 for the general location of the property.

Mining claims

The APPLE PROPERTY consists of 194 mining claims covering
9,928.13 hectares recorded in the name of the Company.

On August 28, 2007, the Company has acquired 100% the Apple
uranium property, wholly owned by Virginia Mines Inc (Virginia) in
consideration of 3,250,000 common shares of the Company.

The agreement also provided for a 2% NSR royalty payable upon
production to Virginia, half of which can be bought back by the Company for $1.0
million. The transaction closed on September 6, 2007.

---

49

Figure 4below represents the location of the claims for
APPLE PROPERTY:



Uranium potential

The project covers a portion of the Apple Formation, which came
to light in the early 1970s with the discovery of several extensive
uranium-pyrite matrix, quartz pebble conglomerate zones.

The Apple uranium deposit was in fact discovered in 1971 during
an airborne survey. The International Nickel Company of Canada Limited (INCO)
and James Bay Development Corporation subsequently conducted an extensive joint
exploration program from 1972 to 1975, with INCO as the operator. A total of 65
holes were drilled for a total of 14,000 metres, and the uranium conglomerates
were traced over a distance of eight kilometres along an east-west axis.

Exploration work

From 1972 to 1975 Canadian Nickel Company (Canico) drilled 66
holes for a total of 14,445 metres on Apple in order to evaluate the uranium
potential. In the end of 1974, Canico completed a historical grade and tonnage
estimate in all categories of 9,365,000 tons grading 0.054%
U3O8. Their resource estimate was prepared only for a
strike length of approximately 1,000 m and to a depth of approximately 300 m;
the mineralized horizon remaining opened at depth.

Cautionary Note:A qualified person has not
done sufficient work to classify the historical estimate as current mineral
resources or mineral reserves. The Company does not consider resources or
reserves of an historical estimate to be mineral resources or mineral reserves,
as these categories are defined in articles 1.2 and 1.3 of the National
Instrument 43-101, as amended. The investor or reader should not rely upon this
historical estimate.

---

50

In 2006, Virginia completed a helicopter-borne, combined
magnetic and radiometric orientation survey over most of the actual property.
The strongest radiometric anomalies were found to have a direct correspondence
to the area drilled by Canico form 1972 to 1975.

On August 23, 2007, two Companys representatives visited the
property as part of a due diligence process, accompanied by two representatives
of Virginia and guided by Mr. Jean-François Ouellette of Geonordic Technical
Services Inc. and Mr. Michel Gauthier, Ph.D., a Professor at UQAM and Liège
University in Belgium. Mr. Gauthier is very familiar with the geological context
of the APPLE PROPERTY and has extensive experience in the uranium of the James
Bay region, having been involved there since the 1970s.

During the field visit, two outcrops 2.9 km apart belonging to
the same Apple Formation were seen. The strength and size of the system were
also witnessed.

The second outcrop, which corresponded to the radiometry
anomaly that led to the Apple discovery, is exposed over about 75 metres along
strike. Readings from a few thousand to 10,000 counts per second were taken
during the visit. The Company has for objective to substantially increase the
existing estimated resource of about 9.0 million pounds of
U3O8 in considering that the prospection unit (Apple
Formation) was traced for nearly 14.0 km while the resources calculated by
Canico were limited to 1.0 km.

In the fall of 2007, the Company conducted a helicopter-borne
radiometry survey covering the entire property. This survey led to the
identification of new radiometry anomalies and confirmed those identified by
earlier surveys.

In early January 2008, the Company began construction of a
14-person camp. Drilling began as soon as construction was completed in
mid-February. Various targets were to be tested.

On the APPLE PROPERTY, an initial drilling program totalling
4,000 metres started. The 2008 budget for this property was of $2.3 million.
Five twin holes covered a strike length of 1.1 km where the resource had been
estimated by Inco, most of the program tested new radiometry anomalies
identified by the helicopter-borne survey conducted by the Company in the fall
of 2007.

From February to April 2008, 13 holes totalling 3,357 metres
were drilled on the property, including four holes to twin Canicos intersection
and five holes to infill along the Apple trend. The holes completed by the
Company were successful confirming the lateral and vertical continuity of the
uranium mineralization within the Apple Formation.

As of March 2008, five holes totalling 1,668 metres had been
completed. The first four holes (AP-08-01 to 04: 1,413 metres) were drilled near
old holes drilled by INCO in the 1970s (twin holes) to confirm the geology and
verify the mineralized zones intersected by the old holes, drilled over a linear
distance of one kilometre. The casings of the twinned holes were located on the
property.

In the four twinned holes totalling 1,413 metres (AP-08-01to 04), the main geological units intersected are the same and in
virtually the same position as those shown on INCOs drill sections (GM57894).
There is also good correlation between the conglomerate beds identified by INCO
and those seen in the 2008 holes. The conglomerate beds are where they were
expected to be with similar grades. The grades and thicknesses obtained by INCO
and those for the 2008 twin holes were correlated once the assay results had
been received.

The results of these first four holes provided the basis under
Canadian National Instrument 43-101 (NI 43-101) for thetechnical
reportdated June 2, 2008 entitled: Technical Report on the Apple
Project, James Bay Area, Northwestern Québec, Canada prepared for Strateco
Resources Inc. NI 43-101 Reportprepared by R. Barry Cook, M.Sc., P.Eng. and
Paul Chamois, M.Sc., P.Geo. of Scott Wison Roscoe Postle Associates Inc.(Scott Wilson RPA).

Scott Wilson RPA was of the opinion that the Companys Apple
Project merited considerably more uranium exploration and a substantial work
program was recommended. Scott Wilson RPA recommended work on the Phase I
program, beginning as soon as practical in early summer 2008 and continuing
through winter 2009. The Phase I program included: i) line cutting and ground
geophysical surveys (magnetics, radiometrics, Induced Polarization (IP)) and
geological mapping along the main Apple trend, ii) prospecting and sampling
along the main Apple trend and investigating airborne radiometric anomalies elsewhere, and
iii) diamond drilling primarily along the main Apple trend with a proposed
budget of $4,176,000.

---

51

According to Scott Wilson RPA, a Phase II program were
envisioned to begin in early summer 2009 and to consist of first pass definition
drilling in the most attractive areas. Advancing to Phase II with a proposed
budget of $6,011,000 would be however contingent upon positive results from
Phase I.

Five holes totalling 1,263 metres (AP-08-05, 10, 11, 12 and
13) were drilled to verify the lateral extensions of the mineralized zones
surrounded by Canico for the resource estimate done between the 4, 400 West and
1,100 West sections. To the exception of hole AP-08-13drilled on the
4,000 West section, the other holes the Company drilled east of the 1,100 West
section over a lateral distance of 790 metres, with an average spacing of 150
metres between holes, with the exception of hole most to the east,
AP-08-10, distant of 370 metres with hole AP-08-11. (The 4.400
West and 1,100 West Sections can be seen on the Companys website at www.stratecoinc.com.

Among those four holes, only Hole AP-08-10did not
intersect uranium mineralization. Hole AP-08-05centered on an important
radiometric anomaly, turned out to be conclusive with the intersection of three
mineralized zones measuring from 3.7 metres to 7.1 metresin length with
an average grade of 0.03%U3O8.

Holes AP-08-11and **AP-08-12 have each intersected
  two mineralized zones of an average length of 3.5 metres with grades oscillating
  between 0.02 and 0.06% U3O8The best intersection was
  0.06%**U3O8**over 4.0metres**in
  hole AP-08-12.

Hole AP-08-13drilled on the 4,400 West section intersected
  the mineralization on thickness of 2.5 and 3.6 metreswith an **average
  grade of 0.04%**U3O8**.**

The four other holes for a total of 710 metres (AP-08-06 to
09), drilled to investigate certain radiometric anomalies identified by the
2007 airborne survey in the southern portion of the property, did not intersect
any significant mineralization.

Exploration work on the Apple property consisted primarily of
prospecting, channel sampling and geological reconnaissance carried out on the
basis of the results of an airborne radiometry survey conducted in the fall of
2007. The field work took place from June 5 to August 9, 2008.

The geological reconnaissance revealed five main outcrops, each
with different anomalous bands generally corresponding to the uranium-bearing
quartz pebble/pyrite matrix conglomerate. Subsequent, tighter prospecting of
each of the outcropping areas allowed the uranium zones to be precisely traced
to determine their morphology, which is primarily controlled by ductile/fragile
deformation. Systematic GR-135 spectrometer readings were taken to characterize
the various anomalous bands and determine their uranium content.

The Apple uranium-bearing conglomerates were also traced over
  a distance of nearly 8 km along the northern contact with the Yasinski volcano-sedimentary
  formation. Many readings were obtained for each outcrop, ranging from a few
  thousand to up to 10,000 counts per second (cps). Four of the five
  outcrops returned values of 5,000 to 13,000 cps. Some anomalous bands also returned
  values of up to 20,000 cps. The uranium content of the main Apple band therefore
  ranges from 0.082% to 0.330% eU3O8in the richest zones.
  The average uranium/thorium ratio is about 0.75. Chemical assays have not been received yet.

In addition to having better outlined the Apple formation, the
exploration work in this program revealed fold zones in the conglomerate
horizons that do not seem to have been identified by earlier work. The presence
of these folds could entail the repetition of the uranium bands to the south of
and parallel to the main band.

---

52

Given the extent of the pyrite-matrix uranium-bearing
conglomerates as well as their degree of deformation, a 42 line/km induced
polarization survey was performed in mid-August following the geological
prospecting program to locate the anomalous conglomerates at depth and identify
new drill targets south of the 8-km-long Apple formation.

Preliminary data was received at the end of September 2008 for
holes not included in the NI 43-101 report.

In reason of the international financial crisis, the Company
has decided not to drill on APPLE PROPERTY during winter 2009 and to concentrate
its moneys and efforts on the MATOUSH PROJECT.

The Company did not conduct any exploration work on the Apple
property in 2009.

Item 2 D. MONT-LAURIER URANIUM PROPERTY

Location and Access

The MONT-LAURIER URANIUM PROPERTY is located in Pérodeau
Township, 40 kilometres northeast of Mont-Laurier, Québec in Canada. The
property is easily accessible by paved road from Mont-Laurier.

Please see Figure 1 for the regional map indicating the
location of the MONT-LAURIER URANIUM PROPERTY at page 7and the following
Figure 5for the location of the Companys claims on this property.



---

53

Mining Claims

The property consists of 80 claims that cover an area of
4,710.35 hectares. The Company owns a 100% interest in the property, acquired at
the end of March 2005.

Uranium Potential

The ground acquired lies within the Cabonga-Mont-Laurier
radioactive district of the Grenville geological province. Intensive exploration
work was conducted in the area from 1969 to 1981, after Canadian Johns-Manville
discovered uranium mineralization in 1967.

The Companys property covers ground previously held by
Mont-Laurier Uranium Mines in the 1970s. The claims block straddles the crest of
a northeast-trending anticline and covers the high-potential southern extension
of the Tom Dick uranium zones.

The uranium occurs mainly as disseminated uraninite in
metamorphosed white pegmatites, as well as in biotite gneiss and impure biotite
feldspath quartzites. The paragneiss covers Archean granite gneiss exposed
mainly in the eroded windows along the crest of the major northeast-trending
anticlinal folds.

Two white pegmatite uranium zones have been identified in the
centre-south portion of the ground held by the Company, previously known as the
Lac Hanson claims. The largest zone, which is six metres thick and dips
20o to the northwest, has been traced over a distance of 365 metres
to the northeast by trenching. The central portion of the Companys property, on
the same axis between the Lac Hanson and the Tom Dick zones, remains virtually
unexplored due to the fluvio-glacial overburden.

Exploration Work

The Company initiated exploration work on the MONT-LAURIER
URANIUM PROPERTY in the summer and fall of 2006.

First, in mid-June 2006, a helicopter-borne geophysical survey
was done over the entire property. The radiometry, Mag and VLF survey was flown
along lines spaced at 100 metres, totalling 885 line-kilometres. Various
anomalous zones were identified.

The radiometry anomalies, particularly the uranium anomalies,
are primarily concentrated along a 200- to 1,000-metre wide, northeast striking
band that crosses the entire property. This band of anomalies covers a distance
of over 14 kilometres. The two most strongly-anomalous areas are in the north
and south of the property.

Following this survey, prospecting was carried out on the most
promising areas. This work primarily consisted of scintillometry prospecting
over approximately 26 line-kilometres, blasting and collection of 73 samples in
the Tom Dick area. Some 11.2 kilometres of line-cutting was done in the Lac
Hanson area.

This exploration work resulted in the identification of zones
of high radioactivity (many times the background level) in the Tom Dick South,
Hanson West and Hanson Centre areas. Occasional readings of over 10,000 cps were
seen.

Local outcrop spectrometry measurements (GR-135 spectrometer)
confirmed the presence of uranium in association with the target
helicopter-borne anomalies. For instance, on an outcrop containing white
pegmatite on Tom Dick South, the unit recognized as the host of uranium
mineralization showed readings of 1,800 to 2,500 cps. Readings of 2,000 to
10,250 cps were recorded at sites on Hanson West, and 4,800 cps on Hanson
Centre.

In 2007, the exploration program on the property consisted
essentially of drilling.

---

54

From January to March 2007, a 2,614 metres - 32-holes drilling
program was completed on Area A, B and C. This is the first program carried by
the Company since the staking of the property in 2005 and since the work done by
Mont-Laurier Uranium Mines in 1971 and SOQUEM in 1973.

In Area A (Lake Hanson West) the 2007 drilling was aimed at testing
  this zone on a 100-metre spacing drill grid over 1,000 metres of strike. A series
  of 28 mostly vertical holes (2,274 metres) were drilled to an average depth
  of about 81 metres. The key white pegmatite units alternating with granitic
  gneiss were intersected as expected but the dissemination of uranium-bearing
  minerals seems greater than expected. Decimetric to metric assayed intervals
  returned values below 0.05 % U3O8.

In Area B between Hanson West and Tom Dick South, only one hole
was drilled and abandoned at 54 metres. Water and logistic problems were
encountered.

For the Area C (Tom Dick South) three drill holes totalling 285
  metres were completed. Only minor intersections of decimetric width with grades
  below 0.02% U3O8 were obtained.

Even with the mixed results of the 2007 drilling program, the
property still shows various exploration targets but the Company did not conduct
any exploration work on this property in 2008 and in 2009 but claims have been
renewed. The Company decided to write off this property in the financial
statements as of December 31, 2008as mentioned in Form 10-K for the exercise ended December 31, 2008 at Item
8: Financial Statements of an exploration stage company, Note 8 Deferred
expenditures.

Item 2 E. QUÉNONISCAPROPERTY ZN, PB, CU, AG

The QUÉNONISCA PROPERTY consists of 33 claims for a total area
of 1,799 hectares. It lies 180 kilometres northwest of Chibougamau, Québec,
Canada.

On February 26, 1996, Altavista Mines Inc. (Altavista)
obtained an exclusive, irrevocable option from SOQUEM to acquire a 50% undivided
interest in the Quénonisca property as consideration for exploration work to be
carried out under SOQUEMs direction for a total of $75,000, plus an undertaking
by Altavista to subsequently finance a minimum of $127,500 in exploration work
by February 28, 1997. In 1997, stripping and drilling were carried out on the
property. In 1998, three sulfide occurrences in stockworks were discovered on
the Montagnes-Nord grid by SOQUEM.

---

55

Drill Hole
      Localisation
        (m)
      Length (m)
      ResultsFrom:
      To:1187-97-01
      116.6
      118.1
      1.5
      0.12% Zn136.1
      137.6
      1.5
      0.16% Zn1187-97-02
      110.5
      111.1
      0.6
      0.15% Zn, 0.16 g/t Ag113.5
      114.4
      0.9
      0.28% Zn, 2.4 g/t Ag120.4
      124.9
      4.5
      0.20% Zn, 1.2 g/t Ag1187-97-03
      37.5
      38.7
      1.2
      0.25% Zn, 1.9 g/t Ag65.1
      72.3
      7.2
      0.18% Zn, 2.6 g/t Agincluding68.1
      69.6
      1.5
      0.26% Zu, 3.5 g/t Ag, 0.12% Cu1187-97-04
      96.3
      98.8
      2.5
      0.34% Zn, 6.0 g/t Ag, 0.17% Pb102.4
      103.5
      1.1
      0.32% Zn, 5.9 g/t Ag, 0.57% Pb112.0
      113.5
      1.5
      0.21% Zn, 3.0 g/t Ag, 0.13% Pb120.8
      123.8
      3.0
      0.19% Zn, 2.3 g/t Ag, 0.12% Pb1187-97-05
      79.4
      83.2
      3.8
      1.08% Za, 7.5 g/t Ag, 0.44% Pbincluding
      81.0
      81.9
      0.9
      2.00% Zn, 7.0 g/t Ag, 0.53% Pb1187-97-06
      No
        significant value1187-97-07
      60.9
      61.5
      0.6
      6.58 g/t Au1187-97-08
      22.1
      22.8
      0.7
      0.48 g/tAu


In 1999, SOQUEM carried out a linear 19.6 line-kilometre
magnetometer and Max-Min survey on the Montagnes-Nord grid. Various conductors
were detected by this survey.

In the fall of 2000, SOQUEM conducted a 1,050-metre, eight-hole
drilling program in order to test the best conductors detected in 1999. Numerous
sections of mineralized cherts were intersected. Several lenses of
pyrrhotite-rich massive sulfides were identified. The Company contributed 50% of
the total $201,173 program cost for 2000.

No significant work was carried out on the QUÉNONISCA PROPERTY since 2001. In 2008, the mining claims have been renewed but no exploration work was made on this property.

Item 2: NOTE Detailed uranium exploration analytical
procedures

Commitment to Quality Assurance and Quality Control

Ensuring proper quality measurements in all aspects of the
exploration phase is a priority for Strateco Resources Inc. (the Company). The
Company continuously reviews data quality and routinely reviews and enhances its
methods of monitoring quality. The Company is committed to proper data gathering
and management. External reviews of quality assurance and quality control
methods by outside experts such as Scott Wilson Roscoe Postle Associates Inc.
(Scott Wilson RPA) have enabled the Company to continuously enhance its
procedures. Quality Assurance and Quality Control (QA/QC) are notably critical
in two aspects of the mineral resource assessment phase: geochemical sampling
(assays) and radiometric readings (probing). This Note 1to the annual
report is intended to comprehensively review methods applied to both
aspects.

Geochemical sampling

The sampling program at Matoush Project, including all aspects
of Quality Assurance and Quality Control, is supervised by the Companys Chief
Geologist, Jonathan Lafontaine, P.Geo., who is a Qualified Person as defined
under NI 43-101.

Sample preparation

Drill core is accurately measured, descriptively logged, and
samples picked based on lithology, alteration, and radiometric data carefully
measured with a hand-held spectrometer (GR-135 from SAIC). The Company samples
all fault zone intersections.

---

56

Individual sample lengths vary between 0.5 m to 1.0 m but are
subject to variations if the geologist deems this absolutely necessary to ensure
proper and comprehensive sampling. Barren samples typically 1.0 m in length are
taken to close off the intersections. Core length intersections do not represent
true width and are corrected when mineral resources are assessed. It is not the
Companys policy to estimate true widths until three-dimensional continuity of
the intercepts is definitively established.

Sampling and Shipment

Three-part sample tags are used to track the samples. The first
tag is stapled in the core box with a numerically corresponding aluminum dymo
tag. The second tag is inserted into a clear plastic bag identified with the
identical number inscribed on the bag. The third is archived in the field office
located on the Matoush Property. Core is split using a hand or hydraulic
splitter according to sample intervals marked on the core with one half
preserved in the box and the other inserted into the sealed plastic bag. The
sample bags are then placed in large plastic or metal pails of 5 gallons and
sealed for shipping. Pails of samples are shipped by helicopter or float plane
to the Temiscamie float plane base, trucked to Chibougamau where they are sent
by courier to the Saskatchewan Research Council (SRC) in Saskatoon, SK.

Saskatchewan Research Council (SRC) Analytical
Procedure

The Geo-analytical Laboratories at SRC are a high quality
analytical service facility with a stringent Quality Assurance (QA) program
dedicated to actively seeking to evaluate and continually improve the internal
quality management system. The laboratory is accredited by the Standards Council
of Canada as an ISO/IEC 17025 laboratory for Mineral Analysis Testing and is
licensed by the Canadian Nuclear Safety Commission (CNSC) for possession,
transfer, import, export, use and storage of designated nuclear substances by
CNSC Licence Number 01784-1-09.3.

On arrival at SRC, samples are sorted into lots according to
radioactivity level and samples are prepared in order from least to most
radioactive. SRC inserts, at the minimum, a blank sample, a duplicate from the
batch and a Quality Control (QC) standard of its own with each sample batch.

Sample processing includes the following steps:

| | 1. | Samples are dried and jaw crushed to 60% passing -2
      mm.                                                                                                                                                                                                                                                                                       
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                     
| | 2. | A 100 g to 200 g subsample is split using a
    riffler.                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                     
| | 3. | A ring and puck grinding mill pulverizes the subsample to
      90% passing 106 microns. The mills are cleaned between samples using steel
      wool and compressed air.                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                     
| | 4. | Uranium content is measured by inductively coupled plasma
      ICP 4-3 (near total tri-acid digestion using fluoric, nitric and
      perchloric acids followed by a dilute nitric acid bath), ICP 4-3R (partial
      aqua-regia digestion); fluorimetry on partial digestion is also used if
      total digestion of U3O8is less than 100
  PPM.
| |    |                                                                                                                                                                                                                                                                                                                                                     
| | 5. | Samples done by ICP 4-3 also have the full package of
      trace elements run. Samples with greater than 1,000 ppm U3O8are also subjected to an aqua regia digestion before
      determination of U3O8wt% also by ICP and samples
      are also fire assayed for precious metals (Au, Pt,
Pd).                                                   

QA/QC methods

SRC QA Protocols

Upon receipt, batches of data are checked in order to determine
that the batches of data comply with SRC own analytical protocols; the repeats
and standards inserted by the SRC into the batches of samples are also
verified.

Quarter-split drill core duplicates

Drill core duplicates assess: the variability introduced by
selecting one half of the drill core versus the other, the sample numbering
mistakes, and the nugget effect. Samples to be duplicated are randomly selected
by the sampling technician with rough guidelines given by the geologist. A quarter-split
duplicate is separately inserted every 14 samples by the Companys sample
technician. Once the sample to be duplicated is selected, the sample bag is
re-opened; split core is pulled out and quartered into separate bags. Duplicates
are inserted randomly into the sample number sequence. A thorough program is
underway to clearly determine natural heterogeneity but pairs are considered
acceptably identical if they are within 10%. The Company is currently
standardizing sample batches to ensure that approximately 5% of all samples in a
batch correspond to quarter split duplicates.

---

57

Blanks

The regular submission of blank material is used to assess
contamination during sample preparation and to identify sample numbering
mistakes. Blanks are selected by the sampling technician under the guidance of
the geologist. Blanks correspond to clean, non-radioactive, 1 m-long,
fine-grained silicified sandstone samples. A blank is separately inserted every
14 samples by the Companys sample technician. SRCs system of sorting samples
in ascending order of radioactivity helps eliminate significant contamination
from preceding samples but also nullifies the use of blanks as contaminant
assessment mechanisms. Nonetheless, submission of blanks inserted into the
sampling sequence is used to asses sample numbering mistakes. The Company is
currently reviewing the threshold for allowable trace uranium to be detected but
blanks are considered acceptable if they contain less than 50 PPM. The Company
is currently standardizing sample batches to ensure that approximately 3% of all
samples in a batch are blanks.

Certified Reference Materials (CRM)

Results from the regular submission of certified reference
materials (CRM) are used to identify problems with specific sample batches and
long-term biases associated with the regular assay lab (SRC). It is important
that the uranium grade of the CRM be representative of the grade range of the
resource assays. CRM are sampled with a small baggie and placed in a standard
sample bag which is identified and inserted into the sample number sequence. The
Company considers that failure occurs when assays from two consecutive CRM are
greater than +/- two standard deviations or if the assays from a single CRM are
greater than +/- three standard deviations from the expected value. The Company
is currently standardizing sample batches to ensure approximately 2% of all
samples in a batch are CRM and at least one CRM is inserted into the sample
batch.

Future QA/QC methods

The Company is committed to continuously improving QA/QC
procedures. As such, the Company is currently reviewing potential analytical
procedures to implement assessment of laboratory bias by sending out pulps to a
second independent laboratory and re-analysis of coarse pulp duplicates.
Although intermittent studies of this type have been completed to satisfaction,
a routine has yet to be established.

Radiometric Assays (probing)

All completed drill holes are probed from collar to the end of
hole by a geo-technician of the Company after allowing adequate time for washing
to remove smear and ensuring proper radon diffusion to ambient background
levels. The Company currently uses a Mount Sopris 2GHF triple gamma downhole
probing tool which uses a combination of two Geiger-Müller detectors and a
sodium iodide detector incorporated into one tool allowing accurate measurements
of a variety of uranium mineralization types (from background levels to high
grades). Data is collected every 5 cm going up hole.

These data are compared with geochemical grades once sample
results are returned from the SRC. Natural variations on the order of 5% - 10%
differences in grade x thickness (GT) do occur, though variations are typically
less than 5%. Cable stretch and slip are of particular concern and can be as
high as approximately 1% (meaning one centimetre of slip and stretch going up
hole per metre of coiled cable). Although this value is negligible for drill
holes of less than 100 m, it can be significant for the Matoush Project where
drill holes usually exceed 300 m and can go as deep as 800 m or more. Stretch
and slip of the cable during uphole readings are assumed to be due to cable
twisting-untwisting or slip of the pulley that measures cable length. Usually,
downhole gamma readings appear higher up in the log than radioactive peaks as
measured on drill core. To compensate for this effect, depths are multiplied by
1.01.

Grade X Thickness (GT) estimates

All calculations for the grade x thickness (GT) estimates are
based on instrument readings inside a water-filled drill rod string. Raw counts
per second (CPS) data are compensated for the dampening effects of steel rods
and water. For the 2GHF triple gamma tool, once a simple correction is applied
to compensate for the spatial distribution of the detectors in the instrument,
the values are smoothed by a moving average covering 70 cm centred on the depth
of the instrument measurement to remove spurious short narrow peaks which are
not considered representative. The results are triaged based on the ideal range
of detection for both types of detectors. The sodium iodide detector
readings are retained if they are below 6,000 CPS (i.e., low grades), and the
sum of the Geiger-Müller detectors above this cut-off.

An in-house Excel macro uses a high order polynomial (3rd order
for sodium iodide detectors, 2nd order for Geiger-Müller detectors) to assign
grade to CPS value on a sample per sample basis. This polynomial is determined
through controlled experiments using an on-site calibration drill hole from
which known assay results are taken. Thus, a known grade over a known thickness
is assigned a CPS value for both detectors for a variety of grades typically
encountered on the property. The calibrated polynomial curve is acceptable up to
the maximum grade encountered on the calibration curve. When this maximum CPS
is

---

58

exceeded in a drill hole, the calibrated polynomial is no
longer applicable over this value and a procedure is in place to re-compute a
more accurate polynomial once accepted assay data have been recovered. Finally,
the macro will attempt to estimate U3O8content
(eU3O8) over a minimal length that the Company has
determined to be geo-physically reliable as per suggested by Mount Sopris
information (70 cm). GT estimates are then un-convoluted to length and
grade.

QA/QC methods

Once data are imported into the database, the down-hole probing
data are visually compared with logged radiometric readings on drill core.
Discrepancies in results are immediately investigated and corrected. Although
the data sources and reporting methods are significantly different, it is
visually checked to ascertain the concordance of peak spacing and general width
of mineralized zones. Radiometric data on drill core is gathered by removing
each piece of drill core from the ambient background, noting the most pertinent
reproducible result, and carefully returning it to its correct place in the core
box.

Prior to and after each probed drill hole, the geophysical
instrument is tested with a calibration sleeve composed of several Am241 point
sources distributed evenly within a steel sleeve slid onto the NaI detector. The
Company considers the calibration test acceptable if 95% of measurements fall
within 2 standard deviations of the average value.

Furthermore, a water-filled and cased calibration drill hole is
probed once per 3-weeks to ensure minimal but measured instrument drift (if
any).

Finally, a highly-regarded outside independent specialist in
the field of nuclear log analysis, Dr. Robert D. Wilson, reviewed and audited
the probing procedures and methods used by the Company. Dr. Wilson concluded
that the procedural methods are valid, and protocols are adequate for the remote
environment in which the instruments are used.

All reported samples are split with hydraulic splitter by
dedicated personnel. Samples are individually bagged and tagged and shipped as
per transportation protocols. Blanks, duplicates, and standards are randomly
inserted in the sample shipment within the sample number sequence.

Analytical results are received and imported into our data
base. Laboratory replicates and laboratory standards are checked. Internal
duplicates, blanks and standards are checked. Analytical drift from expect
results triggers re-analysis.

Results are also compared with estimated GT values from in-situ
downhole probing, and with CPS values logged during initial core logging
procedures.

**Reference to eU3O8 means****the following:**

The "e" in eU3O8represents the estimated
or equivalent value of U3O8as determined by downhole
geophysical probing. The "e" indicates that the value is not obtained by drill
core assays, but rather by converting gamma radiation measured in situin
the drill hole into U3O8values by assuming that all gamma
radiation can be directly attributed to the quantity of uranium present in the
rock. The Company can clearly show that all our mineralized intersections
typically have a negligible quantity of radioactivity related to thorium or
potassium that would skew this analysis. Furthermore, after isotopic analysis,
the Company can safely say that, like most other deposits older than 0.35
million years, the uranium is in equilibrium (i.e. daughter elements are
produced and disintegrated at a steady sate, correlated to the quantity of
uranium).

This method of distinguishing analytical assay values from geophysical
  measurements is common in the industry. Although the Company may indicate that
  reported U3O8values are estimated from gamma probe readings,
  it is best to use eU3O8for clarity, if applicable, as
  per the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) guidelines
  cited here: Equivalent Assay: Determination of uranium content by radiometric
  methods. The validity of Equivalent Assays must be demonstrated with chemical
  assay determination. Where employed, equivalent uranium determination should
  be reported and appropriately illustrated in the*database (e.g. e*U3O8*).
  Excerpt: http://www.cim.org/committees/estimation2003.pdf at page 50 of 55.*

**Explanation for U3O8 and****eU3O8comparison:**

Assays are considered by the Company to be the reliable
value. However, down-hole readings are used in lieuof assay data if
these data are not available due to missing core or lengthy turn around time by
analytical procedures. Comparing the down-hole gamma log data against the assay
results is best made on a GT basis for several reasons. First and most
obviously, sampled media is different.

Assays represent a measured quantity of uranium, whereas
uranium values obtained from the in situ probing represent the radioactive
signature of a football-shaped volume incorporating fluids, rod casing and wall
rock. Furthermore, the natural heterogeneity of the mineralization may also lead
to variation in the estimated grades. It is also important to note that the
probe is not centered in the drill rod string but is gravity-held in the trough
(bottom) of the rod string as it is descended and raised and thus

---

59

does not evenly read the mineralization in the wall rock.
Variation of sample length is yet another reason for comparing GT values.
Finally, because the end product of the down-hole probing estimate is the GT
value (which is later un-convoluted to length and grade), it is simply more
advisable to compare the source of the data, the GT, rather than the actual
grade and lengths.

Item 3: Legal Proceedings.

The Company is not involved in any legal proceedings.

Item 4: Submission of Matters to a Vote of Security Holders.

There was no matter submitted to security holders during the
fourth quarter of the fiscal year covered by this report through the
solicitation of proxies or otherwise.

PART II

Item 5: Market for Registrants Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities.

(a) Market for Registrants Common Equity

CURRENCY AND EXCHANGE RATES

All dollar amounts set forth in this report are in Canadian
dollars, except where otherwise indicated. The following table sets forth
(i) the rates of exchange for the Canadian dollar, expressed in the U.S.
dollars, in effect at the end of each of the periods indicated; (ii) the average
exchange rates in effect on the last day of the end of each such period; (iii)
the high and low exchange rate during such periods, in each case based on the
noon buying rate in cable transfers in Canadian dollars as certified for customs
purposes by the Federal Reserve Bank of New York. Prices based on the period
January 1 to December 31 yearly, and quoted in U.S. Dollars.

|                           | 2009   | 2008   | 2007  
|-------------------------- | ------ | ------ | ------
|Rate at end of Period      | 1.0461 | 1.2240 | 0.9881
|Average Rate During Period | 1.1549 | 1.0713 | 1.0750
|High Rate                  | 1.2995 | 1.2971 | 1.1852
|Low
      Rate             | 1.0289 | 0.9717 | 0.9168

The high and low exchange rates for each month during the
previous six months are as follows:

September
    October
    November
    December
    January
    February2009
    2009
    2009
    2009
    2010
    2010High rate
    $1.1060
    $1.0843
    $1.0742
    $1.0713
    $1.0669
    $1.0735Low rate
    $1.0615
    $1.0289
    $1.0458
    $1.0400
    $1.0260
    $1.0419


On March 10, 2010,  the noon buying rate in New York City for cable transfer in Canadian dollars as  certified for customs purposes by the Federal Reserve Bank of New York was$  1.00 USD=$1.0241CND.

The Companys securities were traded in Canada as Strateco
Resources Inc. (RSC) on the Bourse de Montréal Inc. from November 7, 2000 to
September 30, 2001, on Canadian Venture Exchange (CDNX) from October 1, 2001 to
May 15, 2002 and on TSX Venture Exchange, from May 15, 2002 to June 5, 2007. The
Company graduated to the Toronto Stock Exchange on June 6, 2007.

---

60

The following table indicates prior sales of common shares
in Canada in Canadian Dollars for the last three years on the TSX Venture
Exchange until June 6, 2007 and from June 6, 2007 up to March 10, 2010 on the
Toronto Stock Exchange.

|2007                            | High   | Low    | Volume    
|------------------------------- | ------ | ------ | ----------
|First Quarter                   | $3.890 | $2.170 | 58,241,235
|Second Quarter                  | $4.000 | $2.050 | 46,563,334
|Third Quarter                   | $2.610 | $1.400 | 51,358,227
|Fourth Quarter                  | $3,460 | $2,110 | 39,830,756
|2008                            | High   | Low    | Volume    
|First Quarter                   | $3.150 | $1.990 | 30,786,146
|Second Quarter                  | $2.230 | $1.520 | 19,577,013
|Third Quarter                   | $1.740 | $1.010 | 16,306,416
|Fourth Quarter                  | $1.630 | $0.400 | 25,418,930
|2009                            | High   | Low    | Volume    
|First Quarter                   | $1.350 | $0.550 | 21,155,059
|Second Quarter                  | $1.300 | $0.700 | 9,349,852 
|Third Quarter                   | $1.120 | $0.650 | 24,303,906
|Fourth Quarter                  | $0.920 | $0.680 | 69,868,571
|2010                            | High   | Low    | Volume    
|January 1stto January 31, 2010  | $1.030 | $0.800 | 8,056,444 
|February 1 to February 28, 2010 | $0.850 | $0.720 | 8,712,440 
|March 1 to March 10, 2010       | $0.730 | $0.670 | 5,900,222 

On March 10, 2010, the closing bid price of the Common Shares
on the TSX was $0.67 per share. The Company is not listed for trading on any
securities exchange in the United States, and there has been no active market in
the United States for the Common Shares except for over the counter quotations
by Pink Sheets. Such over the counter market quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commissions and may not necessarily
represent actual transactions and have not been taken into consideration in the
preceding table.

Price Fluctuations, Share Price Volatility in Canadian
dollars

Securities markets in Canada have experienced a high level of
price and volume volatility in recent years, with many resource companies
experiencing wide price fluctuations not necessarily related to operating
performance or underlying asset values of such companies. The Companys shares
traded between $0.40 and $3.15 during the year 2008 and between $0.55 and $1.35
during the year 2009. The Companys shares traded between $0.65 and $1.12 during
the third quarter of 2009, between $0.68 and $0.92 during the fourth quarter of
2009 and between $0.67 and $0.73 from January 1, 2010 to March 10, 2010. No
assurance can be made that the Companys share price and volume will not
continue to fluctuate materially.

(b) Holders

As of December 31, 2009, the Company has no holder of
debentures and had 55 holders of record of which 11 were registered holders in
the United States holding according to Computershare of Canada, holding
approximately 1,000,634 common shares or 0.80% of the shares capital of the
Company. CEDE & CO is holder of record in the United States and represents
an unidentified number of holders residing in the United States of America, The
Company had 44 registered holders in Canada holding 99.10% of the shares capital
of the Company. The Company had only 1 registered holder in other countries.

(c) Dividends

The Company has not paid any dividend since its incorporation
and does not anticipate as of March 10, 2010, the payment of dividends in the
foreseeable future. At present, the Companys policy is to retain earnings, if
any, to

---

61

finance exploration on its properties. The payment of dividends
in the future will depend upon, among other factors, of the Companys earnings,
capital requirements and operating financial conditions.

(d) Equity compensation plan information as at December 31,
2009

|Plan Category                                                                        | Number of securities to be issued upon
      exercise of outstanding options, warrants and
      rights | Weighed-average exercise price of
      outstanding options, warrants and rights | Number of securities remaining available for
      future issuance under equity compensation plan
      (excluding securities reflected in column (a))
|------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|Stock option plan
      Equity compensation plans approved by security
      holders | 4,310,500                                                                                               | $1.89                                                                            | 3,474,586                                                                                                                                             
|Equity
      compensation plans not approved by security holders                     | N.A.                                                                                                    | N.A.                                                                             | N.A.                                                                                                                                                  
|Total:                                                                               | 4,310,500                                                                                               | $1.89                                                                            | 3,474,586                                                                                                                                             

Recent sales of unregistered securities: use of proceeds
from registered securitiesin Canadian dollars.

1. Private placement of December 7 and December 8, 2009(1)

|                   | Securities Sold            | Price per flow- | Consideration
|------------------ | -------------------------- | --------------- | -------------
|                   | (a)                        | through common  | ©            
|                   |                            | share           |              
|                   |                            | (b)             |              
|Date of placements | Flow-through common shares |                 |              
|2009/12/07(1)      | 2,000,000                  | $1.00           | $2,400,000.  
|2009/12/08(1)      | 400,000                    | $1.00           | $400,000     
|2009/12/08         | 100,000                    | $1.00           | $100,000.    
|Total:             | 2,500,000                  |                 | $2,500,000   

2.Private Placement dated January 27, 2010(2)

|           | Securities Sold |             |             |            |                                                      | Price          | Consideration
|---------- | --------------- | ----------- | ----------- | ---------- | ---------------------------------------------------- | -------------- | -------------
|           | (a)             |             |             |            |                                                      | (b)            | (c)          
|Date       | Units           | Common      | Warrants    | Expiry     | Exercise price                                       | Price per Unit | Total:       
|           |                 | shares      | included in | Date of    | of Warrants                                          |                |              
|           |                 | included in | the Units   | Warrants   |                                                      |                |              
|           |                 | the Units   |             |            |                                                      |                |              
|2010/01/27 | 100,000         | 100,000     | 50,000      | 2013/01/27 | $1.00  0 to 24 months $1.05 
      24 to 36 months | $0.95 per Unit | $95,000      

|Date       | Convertible | Subscription | Maturity   | Conversion                                                         | Warrants     | Expiry     | Exercise                                            
|---------- | ----------- | ------------ | ---------- | ------------------------------------------------------------------ | ------------ | ---------- | ----------------------------------------------------
|           | Notes       | price        | Date       | of Notes                                                           | accompanying | date of    | price                                               
|           |             |              |            |                                                                    | the Notes    | warrants   |                                                     
|2010/01/27 | 14,905      | $14,905,000  | 2015/02/27 | 1,053 common shares per Note
      Total: 15,689,474 common shares | 7,844,737    | 2013/01/27 | $1.00  0 to 24 months $1.05 
      24 to 36 months

---

62

|Date       | Securities Sold (a)
      Transaction Fee Units | Common shares
      included in the Units | Warrants included in
      the Units | Expiry Date of
      Warrants | Exercise price of
      Warrants                     | Price (b) Price
      per Unit | Consideration ( c ) 5%
      of gross proceeds in Transaction Fee
      Units
|---------- | ----------------------------------------------- | ----------------------------------------- | ------------------------------------ | ----------------------------- | ---------------------------------------------------- | ------------------------------ | -----------------------------------------------------------------------------
|2010/01/27 | 789,474                                         | 789,474                                   | 394,737                              | 2013/01/27                    | $1.00  0 to 24 months $1.05 
      24 to 36 months | $0.95                          | $750,000                                                                     

|(1) | As reported in Form 8 K dated December 15, 2009 and in
      the table above, on December 8, 2009 the Company completed in Canada a
      non-brokered private placement for a total flow-through financing of
      $2,500,000. The Company issued in this private placement a total of
      2,500,000 flow-through common shares at the price of $1.00 per share. This
      private placement was made with three (3) subscribers from the Province of
      Ontario in Canada. Each subscriber qualified as an accredited investor.
      Strateco realised this private placement with one insider holding more
      than 10% of the share capital of Strateco through one fund and one
      accredited investor that are related for an aggregate amount of $2.4M and
      another accredited investor for an amount of $100,000.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The flow-through proceeds will be used by the Company to
      incur eligible exploration expenses on its MATOUSH PROJECT including
      MATOUSH, MATOUSH EXTENSION, ECLAT AND PACIFIC BAY - MATOUSH PROPERTIES and
      also on the MISTASSINI PROPERTY, all located in the Province of Quebec in
      Canada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Company paid to third parties a total amount of
      $100,000 as Finders fees.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(2) | As reported in Form 8-K dated February 1, 2010 and in the
      table above, the Company concluded in Canada a non- brokered private
      placement for a financing of $15,000,000 (Private Placement). Sentient
      Executive GP III Limited subscribed on behalf of two funds from Cayman
      Islands (Sentient) is anindependent society managing funds
      having investments totaling more than US$1.3G in natural resources
      sector.                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Company issued in this Private Placement a total of
      100,000 Units at the price of $0.95 per Unit for a total subscription
      price of $95,000. Each Unit is comprised of one common share and half of
      one share purchase warrant for a total of 50,000 warrants related to the
      Units. Each warrant (Warrant) gives the right to its holder to acquire a
      common share of the Company for a period of three years at the exercise
      price of $1.00 per share for the first 24 months and at the price of $1.05
      per share for the next twelve months.                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | In this Private Placement, the Company also issued a
      total of 14,905 unsecured convertible Notes. Each Note is subscribed at a
      $1,000 principal amount for a total subscription price at Closing in the
      amount of $14,905,000. Each tranche of $1,000 in Notes is accompanied by
      527 Warrants for a total of 7,844,737 Warrants related to Notes. Each
      Warrant related to Notes gives the right to its holder to acquire a common
      share of the Company for a period of three years at the exercise price of
      $1.00 per share for the first 24 months and at the exercise price of $1.05
      per share for the next twelve months.                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Notes do not bear interest and will mature five years
      plus one month after Closing, on February 27, 2015. At the option of
      Sentient, any time during this period, the Notes may be repaid by the
      Company by conversion of the Notes into common shares, at a conversion
      price of $0.95 per share and at the rate of 1,053 common shares per $1,000
      principal amount of Notes for a total of 15,689,474 common
  shares.                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Subject to subsequent regulatory approvals, upon
      occurrence of specific events, the Notes conversion price could be
      eventually adjusted pursuant to formula set forth in the Notes
      Certificates. The Company holds also the option no more than 60 days prior
      to Maturity date to repay the Notes in issuing common shares at a
      conversion price to be established according to a formula based on the
      market price then in effect. The Notes are not redeemable by the Company,
      except under specific conditions set forth in the Notes
    Certificates.                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Company has agreed to pay, to Sentient, transaction
      fees equal to 5% of the gross proceeds of the Private Placement. These
      transaction fees in the total amount of $750,000 will be paid in the
      corresponding number of Units for a total of 789,474 Transaction Fee Units
      representing a total 789,474 common shares and 394,737 Warrants.
      Transaction Fee Units are issued upon the same terms and conditions as the
      other Units in the Private Placement.                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The common shares issued with the Units and the
      Transaction Fee Units or upon exercise of the Warrants or conversion of
      the Notes cannot be traded for a period of four months plus one day
      following the closing date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

---

63

Subject to compliance with the TSX
rules and policies in Canada and the conditions set forth in the subscription
agreements, Sentient has the option for a period of 5 years and one month after
Closing to subscribe in Stratecos future equity financings, sufficient
securities to maintain a 5% holding position in the Company.

In reason of Sentients substantial
investment, Strateco management has agreed to recommend the election of a
Sentient Group representative to the Companys Board of Directors.

The Company intends to use the net
proceeds of the transaction to finance exploration work, mainly for the
acquisition of materials and infrastructure for its Matoush uranium project
located in the Otish Mountains in the Province of Québec, Canada.

The Company negotiated this transaction
at arms length with Sentient. However, following the Closing, Sentient would be
deemed to be a new insider of the Company in assuming that it could hold
directly and indirectly upon conversion of the Notes and upon exercise of
Warrants, an interest of 24,868,422 common shares, or 16.48% of the total issued
and outstanding common shares of the Company.

|(d) | Exemption from registration                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | For the private placement concluded on December 7 and 8,
      2009, no form of general solicitation or general advertising, as such term
      is defined under the U.S. Securities Act (including advertisements,
      articles, notices or other communications published in any newspaper,
      magazine or similar media or broadcast over radio or television or any
      seminar or meeting whose attendees had been invited by general
      solicitation or general advertising), was used by the Company or. to the
      best of its knowledge, any other person acting on behalf of the Company
      on, in respect of or in connection with the offer and sale of the
      flow-though common shares, in the United States or elsewhere or to
      citizens or residents of the United States or elsewhere.                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Neither the Company nor any person authorized to act on
      its behalf has sold or offered for sale any flow-through common share or
      solicited any offers to buy any flow-though common shares in violation of
      Section 5 of the U.S. Securities Act or Canadian or other securities laws.
      The transactions were exempt from the registration requirements of the
      U.S. Securities Act and all other applicable securities laws, including
      Canadian securities laws pursuant to section 2.3 (2) of Canadian National
      Instrument 45-106 entitled: Regulation 45-106 respecting prospectus and
      registration exemptions(NI 45-106) for two subscribers and both
      sections 2.3(2) and 2.10 (2) of NI 45-106 for the third
  subscriber.                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | For the private placement closed on January 27, 2010, no
      form of general solicitation or general advertising, as such term is
      defined under the U.S. Securities Act (including advertisements, articles,
      notices or other communications published in any newspaper, magazine or
      similar media or broadcast over radio or television or any seminar or
      meeting whose attendees had been invited by general solicitation or
      general advertising), was used by the Company or. to the best of its
      knowledge, any other person acting on behalf of the Company on, in respect
      of or in connection with the offer and sale of the common shares, in the
      United States or elsewhere or to citizens or residents of the United
      States or elsewhere.                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Neither the Company nor any person authorized to act on
      its behalf has sold or offered for sale any common share or solicited any
      offers to buy any common shares in violation of Section 5 of the U.S.
      Securities Act or Canadian or other securities laws. The transactions were
      exempt from the registration requirements of the U.S. Securities Act and
      all other applicable securities laws, including Canadian securities laws.
      The transactions were exempt from the registration requirements of the
      U.S. Securities Act and all other applicable securities laws, including
      Canadian securities laws pursuant to section 2.10 (2) of Canadian National
      Instrument 45-106 entitled: Regulation 45-106 respecting prospectus and
      registration exemptions(NI 45-106) for both subscribers.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(e) | Terms of conversion or exercise.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | In the Private Placement closed on January 27, 2010, each
      warrant accompanying the Units, Transaction Fee Units and the Notes gives
      the right to its holder to acquire a common share of the Company for a
      period of three years at the exercise price of $1.00 per share for the
      first 24 months and at the price of $1.05 per share for the next twelve
      months.                                                                                                                                                                                                                                                                                                                                                                                                                                                               

---

64

At the option of Sentient, any time
during this period, the Notes may be repaid by the Company by conversion of the
Notes into common shares, at a conversion price of $0.95 per share and at the
rate of 1,053 common shares per $1,000 principal amount of Notes for a total of
15,689,474 common shares.

(f) Use of proceeds in Canadian dollars

During the year ended December 31, 2009, the Company in order
to conduct exploration works on its properties used sums from proceeds obtained
from the private placements consisting of non flow-through proceeds realized in
the year 2007, in the remaining amount of $18.9M as of January 1, 2008, the
amount of $197,700 representing the sums obtained from the exercise of stock
options and warrants during the year 2008 and the sum of tax credits for
exploration expenses in the amount of $7,394,153. Other proceeds were realised
late in the year 2008 from flow-through financing in the amount of $8M. In 2009,
the Company realised a private placement of $2.5 M. Therefore the Company had
obtained since the year 2007, a total approximate amount $36.9 M of net
proceeds. The use of proceeds for exploration expenses and acquisition of
properties for the first three quarters of the year 2009 have been disclosed in
Forms 10 Q for the periods ended March 31, June 30 and September 30,
2009.

Proceeds have been used in the last quarter of the period in the following manner: A total amount of $3,339,716 has been spent on exploration of MATOUSH, MATOUSH EXTENSION, ECLAT PROPERTY, an annual payment of $100,000 pursuant to the Option Agreement on PACIFIC BAY-MATOUSH, APPLE and MISTASSINI properties, $96,000 on the acquisition of an interest in ECLAT and $8,441,128  on working capital expenses. The Company anticipates possibly using the proceeds for other projects if the results obtained do not justify further expenses and the Company reserves the right to reallocate the use of proceeds as it deems appropriate in the best interests of the Company and its shareholders.

The Company conducted during the last quarter of 2009
exploration works on MATOUSH PROPERTY 3,054,920 representing 8.20% of the
issuers net offering proceeds in the approximate amount of $36.9 M for the year
2009. A summary of exploration works conducted during this reporting period on
the MATOUSH PROPERTY can be consulted in the section Item 2: Properties
and Item 7: Management Discussion and Analysis of Financial
Position.

The Company also spent during the fourth quarter period
exploration related expenses in the amount of $183,777 on ECLAT PROPERTY, and
$96,000 as the last condition for the acquisition of a 100% interest in the
property ECLAT on June 15, 2009 on all minerals except diamonds as discussed in
details in Item 2: Properties, $13,198 on PACIFIC BAY-MATOUSH PROPERTY
and $100,000 for the acquisition of an interest of 60% in the property pursuant
to the Option Agreement, of $71,655 on Mistassini Property, each amount
representing less than 5 % of the issuers net offering proceeds.

Agreements to issue securities for acquisition of properties

On or about October 27, 2009, the Company issued 40,000 common
shares to Pacific Bay Minerals Ltd (Pacific Bay) pursuant to an agreement with
Pacific Bay allowing the Company to earn a 60% interest in PACIFIC BAY MATOUSH
PROPERTY further detailed in Part I Item 2 Properties MATOUSH PROJECT A.2
PACIFIC-BAY MATOUSH property.

This private placement is exempted from registration in the
United States pursuant to sections 4 (2) and 5 of the Securities Act 1933.

Directors fees in Canadian dollars

The Company paid payments in the last quarter to independent
directors fixed fees for their presence to the Board of Directors Meetings and
Audit committee meetings in the amount of $5,400 for a total amount during the
year of $23,400 (See Item 10 Executive Compensation for U.S.
dollar amounts and details).

---

65

Item 6 Selected Financial Data.

Selected Annual Information

CURRENCY AND EXCHANGE RATES

All dollar amounts set forth in this report are in Canadian
dollars, except where otherwise indicated. The following table sets forth
(i) the rates of exchange for the Canadian dollar, expressed in the U.S.
dollars, in effect at the end of each of the periods indicated; (ii) the average
exchange rates in effect on the last day of the end of each such period; (iii)
the high and low exchange rate during such periods, in each case based on the
noon buying rate in cable transfers in Canadian dollars as certified for customs
purposes by the Federal Reserve Bank of New York. Prices based on the period
January 1 to December 31 yearly, and quoted in U.S. Dollars.

2009
    2008
    2007
    2006
    2005Rate at end of Period
    1.0461
    1.2240
    0.9881
    1.1652
    1.1656Average Rate during Period
    1.1549
    1.0713
    1.0750
    1.131
    1.2115High Rate
    1.2995
    1.2971
    1.1852
    1.172
    1.2703Low
      Rate
    1.0289
    0.9717
    0.9168
    1.099
    1.1507


Selected financial information for the five preceding years
ended December 31, 2009, 2008, 2007, 2006 and 2005 is shown in the following
table:

**FOR THE PAST FIVE FINANCIAL YEARS in Canadian
Dollars**

2009-12-31
    2008-12-31
    2007-12-31
    2006-12-31
    2005-12-31(Restated)
    (Restated)
    (Restated)$
    $
    $
    $
    $Total income
    54,049
    446,328
    963,895
    264,008
    2,246ExpensesGeneral and administrative expenses
    1,529,121
    1,297,654
    1,714,447
    1,497,857
    1,120,470Stock-based compensation
    543,199
    1,089,533
    1,377,348
    244,541
    79,600Write-down of deferred expenditures and
      mining properties
    -
    356,690
    -
    -
    -Unrealized loss (gain) on changes in fair
      value of investment-
    (10,000)
    265,000
    -
    -
    -Future income taxes benefits
    525,000
    1,028,000
    1,973,321
    (689,200)
    374,600Net
      loss
    1,483,274
    1,534,549
    154,579
    2,167,590
    823,224Net loss per share, basic and diluted
    0.012
    0.013
    0.001
    0.027
    0.020Current assets
    10,295,244
    1,695,007
    28,884,998
    11,561,056
    1,383,442Total assets
    61,655,744
    59,562,068
    52,744,147
    15,270,641
    4,731,443Current liabilities
    1,854,116
    1,396,939
    1,162,814
    1,555,924
    700,951Working capital
    8,441,128
    15,562,068
    27,722,184
    10,005,132
    682,491Shareholders equity
    58,177,106
    56,488,651
    50,829,333
    13,798,717
    4,006,092Number of outstanding shares
    121,806,432
    119,266,432
    114,167,867
    96,373,367
    61,771,257Number of outstanding stock options
    4,310,500
    3,314,500
    2,106,500
    928,000
    2,248,000


---

66

Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations.

Scope of managements financial analysis

The following analysis should be read in conjunction with the
audited financial statements of the Company, Strateco Resources Inc. an
exploration stage company and notes thereto for the years ended December 31,
2009 and 2008. The financial statements were prepared in accordance with
Canadian generally accepted accounting principles (GAAP) with a note of
reconciliation to U.S. GAAP at Note 23 of the Financial Statements.

Forward-looking statements

Certain statements other than purely historical information,
including estimates, projections, statements relating to the business plans,
objectives, and expected operating results, and the assumptions upon which those
statements are based, are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, Section 27A of the Securities
Act of 1933 and Section 21 E of the Securities Exchange Act of 1934. These
forward-looking statements generally are identified by the words believes,
project, expects, anticipates, estimates, intends, strategy, plan,
may, will, would, will be, will continue, will likely result, and
similar expressions. We intend such forward-looking statements to be covered by
the safe-harbor provisions for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995, and are including this
statement for purposes of complying with those safe-harbor provisions.
Forward-looking statements are based on current expectations and assumptions
that are subject to risks and uncertainties which may cause actual results to
differ materially from the forward-looking statements. The management ability to
predict results or the actual effect of future plans or strategies is inherently
uncertain. There can be no assurance that such statements will prove to be
accurate. Factors that could cause future results, activities and events to
differ materially from those expressed or implied by such forward-looking
statements include the volatility of uranium prices, risks inherent in the
mining industry, uncertainty in the estimation of mineral resources and
additional financial requirements, as well as the Companys ability to secure
such financing.

2009 highlights in Canadian dollars

The Company had an excellent year in 2009. The sustained efforts of its highly qualified, dedicated team resulted in considerable progress on the MATOUSH PROJECT development, thanks to its strong potential and very high, consistently-impressive grades.

In terms of exploration, the Company focused on the development
of its best uranium project, the MATOUSH PROJECT. Located in the Otish Mountains
of northern Quebec, about 275 km north of Chibougamau, the project comprises the
MATOUSH, MATOUSH EXTENSION, ECLAT and PACIFIC BAY-MATOUSH properties as
described in details in Item 2: PROPERTIES.

Once again, work yielded very good results, in particular the
discovery of new mineralized zones on the Eclat property. These results
confirmed the enormous potential for increasing the resource on the MATOUSH and
ECLAT properties along the Matoush fault, which extends over a distance of more
than 15 km. Consequently, the 2009 surface exploration program was augmented
from 30,000 to 35,000 metres of drilling.

According to the most recent update of resource estimate by Scott Wilson  Roscoe Postle Associates Inc. (“Scott Wilson RPA”) dated September 18, 2009,  the indicated resource at the  MATOUSH PROPERTY has doubled in 12 months to 436,000 tonnes grading 0.78%  U3O8 containing 7.46 million pounds of U3O8.  The inferred mineral resource is  estimated at 1.16 million tonnes grading 0.50% U3O8 containing 12.78 million pounds of U3O8. These results  attest to the robustness of the Matoush deposit, and have raised the bar much  higher in terms of attainable objectives.

Due to the ever-growing
  potential of the MATOUSH PROJECT, the Companys objective is now to determine
  the possibility of reaching 60 million pounds of U3O8.

On the engineering front, 2009 was marked by the completion of
multiple detailed plans required for the MATOUSH PROJECT underground exploration
program. The Company finalized the technical documentation and applied to
the

---

67

Canadian Nuclear Safety Commission (CNSC) for the licence
required to begin driving the exploration ramp. Once it obtains this licence,
the Company will become the first company in Québec, Canada in this uranium
cycle to advance a uranium exploration project to the underground exploration
stage.

The Company also completed and filed the hefty environmental
impact study for the underground exploration phase of the MATOUSH PROJECT. The
completion of this study is a major step forward for the MATOUSH PROJECT,
particularly as the study concludes that the project will have a negligible
impact on workers, the local population and the environment. The study contents
will be presented and discussed at public hearings to be held in Quebec, Canada
on dates set jointly by the provincial review committee (COMEX), which
administers the James Bay Agreement, and the federal review panel (COFEX).

The Operations and Engineering department also obtained the
permit required to build a landing strip on the MATOUSH PROPERTY. The strip will
facilitate the transportation of the manpower and equipment required for
operations at the MATOUSH PROJECT site to move forward.

Despite financial market woes, the Company closed two major
financings in 2009. The month of December started with the closing of a $2.5
million financing and ended with discussions that led to the closing of a $15
million financing in January 2010.

On June 9, 2009, the Companys Board of Directors appointed
Ingrid Martin, CA, as the Companys new Treasurer and Chief Financial Officer.

Finally, throughout 2009, there were multiple initiatives aimed
at maintaining and strengthening communications with the Mistissini Cree and
citizens of Chibougamau and Chapais in Quebec, Canada. The opening of offices in
Mistissini and Chibougamau, the creation of the position of Community Affairs
Manager and involvement in the Conférence régionale des élus de la
Baie-James (CREBJ) are just some indications of how important openness,
transparency and the dissemination of information are for the Company. The
Company took the measures required to publicise the main aspects of the MATOUSH
PROJECT, demystify uranium and respond to the publics questions and concerns.

Projects and new acquisitions

At December 31, 2009, the Company had a portfolio of five wholly-owned mining properties and an interest in and options on three mining properties in Quebec. These properties total 1,068 claims for a total area of 56,747 hectares (567km2).

ECLAT Property

The Company acquired a 100% interest in the 90 claims of the
ECLAT property for all mineral substances except diamonds on June 15, 2009, when
it made the final $96,000 payment before the fourth anniversary of the date of
the agreement signed on July 6, 2005 with Vija Ventures Corporation (Vija). The
property is subject to a 2% NSR royalty on any production, payable to Vija for
all minerals except diamonds, and a 2% share of the gross proceeds from the
future sale or disposition of the carbon emissions rights related to uranium
production on the property, payable to Vija.

PACIFIC BAY-MATOUSH Property

On October 22, 2009, the Company notified Pacific Bay Minerals
Ltd. (Pacific Bay) that it had incurred cumulative exploration expenses of
$1.5 million before the date of the second anniversary of the option and joint
venture agreement dated October 29, 2007, and completed more than the required
cumulative minimum of 5,000 metres of drilling on the PACIFIC-BAY MATOUSH
property.

Pursuant to the terms of the agreement, the Company also issued
40,000 common shares at $0.86 per share to Pacific Bay on that date, as well as
a cash payment of $100,000.

To acquire an undivided 60% interest in the PACIFIC BAY-MATOUSH
property, the Company must still issue a total of 120,000 common shares, make
cash payments totalling $300,000, incur an additional $1.5 million in exploration expenses and complete an additional 5,000 metres of
drilling before the fourth anniversary of the date of the agreement.

---

68

MISTASSINI Property

The Mistassini property located in the Otish Mountains at about
40 km south west of MATOUSH PROPERTY .consists of 171 claims covering a surface
area of 9,114.47 hectares (91.15 km2).

On November 24, 2008, the Company and Majescor Resources Inc.
(Majescor) signed an option and joint venture agreement retroactive to
February 14, 2008, for the Company to earn an undivided 60% interest in
Majescors uranium rights on the Mistassini property by incurring an aggregate
of $1.3 million in exploration expenditures over three years for a total firm
commitment of $500,000 for Year 1 of the option. The remaining $800,000 in
exploration expenses will be incurred equally in Year 2 and Year 3.

Northern Superior Resources Inc. which holds 100% of rights on
diamonds and 50.5% of minerals rights other than uranium in the Mistassini
property, is entitled upon production to a 2.0% Yellow Cake Royalty.

As of February 14, 2009, on the first anniversary of the Option
Agreement, the Company had met its obligations in spending more than $500,000 in
exploration expenses on the Mistassini property.

Strategy and action plan

The Company plans to sustain and accelerate its efforts to
achieve its objectives of increasing the uranium resource on its wholly-owned
MATOUSH property and becoming the first Quebec company and first so-called
junior company in Canada in this cycle, meaning in nearly 25 years, to advance a
uranium exploration project to the underground exploration stage.

To do this, the Company is relying on an aggressive drilling
program and a highly qualified team with an enhanced understanding of the
MATOUSH PROJECT geology.

Management is also proud of the new update of the resource
estimate by Scott Wilson RPA. The estimate provides yet more evidence of the
very important potential of the MATOUSH PROPERTY and the Companys promising
future.

Given the demonstrated potential for resource growth, the
number of metres to be drilled in the coming years should be increased
substantially. Consequently, for 2010 and 2011, management plans to conduct a
surface drilling program of 60,000 metres per year along the Matoush fault,
which has been traced by drilling over a distance of more than 15 km. This
program will be carried out in parallel with the underground exploration work,
and will focus on of systematic exploration of the structure. The results of the
surface drilling program should allow the maximum capacity of the Matoush ore
processing plant to be established.

The objectives set by management in 2006 have been met. With
  the latest resource estimate and drilling now underway and likely exceed 120,000
  metres over the next two years, management now has a much more ambitious goal,
  which is to outline 60 million pounds of U3O8for future
  production of over 2.5 million pounds of U3O8 per year. The final mill production capacity will, however, only be
determined on the basis of the resource defined in 2011.

In addition, as of 2011, the Company plans to accelerate the
mine construction permitting process by starting the environmental studies
required for tailing pond construction.

In terms of communications, the Company intends to maintain and
strengthen communications with the First Nations and residents of the
municipality of James Bay. To do so, it will continue to organize various
meetings and information sessions.

The Company also accords a high priority to public and investor
information, knowing that information disclosure is essential to the success of
the project. The Company will therefore take the measures required to ensure
that all project work and activities are part of an open, transparent process.

---

69

The exploration budget for the year 2010 is of $1,600,000 to
cover general and administrative expenses and approximately $28.2 million to
pursue the exploration programs planned for the remaining of fiscal year
2010.

The Company plans to carry out 60,000 metres of surface
drilling per year in 2010 and 2011, in parallel with underground exploration
work. The results of the surface drilling program should allow the maximum
capacity of the Matoush ore processing plant to be established.

In fiscal year 2009, the Company received $8.3 M in exploration
credits and received amounts from financing of $2.5 M in December 2009. As of
December 31, 2009, the annual cash flow for investing activities was of
$9.2M  for the year 2009.

The Companys exploration activities are all concentrated in
Quebec, considered to be amongst the most favourable regions in the world for
mine development, considering credits and the absence of political risks.

The Company is eligible for combined exploration tax credits in
Quebec and Canada equal to approximately 50% of surface exploration expenses
until such time as it achieves commercial producer status.

Liquidity

The Companys working capital stood at $8,441,128 at December
31, 2009 ($15,562,068 at December 31, 2008). On January 27, 2010, the Company
closed a private placement with Sentient of 100,000 units for an amount of
$95,000 and $14,905,000 of convertible notes accompanied by common share
purchase warrants.

In fiscal 2009, the Company did not receive any proceeds from
the exercise of stock options,( $9,500 in 2008 ) and did not receive any
proceeds from the exercise of warrants ( $ 188,200 in 2008).

The Company does not have any debt or investments in
asset-backed commercial paper.

The Companys investment activities primarily consist of funds
used in exploration work and the addition of properties. The Company is entitled
to a refundable tax credit for resources for up to 38.75% of eligible expenses,
and a credit on mining duties refundable for losses of 12% of eligible expenses
incurred. During 2009, the Company cashed $8,310,361 in tax credits for
resources ($7,394,153 in 2008).

The 2010 budget is approximately of $1.6 million to cover
general and administrative expenses and approximately $28.2 million to pursue
the exploration programs planned for the remaining of fiscal year 2010.

Management is of the opinion that the Company requires more
funding before the end of the year. In the past, the Company has been able to
rely on its ability to raise financing through public and private equity
offerings. In addition, once its interests on the MISTASSINI and
PACIFIC-BAY-MATOUSH properties are acquired, the Company will be able to explore
and develop further theses properties through joint-venture participation.

The Company expects to spend $28.2 million on the Matoush
Project including approximately $8M on drilling.

Outstanding Share Data

The Company is authorized to issue an unlimited number of
common shares without par value.

The Company has a stock option plan for its officers,
directors, key employees, consultants and suppliers employees. The board of
directors sets the conditions for acquiring the common stock options according
to quantity and exercise price, for a maximum term of five years. The strike
price of the options granted may not be less than the market price, which
corresponds to the weighted average price based on the volume and value of the
shares traded on the Toronto Stock Exchange for the five days preceding the
option grant. The options granted are valid for a period established by the
board of directors, not to exceed five years from the date the options are
granted. At December 31, 2009, the number of common shares reserved for common
stock option grants was 10,654,586. The maximum number of options that can be
granted to any participant may not exceed 5% of the issued and outstanding
shares of the capital stock.

---

70

As at December 31, 2009, the Company had 121,806,432 shares
(119,266,432 at December 31, 2008) and 4,310,500 stock options issued and
outstanding, of which 4,159,833 were exercisable at prices from $0.20 to $3.37
each, with expiry dates ranging from December 20, 2010 to September 14, 2014. In
fiscal year 2009, the Company granted 1,077,500 (1,363,500 in 2008) stock
options to officers, directors, consultants and employees of the Companys
suppliers. These options have an exercise price of $1.00 per share for a
five-year period.

Of the total number of stock options granted, 4,159,833 stock
  options can be exercised and 143,667 stock options cannot be exercised as of
  December 31, 2009. During the year 2009, 81,500 stock options were annulled 90
  days after the end of employment of a management companys employees. These
  stocks options can be replaced in the reserve which as of December 31, 2009
  totalled 3,488,586 stock options not yet granted.

As at December 31, 2009, the Company had no outstanding
warrant.

As it appears at the following table, as at March 10, 2010,
following the private placement of January 27, 2010, the Company had 122,695,906
common shares issued and outstanding, 8,289,474 warrants outstanding
representing a total of 8,289, 474 underlying common shares reserved on the TSX.
The Company has also reserved on the TSX for eventual conversion of 14,905 Notes
a total of 15,689,474 common shares. On that date, following grants to employees
of a Companys suppliers a total number of 4,354,500 stock options were
outstanding.

|OUTSTANDING OR RESERVED SHARE DATA                                       |  |                         | 
|------------------------------------------------------------------------ |  | ----------------------- | 
|                                                                         |  |                         | 
|                                                                         |  | On
      March 10, 2010 | 
|                                                                         |  | Number                  | 
|Common shares outstanding                                                |  | 122,695,906             | 
|Reserved shares for eventual exercise of outstanding Stock
      options |  | 4,354,500               | 
|Reserved shares for eventual exercise of
      outstanding Warrants      |  | 8,289,474               | 
|Reserved shares
      for eventual conversion of outstanding Notes       |  | 15,689,474              | 
|Outstanding or reserved common shares- diluted                           |  | 151,029,354             | 

**Dividend Policy**

The Company has not declared any cash dividend on its
outstanding common shares since incorporation. Any dividend payment will depend
on the Companys financial requirements for its exploration programs, its level
of growth and other factors deemed pertinent by the Board of Directors under the
circumstances. It is unlikely that a dividend will be paid in the foreseeable
future.

Accounting Value of Mining Properties

At the end of each year, work is assessed to determine the
future potential of each property.

Capital resources

The Company has no material commitments for capital
expenditures as of the end of the latest fiscal period.

---

71

|Results of Operations                                                 |  |                   |   |  |            |   |  |            |  
|--------------------------------------------------------------------- |  | ----------------- | - |  | ---------- | - |  | ---------- | -
|                                                                      |  |                   |   |  |            |   |  |            |  
|SELECTED INFORMATION AND OPERATING RESULTS                            |  |                   |   |  |            |   |  |            |  
|                                                                      |  |                   |   |  |            |   |  |            |  
|                                                                      |  | 2009              |   |  | 2008       |   |  | 2007       |  
|                                                                      |  | $                 |   |  | $          |   |  | $          |  
|Income Interest                                                      |  | 54,046            |   |  | 446,328    |   |  | 963,895    |  
|Expenses                                                              |  |                   |   |  |            |   |  |            |  
|General and administrative
      expenses                             |  | (1,529,121        | ) |  | (1,297,654 | ) |  | (1,714,447 | )
|Stock-based compensation                                              |  | (543,199          | ) |  | (1,089,533 | ) |  | (1,377,348 | )
|Fair value variation
      for financial instruments held for trading |  | 10,000            |   |  | 265,000    |   |  | -          |  
|Write-off of deferred expenditures
      and mining properties        |  | -                 |   |  | (356,690   | ) |  | -          |  
|Future income taxes benefits                                          |  | 525,000           |   |  | 1,028,000  |   |  | 1,973,321  |  
|Net loss                                                              |  | (1,483,274        | ) |  | (1,534,549 | ) |  | (154,579   | )
|Net loss per share, basic and diluted                                 |  | (0.012            | ) |  | (0.013     | ) |  | (0.001     | )
|                                                                      |  |                   |   |  |            |   |  |            |  
|                                                                      |  | As of December 31 |  
|                                                                      |  | 2009              |   |  | 2008       |   |  | 2007       |  
|                                                                      |  | $                 |   |  | $          |   |  | $          |  
|Total assets                                                          |  | 61,655,744        |   |  | 59,761,590 |   |  | 52,744,147 |  
|                                                                      |  |                   |   |  |            |   |  |            |  
|Long term liabilities                                                 |  |                   |   |  |            |   |  |            |  
|Obligation
      under capital lease                                  |  | 171,522           |   |  | -          |   |  | -          |  
|Future income
      tax                                               |  | 1,293,000         |   |  | 1,876,000  |   |  | 752,000    |  
|Asset retirement obligation                                           |  | 160,000           |   |  | -          |   |  | -          |  
|                                                                      |  | 1,624,522         |   |  | 1,876,000  |   |  | 752,000    |  

The interest income is lower in 2009 than in 2008 and 2007 due
to a combination of lower interest rates and lower level of cash invested. As at
December 31, 2009, the Company has one term deposit of $1,000,000 earning a
0.40% interest while as at December 31, 2008 deposits term of $9,500,000 were
earning between 2.20% and 2.35% interest. As at December 31, 2007 deposits term
of $18,000,000 were earning between 4.35% and 4.56% interest.

The Company posted a net loss of $1,483,274 for the financial
year 2009, compared to a net loss of $1,534,549 for the previous year and a loss
of $154,579 for the fiscal year ended December 31, 2007.

In 2009, 1,077,500 options (1,363,500 in 2008 and 1,499,000 in
2007) were granted and their fair value (determined using the
Black-Scholesoption-pricing model) were established at $0.41 per option
($0.7627 in 2008 and $1.3110 in 2007). In 2009, the stock-based compensation
cost was recognized in the statement of operations and an amount of $169,945
(nil in 2008 and 2007) was capitalized against the deferred expenditures.

General and administrative expenses were kept in essence at the
same level except for Companys increased activities in 2009 in investor
relations and legal and audit expenses

On January 14, 2008, the Company acquired 1,000,000 units of
Pacific Bay Minerals Limited (Pacific Bay) at $0.30 per unit, for $300,000. As
of December 31, 2008, the value of the investment decreased to $35,000. As of
December 31, 2009, the value of the investment is $45,000.

---

72

EXPLORATION EXPENSES

|                                                                |  |            |   |  |                   |   |  |          |   |  |           |   |  |                      |   |  |            |   |  |            |  
|--------------------------------------------------------------- |  | ---------- | - |  | ----------------- | - |  | -------- | - |  | --------- | - |  | -------------------- | - |  | ---------- | - |  | ---------- | -
|Exploration expenses for the year ended
      December 31, 2009 |  | Matoush    |   |  | Matoush Extension |   |  | Eclat    |   |  | Apple     |   |  | Pacific Bay- Matoush |   |  | Mistassini |   |  | Total      |  
|                                                                |  | $          |   |  | $                 |   |  | $        |   |  | $         |   |  | $                    |   |  | $          |   |  | $          |  
|Balance beginning of period                                     |  | 22,864,066 |   |  | 456,320           |   |  | 669,376  |   |  | 1,252,357 |   |  | 422,741              |   |  | 293,215    |   |  | 25,958,075 |  
|Additions                                                       |  |            |   |  |                   |   |  |          |   |  |           |   |  |                      |   |  |            |   |  |            |  
|Consultants and subcontractors                                  |  | 3,506,561  |   |  | 24,661            |   |  | 55,919   |   |  | 90,363    |   |  | 58,361               |   |  | 64,593     |   |  | 3,800,458  |  
|Infrastructure, access roads, fuel depot and others             |  | 1,933,886  |   |  | -                 |   |  | -        |   |  | -         |   |  | 4,124                |   |  | 45,625     |   |  | 1,983,635  |  
|Drilling                                                        |  | 2,873,116  |   |  | -                 |   |  | 503,583  |   |  | 2,299     |   |  | 507,183              |   |  | 117,363    |   |  | 4,003,544  |  
|Transport and fuel                                              |  | 955,169    |   |  | -                 |   |  | -        |   |  | 1,208     |   |  | 59,654               |   |  | 83,400     |   |  | 1,099,431  |  
|Geophysics                                                      |  | -          |   |  | -                 |   |  | -        |   |  | -         |   |  | -                    |   |  | 100        |   |  | 100        |  
|First aid                                                       |  | 29,140     |   |  | -                 |   |  | -        |   |  | -         |   |  | -                    |   |  | -          |   |  | 29,140     |  
|Laboratory and analysis                                         |  | 389,534    |   |  | -                 |   |  | -        |   |  | -         |   |  | 12,600               |   |  | -          |   |  | 402,134    |  
|Travel and lodging                                              |  | 1,522,891  |   |  | -                 |   |  | -        |   |  | 365       |   |  | 15,971               |   |  | 21,086     |   |  | 1,560,313  |  
|Nuclear permits                                                 |  | 1,235,286  |   |  | -                 |   |  | -        |   |  | -         |   |  | -                    |   |  | -          |   |  | 1,235,286  |  
|Management fees                                                 |  | 474,948    |   |  | -                 |   |  | 49,785   |   |  | 2,280     |   |  | 60,585               |   |  | 41,066     |   |  | 628,664    |  
|Supplies and equipment rental                                   |  | 409,524    |   |  | -                 |   |  | -        |   |  | -         |   |  | -                    |   |  | -          |   |  | 409,524    |  
|Rolling equipment maintenance                                   |  | 158,122    |   |  | -                 |   |  | -        |   |  | 8,415     |   |  | 2,900                |   |  | -          |   |  | 169,437    |  
|General expenses                                                |  | 356,408    |   |  | -                 |   |  | -        |   |  | 2,027     |   |  | 1,300                |   |  | -          |   |  | 359,735    |  
|Environment                                                     |  | 854,999    |   |  | -                 |   |  | -        |   |  | -         |   |  | -                    |   |  | -          |   |  | 854,999    |  
|Stock-based compensation                                        |  | 169,945    |   |  | -                 |   |  | -        |   |  | -         |   |  | -                    |   |  | -          |   |  | 169,945    |  
|Amortization of property and equipment                          |  | 486,725    |   |  | -                 |   |  | -        |   |  | 53,611    |   |  | -                    |   |  | -          |   |  | 540,336    |  
|                                                                |  | 15,356,254 |   |  | 24,661            |   |  | 609,287  |   |  | 160,568   |   |  | 722,678              |   |  | 373,233    |   |  | 17,246,681 |  
|Credit for mining duties and other exploration credits          |  | (6,071,922 | ) |  | (27,641           | ) |  | (280,882 | ) |  | (10,853   | ) |  | (332,842             | ) |  | (175,729   | ) |  | (6,899,869 | )
|                                                                |  |            |   |  |                   |   |  |          |   |  |           |   |  |                      |   |  |            |   |  |            |  
|Net increase                                                    |  | 9,284,332  |   |  | (2,980            | ) |  | 328,405  |   |  | 149,715   |   |  | 389,836              |   |  | 197,504    |   |  | 10,346,812 |  
|                                                                |  |            |   |  |                   |   |  |          |   |  |           |   |  |                      |   |  |            |   |  |            |  
|Balance end of period                                           |  | 32,148,398 |   |  | 453,340           |   |  | 997,781  |   |  | 1,402,072 |   |  | 812,577              |   |  | 490,719    |   |  | 36,304,887 |  

Pursuant to the financing closed on October 1, 2008, the
Company had to incur expenses of $8,000,000 on the Matoush and Apple projects by
December 31, 2009. As of December 31, 2008, $3,147,744 was spent and as of
December 31, 2009, the residual engagement was spent. Therefore, the full
exploration expenses commitment was met on the $8,000,000 flow-through
financing.

Pursuant to the financing completed on December 8, 2009, the
Company had to incur expenses of $2,500,000 on the Matoush project by December
31, 2010. On December 31, 2009, $643,327 exploration expenses were incurred of
which $26,740 were disbursed.

---

73

|Exploration expenses for
      the year ended December 31, 2008 |  | Matoush    |   |  | Matoush Extension |   |  | Eclat   |   |  | Apple     |   |  | Pacific Bay-
      Matoush |   |  | Mistassi- ni |   |  | Mont- Laurier +
      Prospec- tion |   |  | Total      |  
|--------------------------------------------------------------- |  | ---------- | - |  | ----------------- | - |  | ------- | - |  | --------- | - |  | -------------------------- | - |  | ------------ | - |  | ----------------------------------- | - |  | ---------- | -
|                                                                |  | $          |   |  | $                 |   |  | $       |   |  | $         |   |  | $                          |   |  | $            |   |  | $                                   |   |  | $          |  
|Balance beginning of period                                     |  | 11,545,831 |   |  | 346,265           |   |  | 268,742 |   |  | 69,526    |   |  | 149,434                    |   |  | -            |   |  | 332,353                             |   |  | 12,712,151 |  
|Additions                                                       |  |            |   |  |                   |   |  |         |   |  |           |   |  |                            |   |  |              |   |  |                                     |   |  |            |  
|Consultants and
      subcontractors                            |  | 4,006,174  |   |  | 15,370            |   |  | 33,807  |   |  | 507,468   |   |  | 65,112                     |   |  | 81,501       |   |  | 17,101                              |   |  | 4,726,533  |  
|Infrastructure, access roads, fuel depot and
      others       |  | 871,709    |   |  | -                 |   |  | -       |   |  | 336,659   |   |  | 193                        |   |  | -            |   |  | -                                   |   |  | 1,208,561  |  
|Drilling                                                        |  | 7,058,631  |   |  | 129,142           |   |  | 340,877 |   |  | 466,418   |   |  | 221,462                    |   |  | 73,099       |   |  | -                                   |   |  | 8,289,629  |  
|Transport and fuel                                              |  | 1,830,237  |   |  | 27,875            |   |  | 5,245   |   |  | 234,743   |   |  | 169,606                    |   |  | 150,654      |   |  | -                                   |   |  | 2,418,360  |  
|Geophysics                                                      |  | 700        |   |  | -                 |   |  | -       |   |  | 10,682    |   |  | -                          |   |  | 180,000      |   |  | -                                   |   |  | 191,382    |  
|First aid                                                       |  | 188,555    |   |  | -                 |   |  | -       |   |  | 1,540     |   |  | -                          |   |  | -            |   |  | -                                   |   |  | 190,095    |  
|Laboratory and analysis                                         |  | 672,999    |   |  | 14,542            |   |  | 29,206  |   |  | 83,472    |   |  | 8,496                      |   |  | 15,644       |   |  | -                                   |   |  | 824,359    |  
|Travel and lodging                                              |  | 1,563,397  |   |  | -                 |   |  | -       |   |  | 294,677   |   |  | -                          |   |  | 40           |   |  | 225                                 |   |  | 1,858,339  |  
|Management fees                                                 |  | 1,115,804  |   |  | 17,256            |   |  | 37,006  |   |  | 141,089   |   |  | 40,076                     |   |  | 28,929       |   |  | 430                                 |   |  | 1,380,590  |  
|Supplies and equipment rental                                   |  | 558,826    |   |  | -                 |   |  | 1,950   |   |  | -         |   |  | -                          |   |  | -            |   |  | -                                   |   |  | 560,776    |  
|Rolling equipment maintenance                                   |  | 107,179    |   |  | -                 |   |  | -       |   |  | 44,359    |   |  | -                          |   |  | -            |   |  | -                                   |   |  | 151,538    |  
|General expenses                                                |  | 149,201    |   |  | -                 |   |  | 4,500   |   |  | 16,277    |   |  | 1,144                      |   |  | 431          |   |  | 4,175                               |   |  | 175,728    |  
|Amortization of property and equipment                          |  | 424,623    |   |  | -                 |   |  | -       |   |  | 43,769    |   |  | -                          |   |  | -            |   |  | -                                   |   |  | 468,392    |  
|                                                                |  | 18,548,035 |   |  | 204,185           |   |  | 452,591 |   |  | 2,181,153 |   |  | 506,089                    |   |  | 530,298      |   |  | 21,931                              |   |  | 22,444,282 |  
|Credit for mining duties and
      other exploration credits    |  | (7,229,800 | ) |  | (94,130           | ) |  | (51,957 | ) |  | (998,322  | ) |  | (232,782                   | ) |  | (237,083     | ) |  | (7,594                              | ) |  | (8,851,668 | )
|Write-off                                                       |  | -          |   |  | -                 |   |  | -       |   |  | -         |   |  | -                          |   |  | -            |   |  | (346,690                            | ) |  | (346,690   | )
|                                                                |  |            |   |  |                   |   |  |         |   |  |           |   |  |                            |   |  |              |   |  |                                     |   |  |            |  
|                                                                |  |            |   |  |                   |   |  |         |   |  |           |   |  |                            |   |  |              |   |  |                                     |   |  |            |  
|Net increase                                                    |  | 11,318,235 |   |  | 110,055           |   |  | 400,634 |   |  | 1,182,831 |   |  | 273,307                    |   |  | 293,215      |   |  | (332,353                            | ) |  | 13,245,924 |  
|                                                                |  |            |   |  |                   |   |  |         |   |  |           |   |  |                            |   |  |              |   |  |                                     |   |  |            |  
|Balance end of period                                           |  | 22,864,066 |   |  | 456,320           |   |  | 669,376 |   |  | 1,252,357 |   |  | 422,741                    |   |  | 293,215      |   |  | -                                   |   |  | 25,958,075 |  

Off-balance sheet arrangements

The Company does not have any off balance-sheet arrangements.

---

74

Tabular disclosure of contractual obligations as of December
31, 2009

Contractual Obligations
    
    Less
      than 1
    1 
      3 years
    4 
      5 years
    After 5 yearsyearTotal $
    $
    $
    $
    $Obligation under capital lease
    360,000
    180,000
    180,000
    -
    -Operating Lease Obligation
    200,743
    139,623
    61,120
    -
    -Asset retirement obligation
    200,000
    -
    200,000
    -
    -Purchase and Options to Purchase
    -
    -
    -
    -
    -Other Long-Term Liabilities Reflectedon the Registrants Balance Sheet underGAAP
    -Total contractual obligations
    760,743
    319,623
    441,120
    -
    -


|(1) | In December 2009, the Company signed a new capital lease
      agreement for the lodging camp for 50 persons with under- structures on
      the MATOUSH PROJECT for a 24 month-period starting January 1, 2010. The
      capital lease bears interest at 9%, capital and interest are repayable in
      24 monthly instalments of $15,000 commencing January 2010.                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(2) | On August 9, 2009, the Company renewed a short-term lease
      agreement for a Carterpillar for a 9 month-period with monthly payments of
      $13,126. 100% of the rent payments could eventually be applied upon
      exercise of an option to purchase in the amount of $273,000.                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(3) | On August 1, 2008, the Company signed a services
      agreement which requires that the Company pays a rent in the amount of
      $5,200 per month for office space.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(4) | The Company has recorded an asset retirement obligation, which reflects the present value of the estimated amount of undiscounted cash flow required to satisfy the asset retirement obligation in respect of the MATOUSH PROPERTY. The primary component of this obligation is the removal of equipment currently used at the site. If the Company decides not to go into production on the property, it is assumed that the asset retirement obligation will be incurred in 2012 for an amount of $200,000. Should the Company decide to proceed with a production decision on the MATOUSH PROPERTY, the obligation will be realized further into the future.

Related-Party Transactions

On August 1, 2008, the Company renewed a three-year service
agreement until July 31, 2011 with Géo-Management Inc. (BBH), a related
company of which Mr. Guy Hébert, an officer and director of the Company, is also
an officer and director. The agreement provides for BBH to manage the Companys
exploration activities. Costs and expenses to be billed by BBH to the Company
include the following:

- Use of BBHs offices and equipment for a monthly charge of $5,200;
- Management fees of 5% on all costs related to exploration and development
  programs and purchases related to the MATOUSH PROPERTY;
- Management fees of 10% on all costs related to exploration and development
  programs on the other properties: ECLAT, PACIFIC BAY-MATOUSH, MISTASSINI,
  APPLE and other future properties, and of 5% on all purchases related to
  exploration projects and option agreements on the ECLAT, PACIFIC BAY- MATOUSH,
  MISTASSINI, APPLE and other future properties;
- Management, administration, accounting and legal services;
- Consulting services, including geology;
- Relations with investors and regulatory authorities;
- Identification of sources of financing.

The fees to be paid to BBH are APPROVED by the Companys board
of directors without Mr. Guy Hébert being present, and are equivalent to what
the Company would otherwise pay to a third party in the industry.

---

75

The Company concluded the following transactions with BBH:

|                                                                                   |   | December 31, |  |   | December 31, | 
|---------------------------------------------------------------------------------- | - | ------------ |  | - | ------------ | 
|                                                                                   |   | 2009         |  |   | 2008         | 
|EXPENSES CAPITALIZED IN THE STATEMENT OF
      DEFERRED EXPENDITURES:              |   |              |  |   |              | 
|Consultants and subcontractors (1)                                                 | $ | 2,937,000    |  | $ | 2,572,000    | 
|Management fees (2)                                                                | $ | 632,000      |  | $ | 1,381,000    | 
|                                                                                   |   |              |  |   |              | 
|General and administrative expenses in the
      statement of earnings and deficit |   |              |  |   |              | 
|Professional fees                                                                  | $ | 392,000      |  | $ | 375,000      | 
|Legal expenses                                                                     | $ | 118,000      |  | $ | 94,000       | 
|Investor relations                                                                 | $ | 169,000      |  | $ | 142,000      | 
|Rent                                                                               | $ | 62,000       |  | $ | 48,000       | 
|Share issue costs charged against capital stock                                    | $ | 2,000        |  | $ | 11,000       | 
|Management fees charged against property
      and equipment                       | $ | 12,000       |  | $ | 128,000      | 

(1) The increase in
consulting and subcontractor expenses is primarily attributable to an increase
in the number of consultants.

(2) The management fee for
the MATOUSH PROPERTY was reduced from 10% in 2007 to 5% as of August 1,
2008.

In addition, the Company concluded the following related party
transactions:

- A company controlled by Ingrid Martin, CA, CFO and treasurer in function
  since June 9, 2009, charged accounting fees of $35,000 included in legal and
  audit expenses.
- Pauline Comtois, CGA, CFO up till June 9, 2009, charged accounting fees of
  $7,000 ($38,000 in 2008) included in professional fees;
- A limited partnership company in which Me Henri Lanctôt, secretary and
  director, is also a partner, charged legal fees amounting to $21,000 ($35,000
  in 2008) included in legal and audit expenses and $27,000 ($10,000 in 2008)
  included in capital stock as issue costs.

At December 31, 2009, accounts payable and accrued liabilities
included an amount of $397,000 ($157,000 at December 31, 2008) owed to
related-parties. These transactions occurred in the normal course of business
and were measured at the exchange amount, which is the amount of consideration
established and agreed to by the related parties. The payment conditions are the
same as the other suppliers of the Company except for BBH for which the invoices
are payable upon receipt.

STOCK OPTION PLAN 
The Stock option plan is designed to enable the Company to use shares as a means of retaining, motivating and compensating beneficiaries to whom the Board of directors grants options under the plan, for the efforts they invest in achieving the Company’s goals and to enable them to acquire shares as an investment and an incentive.

CRITICAL ACCOUNTING ESTIMATES The preparation of financial
statements in accordance with generally recognized accounting principles in
Canada requires management to make estimates and assumptions that affect the
assets and liabilities reported. These same estimates and assumptions also have
an impact on the contingencies as at the date of the financial statements, as
well as amounts related to revenue and expenses for the periods.

Critical estimates include estimates of the credit for mining
duties refundable for losses and the refundable tax credit for resources, future
income tax assets and liabilities, mining properties and deferred exploration
expenditures, the asset retirement obligation and the fair value of stock
options granted and certain amounts payable. Actual results could therefore
differ from these estimates.

---

76

LONG-TERM INVESTMENTS The Company has chosen to present its
long-term investments as securities held for trading. Consequently, they are
recognized at cost, less any impairment loss.

MINING PROPERTIES AND DEFERRED EXPENDITURES Mining
properties are recorded at cost and related exploration costs are deferred, net
of government assistance received. In the event of a production decision, costs
related to a deposit and recorded under mining properties and deferred
exploration expenditures are transferred to mining assets, and then amortized on
the basis of units of production for the year and proven and probable ore
reserves. However, when a project is abandoned, the corresponding costs are
charged against earnings.

CREDIT ON MINING DUTIES REFUNDABLE FOR LOSSES AND REFUNDABLE
TAX CREDIT FOR RESOURCESThe Company is eligible for a refundable credit on
mining duties under the Quebec Mining Duties Act. This refundable credit
on mining duties is equal to 12% of expenses incurred for mining activities in
Quebec and is recognized as a credit under deferred expenditures.

The Company is also eligible for a refundable tax credit for
resources for mining industry companies in relation to eligible expenses
incurred. The refundable tax credit for resources represents up to 38.75% of the
amount of eligible expenses incurred. This tax credit is recognized as a credit
under deferred expenditures.

CHANGES IN ACCOUNTING POLICY

Business combinations and non-controlling
interestsAs an activity consistent with Canadian generally accepted
accounting principles being converged with IFRS-IASB, the previously existing
recommendations for business combinations and consolidation financial statements
will be replaced with new recommendations for business combinations (CICA
Handbook Section 1582), consolidations (CICA Handbook Section 1601) and
non-controlling interests (CICA Handbook Section 1602).

Generally, the new recommendations result in measuring business
acquisitions at the fair value of the acquired business and a prospectively
applied shift from a parent corporation conceptual view of consolidation theory
(which results in the parent corporation recording book values attributable to
non-controlling interests) to an entity conceptual view (which results in the
parent corporation recording fair values attributable to non-controlling
interests). Both the new Canadian GAAP recommendations and IFRS-IASB allow the
choice of whether or not to recognize the fair value of goodwill attributable to
non-controlling interests on an acquisition-by-acquisition basis.

As of June 30, 2009, the Company decided to postpone the
adoption of these recommendations till January 1st 2011 (as allowed
by the CICA Handbook).

EIC 173: credit risk and the fair value of financial assets
and financial liabilitiesOn January 20, 2009, the CICA issued EIC
abstract 173 which establishes that an entitys own credit risk and the credit
risk of the counterparty should be taken into account in determining the fair
value of financial assets and financial liabilities, including derivative
instruments. The adoption of this standard did not have a significant impact on
the Companys financial statements.

---

77

EIC 174: mining exploration costsOn March 27, 2009,
the CICA issued abstract EIC 174 to provide additional guidance for mining
exploration enterprises on when an impairment test is required. This abstract
was applied during the current year. The adoption of this standard did not have
a significant impact on the Companys financial statements.

On June 2009, the Company adopted the amendments to Section
3862, "Financial Instruments - Disclosures", issued by the CICA. The amendments
of improved disclosures are about fair value measurements of financial
instruments, including the relative reliability of the inputs used in those
measurements and liquidity risk, in light of concerns that the nature and extent
of liquidity risk requirements were unclear and difficult to apply. The
amendments to Section 3862 apply to annual financial statements relating to
fiscal years ending after September 30, 2009. The prospective adoption of this
section did not have any measurement impact on the Companys financial
statements. The additional disclosure requirements are presented in Note 15.

Other new standards were issued, but are not expected to have a
material impact on the Companys financial requirements.

IFRS CONVERGENCEIn April 2008, the CICA published an
exposure draft as guidance which requires the transition to International
Financial Reporting Standards (IFRS) to replace Canadian GAAP as currently
employed by Canadian publicly accountable enterprises. The changeover will occur
no later than fiscal years beginning on or after January 1, 2011. Accordingly,
the Company expects that its first interim financial statements presented in
accordance with IFRS will be for the three-month period ended March 31, 2011,
and its first annual financial statements presented in accordance with IFRS will
be for the year ended December 31, 2011. IFRS uses a conceptual framework
similar to Canadian GAAP, but there are significant differences in recognition,
measurement and disclosure requirements.

Team:The Company convergence team will be composed
of the CFO (who is a Chartered Accountant) and the head of accounting services.
The president and the audit committee will be informed of the progress along the
way.

Training: In the fall 2008, the actual CFO
participated in a 3 days training session given by the IFRS Task Force of an
accounting cabinet. The objective of that training was to compare Canadian GAAP
to IFRS. During the spring 2009, the CFO participated in 3 other days of
training given by the order of chartered accountant on specific subjects: fixed
assets, grouping of companies, financial instruments and provisions and
contingent liabilities. As IFRS is expected to change prior to 2011, any changes
impacting the Company will have to be monitored. In the fall 2009, the CFO
participated in two training sessions given by the CICA, one on IFRS 1 initial
adoption and one on IFRS applied specifically to the mining industry.

Accounting policies impacted:The detailed analysis
of the accounting policies impacted by the IFRS convergence is expected to be
completed throughout 2009. Overall, a lot of effort will be put in the financial
statements presentation as IFRS requires more disclosure.

Set out below are the main areas where changes in accounting
policies are expected to have a significant impact on the Companys financial
statements. The list below should not be regarded as a complete list of changes
that will result from transition to the IFRS. It is intended to highlight areas
that the Company believes to be the most significant; however, analysis of
changes is still in process and the selection of accounting policies where
choices are available under IFRS has not been completed. We note that the
regulatory bodies that promulgate the Canadian GAAP and the IFRS have
significant ongoing projects that could affect the ultimate differences between
Canadian GAAP and IFRS and their impact on the Companys financial statements in
future years. The future impacts of the IFRS will also depend on the particular
circumstances prevailing in those years. The standards listed below are those
existing based on current Canadian GAAP and IFRS. At this stage, the Company is
not able to reliably quantify the expected impacts of these differences on its
financial statements. They are as follows:

---

78

First time adoption (IFRS 1)IFRS 1 provides
guidance to entities on the general approach to be taken when first adopting
IFRS. The underlying principle of IFRS 1 is retrospective application of IFRS
standards in force at the date an entity first reports using IFRS. IFRS 1
acknowledges that full retrospective application may not be practical or
appropriate in all situations and prescribes:

- optional exemptions from specific aspects of certain IFRS standards in the
  preparation of the Companys opening balance sheet; and
- mandatory exceptions to retrospective application of certain IFRS
  standards.

Additionally, to ensure financial statements contain
high-quality information that is transparent to users, IFRS 1 contains
disclosure requirements to highlight changes made to financial statement items
due to the transition to IFRS.

Impairment of assets (IAS 36)IFRS requires the use
of a one-step impairment test (impairment testing is performed using discounted
cash flows) rather than the two-step test under Canadian GAAP (using
undiscounted cash flow as a trigger to identify potential impairment loss).

IFRS requires reversal of impairment losses (excluding
goodwill) where previous adverse circumstances have changed; this is prohibited
under Canadian GAAP.

Impairment testing should be performed at the asset level for
long-lived assets and intangible assets. Where the recoverable amount cannot be
estimated for individual assets, it should be estimated as part of a Cash
Generating Unit (CGU).

Share-based payments (IFRS 2)Per IFRS, the
forfeiture rate, with respect to share options, needs to be estimated by the
Company at the grant date instead of recognizing the entire compensation expense
and only record actual forfeitures as they occur.

For graded-vesting features, IFRS requires each instalment to
be treated as a separate share option grant, because each instalment has a
different vesting period and hence the fair value of each instalment will
differ.

Mineral property interests, exploration and evaluation costs
(IFRS 6)Under IFRS, the Company would be required to develop an
accounting policy to specifically and consistently identify which expenditures
on exploration and evaluation activities will be recorded as assets. Unlike
IFRS, Canadian GAAP indicates that exploration costs may initially be
capitalized if the Company considers that such costs have the characteristics of
property, plant and equipment.

Exploration and evaluation assets shall be classified as either
tangible or intangible according to the nature of the assets acquired.

Property, plant and equipment (IAS 16, IFRIC 1)Under IFRS, the Company can elect to measure fixed assets using either
the cost model or the revaluation model. Canadian GAAP only accepts the cost
model. The Company will not select the revaluation model due to the difficulty
and effort needed to determine the fair value.

Under IFRS, each part of a fixed asset with a cost that is
significant in relation to the total cost of the asset shall be depreciated
separately. In Canadian GAAP, the same requirement exists but when practical,
and consequently rarely implemented. The IFRS may result in additional details
needed to maintain de fixed assets sub-ledger. Under IFRS, the residual value
and the useful life of an asset shall be reviewed at least at each year end. The
Canadian GAAP was requesting the same review but only on a regular basis.

Information systems:The accounting processes of the
Company are simple since it is still at the exploration stage and no major
challenges are expect at this point to operate the accounting system under the
IFRS. Nevertheless, some excel spreadsheets will probably have to be adapted to
support the change made in accounting policies.

---

79

The Company has yet to establish if historical data will have
to be regenerated to comply with some of the choices to be made under IFRS 1.

As the Company will perform its accounting under Canadian GAAP
2010, it has yet to determine how it will generate in parallel the accounting
under IFRS so that in 2011 it has the comparative available. Once the extent of
the adjustments needed to convert to IFRS will be established, processes will be
put in place effective in 2010 to generate the dual accounting.

Internal Controls:Management is responsible for
ensuring that processes are in place to provide it with sufficient knowledge to
support its certification of the financial statements and MD&A, more
specifically assessing that the SEDAR and EDGAR filings are presenting fairly
the results of the Company. Management will make sure that once the convergence
process is completed, it can still certify its fillings.

Impact on the business:The business processes of
the Company are simple and no major challenges are expected at this point to
operate under IFRS. The Company has no foreign currency transactions, no hedging
activities, no debt and no capital obligations. The Company doesnt expect that
IFRS will have an impact on the requirements or business processes when it
enters in flow-through financing. The Company has no compensation arrangements
that will be affected by the IFRS implementation. The Companys Stock Option
Plan is not affected by ratios or financial targets.

Business process will be monitored through 2010 to detect
unsuspected impact.

Financial instruments

INTEREST RISK Part of the cash and cash equivalents bear
interest at a fixed rate and the Company is, therefore, exposed to the risk of
changes in fair value resulting from interest rate fluctuations. The obligation
under capital lease bears interest at a fixed rate. A fluctuation of 1% of the
interest rate would have a non-significant impact on the financial statements.
The Companys other financial assets and liabilities do not comprise any
interest rate risk since they do not bear interest.

MARKET RISK The Company is exposed to fluctuations in the
uranium price, as the uranium price influences the potential economics of the
Companys mining properties and therefore has an effect on its exploration
program and on the decision on whether or not to proceed with production.

Also, market risk is the risk that the fair value of, or future
cash flows from, the Companys financial instruments will significantly
fluctuate because of changes in market prices. The Company is exposed to market
risk in trading its investment in Pacific Bay, a TSX Venture issuer whose
activities are in the exploration field. As of December 31, 2009, a 10% decrease
(increase) in the price on the stock market would result in an estimated
increase (decrease) in net after-tax loss of approximately $4,500.

CREDIT RISK The financial instruments which expose the
Company to market risk and concentrations of credit risk include cash and cash
equivalents, deposits on exploration work, exploration funds as well as credit
and accounts payable and accrued liabilities. The Company invests part of its
cash and cash equivalents and exploration funds in guaranteed investment
certificates guaranteed by and held with a Canadian chartered bank. Concerning
the accounts receivable, the Company does not have any security, but mitigates
its credit risk by only transacting with a diversified group of partners with
strong financial conditions, and consequently does not anticipate any
losses.

LIQUIDITY RISKThe Company manages its liquidity
risk by using budgets that enable it to determine the amounts required to fund
its exploration programs. The Company also ensures that it has sufficient
working capital available to meet its day-to-day commitments.

---

80

As at December 31, 2009, the Company has a cash and equivalents
balance of $321,065 ($5,847,120 as at December 31, 2008) and exploration funds
of $2,473,260 (4,852,256 as at December 31, 2008) to settle current liabilities
of $1,854,116 ($1,396,939 as at December 31, 2008).

Given the Company’s available liquid resources as compared to the timing of payments of the liabilities, management assesses the Company’s liquidity risk to be moderate. Management seeks additional financing through the issuance of new equity instruments to continue its operations, and while it has been successful in doing so in the past, there can be no assurance it will be able to do so in the future.

FAIR VALUE The faire value of financial instruments is
summarized as follows:

2009
      2008Carrying
      Fair
      Carrying
      Fairamount
      Value
      amount
      value$
      $
      $
      $Financial assetsHeld for tradingCash and cash equivalents
      321,065
      321,065
      5,847,120
      5,847,120Investment
      45,000
      45,000
      35,000
      35,000Exploration funds
      2,473,260
      2,473,260
      4,852,256
      4,852,256Financial liabilitiesOther liabilitiesAccounts payable and accrued liabilities
      1,697,302
      1,697,302
      1,396,939
      1,396,939Obligation under capital lease
      328,336
      328,336
      -
      -


Fair value estimates are made at the balance sheet date, based
on relevant market information and other information about financial
instruments.

The fair value of the investment is based on the last bid price
on the stock market at the end of the period. Since this evaluation is based on
quoted prices in active markets, its considered a level 1 in the fair value
hierarchy.

RISK FACTORS

EXPLORATION AND MINING RISKS Exploration and mining
activities are subject to a high level of risk. Few exploration properties reach
the production stage. Unusual or unexpected formations, fires, power failures,
labour disputes, floods, explosions, subsidence, landslides and the inability to
locate the appropriate or adequate manpower, machinery or equipment are all
risks associated with mining activities and the execution of exploration
programs.

The development of resource properties depends on many factors,
including the cost of mining, variations in the material mined, fluctuations in
the commodities and exchange markets, the cost of processing equipment and other
factors such as aboriginal claims, government regulations including in
particular regulations on royalties, authorized production, importation and
exportation of natural resources and environmental protection. Depending on the
price of the commodities produced, the Company may decide not to undertake or
continue commercial production. There can be no assurance that the exploration
expenses incurred by the Company will result in the discovery of commercial
quantities of ore. Most exploration projects do not result in the discovery of
economic deposits.

TITLES TO PROPERTY Although Management has taken steps to
verify title to mining properties in which the Company has an interest, in
accordance with industry standards for the current stage of exploration of such
properties, these procedures do not

---

81

guarantee the Companys title. Property title may be subject to
unregistered prior agreements and be non-compliant with regulatory
requirements.

ENVIRONMENTAL AND OTHER REGULATIONS Current, possible or
future environmental legislation, regulations and measures may entail
unforeseeable additional cost, capital expenditures, restrictions or delays in
the Companys activities. The requirements of the environmental regulations and
standards are constantly re-evaluated and may be considerably increased, which
could seriously hamper the Company or its ability to develop its properties
economically. Before a property can enter into production, the Company must
obtain regulatory and environmental approvals. There can be no assurance that
such approvals will be obtained or that they will be obtained in a timely
manner. The cost related to assessing changes in government regulations may
reduce the profitability of the operation or altogether prevent a property from
being developed. The Company considers that it is in material compliance with
the existing environmental legislation. At the exploration stage, costs related
to environmental legislations compliance are not material.

FINANCING AND DEVELOPMENT RISKS The Company has incurred
losses to date and does not presently have the financial resources required to
finance its planned exploration and development programs. Development of the
Companys properties therefore depends on its ability to obtain the additional
financing required. There can be no assurance that the Company will succeed in
obtaining the required funding. Failure to do so may lead to substantial
dilution of its interests (existing or proposed) in its properties.

Furthermore, the Company has limited experience in developing a
resource property, and its ability to do so will depend on the use of
experienced people or in the signature of agreements with major resource
companies that can produce such expertise.

COMMODITIES PRICES The market for uranium, gold, diamond,
base metals or other mineral discovered can be affected by factors beyond the
Companys control. Commodities prices have fluctuated widely, particularly in
recent years. The impact of these factors cannot be accurately predicted.

UNINSURED RISKS The Company could become liable for
subsidence, pollution and other risks against which it cannot insure itself or
chooses not to insure itself due to the high cost of premiums or for some other
reason. Payment of such liabilities could decrease or even eliminate the funds
available for exploration and mining activities.

PROJECT DELAY RISK 
  The Company plans to complete the
permitting application process in respect of the Matoush project. However, there
are risks that the commencement and completion of the construction of the
exploration ramp be delayed due to circumstances beyond the Companys control.
Such risks include delays in environmental and construction authorizations and
permits, delays in finalizing all necessary detailed engineering and
construction contract as well as unforeseen difficulties encountered during the
construction process.

---

82

U.S. GAAP reconciliation

The Companys financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP) in Canada. The
effect of applying United States generally accepted accounting principles (U.S.
GAAP) on the balance sheet, net earnings, and cash flows are outlined below and
in Note 23 of Financial Statements:

(1) Properties and deferred expenditures are accounted for in
accordance with Canadian GAAP as disclosed in note 3. Under Canadian GAAP, the
propertys potential for development is sufficient to permit the capitalization
of exploration expenditures incurred as property acquisition costs and deferred
expenditures and the management intends to pursue the development. Under U.S.
GAAP, a final feasibility study showing economically recoverable proven and
probable reserves is required for capitalization of exploration expenditures.
Accordingly, the exploration related costs must be expensed as incurred.

(2)Under Canadian GAAP, shares issued as
flow-through shares are recorded at their face value when issued. When the
entity acquires assets the carrying value may exceed the tax basis as a result
of the enterprise renouncing the deductions to the investors. The tax effect of
the temporary difference is recorded as a share issue cost. Under US GAAP, the
proceeds from issuance should be allocated between the offering of shares and
the sale of tax benefits. The allocation is made based on the difference between
the quoted price of the existing shares and the amount the investor pays for the
shares. A liability is recognized for this difference. The liability is reversed
when tax benefits are renounced and a deferred tax liability is recognized at
that time. Income tax expense is the difference between the amount of the
deferred tax liability and the liability recognized on issuance. Amounts
received upon the issuance of flow-through shares and not spent on exploration
costs are presented separately as exploration funds. Exploration funds must be
excluded from cash in the statement of cash flows and presented in investing
activities. Amounts raised by the issuance of flow-through shares and spent on
exploration costs amounted to $4,878,996, $3,147,744, and $0 for the years ended
December 31, 2009, 2008 and 2007, respectively. Amounts received for share
issuances and not spent on exploration costs amounted to $2,473,260, $4,852,256,
and $0 for the years ended December 31, 2009, 2008, and 2007, respectively.

The effect of the application of the above adjustments on the
balance sheet of the Company at December 31, 2008 and 2007 would be to decrease
deferred expenditures by $36,304,887 to $0 in 2009 and $25,958,075 to $0 in 2008
(1). There would be an increase to liabilities in the ending amount
of $653,188 as of December 31, 2009 and $1,020,218 as of December 31,
2008.(2). This would result in an ending decrease to shareholders
equity in the amounts of $36,958,075 and $26,978,293 for the years ended
December 31, 2009 and 2008, respectively.

The effect on cash flows would be to decrease cash flows from
operating activities by $10,346,812 in 2009, $12,607,929 in 2008 and $10,099,561
in 2007 and increase cash flows used in investing activities by $10,489,412 in
2009, $12,607,929 in 2008 and $10,099,561 in 2007.

Changes in U.S. GAAP Significant Accounting Policies and
Restatement

As a result of the restatement items identified in Note 4 and
also the Companys internal review of the financial statements,the
company determined to make the following accounting policy change under U.S.
GAAP and has restated its financial statements for the years ended December 31,
2008 and December 31, 2007 to conform to this change.

Prior to this change, the Company had expensed the acquisition
costs of mining properties, the mining rights and exploration fees for U.S. GAAP
financial reporting. As codified in ASC Topic 805 Business Combinations, the
Company has modified its accounting policy, and restated 2008 and 2007 in order
to capitalize the acquisition of mining properties and mining rights until the
mining property is sold, abandoned, or otherwise determined to be impaired. If
the acquired mineral rights relate to unproven properties, the company does not
amortize the capitalized mining costs, but evaluates them periodically for
impairment.

The impact of these restatements on previously issued U.S. GAAP
financial information is as follows:

|Impact of restatements on previous US GAAP financial
      reporting: |   | 2008       |  |   | 2007       | 
|--------------------------------------------------------------------- | - | ---------- |  | - | ---------- | 
|Reduction of net loss                                                 | $ | 1,446,402  |  | $ | 9,953,314  | 
|Reduction of loss per share                                           | $ | 0.02       |  | $ | 0.10       | 
|Increase to Mining Properties                                         | $ | 10,571,154 |  | $ | 10,044,314 | 

---

83

|Increase in Shareholders Equity                    | $ | 11,082,716 |  | $ | 10,044,314 | 
|--------------------------------------------------- | - | ---------- |  | - | ---------- | 
|Decrease in cash used in Operating Activities       | $ | 1,038,402  |  | $ | 8,983,338  | 
|Increase in cash used in Investing
      Activities | $ | 1,038,402  |  | $ | 8,983,338  | 

Recently Issued U.S. Accounting Pronouncements

The Company adopted the provisions of FIN 48 (as codified in
ASC topic 740 Income Taxes) (ASC 740) for US GAAP purposes. ASC 740
prescribes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. ASC 740 requires that we recognize in the financial
statements, only those tax positions that are more-likely-than-not of being
sustained as of the adoption date, based on the technical merits of the
position. As a result of the implementation of ASC 740, the Company performed a
review of the material tax positions in accordance with recognition and
measurement standards established by ASC 740. Based on this review the
provisions of ASC 740 had no effect on our financial position, cash flows or
results of operations at either December 31, 2009 or December 31, 2008.

In May 2009, the FASB issued new standards for 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. The new standards are effective for
interim and annual reporting periods ending after June 15, 2009. We adopted the
new standards during the third quarter of fiscal 2009 and, as the pronouncement
only requires additional disclosures, the adoption did not have an impact on the
Companys financial position, results of operations or cash flows. The Company
evaluated events that occurred subsequently to December 31, 2009, for
recognition or disclosure in the Companys financial statements and its notes to
financial statements.

In June 2009, the FASB issued amended standards for determining
whether to consolidate a variable interest entity. These new standards amend the
evaluation criteria to identify the primary beneficiary of a variable interest
entity and require ongoing reassessment of whether an enterprise is the primary
beneficiary of the variable interest entity. The provisions of the new standards
are effective for annual reporting periods beginning after November 15, 2009 and
interim periods within those fiscal years. These standards will be effective for
the Company beginning in the first quarter of fiscal 2010. The adoption of the
new standards will not have an impact on the Companys financial position,
results of operations and cash flows.

In June 2009, the FASB issued the FASB Accounting Standards
Codification (the Codification) for financial statements issued for interim
and annual periods ending after September 15, 2009, which was effective for the
Company beginning in the fourth quarter of fiscal 2009. The Codification became
the single authoritative source for GAAP. Accordingly, previous references to
GAAP accounting standards are no longer used in the Companys disclosures,
including these Notes to the Financial Statements. The codification in not
expected to affect the Companys financial position, cash flows, or results of
operations.

In January 2010, the FASB issued Accounting Standards Update
No. 2010-06, Fair Value Measurements Disclosures, which amends Subtopic
820-10 of the FASB Accounting Standards Codification to require new disclosures
for fair value measurements and provides clarification for existing disclosures
requirements. More specifically, this update will require (a) an entity to
disclose separately the amounts of significant transfers in and out of Levels 1
and 2 fair value measurements and to describe the reasons for the transfers; and
(b) information about purchases, sales, issuances and settlements to be
presented separately (i.e. present the activity on a gross basis rather than
net) in the reconciliation for fair value measurements using significant
unobservable inputs (Level 3 inputs). This update clarifies existing disclosure
requirements for the level of disaggregation used for classes of assets and
liabilities measured at fair value and requires disclosures about the valuation
techniques and inputs used to measure fair value for both recurring and
nonrecurring fair value measurements using Level 2 and Level 3 inputs. The
Company does not anticipate that the adoption of this statement will materially
expand its financial statement footnote disclosures.

Forward Looking Statement

Statutory safe harbours shall apply, with respect to the
Company and all types of transactions, to information provided pursuant to
paragraphs (a) (4) Off  balance sheet arrangements and (5) Tabular disclosure
of contractual obligations of this Item: Managements Discussion and analysis
of financial condition and results of operation, since the

---

84

disclosure is made by the Company; a person acting on behalf of
the Company; an outside reviewer retained by the Company making a statement on
behalf of the Company; or an underwriter, with respect to information provided
by the Company or information derived from information provided by the Company.

Item 7A. Quantitative and Qualitative Disclosures about
Market Risk.

Quantitative information about market risk as of the end of latest
  fiscal year.

INSTRUMENTS ENTERED INTO FOR PURPOSES OTHER THAN TRADING
  PURPOSES

Interest rate sensitivity: Investments Deposits returns

The Company does not have any deposits with terms of more than
three months and has as of December 31, 2009, a deposit of $1,000,000
($5,515,358 in 2008) was invested in a financial institution for a term of one
month at a time. As such the Company does not foresee any interest rate
sensitivity during the following 5 years.

Foreign currency exchange rate risk Canadian dollars

The Company does not have any transaction with foreign
countries that could cause a risk for its investments as a consequence of
fluctuation of a foreign currency exchange rate.

Commodity price sensitivity

As at December 31, 2009, the Company is at an exploration stage
only and as discussed in Item 2: Properties MATOUSH PROJECT, MATOUSH PROPERTY
Scoping Study, , the Company had one preliminary economic assessment of the
uranium resources made on the MATOUSH PROPERTY, and the price scenario was
established by SD Energy with a long term price from US$60.00 to US$90.00 per
pound U3O8over the life of the project with an evaluation
price of US$75.00 per pound U3O8 with an exchange rate
$US/$CAN of 0.85.

Qualitative information about market risk

Fair ValueCash and cash equivalents, tax credits
receivable, deposits on exploration work and accounts payable and accrued
charges are financial instruments whose carrying value approximates their fair
value due to their short-term maturities or the prevailing market rates.

Investments in shares are recognized at fair value, which
equals the closing asking price at the end of the period.

The Company classifies its investments as financials assets
held for trading and recognizes them at their fair value. The fair value of
shares corresponds to the last asking price at the end of the period and the
fair value of warrants corresponds to the difference between the asking price of
the shares and the exercise price of the warrants. The fair value of the
warrants is nil when the asking price is lower than their exercise price.

Credit RiskCash and cash equivalents are deposited
in banking accounts at Canadian financial institution and invested in high
quality securities.

Interest Rate RiskAt December 31, 2009, the
Companys exposure to interest rate risk was as follows:

Cash and cash equivalents and
exploration funds  variable interest rate Amounts payable  interest free

In managements opinion, the Company was not exposed to any
interest rate risk as at December 31, 2009.

Financial Risk

---

85

The Company is considered an exploration company. It must
therefore obtain financing regularly in order to pursue its exploration
activities. While it has always succeeded in doing so in the past, there can be
no assurance that it will succeed in doing so in the future.

(a) Interim periods

The Company does not include in this annual report financial
statements for an interim period ended after the fiscal year ended December 31,
2009.

(b) Safe Harbor

Statutory safe harbours shall apply, with respect to the
Company and all types of transactions, to information provided pursuant to
paragraphs (a), (b), and (c) of this Item 7A, provided that the
disclosure is made by the Company; a person acting on behalf of the Company; an
outside reviewer retained by the Company making a statement on behalf of the
Company; or an underwriter, with respect to information provided by the Company
or information derived from information provided by the Company.

Item 8. Financial Statements and Supplementary Data.

See the audited financial statements annexed to this annual
report.

The following table contains selected financial information for
the last eight quarters.

2009-12-31
    2009-09-30
    2009-06-30
    2009-03-31
    2008-12-31
    2008-09-30
    2008-06-30
    2008-03-31$
    $
    $
    $
    $
    $
    $
    $Total income
    2,441
    8,203
    12,046
    31,356
    90,537
    85,241
    96,032
    174,518General and administrative expenses
    494,044
    354,064
    297,266
    383,747
    250,549
    283,611
    367,378
    396,116Net profit (loss)
    (526,573)
    (261,978)
    (236,613)
    (458,110)
    33,359
    (360,225)
    (787,005)
    (420,858)Net loss (Net benefit) per share, basic and diluted
    0.00
    0.00
    0.00
    0.00
    0.00
    0.00
    0.01
    0.00Current assets
    10,295,244
    13,716,658
    16,996,665
    18,137,213
    16,924,007
    18,545,710
    22,114,699
    28,250,036Total assets
    61,655,744
    59,295,168
    59,765,913
    60,546,678
    59,761,590
    52,921,254
    53,633,968
    56,455,302Current
      liabilities
    1,854,116
    1,699,043
    1,848,928
    2,524,418
    1,396,939
    1,672,935
    2,146,779
    5,107,367Working capital
    8,441,128
    12,017,615
    15,147,737
    15,612,795
    20,379,324
    16,872,775
    19,967,920
    23,142,669Shareholders equity
    59,165,106
    56,145,125
    56,765,913
    55,337,260
    55,628,653
    50,404,319
    50,583,189
    50,235,935


In June 2009, the stock-based compensation expense was of
$237,393 and of $746,659 in June 2008 since the Board of Directors grants
annually the majority of its stock options, at the Boards Meeting following the
annual general meeting of shareholders. The expense is recorded on the vesting
period.

In 2009, the Company realized that a misinterpretation occurred  in the methodology to calculate one aspect of the future income tax and recorded the adjustments in the months of December 2007, 2008 and 2009.

---

86

Fourth Quarter Performance in Canadian Dollars

|                                                                      |  | 2009     |   |  | 2008     |   |  | 2007      |  
|--------------------------------------------------------------------- |  | -------- | - |  | -------- | - |  | --------- | -
|                                                                      |  | $        |   |  | $        |   |  | $         |  
|Income Interest                                                      |  | 2,441    |   |  | 90,537   |   |  | 218,021   |  
|Expenses                                                              |  |          |   |  |          |   |  |           |  
|General and administrative expenses                                   |  | (494,044 | ) |  | (250,549 | ) |  | (298,308  | )
|Stock-based compensation                                              |  | (25,970  | ) |  | (82 759  | ) |  | 233,885   |  
|Fair value variation for financial instruments
      held for trading |  | (35,000  | ) |  | (35,000  | ) |  | -         |  
|Write-off of deferred expenditures and mining properties              |  | -        |   |  | (356,690 | ) |  | -         |  
|Future income taxes benefits                                          |  | 26,000   |   |  | 668,000  |   |  | 1,973,321 |  
|Net profit
      (loss)                                               |  | (526,573 | ) |  | 33,539   |   |  | 2,126,919 |  
|Net profit (loss) per share, basic and diluted                        |  | -        |   |  | -        |   |  | 0.02      |  

In 2009, the Company realized that a misinterpretation occurred  in the methodology to calculate one aspect of the future income tax and recorded the adjustments in the months of December 2007, 2008 and 2009.

In 2009, investor relations and legal and audit expenses were
higher than in the comparative previous quarters due to increase activities.

In 2008, the Company decided to write-down expense for
prospecting and the Mont-Laurier Uranium property as no significant work had
been done on the property since 2006.

On October 1st, 2008, the Company closed a non-brokered private
placement of 4,102,565 flow-through shares at $1.95 per share for gross proceeds
of $8,000,002.

On December 8, 2009, the Company completed a non-brokered
private placement of 2,500,000 flow-through common shares issued at the price of
$1.00 per share for a total amount of $2.5 million.

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.

The Company does not have any change or disagreement with its
accountants on accounting and financial disclosure to report for the period.

Item 9A. Controls and Procedures.

The Companys Management, including the Chief Executive
Officer, Mr. Guy Hébert, President, and Mrs. Ingrid Martin, Chartered
Accountant, Chief Financial Officer have conducted an evaluation regarding the
effectiveness of disclosure controls and procedures (as defined in §240.13a -15
(e) or §240.15d -15 (e) of Title 17) as of the end of the period covered by the
report, based on the evaluation of these controls and procedures required by
paragraph (b) of §240.13a -15 or §240.15d -15 of Title 17. The Chief Executive
Officer and the Chief Financial Officer concluded that the disclosure controls
and procedures are effective.

Internal control over financial reporting

The Companys management, including the Chief Executive
Officer, Mr. Guy Hébert, President, and the Chief Financial Officer, Mrs. Ingrid
Martin, Chartered Accountant (CA), is responsible for establishing and
maintaining adequate internal control over financial reporting for the Company;

The management use the following framework to evaluate the
effectiveness of the Companys internal control over financial reporting as
required by paragraph ( c ) of §240.13a -15 or §240.15d -15:

The management relied on the interpretive guidance issued by
U.S. Securities and Exchange Commission in Release 34-55929 and Rule 13 (a) -15
( c ) under the Securities Exchange Act of 1934 to identify a framework suitable
for managements evaluation of the Internal Controls over Financial Reporting
(ICFR). The Company first identified the risks to reliable financial reporting
or material misstatement including the risk related to related parties

---

87

transactions with BBH Géo-Management Inc. for which the sole
officer and director is also a director and officer of the Company.

The Company evaluated that the existing controls established in
a document entitled Internal Controls of Purchases and Expenses Cycle as
amended on October 1, 2008 and produced as Exhibit 99.1.1 with the Form 10-K
for the year ended December 31. 2008, addressed those risks as follows.

The Board of Directors with recommendation of the audit
committee approves the project and budget for exploration programs. An internal
control on three levels of authorization and verification is in place for each
purchase-order, each check issued in payment of invoices and each entry into the
books of the Company on a daily basis is available on system Buzzsaw. Each check
that is issued requires two signatures from authorized representatives.

The internal procedures for the financial information within
the Company with organizational charts are written in a pamphlet that has been
approved by the Board of Directors and the Audit Committee and communicated to
officers of the Company and each concerned employee of the management company.

Each financing and its costs and each issuance of shares or
convertible securities related to a financing is authorized by the Board of
Directors and has to be reported in details to each Securities Commission for
which the Company is a reporting issuer and must be published in press releases.
Each grant of stock options to directors or officers of the Company must also be
disclosed in press releases in Canada.

During the financing process either by private placement or
public offering in Canada and other countries except in the United States the
Company follows for several years the same process that is described in details
in Exhibit 99.2for: (i) the negotiations, term sheets, due diligence
sessions, subscription agreements or prospectus; (ii) issuance of shares, of
warrants, broker warrants or compensation options, commission or finders fees,
warrant indentures; (iii) filing of documents and request of approvals from
Toronto Exchange and Autorité des marches financiers (Québec Securities
Commission) and other regulatory authorities for the closings, the filings
of post-closing required documents including amongst others, press releases and
Forms 8K.

The Management, financial advisors, finders or brokers,
accountants and legal counsels all collaborate to achieve the financings
required to pursue the exploration programs of the Company.

The Management proceeded throughout the year to the
verification and evaluation of the Companys internal control over financial
reporting in verifying the operations described in the pamphlet such as the
established process for monitoring of signature of checks, numerical order of
checks, issuance of purchase orders, invoices auditing, approval of expenses,
distribution of expenses in conformity with the budget of operations, time
sheets and confidential information of documents. As to the verification of the
financial information itself the Management analyzed the expenses logins and the
expenses fluctuations.

Following a sample evaluation, the Management can conclude that
the internal control is effective, the persons who are responsible apply
effectively and vigorously their functions. In taking into account the small
number of persons involved, the internal control of financial information is
executed in a way so to provide a reasonable assurance that the controls are
operating effectively.

The management with the participation of the principal
executive and financial officers evaluated the effectiveness of the Companys
internal control over financial reporting as of the end of the Companys most
recent fiscal year by monitoring of activities and by direct testing.

The framework on which managements evaluation of the Companys
internal control over financial reporting is based is a suitable control
framework based on top-down approach for expenditures and purchases and an
entity-level approach for transactions with related party.

After evaluation of evidence, the Management did not find any
deficiency that could constitute a material weakness in the Companys internal
controls over financial reporting.

---

88

The Companys management confirms hereby that the registered
public accounting firm that audited the financial statements included in the
annual report containing the disclosure required by this Item 9 has
issued an attestation report on the Companys internal control over financial
reporting.

The Auditors of the Company have audited the Companys internal
control over financial reporting as of December 31, 2009 based on criteria
established in Risk Management and Governance/Guidance on Control
published by the CICAs Criteria of Control Board. The Companys management is
responsible for maintaining effective internal control over financial reporting,
and for its assessment of the effectiveness of internal control over financial
reporting, included in the Annual Report. The Auditors responsibility is to
express an opinion on these financial statements and an opinion on the Companys
internal control over financial reporting based on its audits as reported in
Auditors Report joined to the present annual report.

Additional Information and Continuous Disclosure

This management discussion and analysis is dated March 11, 2010
and complies with Canadian Securities Administrators National Instrument
51-102A on continuous disclosure. The purpose of this management discussion
and analysis is to help the reader understand and assess the material changes
and trends in the Companys results and financial position. It presents
managements perspective on the Companys current and past activities and
financial results, as well as an outlook of activities planned for the coming
months. The Company regularly discloses additional information through press
releases and financial statements filed on the Companys website (www.stratecoinc.com), SEDAR (www.sedar.com) and EDGAR (www.sec.gov/edgar.shtml).

|(Signed) Guy Hébert | (Signed) Ingrid Martin
|------------------- | ----------------------

---

89

PART III

Item 10. Directors, Executive Officers and Corporate
Governance.

(a) Identification of Directors and executive officers

The board of directors of the Company is a multidisciplinary
team with recognized practical experience in various fields of activity that
enables it to practice good corporate management. The members of the Board of
Directors are:

Guy Hébert  President, Chief executive officer of the Company
and director
Jean-Pierre Lachance  Executive Vice President of the Company and
director
Jean-Guy Masse  President of Masvil Capital Inc. and Northern
Precious Metals Management Inc., director and member of the Audit Committee

Robert Desjardins President of Robert G. Desjardins & Associates
Inc., director and member of the Audit Committee 
Henri Lanctôt  Lawyer and
Associate of Gowling Lafleur Henderson LLP, director and Corporate Secretary

Marcel Bergeron - Financial   consultant, director and member of the Audit
Committee

The mandate of the directors will expire at the date of the
next Annual Assembly of shareholders unless they are elected at that time for a
new mandate.

Mr. Guy Hébert, 60 years old, has been a director, the Chief
executive officer and President of the Company since April 13, 2000. Mr. Hébert
holds a B.Sc. degree in Geology from the University of Montreal and a Master in
Business Administration from Sherbrooke University.

Mr. Jean-Pierre Lachance, 57 years old, is Executive Vice
President of the Company. He has been a director of the Company since April 13,
2000. Mr. Lachance holds a B.Sc. degree in Geology from the University Laval, in
Québec.

Mr. Jean-Guy Masse, 68 years old, is a director of the Company
since April 13, 2000. Mr. Masse holds a B.Sc. A. from the École Polytechniqueof Montreal and M. Sc from Stanford University, California U.S.A. He is a
CFA and member of the Association since September 1975.

Mr. Robert Desjardins, 65 years old, is director of the Company
since October 30, 2001. He holds a Bachelors Degree in Commerce from the
École des Hautes Études Commercialesand is a member of the
Corporation des Administrateurs Agréés du Québec.

Mr. Henri Lanctôt, 66 years old, was appointed director of the
Company on January 24, 2007 further to the resignation of Mr. Claude Hubert on
January 18, 2007 and elected at the next annual and special Meeting of
shareholders. Mr. Henri Lanctôt was admitted to the Quebec Bar in 1968 after
graduating in 1967 from the Faculty of Law of the University of Montreal.

Mr. Marcel Bergeron, 54 years old, was appointed director and
member of the Audit Committee on March 21, 2007 in replacement of Ms. Francine
Bélanger and was elected at the next annual and special meeting of shareholders.
He is a member of the Quebec Institute of Chartered Accountants and of the
Quebec Institute of Certified Management Accountants.

b) Identification of executive officers.

Mr. Guy Hébert is Chief Executive Officer and President of the
Company since April 13, 2000;

Mr. Jean-Pierre Lachance is Executive Vice-president of the
Company since April 13, 2000;

Mrs. Ingrid martin, Chartered Accountant, is acting as Chief
Financial Officer since June 9, 2009 date on which Mrs. Pauline Comtois,
resigned as Chief financial officer as reported in Form 8-K dated June 15,
2009;

---

90

c) Identification of certain significant employees

Mr. Pierre H. Terreault, is Vice-President to Operations
and engineering since April 15, 2008 for the planning, permits, authorizations,
construction and operations of the underground exploration ramp on the MATOUSH
PROJECT and all future and eventual mining facilities of this property as
reported in Form 8-K dated April 21, 2008.

d) Family relationships

There exists no family relationship between any director,
executive officer, or person nominated or chosen by the Company to become a
director or executive officer.

e) Business experience of directors, officers and
significant employee during the last five years.

Mr. Guy Hébert, President and Chief Executive Officer

Mr. Guy Hébert is employed by BBH Géo-Management Inc. to render
services to the Company as the Chief executive officer and President of the
Company since April 13, 2000 that represented an occupation for approximately
95% of his time during the year 2009. He is also director and president of BBH
Géo-Management Inc., since October 1992. BBH Géo-Management is a private company
rendering management services to mining companies and has a services agreement
with the Company since July 2000 (See Part I, Financial Information, Related
parties transactions). Mr. Hébert has been president for a few months at the
time of incorporation from March 2006 to June 1, 2006 and remained afterward
solely director and Chairman of the Board of Cadiscor Resources Inc.
(Cadiscor), a company having its common shares registered pursuant to section
12 of the Exchange Act since its incorporation. On May 26, 2009, Mr. Hébert
resigned as director from the Board of directors of Cadiscor following the
merger between Cadiscor and North American Palladium Ltd.

Professional experience

Mr. Hébert has been active in the international mining industry
for the last 30 years. He has a Master degree in Business Administration and a
Bachelor of Sciences degree in geology. He was the architect of over $300
million in financing for various gold and base metals mining projects in Canada
and overseas. Since 1980, he has brought three mines into production.

Mr. Hebert was President and Chief Executive Officer of Lyon
Lake Mines from 1986 to 2001. He brought into production Beta Vargas, an open
pit 1,000 tpd gold mine in Costa Rica. Permitting and reclamation were a
success. In September 1997, the Beta Vargas Mine was awarded the top
environmental prize by Latin American Association of Geosynthetics. The Beta
Vargas treatment plant represented a model for environmental design. From 1985
to 1992, he was President and CEO of Audrey Resources Inc. He brought into
production the Bouchard-Hebert open pit and underground 2,500 tpd polymetallic
mine (Zn,Cu,Au,Ag) in Quebec, Canada that Cambior took over in 1992. Cambior
named the mine Bouchard-Hébert in recognition of his achievements with Audrey
Resources Inc.

As President of Aiguebelle Resources Inc. from 1980 to 1985,
Mr. Hebert brought into production the Yvan Vezina underground 1,500 tpd gold
mine in Quebec. The mine became part of Cambior's organization in 1986.

Mr. Jean-Pierre Lachance, Executive Vice-president

Mr. Jean-Pierre Lachance is employed by BBH Géo-Management Inc.
to render services as Executive Vice President of the Company in charge of
exploration programs. He has been a director and Executive Vice-President of the
Company since April 13, 2000 and spends 95% of his time for the Company. He is
also Vice-President of BBH Géo-Management Inc. since 2004 but does not exercise
any control over this related company (See Part I, Financial Information,
Related parties transactions).

---

91

Professional experience

Mr. Lachance has 30 years of experience in the mining industry,
and has held various management positions with public and private companies in
Canada and overseas. He has a Bachelor of Science degree in geology from the
University Laval,in Québec.

Mr. Lachance was Vice President, International Development of
Lyon Lake Mines Ltd. from 1994 to 1998 and Executive Vice President from 1999 to
2001. He has also been President of Novontar S.A., a subsidiary of Lyon Lake
Mines Ltd. in Costa Rica, from 1996 to 2001. He was responsible for bringing
Lyon Lake's Beta Vargas mine into production and for the reclamation after the
mine's closure in 2000. He was Vice President of Altavista Mines Inc. from 1994
to 2000 and was responsible for all the exploration activities of the Company

As the Company's Executive Vice President, he closely assists
the President in his functions He maintains relations with the Cree
Community.

Mr. Lachance has been for a few months in 2006, Vice-President
and director of Cadiscor Resources Inc., and remained director from 2007 to 2009
of Cadiscor. On May 26, 2009, Mr. Lachance resigned as director of Cadiscor
following the merger between Cadiscor and North American Palladium Ltd.

Mr. Jean-Guy Masse, director and member of the Audit
Committee

Mr. Jean-Guy Masse, 67 years old, is a director of the Company
since April 13, 2000 and member of the Audit Committee since its creation. Mr.
Masse holds a B.Sc. A. from the École Polytechniqueof Montreal and an M.
Sc from Stanford University, California U.S.A. He is a CFA and member of the
Association since September 1975.

He is President of Northern Precious Metals Funds since 2003
and is also President of Masvil Capital Inc. since 1992. He has been President
of the Board of Directors of Metco Resources Inc. from 1999 to 2003. Mr. Masse
is also a director of mining companies listed on the TSX Venture Exchange.

Mr. Robert Desjardins, director and member of the Audit
Committee

Mr. Robert Desjardins holds a Bachelors Degree in Business
from the École des Hautes Études Commercialesand is a member of the
Corporation des Administrateurs Agréés du Québec. Since 1989, Mr.
Desjardins has been President of Robert G. Desjardins & Associates Inc., a
firm specializing in corporate finance and the development of financial
products.

Mr. Marcel Bergeron, director and Member of the Audit
Committee.

Mr. Marcel Bergeron is a  member of the Quebec Institute of Chartered Accountants and of the Quebec  Institute of Certified Management Accountants. Mr. Bergeron is an accounting  consultant and is acting as Finance Vice-President of Northern Precious Metals  Management Inc. He is also a director of Matamec Explorations Inc, Jourdan  Resources Inc. and Chief Financial Officer of Corporation de Capital du Risque Nevado  inc., companies listed on the TSX Venture Exchange. He was employed  from June 2006 to March 2009 as the General Director of Devimco Inc., a company  specialized in the real estate development. Between July 1990 and June 2006,  Mr. Bergeron was an associate of Petrie Raymond LLP, Chartered Accountants and  Auditors of the Company. Between December 1995 and August 2005, he was on the  board of directors of Fairstar Explorations Inc. and is on the board of directors  of the following companies: ●.

Mr. Henri Lanctôt, director and Corporate Secretary

Mr. Henri Lanctôt was admitted to the Quebec Bar in 1968 after
graduating in 1967 from the Faculty of Law of the University of Montreal in
1984. He is a partner of Gowling Lafleur Henderson LLP and, Mr. Henri Lanctôt
joined Lafleur Brown, the law firm that merged with Gowlings on July
1st, 2000.

Mrs. Ingrid Martin, Chartered Accountant, Chief financial
Officer and Treasurer

On June 9, 2009, the Board of Directors appointed Mrs. Ingrid
Martin, C.A. as the new Chief Financial Officer and Treasurer of the Company in
replacement of Mrs. Pauline Comtois, CGA who performed functions similar to a
Chief

---

92

Financial Officer from the year 2001 to the year 2007 and
thereafter became Chief Financial Officer until her resignation on June 9,
2009.

As Chief Financial Officer of the Company, Mrs. Martin is
responsible to assess and to verify the internal controls of the Company over
financial information reporting and to approve financial statements and
management discussion and analysis filings with authorities including the
filings of Chief Financial Officer certificates. Mrs. Martin will be present
upon demand, to the Audit Committee meetings to answer questions of its members.
As Treasurer of the Company, Mrs. Martin will insure that the accounting books
and registers of the Company are efficient and meet the legal requirements.

The Company will retain services of Ingrid Martin CA Inc., a
company under the control of Mrs. Martin, as a consultant on a contractual basis
to assist the financial department in the preparation of quarterly and annual
reports according to Canadian GAAP and to prepare the tax returns of the
Company.

Professional experience

Mrs. Martin holds a Bachelor degree in accounting from HEC in
Montreal since July 1988 and became a member of the Order of Chartered
Accountants of Québec as of November 1990. Mrs. Martin provides her services as
consultant in accounting and became Chief Financial Officer of three public
companies engaged in mining exploration listed on the TSX Venture Exchange in
Canada. Mrs. Martin was Regional Accounting Director of Molson Canada from 2001
to 2004. Mrs. Martin fulfilled several functions for Unisource Canada Inc. from
1993 to 2001 acting as Associate-Controller (1993), Financial Analyst,
(1994-1998) Regional Controller (1998) and finally Regional Director of
Operations from 1998 to 2001. Mrs. Martin also worked as Internal Auditor of
Domtar in 1992 and as External Auditor of Price Waterhouse from 1988 to 1992.

Mr. Pierre H. Terreault, significant employee - Vice
President Operations & Engineering

Mr. Terreault is Vice President Operations & Engineering of
the Company since April 2008. He graduated from École Polytechnique deMontreal inMining Engineering and has aMaster's Degree inProject Management from Université du Québec de l'Abitibi Temiscamingue.He is a registered Professional Engineer in Quebec, Ontario and
Newfoundland. He started various mining projects throughout Quebec and
Newfoundland.

Professional experience

Mr. Terreault has more than 29 years experience in different
mining sectors and has held variousmanaging positions. From 2007 to
2008, Mr. Terreault was Mine Manager and Project Leader for a pre-feasibility
study for an underground mine, for Opinaca Mines (Goldcorp). From 2004 to 2007,
he was the General Manager for Kiena Complex (Wesdome). Between 1998 and 2003,
he was the General Superintendent for Ross Finlay 2000.

f) Involvement in certain legal proceedings.

None of the directors and executive officers mentioned above
has been involved in the following legal proceedings in the last five years:

1. None of the directors and executive officers were the
subject of a petition under the Federal bankruptcy laws or any state insolvency
law that was filed by or against, or a receiver, fiscal agent or similar officer
was appointed by a court for the business or property of such person, or any
partnership in which he was a general partner at or within two years before the
time of such filing, or any corporation or business association of which he was
an executive officer at or within two years before the time of such filing;

2. None of the directors or executive officers of the Company
has been subject to any conviction in a criminal proceeding or was named subject
of a pending criminal proceeding (excluding traffic violations and other minor
offenses);

---

93

3. None of the directors or executive officers of the Company
has been 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 the following
activities:

(i) Acting as a futures commission
merchant, introducing broker, commodity trading advisor, commodity pool
operator, floor broker, leverage transaction merchant, any other persons
regulated by the Commodity Futures Trading Commission, or an associated person
of any of the foregoing, or as investment adviser, underwriter, broker or dealer
in securities, or as an affiliated person, director or employee of any
investment company, bank, savings and loan association or insurance company, or
engaging in or continuing any conduct or practice in connection with such
activity;

(ii) Engaging in any type of business
practice; or

(iii) Engaging in any activity in
connection with the purchase or sale of any security or commodity or in
connection with any violation of Federal or State securities laws or Federal
Commodities laws;

4. None of the directors or executive officers was the subject
of any order, judgment or decree, not subsequently reversed, suspended or
vacated, of any Federal or State authority barring, suspending or otherwise
limiting for more than 60 days the right of such person to engage in any
activity described in paragraph (f) (3) (i) of this section, or to be associated
with persons engaged in any such activity; or

5 None of the directors or executive officers of the Company
was found by a court of competent jurisdiction in a civil action or by the
Commission to have violated any Federal or State securities laws, and the
judgment in such civil action or finding by the Commission has not been
subsequently reversed, suspended or vacated.

6. None of the directors or executive officers of the Company
was found by a court of competent jurisdiction in a civil action or by the
Commodity Futures Trading Commission to have violated any Federal commodities
law, and the judgment in such civil action or finding by the Commodity Futures
Trading Commission has not been subsequently reversed, suspended or vacated.

g)          
Compliance with section 16 (a) of the Exchange Act.

Section 16 (a) of the Securities Exchange Act of 1934, as
amended, requires the Companys officers and directors, and persons who own more
than ten percent of a registered class of the Companys equity securities, to
file reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5
with the Securities and Exchange Commission (SEC). Such officers and directors
and 10% stockholders are also required by SEC rules to furnish the Company with
copies of all section 16 (a) forms they file.

The Companys directors and officers have since December 31,
2003 filed only with the Quebec Securities Commission now called Autorité
des marchés financiers, the principal national securities exchange
jurisdiction of the Company as allowed by §240.16a -3 (c). All transactions by
directors and officers have been deposited electronically on SEDI during the
period and can be consulted publicly at http://www.sedi.ca/.

Mrs Ingrid Martin, Chief of Finance and treasurer of the
Company who in her functions obtains privileged information of the Company, is
considered an insider of the Company and registers all her insiders
declarations on SEDI at www.sedi.ca. in
Québec, Canada under the principal jurisdiction of the Company, the Autorité
des marchés financiers (Quebec Securities Commission).

Goodman Company & Investment Counsels which detains
directly and indirectly more than 10% of the share capital of the Company also
reports its holding on Form 13 SG with the U.S. SEC and on SEDI at www.sedi.ca through its representative in Canada, Mr.
Ned Goodman acting for Ravensden Asset Management Inc.

h) Code of ethics

On February 18, 2004, the Board of directors adopted a Code of
ethics that applies to the principal executive officer, principal financial
officer, principal accounting officer or controller. This Code of Ethics can be
consulted on the

---

94

Companys website at www.stratecoinc.com and on SEDAR at www.sedar.com and was filed as Exhibit 14. Any
interested person can receive copy of this Code of ethics without charge in
addressing its request to the Companys head office mentioned on the Title page
of this annual report.

i) Corporate governance

As of March 10, 2010, new corporate governance policies are
under study by the Board of Directors. The Code of Ethics should be updated, a
new Nominating Policy for Directors, a Stock Trading Policy for insiders of the
Company and a detailed mandate for the Board of Directors. Upon adoption of any
new policy or amendment to the Code of Ethics, the Company will provide the new
information in the following quarterly report under Form 10-Q.

During the year ended December 31, 2009, there has been no
material change to the Companys procedures by which security holders may
recommend nominees at the Annual Meeting of shareholders to the Companys board
of directors.

The Audit committee has a charter that was annexed to the
Management Information Circular and Proxy Information filed as Exhibit 22
with Form 10-Q for the period ending June 2009.

The Company has a separately-designated standing Audit
committee established in accordance with section 3(a) (58) A of the Exchange Act
(15 U.S.C. 78c (a)(58)(A)) composed of three members, Mr. Jean-Guy Masse, Mr.
Robert Desjardins and Mr. Marcel Bergeron.

The Companys Board of Directors has determined that the
Company has at least one Audit Committee financial expert serving on its Audit
Committee, Mr. Marcel Bergeron. He was appointed director to replace Mrs.
Francine Bélanger who deceased in November 2006. Mr. Bergeron is the director
seating at the Audit Committee considered the Financial Expert pursuant to
Item 407(d)(5) of Regulation S-K. Please refer to Item 10 (e) for a brief
listing of Mr. Bergerons relevant experience.

As of June 2009, Mr. Bergeron was also considered an
independent director according to LAutorité des marchés financiers
(Quebec Securities Commission) Regulations. Because Mr. Bergeron had been an
associate of the Companys Auditors firm in charge of the Companys file until
June 2006, he was not considered independent until June 2009. However, Mr.
Bergeron benefited from a statutory dispense to remain on the Audit Committee
during this period pursuant to Quebec Article 36 of Regulation 52-110 since the
following requirements amongst others were met during that period:

The Company became a reporting issuer in four (4) provinces of
Canada, Alberta, British Columbia, Ontario and Quebec since its listing on the
TSX Exchange on June 6, 2007. Both the TSX and LAutorité des marches
financiersrequire independence of all members of the Audit Committee unless
a statutory exemption is applicable.

The majority of the Audit Committee remained independent until
June 2009. Mr. Bergeron was eligible to the statutory exemption as to
independence for more than two years or until June 2009.

Mr. Bergeron had no immediate family relationship with an
employee or an executive officer of the Company and was not an employee of
member of the management of the Company.

The Board of directors considered that in this exceptional
case, Mr. Bergeron could have during this period, the required unbiased judgment
necessary to honour his obligations as member of the Audit committee and that
his nomination was in the interest of the Company and of the Company
shareholders.

Mr. Bergeron did not act as president of the Audit Committee
while he was not independent.

Compensation discussion and analysis

The Company has no compensation committee but during the last
completed fiscal year, Misters Robert Desjardins, Jean-Guy Masse and Marcel
Bergron, are the only directors who received fees for their presence to the
Board of Directors or Audit Committee meetings and were entitled to
reimbursement of expenses for their presence to these

---

95

meetings. These fees have been fixed by the Board of Directors
in 2007. Misters Guy Hébert, Jean-Pierre Lachance and Henri Lanctôt, did not
receive any compensation for their presence to the Board of Directors meetings.

Throughout the year ended December 31, 2009, the compensation
of executive officers was paid by a management company, BBH Géo-Management Inc.
(Management Company) with which the Company has a Contract Services agreement.
See Item 13 Certain relationships and Related Transactions and Director
Independence. The Board of Directors upon recommendation of the Audit
Committee and in the absence of Mr. Guy Hébert, CEO and director who is also
president and director of the Management Company, approve the Contract Services
agreement with the Management Company, The amounts paid by the Company to the
Management Company for services rendered by its executive officers are revised
annually by the Board of Directors. The compensation received by executive
officers is reported and made public as required by the Autorité des marches
financiers in the Management Information Circular filed as Exhibit 22
with Form 10Q for the period ended June 30 of each year. Please see Table
and Notes of Summary Executive Compensation in Item 11 for further
explanation concerning delay in public disclosure of executive salaries and
report of summary executive compensation of previous years.

All members of the Board of Directors participated however, to
the discussion on grant of stock options to directors and executive officers,
employees of the Management Company and consultants of the Company during the
fiscal year ended December 31, 2009. The executive officers based on their
day-to-day evaluation of the performance and charges of each grantee, informed
the independent members of the Board of directors of the importance of services
rendered to the Company by each employee of the Management Company in the
exploration programs or administration of the Company managed by the Management
Company.

The objective of the stock option plan is to provide an
incentive to directors, executive officers, employees of the Management Company
and consultants to work with energy and efficiency on the realisation of the
projects of the Company and to retain services of directors, executive officers,
employees of the Management Company and consultants in the Company because
replacements for persons having experience and competency in the specific domain
of uranium exploration are difficult to recruit in Québec, Canada.

Stock options to CEO, CFO, directors, executive officers and
  employees of the Management Company who were assigned to render services to
  the Company and consultants, have been granted for the most part as usual on
  an annual basis on June 9, 2009, at the Boards Meeting immediately following
  the Annual Meeting of Shareholders and also on individual dates whenever the
  Management Company notified the Board of Directors of the employment of new
  employees of whom the services were to be assigned to the Company on a permanent
  basis.

A total of 10,654,586 common shares are reserved for issuance
under the stock option plan. The maximum number of options that can be granted
to any participant cannot exceed 5% of the issued and outstanding shares of the
capital stock. The exercise price of the options granted may not be less than
the average means of the volume weighted average trading price of the listed
securities, calculated by dividing the total value by the total volume of
securities traded for the five trading days immediately preceding the relevant
date of the grant on the Toronto Stock Exchange (TSX) at the time the options
are granted. The options granted are valid for a period established by the Board
of Directors, not to exceed five years from the date the options are granted and
can be annulled 90 days after the end of contract of employment and immediately
upon end of contract of employment for justified reasons and after one year
following the decease of the grantee.

During the year 2009, the Board of directors granted all stock
options to directors, executive officers, employees of the Management Company
and consultants at the same exercise price well above market price as defined
supra and has imposed on new employees hired by the Management Company
restrictions on the number of stock options that can be levied and restriction
periods on 18 months for the levy of stock options in order that the employee
had to work a minimum of six months prior to be able to exercise one third of
the number of stock options that had been awarded and another six months before
to be able to levy another third of the number and so on. These restrictions
were imposed only on new employees of the Management Company to insure fidelity
to the Company.

The directors and employees of the Management Company that have
long standing in the Company did not have a restriction period for the levy of
their stock options.

Compensation Committee Report

---

96

There is no compensation committee in the Company and the Board
of Directors does not issue a compensation report since the compensation and
employment of the employees of the Management Company rendering services to the
Company including the Companys executive officers is under the sole control and
supervision of the Management Company which is responsible to provide its
employees with salaries, social advantages, health insurances, governmental
deductions for workers compensation programs and vacations.

Item 11: Executive Compensation

The following tables in this Item 11 have numbers converted in
U.S. Dollars based on the exchange rate at December 31, 2009, December 31, 2008
and December 29, 2007. The rates of exchange from Canadian dollars to U.S.
dollars as of December 31, 2007 was C$0.9881 for U.S. $1.00, as of December 31,
2008 was C$1.2240 for U.S $1.00 and at December 31, 2009 was C$1.0461 for US
$1.00 were used to fill in the table.

(a) General

During the year ended December 31, 2009, the Company did not
pay any compensation to its executive officers, except for Jean-Pierre Lachance,
who received an allowance of $200 per month for the use of his personal vehicle
in relation with the Company's activities (See Item 6 Managements Discussion
and Analysis of Financial Condition and Results of Operation subsection
(b) entitled Related-Party Transactions for further details on
transactions between the Company and BBH Géo-Management Inc pursuant to the
Services Agreement with the Management Company).

BBH Géo-Management Inc. (BBH) is the Management Company that
provides the Company with project management and administrative services
pursuant to a services agreement. Guy Hébert, the Companys CEO and a director,
is also the sole director and an officer of BBH Géo-Management Inc. and controls
another company that is the sole shareholder of BBH Géo-Management Inc. Services
rendered to the Company by executive officers, Misters Guy Hébert and
Jean-Pierre Lachance, are provided to the Company by BBH Géo-Management Inc.

---

97

Summary Compensation Table: In U.S. dollars *

Name and principal position
    Year
    Salary(1)($)
    Bonus($)
    Optionawards($)
    All othercompensation($)
    Total($)(a)
    (b)
    ( c
      )
    (d)
    (e)
    (g)
      (5)
    (h)Guy Hébert, Chief ExecutiveOfficer(2) (3)
    2007
    $136,599
    -
    $323,302
    -
    $459,9012008
    $147,005
    -
    $93,350
    -
    $240,3552009
    -
    -
    $39,193
    -
    Not
      availableJean-Pierre Lachance,Executive
      Vice-President(4) (5)
    2007
    $193,284
    -
    $194,161
    -
    $196,5322008
    $191,186
    -
    $93,350
    -
    $387,4452009
    -
    -
    $39,193
    -
    Not
      availablePierre H. Terreault, Vice-President of Operations andEngineering since March
      2008(1)(6) (7)
    2008
    $115,810
    -
    $93,350
    -
    $209,1602009
    -
    -
    $29,193
    -
    Not
      availableIngrid Martin
      CFO(8)
    2009
    $33,458
    -
    $39,193
    -
    $72,650


* Since there is no stock awards, non-equity incentive plan
compensation, no change in pension value and non-qualified deferred compensation
earnings these columns have been deleted.

(1)The Company did not pay any salary or other form
of compensation to its executive officers except for Mrs Ingrid Martin, CA,
Treasurer and CFO of the Company. The Company pays fees for the accounting
services provided to the Company by Ingrid Martin CA Inc., a company under the
control of Mrs. Ingrid Martin, CFO and treasurer of the Company on a contractual
basis. The amounts included in column ( c ) for the years 2007 and 2008
represent the funds paid by BBH Géo-Management Inc., (BBH) the Management
Company, to Mr. Guy Hébert and Mr. Jean-Pierre Lachance for services rendered to
the Company.

This table does not include the amounts paid by BBH to Mr.
Hébert, Mr. Lachance and Mr. Terreault for services rendered to the Company for
the year 2009 since BBH is a private company in Quebec, Canada providing
services to the Company including the services of Mr. Hébert as CEO, Mr.
Lachance, as Executive Vice-president and Mr. Terreault as Vice President to
Operations and Engineering.

As a private company the information concerning the
remuneration paid by BBH to the Companys executive officers and significant
employee is considered confidential information and protected as such by the
laws of Quebec, Canada. However this information looses its confidential
character whenever the Autorité des marchés financiers du Québec(Quebec
Securities Commission) requires this specific information to be disclosed
publicly by its laws and regulations.

Since the Autorité des marchés financiers du Québecby
its laws and regulations requires that this information concerning the companys
executive officers compensation be disclosed only in the Management Information
Circular and Proxy solicitations, this information will be disclosed publicly in
such document and will be filed as Exhibit 22with Form 10Q for the
period ended June 30, 2010. Also, the Company qualifies as a foreign private
issuer under Rule 405 of Regulation C and such information is not required to be
rendered public in the United States unless required to be disclosed by the
Autorité des marchés financiers(Quebec Securities Commission) in Quebec,
Canada the principal jurisdiction of the Company;

(2)The Company paid to BBH for the consulting
services of Mr. Guy Hébert as CEO, $259,660 in 2009, $323,426 in 2008 and
$213,787 in 2007. These sums are not representative of the amounts actually
received by Mr. Hébert from BBH Géo-Management Inc. as salary as disclosed in
the table for the years 2008 and 2007 (see Note 1).

As reported in column (e) Mr. Hébert was granted by the Board
of Directors, 100,000 stock options on June 9, 2009 giving him the right to
exercise these options at the price of $0.9559 per share for a period of five
years. Mr. Hébert was granted 100,000 stock options on April 14, 2008 giving him
the right to exercise these options at the price of $2.4970 per share for a
period of five years.

---

98

Mr. Hébert did not exercise any options during the fiscal year
2009 nor did he in the year 2008. The value reported for Option awards is the
one calculated pursuant to Black-Scholes model at the price of $0.3919 per share
for those options awarded in the second quarter of 2009 for a total Black
Scholes value at the date of the grant of $39,193.

During the year ended December 31, 2009, the Company granted
1,077,500 stock options in 2009 (1,363,500 stock options in 2008 and 1,499,000
stock options in 2007) to officers, directors, consultants and employees of
service providers rendering services to the Company, at a strike price of
$0.9559 per share for 5 years, of which 963,500 vest immediately and 114,000
vest in 3 tranches over 18 months. The fair value of each option granted was
determined using the Black-Scholes option pricing model. At the date of the
grant, the weighted-average fair value of the stock options granted was $0.3919
per option in 2009 ($0.9335 per option in 2008 and $1.2954 per option in 2007).
The market price of the Company share was lower than the strike price at the
grant dates.

|                        | 2009    | 2008  | 2007
|----------------------- | ------- | ----- | ----
|                        |         |       |     
|Risk-free interest rate | 1.88%   | 2.46% | 3.06
|Expected life           | 2 years | 1yr   | 1 yr
|Expected volatility     | 97.09%  | 101%  | 103%
|Expected dividend yield | 0.0%    | 0.0%  | 0.0%

In 2009, a stock-based compensation relating to the vested
options of $519,261 ($1,089,533 in 2008) was recognized in the statement of
operations and $162,455 was capitalized against the deferred expenditures, with
the credit being recorded against the contributed surplus in the total amount of
$681,717 in 2009 ($1,333 in 2008 and $1,360,957 in 2007).

(3) The Company paid to BBH for the services of Mr.
Jean-Pierre Lachance as Executive Vice President $316,415 in 2009, $421,982 in
2008 and $292,890 in 2007. These sums are not representative of the amounts
actually received by Mr. Lachance from BBH as salary as disclosed in the table
for the years 2007 and 2008(see Note 1).

(4) As reported in column (e), Mr. Lachance was
granted by the Board of Directors 100,000 stock options on June 9, 2009 giving
him the right to exercise these options at the price of $0.9559 per share for a
period of five years. Mr. Lachance was granted 100,000 stock options on April
14, 2008 giving him the right to exercise these options at the price of $2.4970
per share for a period of five years. Mr. Lachance did not exercise any options
during the fiscal years 2008 and 2009. Mr. Lachance was granted by the Board of
Directors 150,000 stock options on April 12, 2007 giving him the right to
exercise these options at the price of $3.32 per share for a period of five
years. In 2007, Mr. Lachance exercised 150,000 options that had been granted to
him in 2005 at the price of $0.19 per share for an exercise amount of
$29,643.

During the year ended December 31, 2009, the Company granted
1,077,500 stock options in 2009 (1,363,500 stock options in 2008 and 1,499,000
stock options in 2007) to officers, directors, consultants and employees of
service providers rendering services to the Company, at a strike price of
$0.9559 per share for 5 years, of which 963,500 vest immediately and 114,000
vest in 3 tranches over 18 months. The fair value of each option granted was
determined using the Black-Scholes option pricing model. At the date of the
grant, the weighted-average fair value of the stock options granted was $0.3919
per option in 2009 ($0.9335 per option in 2008 and $1.2954 per option in 2007)
for a total Black Scholes value at the date of the grant to Mr. Lachance in 2009
of $39,193. The market price of the Company share was lower than the strike
price at the grant dates.

|                        | 2009    | 2008  | 2007
|----------------------- | ------- | ----- | ----
|                        |         |       |     
|Risk-free interest rate | 1.88%   | 2.46% | 3.06
|Expected life           | 2 years | 1yr   | 1 yr
|Expected volatility     | 97.09%  | 101%  | 103%
|Expected dividend yield | 0.0%    | 0.0%  | 0.0%

In 2009, a stock-based compensation relating to the vested
options of $519,261 ($1,089,533 in 2008) was recognized in the statement of
operations and $162,455 was capitalized against the deferred expenditures, with
the credit being recorded against the contributed surplus in the total amount of
$681,717 in 2009 ($1,333 in 2008 and $1,360,957 in 2007).

(5)Mr. Lachance received an allowance of $191.18
per month ($244.80 in 2008 and $197 in 2007 and ) for the use of his vehicle for
the Companys activities representing an amount less than $10,000 and this
amount has been excluded from column (h).

(6) The Company paid to BBH for the services of Mr.
Pierre H. Terreault as Vice President of Operations and Engineering $290,445 in
2009 ($277,395 in 2008). These sums are not representative of the amounts
actually received by Mr. Terreault from BBH as salary for the year 2009 (See
Note 1).

---

99

(7) As reported in column (e), Mr. Terreault was
granted by the Board of Directors 75,000 stock options on June 9, 2009 giving
him the right to exercise these options at the price of $.9559 per share for a
period of five years. Mr. Terreault was granted 300,000 stock options on March
19, 2008 giving him the right to exercise these options at the price of $2.5704
per share for a period of five years. However, Mr. Terreault could only exercise
his options by series of 100,000 options by period of six months from the date
of entry in service or as September 19, 2008, March 19, 2009 and September 19,
2009. Mr. Terreault did not exercise any options during the fiscal years 2008
and 2009.

During the year ended December 31, 2009, the Company granted
1,077,500 stock options in 2009 (1,363,500 stock options in 2008 and 1,499,000
stock options in 2007) to officers, directors, consultants and employees of
service providers rendering services to the Company, at a strike price of
$0.9559 per share for 5 years, of which 963,500 vest immediately and 114,000
vest in 3 tranches over 18 months. The fair value of each option granted was
determined using the Black-Scholes option pricing model. At the date of the
grant, the weighted-average fair value of the stock options granted was $0.3919
per option in 2009 ($0.9335 per option in 2008 and $1.2954 per option in 2007)
for a total Black Scholes value of the grant in 2009 to Mr. Terreault of
$29,395. The market price of the Company share was lower than the strike price
at the grant dates.

|                        | 2009    | 2008  | 2007
|----------------------- | ------- | ----- | ----
|                        |         |       |     
|Risk-free interest rate | 1.88%   | 2.46% | 3.06
|Expected life           | 2 years | 1yr   | 1 yr
|Expected volatility     | 97.09%  | 101%  | 103%
|Expected dividend yield | 0.0%    | 0.0%  | 0.0%

In 2009, a stock-based compensation relating to the vested
options of $519,261 ($1,089,533 in 2008) was recognized in the statement of
operations and $162,455 was capitalized against the deferred expenditures, with
the credit being recorded against the contributed surplus in the total amount of
$681,717 in 2009 ($1,333 in 2008 and $1,360,957 in 2007).

(8) In 2009, the Company paid directly pursuant to a
services contract agreement $33,457 for the accounting services of Ingrid Martin
CA Inc., a company under the control of Mrs. Ingrid Martin, CA who is also the
CFO and treasurer of the Company.

As reported in column (e), Mrs. Ingrid Martin was granted by
the Board of Directors 100,000 stock options on June 9, 2009 giving her the
right to exercise these options at the price of $.9559 per share for a period of
five years. However, Mrs. Martin can only exercise her options by two series of
33,333 options and one tranche of 33,334 options by period of six months from
the date of entry in service or as December 9, 2009, June 9, 2010 and December
9, 2010. Mrs. Martin did not exercise any options during the fiscal year 2009.

During the year ended December 31, 2009, the Company granted
1,077,500 stock options in 2009 (1,363,500 stock options in 2008 and 1,499,000
stock options in 2007) to officers, directors, consultants and employees of
service providers rendering services to the Company, at a strike price of
$0.9559 per share for 5 years, of which 963,500 vest immediately and 114,000
vest in 3 tranches over 18 months. The fair value of each option granted was
determined using the Black-Scholes option pricing model. At the date of the
grant, the weighted-average fair value of the stock options granted was $0.3919
per option in 2009 ($0.9335 per option in 2008 and $1.2954 per option in 2007)
for a total Black Scholes value of the grant in 2009 to Mrs. Martin of $39,193.
The market price of the Company share was lower than the strike price at the
grant dates.

|                        | 2009    | 2008  | 2007
|----------------------- | ------- | ----- | ----
|                        |         |       |     
|Risk-free interest rate | 1.88%   | 2.46% | 3.06
|Expected life           | 2 years | 1yr   | 1 yr
|Expected volatility     | 97.09%  | 101%  | 103%
|Expected dividend yield | 0.0%    | 0.0%  | 0.0%

In 2009, a stock-based compensation relating to the vested
options of $519,261 ($1,089,533 in 2008) was recognized in the statement of
operations and $162,455 was capitalized against the deferred expenditures, with
the credit being recorded against the contributed surplus in the total amount of
$681,717 in 2009 ($1,333 in 2008 and $1,360,957 in 2007).

(9) The Company does not have a long-term incentive
plan (LTIP)

---

100

Grants of Plan-Based Awards in the fiscal year 2009

Name (a)
    Grant date (b)
    All other option awards:
      Number of securities underlying
      **options (#)** (c)
    Exercise or base price of options
      awards ($/Sh) **(d)**
    Grant date fair value of option
      awards (e)Guy Hébert,
      CEO
    2009-06-09
    100,000
    $0.9556
    $39,193Ingrid Martin,
      CFO(1)
    2009-06-09
    100,000
    $0.9556
    $39,193Jean-Pierre
      Lachance
    2009-06-09
    100,000
    $0.9556
    $39,193Pierre H.
      Terreault
    2009-06-09
    75,000
    $0.9556
    $29,395


(1). Mrs. Martin can only exercise her options by
two series of 33,333 options and one tranche of 33,334 options by period of six
months from the date of entry in service or as December 9, 2009, June 9, 2010
and December 9, 2010.

Outstanding Equity Awards at Fiscal Year-End- In U.S.
dollars

Equity
      incentiveNumber of
    plan awards:Number of
    securities
    Number ofsecurities
    underlying
    securitiesunderlying
    unexercised
    underlyingunexercised
    options (#)
    unexercisedoptions (#)
    
    unearned options
    Option exercise
    OptionName
    exercisable(2)
    Non
      exercisable
    (#)
    price ($)
    Expiration DateGuy Hébert, Chief
      Executive **Officer**
    300,000
    0
    N/A
    $0.19
    2010-12-20250,000
    0
    N/A
    $3.32
    2012-04-11100,000
    0
    N/A
    $2.50
    2013-04-13100,000
    0
    N/A
    $0.95
    2014-06-08Ingrid Martin, Chief Financial Officer
    100,000
    66,667
    N/A
    $0.95
    2014-06-08Jean-Pierre Lachance,
    100,000
    0
    N/A
    $0.19
    2010-12-20100,000
    0
    N/A
    $0.46
    2011-01-24Executive Vice-President
    150,000
    0
    N/A
    $3.32
    2012-04-11100,000
    0
    N/A
    $2.50
    2013-04-13100,000
    0
    N/A
    $0.95
    2014-06-08Pierre H. Terreault(2)
    300,000
    0
    N/A
    $2.57
    2013-03-1875,000
    0
    N/A
    $0.95
    2014-06-08


(1)The Company granted only Option awards and did
not grant any Stock awards so these columns have been deleted from the table.

(2) Except for 100,000 stock options granted to Mrs.
Martin, the other stock options were immediately exercisable at the date of the
grants subject only to a resale restriction period of 4 months and one day prior
to November 23, 2007,for the underlying shares, applicable to trades in Canada.
On November 23, 2007, the Toronto Stock Exchange approved the Companys amended
stock option plan produced as Exhibit 10.3 and 10.4filed withForm
10KSB for the year ended December 31, 2007, removing this resale restriction
period.

---

101

Option exercises during the fiscal year ended December 31, 2009

Name
    Number of shares acquired on exercise
    Value realized on exerciseGuy Hébert
    N/A
    N/AIngrid
      Martin
    N/A
    N/AJean-Pierre
      Lachance
    N/A
    N/APierre H.
      Terreault
    N/A
    N/A


(1)The Company granted only Option awards and did
not grant any Stock awards so columns (d) (e) have been deleted from the table.

Directors Compensation- In U.S. dollars(1)

Name (a)
    Fees earned or paid in cash
      ((b)((2)
    Option awards (d)
    All other compensation
      ($)(g)
    Total (h)($)3)
    ($)(4)(5)
    ($)
    ($)Robert Desjardins
    8,029
    29,395
    N/A
    37,424Jean-Guy Masse
    8,029
    29,395
    N/A
    37,424Henri Lanctôt
      (4)
    -
    29,395
    N/A
    29,395Marcel Bergeron
    6,309
    29,395
    N/A
    35,704Total :
    22,367
    117,580
    
    139,947


(1)The Company did not have any stock awards,
Incentive plan compensation or compensation earnings so columns ( c ), (e) (f)
have been deleted from the table.

(2) Mr. Guy Hébert, director, president and CEO and
Mr. Jean-Pierre Lachance, executive vice-president who work at the head office
as executive officers of the Company do not receive any fees for their presence
to the Board of Directors Meetings but their remuneration by BBH Géo-Management
Inc., the Management Company, for services rendered to the Company pursuant to a
services contract is described in details in this Item 10 at the
sub-section entitled: Summary executive compensation

(3) The Company did not pay any salary or other form
of compensation directly to its external directors other than the fees for their
presences to the Board of directors meetings and Audit Committee Meetings and
the grant of stock options as detailed in the following footnote.

(4) Mr. Henri Lanctôt, director and Corporate
Secretary of the Company, does not receive any fees as Director. Mr. Lanctôt is
a partner of Gowling Lafleur Henderson, LLP, (Gowlings) legal counsel to the
Company. During the year ended December 31, 2009, the Company paid to Gowlings
fees totalling $46,265 which included fees for services of Mr. Lanctôt as
Corporate Secretary of the Company in the approximate amount of $8,133 for Board
of Directors meetings and for Annual Shareholders Meeting documentation. These
amounts do not represent the remuneration actually received by Mr. Lanctôt for
his services.

(5) The Company granted on June 2009, to each of the
four directors mentioned in the preceding table, 75,000 stock options at the
exercise price of $0.9556 per share until June 8, 2014, with each an aggregate
grant date fair value of $29,395computed in accordance with FAS 123 R of $0.3919
per share as indicated at Note 10 Stock Option Plan of Financial
Statements that reads as follows in U.S. Dollars.

During the year ended December 31, 2009, the Company granted
1,077,500 stock options in 2009 (1,363,500 stock options in 2008 and 1,499,000
stock options in 2007) to officers, directors, consultants and employees of
service providers rendering services to the Company, at a strike price of
$0.9559 per share for 5 years, of which 963,500 vest immediately and 114,000
vest in 3 tranches over 18 months. The fair value of each option granted was
determined using the Black-Scholes option pricing model. At the date of the
grant, the weighted-average fair value of the stock options granted was $0.3919
per option in 2009 ($0.9335 per option in 2008 and $1.2954 per option in 2007)
for a Black Scholes value of the grant of 75,000 stock options in 2009 to each
of Misters Desjardins, Masse, Lanctôt and Bergeron of $29,395. The market price
of the Company share was lower than the strike price at the grant dates.

---

102

|                              | 2009    | 2008  | 2007
|----------------------------- | ------- | ----- | ----
|                              |         |       |     
|Risk-free interest rate       | 1.88%   | 2.46% | 3.06
|Expected life                 | 2 years | 1yr   | 1 yr
|Expected volatility           | 97.09%  | 101%  | 103%
|Expected dividend
      yield | 0.0%    | 0.0%  | 0.0%

In 2009, a stock-based compensation relating to the vested
options of $519,261 ($1,089,533 in 2008) was recognized in the statement of
operations and $162,455 was capitalized against the deferred expenditures, with
the credit being recorded against the contributed surplus in the total amount of
$681,717 in 2009 ($1,333 in 2008 and $1,360,957 in 2007).

(3) As at December 31, 2009, Mr. Robert Desjardins
had an aggregate number of option awards outstanding at fiscal year end of
225,000 stock options of which 75,000 at the exercise price of $0.9556 per
share, 75,000 at the exercise price of $2.50 per share and 75,000 stock options
at the exercise price of $3.33per share.

As at December 31, 2009, Mr. Jean-Guy Masse had an aggregate
number of option awards outstanding at fiscal year end of 275,000 stock options
of which 75,000 are at the exercise price of $0.9556 per share, 75,000 at the
exercise price of $2.50 per share, 75,000 at the exercise price of $3.33 per
share and 50,000 stock options at the exercise price of $0.47 per share.

As at December 31, 2009, Mr. Henri Lanctôt had an aggregate
number of option awards outstanding at fiscal year end of 225,000 stock options
of which 75,000 are at the exercise price of $0.9556 per share, 75,000 at the
exercise price of $3.33 per share and 75,000 at the exercise price of $2.50 per
share.

As at December 31, 2009, Mr. Marcel Bergeron had an aggregate
number of option awards outstanding at fiscal year end of 225,000 stock options
of which 75,000 are at the exercise price of $0.9556 per share, 75,000 at the
exercise price of $3.33 per share and 75,000 at the price of $2.50 per share.

During the financial year ended December 31, 2009, the Company
granted during the year ended December 31, 2009 a total of 1,077,500 of which
600,000 stock options were granted to directors and executive officers and the
Chief Financial Officer and 477,500 stock options were granted to employees of
the Management Company under the terms of the stock option plan, as described in
the following table:

In U.S. dollars Name
    Securities under
      option
    **Percentage of total**
      options granted to key employees and
      consultants in the financial year
    Exercise price
    Market value of the
      securities under option on the eve of the
      award
    ExpiryGuy Hébert,
      President
    100,000
    0.092%
    $0.9556
    $0.00
    2014/06/08Jean-Pierre Lachance, Executive Vice President
    100,000
    0.092%
    $0.9556
    $0.00
    2014/06/08


The following table shows the options exercised during the
financial year by executive officers and the year-end value of unexercised
options at December 31, 2009:

---

103

|In U.S.
      dollars        |             |                          |                        | Value
      of unexercised in-
|---------------------------- | ----------- | ------------------------ | ---------------------- | ------------------------------
|                             | Shares      |                          | Unexercised options at | the-money options at          
|                             | acquired on |                          | year-end               | year-end                      
|                             | exercise of |                          | --------// --------    | --------// --------           
|                             | options     | Aggregate value realized | Exercisable /          | Exercisable / non-            
|Name                         | (#)         | ($)(1)                   | non-exercisable        | exercisable                   
|Guy Hébert, CEO              |             |                          | 750,000                | $177,600                      
|President and Director       | 0           | $0                       | ______//_____          | _______//______               
|                             |             |                          | 750,000/ N.A.          | 750,000 / N.A.                
|Jean-Pierre Lachance,        |             |                          | 550,000                | $99,300                       
|Executive Vice President and | 0           | $0                       | _______//______        | ______//_____                 
|Director                     |             |                          | 550,000/ N.A.          | 550,000 / N.A.                

(1)Whenever an option is exercised, the aggregate
value realized is the difference between the market value on the date of the
exercise of the option and the exercise price, multiplied by the number of
shares. On December 31, 2009, at closing on the TSX Exchange, the Company share
traded for $0.783 per share.

Liability Insurance - In U.S. dollars

On June 1, 2009, the Company subscribed a liability insurance
policy for storage tanks and pollution costs coverage until June 1, 2010 in the
amount of $4,779,658 dollars per event and paid an annual premium of $17,757 for
the policy during the financial year.

The Company has an insurance policy that provides directors
and officers liability coverage of $4,779,657 per event. The Company paid an
annual premium of $14,712 for the policy during the financial year.

Termination of Employment, Change in Responsibilities and
Employment Contract

There are no employment contracts between the Company and its
executive officers, nor is there any compensatory mechanism that may be
triggered in the event of a change of control of the Company or a change in
executive officers responsibilities pursuant to a resignation, retirement or
any other termination of employment by a services provider having a services
contract with the Company.

Directors Fees- In U.S. dollars

The external directors receive fees for each board and audit
committee meeting they attend with the exception of those directors who are also
executive officers of the Company. Directors fees totalled $22,369 for the year
ended December 31, 2009 and were allocated as follows:

|Name of Director  | Amount of Directors fees paid for
      fiscal year 2009
|----------------- | ---------------------------------------------------------
|Marcel Bergeron   | $6,309                                                   
|Robert Desjardins | $8,029                                                   
|Jean-Guy Masse    | $8,029                                                   

Aside from stock options granted to directors under the stock
option plan, directors do not receive any other fee or benefit from the Company
to the exception of Mr. Henri Lanctôt, Mr. Guy Hébert and Mr. Jean-Pierre
Lachance as discussed in the preceding paragraphs of this Item.

Loan to Directors and Officer

At the date hereof, no director, nominee as director or officer
or anyone associated with them owed any amount to the Company.

The Company does not have a long-term incentive plan (LTIP).

Stock Option Plan

The Company has a stock option plan for its executive officers,
directors, consultants and employees of services providers. A total of
10,654,586 common shares are reserved for issuance under the plan. The maximum
number of options that can be granted to any

---

104

participant cannot exceed 5% of the issued and outstanding
shares of the capital stock. The exercise price of the options granted may not
be less than the average means of the volume weighted average trading price of
the listed securities, calculated by dividing the total value by the total
volume of securities traded for the five trading days immediately preceding the
relevant date of the grant on the Toronto Stock Exchange (TSX) at the time the
options are granted. The options granted are valid for a period established by
the Board of Directors, not to exceed five years from the date the options are
granted.

The Company has no stock appreciation rights (SAR) plan.

Equity Compensation Plan Information as at December 31,
2009-In U.S. dollars

|                                   |                            |                              | Number
      of securities    
|---------------------------------- | -------------------------- | ---------------------------- | ------------------------------
|                                   |                            |                              | remaining available for future
|                                   |                            |                              | issuance under equity         
|                                   | Number of securities to be |                              | compensation plan (excluding  
|                                   | issued upon exercise of    | Weighed-average exercise     | securities reflected in column
|Plan
      Category                | outstanding options        | price of outstanding options | (a))                          
|Stock option plan                  |                            |                              |                               
|                                   |                            |                              |                               
|Equity compensation plans          |                            |                              |                               
|approved by security
      holders | 4,310,500                  | $1.81                        | 3,474,586                     
|Equity compensation plans          |                            |                              |                               
|not approved by security           |                            |                              |                               
|holders                            | N.A.                       | N.A.                         | N.A.                          
|Total:                             | 4,310,500                  | $1.81                        | 3,474,586                     

(b) Stock options granted during the last financial year -
In U.S. dollars

During the year ended December 31, 2009, the Company granted a
total of 1,077,500 stock options to officers, directors and key employees and
consultants of services provider, BBH Géo-Management Inc.

Of that number, on June 9, 2009, the Company granted a total of
500,000 stock options to directors at the exercise price of $0.9556 per
share, 100,000 to the Chief Financial Officer and 477,500 were granted to
consultants and several employees of the Management Company rendering services
to the Company.

There has been no stock option exercised during the year ended
December 31, 2009.For further details concerning the stock options granted and
exercised during the last fiscal year please refer to NOTE 12 of FINANCIAL
STATEMENTS.

Item 12: Security Ownership of Certain Beneficial Owners and
Management Related Stockholder Matters.

(a) Security ownership of certain beneficial owners

The Company is a publicly traded Canadian corporation, the
shares of which are owned by Canadian residents, U.S. residents and other
countries residents. The Company is not owned or controlled, directly or
indirectly by any foreign government or any other companies. Ownership is based
on information furnished to the Company by its Transfer Agent, Computershare
Company of Canada. As of December 31, 2009, the Company knew of one person
owning more than 5% of common shares of the issuers voting securities.

Title of class
    Name and address of
      beneficial owner
    Amount and nature of
      beneficial ownership at December 31, 2009
    Percent of classCommon shares
    Goodman & Company, Investment Counsel
      Ltd One Adelaide Street East 29thFloor, Toronto
      Ontario, Canada M5C 2V9
    14,744,565 common shares are held within
      mutual funds or other client accounts managed by Goodman &
      Company, Investment Counsel Ltd, acting as Investment Counsel and
      Portfolio Manager
    12.11%
      undiluted.


---

105

(b) Security ownership of management

The following table sets forth the names and addresses of each
  of the directors and officers of the Company, their principal occupations and
  their respective date of commencement of their term with the Company. All directors
  and officers hold office until the next Annual General Meeting of Shareholders
  of the Company or until a successor is appointed.

1
    2
    3
    4Title of class
    Name and Position with
      the Company
    Number of Common
      Shares of the Company Beneficially Owned
      or Directly/Indirectly Controlled(1)(6)
    Percentage of Issued
      Share Capital(6)Common shares, (1), stock options
      to purchase common shares and common shares indirectly controlled
    GUY HEBERT(3)(5)595
      Marie-Victorin, Boucherville, Québec, Canada J4B 1X4 President and
      Director 2000
    232,000 common shares
      5,355,614 common shares held indirectly 750,000 stock
      options (3)
    4.90%Common shares, escrowed shares and stock options to
      purchase common shares
    JEAN-PIERRE LACHANCE,(5)5146
      Nantel, St-Hubert, Québec, Canada J3Y 2Y4 Executive Vice President
      and Director 2000
    198,600 common shares
      550,000 stock options (4)
    0.60%Common shares and stock options to purchase
      common shares
    ROBERT DESJARDINS, (2)400 rue
      de Linspecteur, # 810 Montréal, Québec H3C 4A8 Director 2001
    100,000 common shares
      225,000 stock options
    0.20%Common shares and stock options to purchase
      common shares
    JEAN-GUY MASSE, (2)(5)775
      Chemin Markham, Montreal, Québec, Canada H3P 3A6 Director 2000
    43,000 common shares
      275,000 stock options
    0.20%Common shares and stock options to purchase
      common shares
    HENRI LANCTÔT, (5), 247,
      Trenton ave., Montreal, Quebec, Canada H3P 1Z8 Corporate secretary
      and director 2007
    50,375 common shares
      225,000 stock options
    0.20%Common shares and stock options to purchase
      common shares
    MARCEL BERGERON (2) (5), 108,
      ave. Kenaston, Mont-Royal Town, Québec H3R 1M2 Director 2007
    27,000 common shares
      225,000 stock options
    0.20%Stock options to purchase common shares
    INGRID MARTIN(5), 4672, Brébeuf
      Street Montreal, Québec H2J 3L3 Chief Financial Officer , June
      2009
    100,000 stock
      options
    0.00%Total Common shares and stock options to
      purchase common shares directly and indirectly controlled.
    
    6,006,589 common
      shares 2,350,000 stock options
    6.81%(6)


(1) Information relating to the Shares over which
control or direction is exercised was provided by the directors and officers as
of March 10, 2010. Common Shares beneficially owned, directly or indirectly, or
over which control or direction is exercised, as at the date hereof, based upon
information furnished to the Company by individual directors and officers.
Unless otherwise indicated, such shares are held directly.

(2) Member of the Audit Committee

---

106

(3)Mr. Hébert holds directly a total of 232,000
shares, indirectly 5,355,614 shares through a company disclosed at Item
13:Certain relationships and related transactions and
Director Independence of which Mr. Hébert is president and sole director and
these shares are controlled by Mr. Hébert and 750,000 stock options.

(4)The directors, officers and other members of
management of the Company, as a group beneficially own, directly or indirectly,
6,006,589 common shares of the Company, representing 4.90% of the total
122,695,906 common shares issued and outstanding of the Company as of March 10,
2010 and 6.81% of that same number in taking in consideration the stock options
that can be exercised in a delay of 60 days.

(5) Of the number of common shares mentioned in
Column 4 of the preceding table, the directors owned each a number of
stock options with right to exercise within 60 days as follows: Mr. Hébert,
750,000; Mr. Lachance, 550,000; Mr. Masse, 275,000; Mr. Lanctôt, 225,000 Mr.
Desjardins 225,000, Mr. Bergeron 225,000 stock options and Mrs. Martin, Chief
Financial Officer, 33,333 stock options.

(c) Changes in control

The Company does not anticipate at this time any changes in
control of the Company.

Item 13: Certain Relationships and Related Transactions, and
Director Independence

(a) Related parties transactions

During the year, the Company conducted the following
transactions with another company, BBH Géo-Management Inc. (BBH) for which the
Companys director and President, Mr. Guy Hébert, also serves as sole director
and President On August 1, 2008, the Company and BBH, a related company, signed
an agreement under which BBH will provide the Company with the following
services: office space, office and computer equipment, secretarial, management,
accounting and legal, geological consulting, investor and regulatory relations
and financing services. The agreement is valid for a three-year period ending on
July 31, 2010, and provides for a fixed monthly charge of $5,200 for office
rent, office equipment and computers that will be reviewed each year on July 31.
See section Related-party Transactions in Item 7: Management Discussion
&Analysis, Executive remuneration, Security management ownership and Note 17
of Financial Statements

Mr. Henri Lanctôt, Director and Corporate Secretary of the
Company, is a Partner of Gowling Lafleur Henderson LLP which acts as legal
counsel to the Company.

(b) Transactions with Promoters

Mr. Guy Hébert, President and director of the Company can be
considered as the promoter of the Company in consideration of his participation
and managing of the business of the Company since its incorporation.

Mr. Hébert does not receive any salary or compensation for his
services as Director and Chief Executive Officer directly from the Company but
receives a salary from BBH and is entitled to receive Companystock options as
an incentive. See section on Security ownership of management and Executive
remuneration.

(c) Director Independence

At March 10, 2010, the Board of Directors consists of six
directors who will serve until the next annual meeting that will be held on May
27, 2010 at 10.30 a.m. at Hotel Fairmount Queen Elizabeth, Hochelaga 4 Room, 900
René-Lévesque Blvd. West Montréal, Québec, H3B 4A5 Canada and they will then
either be re-elected or their successors will be elected. For the discussion as
to Directors Independence please see this Item at subsection (a) Related
parties transactions.

There exist no family relationships between directors of the
Company.

The directors and executive officers of the Company can have
functions in other public mining companies or still to detain important assets
in other public mining companies and to that effect enter into conflicting
interests at the time of negotiation or to conclude the mode or scope related to
that venture when these other mining companies can participate in the same joint
venture.

As of December 31, 2009, Mr. Jean-Guy Masse Mr. Robert
Desjardins and Mr, Marcel Bergeron are independent directors. Mr. Bergeron
qualifies as an independent director since June 2009 as discussed in details
at Item 10 Directors, Executive Officers and Corporate Governance at
sub-section (i) Corporate governance.

---

107

Mr. Guy Hébert, President, Mr. Jean-Pierre Lachance, Executive
Vice President, and Mr. Henri Lanctôt, Director and Corporate Secretary, are not
considered independent directors and further details are disclosed at this
Item 13 subsection (a) Related Parties transactions.

The independent directors meet without the presence of
non-independent directors in the case of the Audit committee meetings. In order
to assure the independence of the directors, the Audit committee has full
authority to review the financial statements and management discussions and
analysis on a quarterly and annual financial basis, to question the auditors and
the employees of the Management Company in charge of the Companys financial
department, to examine and comment on any of the Companys medium- and long-term
obligations, and to review, analyse and comment on the Companys budget.

The Board of directors is chaired by Mr. Guy Hébert, President
and Chief Executive Officer, and Robert Desjardins, an independent director,
acts as the lead director. With the President and Chief Executive Officer, the
lead director establishes the agenda items for each meeting, including the
matters presented to the Audit committee. The Audit committee constitutes a
forum for the independent directors to comment on the Companys activities and
identify matters to be dealt with at Board of director meetings.

Item 14: Principal Accounting Fees and Services in Canadian
Dollars

The mandate of PETRIE RAYMOND, LLP, Chartered Accountants has
been renewed on June 9, 2009 as Auditors of the Company.

1) Audit Fees

In the last two fiscal years, one firm of accountants rendered
to the Company professional services for the total estimated amount of $151,044
for auditing of annual financial statements included in Form 10-K for the
fiscal years ended December 31, 2008 and December 31, 2009, review of quarterly
interim financial statements for the quarterly reports of the fiscal years ended
December 31, 2008 and December 31, 2009 and other services that are normally
provided by the accountants in connection with statutory and regulatory filings
for these periods ("reports").

Services provided by the principal accountant PETRIE RAYMOND,
  LLP, Chartered Accountants, for the year,, ending December 31, 2008 concerning
  the quarterly filings of March, June and September 2008 amounted to fees of
  $18,796 and the fees to be paid for the annual reports including Form 10-K
  amounted to $53,848. For the year ending December 31, 2009, the Company paid
  fees in the amount of $25,400 for the quarterly filings of March, June and September
  2009 and estimates fees in the amount of $53,000 for the annual reports for
  the year ended December 31, 2009 including Form 10-K.

March 31, 2008, June 30, 2008, September 30, 2008,
    PETRIE RAYMOND LLP
    $18,796Annual reports for year ending December 31, 2008 and
    PETRIE RAYMOND LLP
    $53,848March 31, 2009, June 30, 2009 and September 30, 2009
    PETRIE RAYMOND LLP
    $25,400Annual Reports
      2009
    PETRIE
      RAYMOND LLP
    *$53,000


* Estimated fees

2) Audit-Related Fees

None

3) Tax Fees

There are the aggregate fees billed for tax compliance, tax
advice and tax planning in each of the two last fiscal years for professional
services rendered by the principal accountants:

Year ending at December 31, 2008:
$3,556Year ending at December 31, 2009: *$5,000*Estimated fees

---

108

On November 8, 2009, the Board of directors upon pre-approval
of the Audit committe, gave mandate to PricewaterhouseCoopers, Chartered
Accountants to review the Companys tax filings for the year ended December 31,
2009.

4) All other Fees

The Company paid to PETRIE RAYMOND LLP, Chartered Accountants,
fees in the amount of $5,588 in the year ended December 31, 2008 for its
participation in the due diligence process in financing and to answer some
comments of LAutorité des marchés financiers du Québec (Québec
Securities Commission) and of the U.S. Securities and Exchange Commission.

5) Audit committees pre approval policies and procedures:
The Company engages the accountant, to render audit services, once the Companys
audit committee has approved the engagement.

With respect to the provision of services other than audit,
review or attest services, the pre-approval by the Audit committee is waived if
the aggregate amount of all such services provided constitutes no more than five
percent of the total amount of revenues paid by the Company to its accountant
during the fiscal year in which the services are provided. Such servicesare promptly brought to the attention of the Companys Audit committee and
approved prior to the completion of the audit by the Audit committee or by one
or more members of the Audit committee who are members of the Board of directors
to whom authority to grant such approval has been delegated by the Audit
committee.

Item 15: Exhibits, Financial Statement Schedules

a) (1) Index to Financial Statements

|F-1Report
      of Independent Registered Public Accounting Firm;                  
|-----------------------------------------------------------------------------------
|F-2Balance Sheets as of December 31, 2009 and 2008;                                
|F-3Statements of Deferred Expenditures as of December 31, 2009 and 2008;           
|F-4Statements of Earnings and Deficit as of December 31, 2009, 2008 and
      2007;
|F-5Statements of Cash Flows as of December 31, 2009, 2008 and 2007;                
|F-6Notes to Financial Statements including U.S. GAAP                               

---

109

a)(2) Table of Exhibits

Table of Exhibits - Form 10K,
      December 31, 2008
    Format
    Reference to Pages of Form 10K or
      Incorporation by Reference3 (i)
    Certificates of incorporation and
      amendments
    Paper
    See Form 10 SB/A2 Volume 1
      Amended pages 1 to 103 (ii)
    By-laws
    Paper
    See Form 10 SB/A2 Volume 1
      Amended pages 37 to 59(4) (1)
    Instruments defining the rights
      of security holders, including indentures in By-Laws
    Paper
    See Form 10 SB/A2 Volume 1
      Amended By- Laws sections 47 to 54 pages 50 to 52(4) (2)
    Instruments defining the rights
      of security holders, including indentures in Annex A to Certificate of
      incorporation (translation in English)
    CE
    Form 10KSB/A2, 2007-12-31 Page 7910.1
    Amended Contract of Services
      between Strateco Resources Inc. and BBH Geo-Management Inc dated April 1,
      2007 ( French Language version)
    CE
    Form 10KSB/A2, 2007-12-31, Page
      8110.2
    Amended Contract of Services
      between Strateco Resources Inc. and BBH Geo-Management Inc dated April 1,
      2007 (English language summary)
    CE
    Form 10KSB/A2, 2007-12-31 Page 8610.3
    Contract of Services between
      Strateco Resources Inc. and BBH Géo-Management Inc. dated August 1, 2008
      (French language version)
    CE
    Form 10Q, 200-09-30, page 1110.4
    Contract of Services between
      Strateco Resources Inc. and BBH Géo-Management Inc. dated August 1, 2008(
      English Language summary )
    CE
    Form 10Q, 2008-09-30, p. 1510.5
    Amended Stock Option Plan dated
      November 7, 2008 ( French Language version) with Summary in English
      Language
    CE
    Form 10KSB/A2, 2007-12-31 Page 8710.6
    Amended Stock Option Plan dated
      November 7, 2008 (English Language summary)
    CE
    Form 10KSB/A2, 2007-12-31 Page
      10011
    Statement re computation of per share earnings
    
    N/A13
    Annual report to security
      holders, Form 10 Q or quarterly report to security holders
    CE
    Form 10K SB/A December 31. 2007,
      Form 10 Q March 31, June 30 and September 30, 200814
    Code of Ethics
    CE
    Companys website at www.stratecoinc.com22
    Published report regarding
      matters submitted to vote of security holders
    CE
    Form 10 Q for the period ended
      June 30, 200823
    Letter of consent from KPMG, LLP dated July 22, 2002.
    Paper
    Form 10 SB/A2 Volume 1 Amended p. 23423.1
    Consent of expert on technical
      report, David A. Ross, P.Geo, for Scott Wilson Roscoe Postle Associates
      Inc.
    CE
    Form 10KSB/A2, 2007-12-31 Page
      10223.2
    Consent of expert on technical
      report, David A. Ross, M.Sc. P. Geo. for Scott Wilson Roscoe Postle
      Associates Inc.
    CE
    Form 10K, 2008-12-31,23.3
    Consent of expert on technical
      report R. Barry Cook, M.Sc.P. Eng. for Scott Wilson Roscoe Postle
      Associates Inc.
    CE
    Form 10K, 2008-12-3123.4
    Consent of expert on scoping
      study David A. Ross M.Sc. P. Geo. for Scott Wilson Roscoe Postle
      Associates Inc.
    CE
    Form 10K, 2008-12-3123.5
    Consent of expert on scoping
      study Barry Cook, M. Sc. P. Eng. for Scott Wilson Roscoe Postle Associates
      Inc.
    CE
    Form 10K, 2008-12-3123.6
    Consent of expert on scoping
      study Normand L. Lecuyer, P.Eng. for Scott Wilson Roscoe Postle Associates
      Inc.
    CE
    Form 10K, 2008-12-3123.7
    Consent of expert on scoping study Bruce C. Fielder, P.
    Eng., for Melis Engineering Ltd.
    CE
    Form 10K, 2008-12-31    110 23.8
      Consent of expert on scoping
        study Normand DAnjou , Eng. for Golder Associates Ltd
      CE
      Form 10K, 2008-12-3123.9
      Consent of expert on scoping
        study Paul Chamois, , M.Sc., P.Geo. Senior Consulting Geologist for Scott
        Wilson Roscoe Postle Associates Inc
      CE
      Form 10K, 2008-12-3124
      Letter of consent from Gowling
        Lafleur Henderson, LLP dated July 22, 2002
      Paper
      Form 10 SB/A2 Volume 1 Amended p.
        23524
      Form FIX appointing Eaton,
        Peabody as Agent of the Company in the United States of America dated July
        15, 2002 and certified copy of the Board of Directors dated July 15, 2002
      Paper
      Form 10 SB/A2 Volume 1 Amended
        page 23024
      Power of attorney
      Paper
      Form 10 SB/A2 Volume of Exhibits
        Amended page 23231.1
      Sarbanes-Oxley Act Section 302(a) Certification of CEO
      CE
      Form 10K-2008-12-31.31.2
      Sarbanes-Oxley Act Section 302(a) Certification of CFO
      CE
      Form 10K-2008-12-31.32
      Certification pursuant to 18
        U.S.C. Section 1350 asadopted pursuant to Section 906 of the
        Sarbanes-Oxley Act of 2002.
      CE
      Form 10K 2008-12-31 P99.1
      Framework of Internal Control over financial reporting 2007
      CE
      Form 10KSB/A2, 2007-12-31 Page 10699.1.1
      Internal Controls of Purchases
        and Expenses Cycle (2008) with Control of General Administrative expenses
      CE
      Form 10K, 2008-12-3199.2
      Description of Financing process
        by private or public offering and of related disclosure requirements.
      CE
      Form 10K, 2008-12-31
    111 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. STRATECO RESOURCES INC. Dated: March 11, 2010 /s/ Guy Hebert _________________________________ Name:
Guy Hebert Title: President, Chief Executive Officer and Director Dated: March 11, 2010 /s/ Ingrid Martin __________________________________
Name: Ingrid Martin Title: Chief Financial Officer Dated: March 11, 2010 /s/ Jean-Pierre Lachance _________________________________
Name: Jean-Pierre Lachance, Title: Executive Vice-President and Director Dated: March 11, 2010 /s/ Jean-Guy Masse __________________________________
Name: Jean-Guy Masse,Title: Director Dated: March 11, 2010 /s/ Robert Desjardins ___________________________________
Name: Robert Desjardins,Title: Director Dated: March 11, 2010 /s/ Marcel Bergeron
______________________________________Name: Marcel Bergeron,Title:
Director Dated: March 11, 2010 /s/ Henri Lanctôt
_____________________________________Name: Henri Lanctôt         FINANCIAL STATEMENTSAs at December 31, 2009 and 2008   Strateco Resources Inc.1225 Gay-Lussac Street, Boucherville, Québec J4B 7K1Tel.: (450) 641-0775 • 1-866-774-7722 • Fax: (450) 641-1601Website: www.stratecoinc.com     Email: info@stratecoinc.comToronto Stock Exchange: RSC    Frankfurt Stock Exchange
      FSE: RF9    Management’s  Responsibility for Financial Reporting Management is responsible for the financial  statements of Strateco Resources Inc. and the financial information contained  in this report. The financial statements are prepared by management in  accordance with generally accepted accounting principles in Canada and necessarily include  amounts based on best estimates and judgments of management. Management  maintains a system of internal control to provide reasonable assurance that  assets are safeguarded from any loss or unauthorized use and that financial  information is reliable and available in a timely manner. Primarily through its Audit  Committee, the Board of Directors oversees management’s responsibility with  regard to presentation of the information, and reviews and approves the  financial statements. The Audit Committee is appointed by the Board of Directors. All of its members are independent directors.. All three members are external directors. The committee meets from time to time with management as well as the external auditors to discuss matters related to internal controls, audit results, accounting principles and related subjects. Petrie Raymond LLP, Chartered Accountants, an independent chartered accounting firm, was appointed to audit the Company’s financial statements and issue an opinion on them. On the recommendation of the Audit Committee, the Board of Directors has  approved the Company’s financial statements for the years ended December 31,  2009 and 2008.  (Signed) Guy Hébert
    (Signed) Ingrid MartinGuy Hébert,
    Ingrid Martin,President and Chief Executive Officer
    Chief Financial Officer Boucherville, Canada 
  March 11, 2010    255 CRÉMAZIE BLVD. EAST, SUITE 1000
  MONTRÉAL (QUÉBEC)  H2M 1M2
  TEL.: (514) 342-4740
  FAX: (514) 737-4049 Auditors Report Report of Independent Registered Chartered Accountants To the Shareholders and Board of Directors of: Strateco
      Resources Inc.: We have audited the accompanying balance sheets of Strateco
  Resources Inc. as of December 31, 2009 and 2008 and the statements of
  operations, comprehensive loss, deficit and cash flows for the years ended
  December 31, 2009, 2008 and 2007. We also have audited the Companys internal
  control over financial reporting as of December 31, 2009 based on criteria
  established in Risk Management and Governance/Guidance on Control published by the CICAs Criteria of Control Board. The Companys management is
  responsible for these financial statements, for maintaining effective internal
  control over financial reporting, and for its assessment of the effectiveness of
  internal control over financial reporting, included in the accompanying Annual
  Report. Our responsibility is to express an opinion on these financial
  statements and an opinion on the Companys internal control over financial
  reporting based on our audits. We conducted our audits in accordance with the standards of the
  Public Company Accounting Oversight Board (United States). Those standards
  require that we plan and perform the audits to obtain reasonable assurance about
  whether the financial statements are free of material misstatement and whether
  effective internal control over financial reporting was maintained in all
  material respects. Our audits of the financial statements included 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, and evaluating the overall financial statement presentation.
  Our audit of internal control over financial reporting included obtaining an
  understanding of internal control over financial reporting, assessing the risk
  that a material weakness exists, and testing and evaluating the design and
  operating effectiveness of internal control based on the assessed risk. Our
  audits also included performing such other procedures as we considered necessary
  in the circumstances. We believe that our audits provide a reasonable basis for
  our opinions. A companys internal control over financial reporting is a
  process designed 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. A
  companys internal control over financial reporting includes those policies and
  procedures that (1) pertain to the maintenance of records that, in reasonable
  detail, accurately and fairly reflect the transactions and dispositions of the
  assets of the company; (2) provide reasonable assurance that transactions are
  recorded as necessary to permit preparation of financial statements in
  accordance with generally accepted accounting principles, and that receipts and
  expenditures of the company are being made only in accordance with
  authorizations of management and directors of the company; and (3) provide
  reasonable assurance regarding prevention or timely detection of unauthorized
  acquisition, use, or disposition of the companys assets that could have a
  material effect on the financial statements.    Auditors' ReportTo the Shareholders and Board of Directors ofStrateco
      Resources Inc.:
    Page
      2 Because of its 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. In our opinion, the financial statements referred to above
  present fairly, in all material respects, the financial position of the Company
  as at December 31, 2009 and 2008 and the results of its operations and its cash
  flows for the years ended December 31, 2009, 2008 and 2007 in accordance with
  Canadian generally accepted accounting principles. Also, in our opinion, the
  Company maintained, in all material respects, effective internal control over
  financial reporting as of December 31, 2009, based on criteria established in Risk Management and Governance/Guidance on Control published by
  the CICAs Criteria of Control Board. As discussed in Notes 4 and 23, the Company restated its prior
  years financial statements to reclassify some deferred expenditures to property
  and equipment, to correct the calculation of the future income tax and to
  capitalize the acquisition costs of mining properties and mining rights. Canadian generally accepted accounting principles vary in
  certain respects from the accounting principles generally accepted in the United
  States of America. Information relating to the nature and aspect of such
  difference is presented in Note 23 to the financial statements.   Limited Liability Partnership 
  Chartered Accountants Montréal, Canada 
  March 11, 2010 1
    CA
      auditor permit No. 20507     255 CRÉMAZIE BLVD. EAST, SUITE 1000
  MONTRÉAL (QUÉBEC)  H2M 1M2
  TEL.: (514) 342-4740
  FAX: (514) 737-4049 Auditors Report to the Shareholders We have audited the balance sheets of Strateco Resources
  Inc.as at December 31, 2009 and 2008 and the statements of operations,
  comprehensive loss, deficit and cash flows for the years ended December 31,
  2009, 2008 and 2007. 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 Canadian generally
  accepted auditing standards. Those standards require that we plan and perform an
  audit to obtain reasonable assurance whether the financial statements are free
  of material misstatement. An audit includes examining, on a test basis, evidence
  supporting the amounts and disclosures in the financial statements. An audit
  also includes assessing the accounting principles used and significant estimates
  made by management, as well as evaluating the overall financial statement
  presentation. In our opinion, these financial statements present fairly, in
  all material respects, the financial position of the Company as at December 31,
  2009 and 2008 and the results of its operations and its cash flows for the years
  ended December 31, 2009, 2008 and 2007 in accordance with Canadian generally
  accepted accounting principles.   Limited Liability Partnership 
  Chartered Accountants Montreal, Canada 
  March 11, 2010 1
    CA auditor permit No. 20507     STRATECO RESOURCES INC., an exploration stage
      companyBalance SheetsDecember 31, 2009 and 2008  2009
    
    
    2008**$**
    
    
    **$**(Restated)ASSETSCURRENT ASSETSCash and cash equivalents (Note 5)
    
    321,065
    
    
    5,847,120Tax credits receivable (Note 6)
    
    9,306,880
    
    
    10,278,825Sales tax recoverable
    
    334,951
    
    
    515,386Investment (Note 7)
    
    45,000
    
    
    35,000Deposits on exploration work
    
    150,000
    
    
    150,000Prepaid expenses
    
    137,348
    
    
    132,67610,295,244
    
    
    16,959,007EXPLORATION FUNDS (Note 5)
    
    2,473,260
    
    
    4,852,256MINING PROPERTIES (Note 8)
    
    10,827,687
    
    
    10,571,154DEFERRED EXPENDITURES (Note 8)
    
    36,304,887
    
    
    25,958,075PROPERTY AND EQUIPMENT (Note 9)
    
    1,754,666
    
    
    1,421,09861,655,744
    
    
    59,761,590LIABILITIESCURRENT LIABILITIESAccounts payable and accrued charges
    
    1,697,302
    
    
    1,396,939Current portion of
      obligation under capital lease (Note 10)
    
    156,814
    
    
    -1,854,116
    
    
    1,396,939OBLIGATION UNDER CAPITAL LEASE (Note 10)
    
    171,522
    
    
    -FUTURE INCOME TAX (Note 18)
    
    1,293,000
    
    
    1,876,000ASSET RETIREMENT OBLIGATIONS (Note 16)
    
    160,000
    
    
    -3,478,638
    
    
    3,272,939SHAREHOLDERS EQUITYCapital stock (Note 11)
    
    58,766,177
    
    
    55,579,592Warrants (Note 11)
    
    -
    
    
    5,415,675Contributed surplus (Note 13)
    
    8,814,337
    
    
    3,413,518Deficit
    
    (9,403,408
    )
    
    (7,920,134
    )58,177,106
    
    
    56,488,65161,655,744
    
    
    59,761,590 See notes to financial statements. ON BEHALF OF THE BOARD Guy Hébert, Director
    
    Robert Desjardins, Director 2    STRATECO RESOURCES INC., an exploration stage
      companyStatements of Operations, Comprehensive Loss and DeficitDecember 31, 2009 and 2008  2009
    
    
    2008
    
    
    2007**$**
    
    
    **$**
    
    
    **$**(Restated)
    
    
    (Restated)INCOMEInterest income
    
    54,046
    
    
    446,328
    
    
    963,895EXPENSESPROFESSIONAL FEES
    
    437,588
    
    
    416,483
    
    
    391,800Legal and audit expenses
    
    274,628
    
    
    178,147
    
    
    140,031Stock-based compensation
    
    543,199
    
    
    1,089,533
    
    
    1,377,348Directors fees
    
    23,400
    
    
    19,900
    
    
    19,800Shareholder communications
    
    77,356
    
    
    85,164
    
    
    130,697Investor relations
    
    427,132
    
    
    348,698
    
    
    414,697Regulatory fees
    
    42,367
    
    
    58,650
    
    
    285,850Social benefits related to stock options
    
    -
    
    
    2,212
    
    
    4,720Travel and lodging expenses
    
    19,932
    
    
    37,226
    
    
    32,215Donation to environmental fund
    
    -
    
    
    -
    
    
    100,000Rent
    
    64,015
    
    
    49,840
    
    
    39,720Insurance
    
    32,614
    
    
    33,194
    
    
    35,621Office expenses
    
    90,673
    
    
    84,382
    
    
    73,902Taxes and permits
    
    18,053
    
    
    2,437
    
    
    36,019Recovery of part XII.6 tax
    
    -
    
    
    (28,522
    )
    
    -Interest and bank charges
    
    2,217
    
    
    4,772
    
    
    9,375Amortization of property and equipment
    
    19,146
    
    
    5,071
    
    
    -Fair value changes of financial instruments held for
      trading
    
    (10,000
    )
    
    265,000
    
    
    -Write-off of deferred expenditures and mining properties
    
    -
    
    
    356,690
    
    
    -2,062,320
    
    
    3,008,877
    
    
    3,091,795Loss before income tax
    
    (2,008,274
    )
    
    (2,562,549
    )
    
    (2,127,900
    )Future income tax
      benefits
    
    525,000
    
    
    1,028,000
    
    
    1,973,321NET LOSS AND
      COMPREHENSIVE LOSS
    
    (1,483,274
    )
    
    (1,534,549
    )
    
    (154,579
    )Deficit, beginning of year as previously stated
    
    (8,780,137
    )
    
    (6,837,585
    )
    
    (6,315,006
    )Future income tax restatement (note 4)
    
    860,000
    
    
    452,000
    
    
    84,000Deficit, beginning of year (restated)
    
    (7,920,134
    )
    
    (6,385,585
    )
    
    (6,231,006
    )Net loss
    
    (1,483,274
    )
    
    (1,534,549
    )
    
    (154,579
    )Deficit, end of year
    
    (9,403,408
    )
    
    (7,920,134
    )
    
    (6,385,585
    )NET LOSS PER
      SHARE, BASIC AND DILUTED
    
    (0.012
    )
    
    (0.013
    )
    
    (0.001
    )WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUSTANDING(in thousands)
    
    119,432
    
    
    115,986
    
    
    107,539 See notes to financial statements. 3    STRATECO RESOURCES INC., an exploration stage
      companyStatements of Cash FlowsDecember 31, 2009 and 2008  2009
    
    
    2008
    
    
    2007**$**
    
    
    **$**(Restated)
    
    
    (Restated)OPERATING ACTIVITIESNet loss for the year
    
    (1,483,274
    )
    
    (1,534,549
    )
    
    (154,579
    )Non-cash items:Stock-based compensation
    
    543,199
    
    
    1,089,533
    
    
    1,377,348Fair
      value changes of financial instruments held for trading
    
    (10,000
    )
    
    265,000
    
    
    -Write-off of deferred
      expenditures and mining properties
    
    -
    
    
    356,690
    
    
    -Amortization of property and equipment
    
    19,146
    
    
    5,071
    
    
    -Future income tax
    
    (525,000
    )
    
    (1,028,000
    )
    
    (1,973,321
    )(1,455,929
    )
    
    (846,255
    )
    
    (750,552
    )Changes in non-cash working capital itemsDeposits
      on exploration work
    
    -
    
    
    208,031
    
    
    141,969Sales tax recoverable
    
    180,435
    
    
    84,356
    
    
    (284,109
    )Prepaid
      expenses
    
    (4,672
    )
    
    (68,057
    )
    
    (38,182
    )Accounts payable and accrued charges
    
    192,373
    
    
    (435,882
    )
    
    69,897368,136
    
    
    (211,552
    )
    
    (110,425
    )Cash flow from
      operating activities
    
    (1,087,793
    )
    
    (1,057,807
    )
    
    (860,977
    )INVESTING ACTIVITIESTerm deposits
    
    -
    
    
    -
    
    
    8,680,857Acquisition of investment in shares
    
    -
    
    
    (300,000
    )
    
    -Acquisition of mining properties
    
    (222,133
    )
    
    (120,000
    )
    
    (30,493
    )Increase in deferred expenditures
    
    (16,866,957
    )
    
    (21,305,883
    )
    
    (18,267,221
    )Tax credits received
    
    8,310,361
    
    
    7,394,153
    
    
    1,319,853Additions to
      property and equipment
    
    (404,714
    )
    
    (791,877
    )
    
    (1,424,494
    )Cash flow from investing activities
    
    (9,183,443
    )
    
    (15,123,607
    )
    
    (9,721,418
    )FINANCING ACTIVITIESCommon share and warrants issuance
    
    2,500,000
    
    
    8,252,902
    
    
    30,701,350Issue costs
    
    (133,815
    )
    
    (358,208
    )
    
    (1,694,203
    )Cash flow from
      financing activities
    
    2,366,185
    
    
    7,894,694
    
    
    29,007,147NET CHANGE IN CASH AND CASH
      EQUIVALENTS
    
    (7,905,051
    )
    
    (8,286,720
    )
    
    18,424,752Cash and cash
      equivalents, beginning of year
    
    10,699,376
    
    
    18,986,096
    
    
    561,344Cash and cash equivalents, end of year
    
    2,794,325
    
    
    10,699,376
    
    
    18,986,096Less: Exploration
      funds
    
    (2,473,260
    )
    
    (4,852,256
    )
    
    -CASH AND CASH EQUIVALENTS, PRESENTED ON THE BALANCE SHEET
    
    321,065
    
    
    5,847,120
    
    
    18,986,096 Supplemental cash flow information (Note 19) See notes to financial statements. 4    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007  1.
    INCORPORATION, NATURE OF OPERATIONS AND
      GOING CONCERN The Company is incorporated under the Canadian Business
  Corporations Act and is engaged in the acquisition and exploration of
  properties. It has not yet determined whether the mining properties have
  economically-recoverable ore reserves. Recovery of amounts indicated under
  mining properties and the related deferred expenditures are subject to the
  discovery of economically recoverable reserves, the Companys ability to obtain
  the financing required to complete exploration, development and profitable
  future production or the proceeds from the sale of such assets. For the year ended December 31, 2009, the Company recorded a
  loss of $1,483,274 ($1,534,549 in 2008 and $154,579 in 2007). In addition to
  ongoing working capital requirements, the Company must secure sufficient funding
  to meet its existing commitments for exploration and development programs and
  pay general and administration costs. Management periodically seeks additional forms of financing
  through the issuance of new equity instruments and the exercise of stock options
  to continue its operations, and while it has been successful in doing so in the
  past, there can be no assurance it will be able to do so in the future. If
  management is unable to obtain new funding, the Company may be unable to
  continue its operations, and amounts realized for assets may be less than
  amounts reflected in these financial statements. The accompanying audited financial statements have been
  prepared on a going concern basis, which contemplates the realization of assets
  and liquidation of liabilities during the normal course of operations and do not
  reflect the adjustment to the carrying values of assets and liabilities, the
  reported revenues and expenses and balance sheet classifications that would be
  necessary were the going concern assumption not appropriate. These adjustments
  could be material. 2.
    CHANGES IN ACCOUNTING POLICIES EIC 173: Credit Risk and the Fair Value of Financial Assets
  and Financial LiabilitiesOn January 20, 2009, the CICA issued EIC
  abstract 173 which establish that an entitys own credit risk and the credit
  risk of the counterparty should be taken into account in determining the fair
  value of financial assets and financial liabilities, including derivative
  instruments. The adoption of this standard did not have a significant impact on
  the Companys financial statements. EIC 174: Mining Exploration CostsOn March 27, 2009,
  the CICA issued abstract EIC 174 to provide additional guidance for mining
  exploration enterprises on when an impairment test is required. This abstract
  was applied during the current year. The adoption of this standard did not have
  a significant impact on the Companys financial statements. On June 2009, the Company adopted the amendments to Section
  3862, "Financial Instruments - Disclosures", issued by the CICA. The amendments
  improved disclosures about fair value measurements of financial instruments,
  including the relative reliability of the inputs used in those measurements and
  liquidity risk, in light of concerns that the nature and extent of liquidity
  risk requirements were unclear and difficult to apply. The amendments to Section
  3862 apply to annual financial statements relating to fiscal years ending after
  September 30, 2009. The prospective adoption of this section did not have any
  measurement impact on the Companys financial statements. The additional
  disclosure requirements are presented in Note 15. Other new standards were issued, but are not expected to have a
  material impact on the Companys financial requirements. FUTURE CHANGES IN ACCOUNTING POLICYBusiness
    Combinations and Non-Controlling Interests    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007  2.
    CHANGE IN ACCOUNTING POLICIES(CONTD) As an activity consistent with Canadian generally accepted
  accounting principles being converged with IFRS-IASB, the previously existing
  recommendations for business combinations and consolidation financial statements
  will be replaced with new recommendations for business combinations (CICA
  Handbook Section 1582), consolidations (CICA Handbook Section 1601) and
  non-controlling interests (CICA Handbook Section 1602). Generally, the new recommendations result in measuring business
  acquisitions at the fair value of the acquired business and a prospectively
  applied shift from a parent corporation conceptual view of consolidation theory
  (which results in the parent corporation recording book values attributable to
  non-controlling interests) to an entity conceptual view (which results in the
  parent corporation recording fair values attributable to non-controlling
  interests). Both the new Canadian GAAP recommendations and IFRS-IASB allow the
  choice of whether or not to recognize the fair value of goodwill attributable to
  non-controlling interests on an acquisition-by-acquisition basis. As of June 30, 2009, the Company decided to postpone the
  adoption of these recommendations until January 1st 2011 (as allowed
  by the CICA Handbook). Harmonization of Canadian and International StandardsIn April 2008, the CICA published an exposure draft as guidance which
  requires the transition to International Financial Reporting Standards (IFRS)
  to replace Canadian GAAP as currently employed by Canadian publicly accountable
  enterprises. The changeover will occur no later than fiscal years beginning on
  or after January 1, 2011. Accordingly, the Company expects that its first
  interim financial statements presented in accordance with IFRS will be for the
  three-month period ended March 31, 2011, and its first annual financial
  statements presented in accordance with IFRS will be for the year ended December
  31, 2011. IFRS uses a conceptual framework similar to Canadian GAAP, but there
  are significant differences in recognition, measurement and disclosure
  requirements. Set out below are the main areas where changes in accounting
  policies are expected to have a significant impact on the Companys financial
  statements. The list below should not be regarded as a complete list of changes
  that will result from transition to the IFRS. It is intended to highlight areas
  that the Company believes to be the most significant; however, analysis of
  changes is still in process and the selection of accounting policies where
  choices are available under IFRS has not been completed. We note that the
  regulatory bodies that promulgate the Canadian GAAP and the IFRS have
  significant ongoing projects that could affect the ultimate differences between
  Canadian GAAP and IFRS and their impact on the Companys financial statements in
  future years. The future impacts of the IFRS will also depend on the particular
  circumstances prevailing in those years. The standards listed below are those
  existing based on current Canadian GAAP and IFRS. At this stage, the Company is
  not able to reliably quantify the expected impacts of these differences on its
  financial statements. They are as follows: a)
    Property, plant and equipment (IAS 16);b)
    Impairment of assets (IAS 36);c)
    Exploration for and evaluation of mineral resource (IFRS
      6);d)
    Share-based payments (IFRS 2). Furthermore, IFRS 1 provides guidance to entities on the
  general approach to be taken when first adopting IFRS. The underlying principle
  of IFRS 1 is retrospective application of IFRS standards in force at the date an
  entity first reports using IFRS. IFRS 1 acknowledges that full retrospective
  application may not be practical or appropriate in all situations and
  prescribes: a)
    optional exemptions from specific aspects of certain IFRS
      standards in the preparation of the Companys opening balance sheet;
      andb)
    mandatory exceptions to retrospective application of
      certain IFRS standards. 6    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007 Additionally, to ensure financial statements contain high
  quality information that is transparent to users, IFRS 1 contains disclosure
  requirements to highlight changes made to financial statement items due to the
  transition to IFRS. The Company is analyzing the various accounting policy
  choices available and will implement those determined to be most appropriate in
  the Companys circumstances. The Company has not yet determined the aggregate
  financial impact of adopting IFRS 1 on its financial statements. 3.
    ACCOUNTING POLICIES BASIS OF PRESENTATION 
  The Companys financial statements
  have been prepared in accordance with Canadian generally accepted accounting
  principles. All figures are in Canadian dollars unless otherwise noted. CASH AND CASH EQUIVALENTS 
  Cash and cash equivalents include
  cash, bank balances and highly-liquid short-term investments initially maturing
  within three months of their acquisition date. EXPLORATION FUNDS 
  These funds are restricted in use for
  exploration expenses pursuant to flow-through financing agreements. INVESTMENT 
  The fair value of investment in shares
  corresponds to the last bid price at the end of the period and the fair value of
  warrants corresponds to the difference between the asking price of the shares
  and the exercise price of the warrants. The fair value of the warrants is nil
  when the asking price is lower than their exercise price. MINING PROPERTIES AND DEFERRED EXPENDITURES 
  Exploration
  properties include rights in mining properties and deferred exploration
  expenditures. Expenditures incurred on non-producing properties identified as
  having development potential are deferred until the economic viability of the
  project has been established, at which time these costs are added to mining
  properties. Mining assets are reviewed for impairment upon the occurrence of
  events or changes in circumstances indicating that the carrying value of the
  assets may not be recoverable, as identified by comparing their net book value
  to the estimated undiscounted future cash flows generated by their use and
  eventual disposal. Impairment is measured as the excess of the carrying value
  over the fair value, determined principally by discounting the estimated net
  future cash flows expected to be generated from the use and eventual disposal of
  the related asset. In the event that the Company has insufficient information
  about its mining assets to estimate future cash flows to test the recoverability
  of the capitalized costs, the Company will test for impairment by comparing the
  fair value to the carrying amount, without first performing a test for
  recoverability. Expenditures not related to specific properties are accounted
  for in the statements of operations. Proceeds on the sale of exploration properties are applied by
  property in reduction of the mining properties, then in reduction of the
  deferred exploration expenditures and any residual is recorded in the statement
  of operations unless there is contractual work required in which case the
  residual gain is deferred and will be reduced the contractual disbursements when
  done. Government assistance, mining duties credits and other credits related to
  exploration work are applied against the deferred exploration expenditures. PROPERTY AND EQUIPMENT AND AMORTIZATION 
  Property and
  equipment are amortized using the straight line method over three years for fuel
  tanks, computer equipment, rolling stock, leasehold improvements, over a 10-year
  period for the camp over 30 months for the camp under a capital lease and over
  five years for the road; machinery and equipment are amortized using the
  diminishing balance method at a rate of 20%. 7    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007  3.
    ACCOUNTING POLICIES (CONTD) CAPITAL STOCK 
  Share capital issued for non-monetary
  consideration is generally recorded at the fair market value at the date the
  shares were issued, or the date the agreement to issue the shares was entered
  into, as determined by the Board of Directors of the Company. STOCK-BASED COMPENSATION AND OTHER STOCK-BASED PAYMENTS 
  The
  Company offers a stock option plan described in Note 12. The Company uses the
  fair value method based on the Black-Scholes pricing model to record the
  compensation cost related to the issue of stock options to its employees,
  employees of Companys supplies, directors, officers and consultants. When the
  options are granted, the compensation charge is recorded in the statement of
  operations or in deferred expenditures and the counterpart is credited to
  contributed surplus. The expense is recorded over the vesting period for
  employees and over the period of services rendered for consultants. The Company
  recognizes warrants granted to brokers or agents during capital raising based on
  the fair value method based on the Black-Scholes pricing model. The expense is
  recorded in the share issue costs and the counterpart is recorded against the
  warrants. On exercise of stock options or warrants, any consideration paid and
  the warrant related to these titles are credited to capital stock. When the
  warrants expire, the balance of the warrants is transferred to the contributed
  surplus. FAIR VALUE OF WARRANTS 
  Proceeds from unit placements are
  allocated between shares and warrants issued using the Black-Scholes pricing
  model to determine the fair value of warrants issued. SHARE ISSUE COSTS 
  Expenses relating to the issue of shares
  are accounted for as a reduction of the share capital during the year they are
  incurred. The resource expenditure deductions for income tax purposes related to
  exploratory activities funded by flow-through share arrangements are renounced
  to investors in accordance with tax legislation. Under the liability method of
  accounting, taking into account EIC-146, income taxes related to the temporary
  differences are recorded on the date that the Company renounces the deductions
  to investors together with a corresponding charge to issued costs in the capital
  stock. INCOME TAXES 
  The Company records its income taxes using the
  liability method. Under this method, future income tax assets and liabilities
  are recognized taking into account temporary deductible or taxable differences
  between the carrying value and the fiscal value of assets and liabilities, using
  the effective or practically effective income tax rate applicable for the year
  in which the differences should be reversed. The Company establishes a valuation
  allowance for future income tax assets if, based on available information, it is
  more likely than not that part or all of future income tax assets will not be
  realized. NET LOSS PER SHARE 
  The basic and diluted net loss per share
  is calculated based on the weighted-average number of common shares outstanding
  during the year. FINANCIAL INSTRUMENTS  RECOGNITION AND MEASUREMENT 
  All
  financial instruments are required to be measured at fair value on initial
  recognition, except for certain related party transactions. Measurement in
  subsequent periods depends on whether the financial instrument has been
  classified as held-for-trading, available-for-sale, held-to-maturity, loans and
  receivables, or other liabilities. 8    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007  3.
    ACCOUNTING POLICIES (CONTD) Financial assets and liabilities classified as held-for-trading are
    required to be measured at fair value, with gains and losses recognized in net
    earnings.Financial assets classified as held-to-maturity, loans and receivables and
    financial liabilities (other than those held- for-trading) are required to be
    measured at amortized cost using the effective interest method of
    amortization.Available-for-sale financial assets are required to be measured at fair
    value, with unrealized gains and losses recognized in other comprehensive
    income (loss). Investments in equity instruments classified as
    available-for-sale that do not have a quoted market price in an active market
    should be measured at cost. The Company has adopted the following classification: Cash and cash equivalents, investment and exploration funds are classified
    as held-for-trading.Accounts payable and accrued charges and the obligation under capital
    lease are classified as other liabilities. USE OF ESTIMATES The preparation of financial statements in accordance with
  generally recognized accounting principles requires management to make estimates
  and assumptions that affect the assets and liabilities reported. These same
  estimates and assumptions also have an impact on the contingencies as at the
  date of the financial statements, as well as amounts related to revenue and
  expenses for the periods. Critical estimates include estimates of the credit for
  mining duties refundable for losses and the refundable tax credit for resources,
  future income tax assets and liabilities, the mining properties and deferred
  exploration expenditures and retirement obligation and the fair value of stock
  options granted. Actual results could therefore differ from these estimates. 4.
    PRIOR YEARS RESTATEMENTS In 2009, following a fiscal audit, $785,266 deferred
  expenditures were reclassified to property and equipment for acquisitions that
  occurred in 2007. The amortization was increased by $126,433 in 2007 and
  $147,271 in 2008 and the offset entry was recorded in deferred expenditures. In 2009, the Company realized that a misinterpretation occurred in the methodology to calculate one aspect of the future income tax. The balance of the deficit as of January 1st 2009 was therefore reduced by $860,000 and the future income tax benefit was increased by $84,000 in 2006, $368,000 in 2007 et $408,000 in 2008. The future income tax balances on the balance sheets were reduced by an equivalent amount. 5.
    CASH AND CASH EQUIVALENTS  2009
    
    
    2008**$**
    
    
    **$**Cash
    
    1,794,325
    
    
    1,184,018Term deposits  rate of 0.40% (between 2.20% and 2.35% in
      2008) maturing onJanuary 8, 2010
      (between January 7 and 9 in 2009)
    
    1,000,000
    
    
    9,515,358Less: Exploration
      funds
    
    (2,473,260
    )
    
    (4,852,256
    )321,065
    
    
    5,847,120 On December 31, 2009, of the $2,500,000 ($8,000,000 in 2008)
  exploration work that had to be undertaken following the December 8, 2009
  flow-through private placement, $643,327 ($3,147,744 in 2008) exploration
  expenses were incurred of which $26,740 were paid ($3,147,744 in 2008). 9    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007  6.
    TAX CREDITS RECEIVABLE  2009
    
    
    2008**$**
    
    
    **$**Quebec refundable credit on mining duties
      at rate of 12%2006
    
    -
    
    
    288,0602007
    
    1,275,258
    
    
    1,369,7652008
    
    1,501,503
    
    
    1,374,6682009
    
    1,061,665Refundable credit for resources for exploration expenses at
      rates of from 35% to 38.75 %2008
    
    -
    
    
    7,246,3322009
    
    5,468,454
    
    
    -9,306,880
    
    
    10,278,825  7.
    INVESTMENT Pacific Bay Minerals Ltd. (Pacific Bay) shares are trading at
  $0.045 as at December 31, 2009 ($0.035 at December 31, 2008), consequently, the
  Company recorded an unrealized gain of $10,000 on change in the fair value of
  the investment since January 1, 2009 but a loss of $255,000 since its
  acquisition on January 14, 2008. 8.
    MINING PROPERTIES AND DEFERRED
      EXPENDITURES  December 31,
    
    
    
    
    
    
    
    
    December 31,Mining
      properties
    
    Interest
    
    
    2008
    
    
    Acquisitions
    
    
    Write-offs
    
    
    2009**$**
    
    
    **$**
    
    
    **$**
    
    
    **$**Matoush projectMatoush
    
    100 %
    
    
    337,000
    
    
    1,306
    
    
    -
    
    
    338,306Matoush Extension
    
    100 %
    
    
    -
    
    
    1,236
    
    
    -
    
    
    1,236Eclat
    
    100 %
    
    
    1,184,600
    
    
    96,207
    
    
    -
    
    
    1,280,807Pacific Bay-Matoush
    
    Option 60 %
    
    
    126,240
    
    
    135,037
    
    
    -
    
    
    261,277Other projectsMistassini
    
    Option 60 %
    
    
    -
    
    
    9,041
    
    
    -
    
    
    9,041Apple
    
    100 %
    
    
    8,923,314
    
    
    13,706
    
    
    -
    
    
    8,937,02010,571,154
    
    
    256,533
    
    
    -
    
    
    10,827,687  December 31,
    
    
    
    
    
    
    
    
    December 31,Mining
      properties
    
    Interest
    
    
    2007
    
    
    Acquisitions
    
    
    Write-offs
    
    
    2008**$**
    
    
    **$**
    
    
    **$**
    
    
    **$**Matoush projectMatoush
    
    100 %
    
    
    337,000
    
    
    -
    
    
    -
    
    
    337,000Eclat
    
    100 %
    
    
    774,000
    
    
    410,600
    
    
    -
    
    
    1,184,600Pacific Bay-Matoush
    
    Option 60 %
    
    
    -
    
    
    126,240
    
    
    -
    
    
    126,240Other projectsApple
    
    100 %
    
    
    8,923,314
    
    
    -
    
    
    -
    
    
    8,923,314Mont-Laurier Uranium
    
    100 %
    
    
    10,000
    
    
    -
    
    
    (10,000
    )
    
    -10,044,314
    
    
    536,840
    
    
    (10,000
    )
    
    10,571,154 10    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007  8.
    MINING PROPERTIES AND DEFERRED EXPENDITURES
      (CONTD)  Deferred expenditures
    
    2009
    
    
    2008**$**
    
    
    **$**(Restated)Deferred exploration expenditures
    
    36,092,123
    
    
    25,818,425Exploration
      supplies
    
    212,764
    
    
    139,65036,304,887
    
    
    25,958,075  December 31,
    
    
    
    
    
    
    
    
    
    
    
    December 31,Deferred
      expenditures
    
    2008
    
    
    Additions
    
    
    Tax credit
    
    
    Write-offs
    
    
    2009**$**
    
    
    **$**
    
    
    **$**
    
    
    **$**
    
    
    **$**(Restated)Matoush projectMatoush
    
    22,864,066
    
    
    15,356,254
    
    
    (6,071,922
    )
    
    -
    
    
    32,148,398Matoush Extension
    
    456,320
    
    
    24,661
    
    
    (27 641
    )
    
    -
    
    
    453 340Eclat
    
    669,376
    
    
    609,287
    
    
    (280,882
    )
    
    -
    
    
    997,781Pacific Bay-Matoush
    
    422,741
    
    
    722,678
    
    
    (332,842
    )
    
    -
    
    
    812,577Other projectsMistassini
    
    293,215
    
    
    373,233
    
    
    (175,729
    )
    
    -
    
    
    490,719Apple
    
    1,252,357
    
    
    160,568
    
    
    (10,853
    )
    
    -
    
    
    1,402,07225,958,075
    
    
    17,246,681
    
    
    (6,899,869
    )
    
    -
    
    
    36,304,887  December 31,
    
    
    
    
    
    
    
    
    
    
    
    December 31,Deferred
      expenditures
    
    2007
    
    
    Additions
    
    
    Tax credit
    
    
    Write-offs
    
    
    2008**$**
    
    
    **$**
    
    
    **$**
    
    
    **$**
    
    
    **$**(Restated)
    
    
    (Restated)
    
    
    
    
    
    
    
    
    (Restated)Matoush projectMatoush
    
    11,545,831
    
    
    18,548,035
    
    
    (7,229,800
    )
    
    -
    
    
    22,864,066Matoush Extension
    
    346,265
    
    
    204,185
    
    
    (94,130
    )
    
    -
    
    
    456,320Eclat
    
    268,742
    
    
    452,591
    
    
    (51,957
    )
    
    -
    
    
    669,376Pacific Bay-Matoush
    
    149,434
    
    
    506,089
    
    
    (232,782
    )
    
    -
    
    
    422,741Other projectsMistassini
    
    -
    
    
    530,298
    
    
    (237,083
    )
    
    -
    
    
    293,215Apple
    
    69,526
    
    
    2,181,153
    
    
    (998,322
    )
    
    -
    
    
    1,252,357Mont-Laurier Uranium
    
    326,834
    
    
    21,931
    
    
    (7,594
    )
    
    (341,171
    )
    
    -Prospection
    
    5,519
    
    
    -
    
    
    -
    
    
    (5,519
    )
    
    -12,712,151
    
    
    22,444,282
    
    
    (8,851,668
    )
    
    (346,690
    )
    
    25,958,075 MATOUSH 
  The Company owns 100% of the Matoush property,
  located about 260 km north of Chibougamau. The property is subject to a 2% Net
  Smelter Return (NSR) royalty. MATOUSH EXTENSION 
  The Company owns 100% of the Matoush
  Extension property. 11    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007  8.
    MINING PROPERTIES AND DEFERRED EXPENDITURES
      (CONTD) ECLAT 
  In June 2009, the Company made the last payment of
  $96,000 pursuant to the letter of intent signed on July 6, 2005 with Vija
  Ventures Corporation (Vija). Having met all its obligations, the Company owns
  100 % interest on all minerals, except diamonds, on all the claims in Eclat
  property, subject to a 2% NSR royalty and a 2% of gross proceeds of carbon
  emission rights in favour of Vija. In June 2008, the Company made a payment of
  $20,000 and issued 200,000 common shares valued at $390,600. PACIFIC BAY-MATOUSH 
  On January 14, 2008, the Company signed
  the final agreement to earn a 60% interest in the Pacific BayMatoush property
  owned by Pacific Bay located in the Matoush District of Québec's Otish
  Mountains. The agreement calls for the Company to pay Pacific Bay a total of
  $500,000, issue 200,000 common shares over four years and incur $3 million in
  exploration expenditures over four years, including a minimum of 10,000 meters
  of drilling at a rate of 2,500 metres per year. In addition, the Company
  acquired on the signature date of the final agreement 1,000,000 units of Pacific
  Bay at a price of $0.30 per unit whereby each unit consists of one common share
  and one warrant to purchase a common share at $0.60 per share for a period of 24
  months. The warrants expired on January 14, 2010 without being exercised. In October 2008 and 2009, the Company met its annual
  commitments by completing for each year: the issuance of 40,000 common shares
  (valued at $26,240 in 2008 and at $34,400 in 2009), paying $100,000 and
  completing $750,000 in exploration work including the minimum of 2,500 metres of
  drilling. MISTASSINI 
  Pursuant to a letter of intent dated November
  20, 2007 and the exercise of its right of first refusal on February 14, 2008,
  the Company may earn a 60% interest in Majescor Resources Inc (Majescor)
  uranium rights on the Mistassini property located in the Otish Mountains, Québec
  by incurring an aggregate of $1.3 million in exploration expenditures over three
  years. The Company must reimburse Majescor the cost of the drilling program done
  in December 2007 (approximately $250,000) and incur an additional $250,000 in
  exploration expenses on the property in Year 1, for a total firm commitment of
  $500,000. As at December 31, 2009, the Company has met its $500,000 and $400,000
  commitments for Year 1 and Year 2 respectively. On November 24, 2008, the
  Company and Majescor signed a formal agreement retroactive to February 14, 2008.
  The Mistassini property is subject to a royalty of 2% of the proceeds from the
  sale of all uranium oxide. APPLE 
  The Apple property is located 80 km southeast of
  Radisson, in the James Bay area, Québec. The property is subject to a 2% NSR
  royalty of which 1% can by repurchased by the Company for $1 million. MONT-LAURIER URANIUM AND PROSPECTION 
  In 2008, the Company
  decided to write-off expenses for prospecting and the Mont-Laurier Uranium
  property, including $346,690 in deferred expenditures and $10,000 in mining
  properties, because no significant work had been done on the property since
  2006. 12    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007  9.
    PROPERTY AND EQUIPMENT  Net
      CarryingValue as atAccumulated
    
    
    December 31,Cost
    
    
    Amortization
    
    
    2009**$**
    
    
    **$**
    
    
    **$**Fuel tanks
    
    665,670
    
    
    (398,852
    )
    
    266,818Camp
    
    408,100
    
    
    (74,818
    )
    
    333,282Road
    
    203,526
    
    
    (111,940
    )
    
    91,586Rolling stock
    
    223,781
    
    
    (179,688
    )
    
    44,093Machinery
    
    120,764
    
    
    (117,406
    )
    
    3,358Equipment
    
    849,429
    
    
    (329,646
    )
    
    519,783Computer equipment
    
    301,480
    
    
    (139,173
    )
    
    162,307Leasehold improvements
    
    8,335
    
    
    (3,232
    )
    
    5,103Camp under capital lease
    
    328,336
    
    
    -
    
    
    328,3363,109,421
    
    
    (1,354,755
    )
    
    1,754,666  Net
      CarryingValue as atAccumulated
    
    
    December 31,Cost
    
    
    Amortization
    
    
    2008**$**
    
    
    **$**
    
    
    **$**(Restated)
    
    
    (Restated)
    
    
    (Restated)Fuel tanks
    
    403,413
    
    
    (233,272
    )
    
    170,141Camp
    
    408,100
    
    
    (34,008
    )
    
    374,092Road
    
    203,526
    
    
    (71,234
    )
    
    132,292Rolling stock
    
    204,774
    
    
    (110,485
    )
    
    94,289Machinery
    
    120,764
    
    
    (77,151
    )
    
    43,613Equipment
    
    711,621
    
    
    (213,291
    )
    
    498,330Computer equipment
    
    155,838
    
    
    (55,378
    )
    
    100,460Leasehold
      improvements
    
    8,335
    
    
    (454
    )
    
    7,8812,216,371
    
    
    (795,273
    )
    
    1,421,098  10.
    OBLIGATION UNDER CAPITAL LEASE  2009
    
    
    2008**$**
    
    
    **$**Obligation under capital lease, capital and
      interest repayable in 24 monthly 
           instalments
      of $15,000 each commencing January 2010
    
    328,336
    
    
    -Current portion of
      an obligation under capital lease
    
    (156,814
    )
    
    -171,522
    
    
    - 13    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007  10.
    OBLIGATION UNDER CAPITAL LEASE (CONTD) The aggregate capital amount of the obligation under capital
  lease is as follows: **$**2010
    
    180,0002011
    
    180,000360,000Less : imputed
      interest calculated at 9%
    
    (31,664
    )328,336  11.
    CAPITAL STOCK AUTHORIZED 
  An unlimited number of common shares without par
  value An unlimited number of preferred shares without par value
  issuable in series with rights, privileges, restrictions and conditions to be
  determined by the Board of Directors. ISSUED AND FULLY PAID 2009
    
    
    2008
    
    
    2007Common
    
    
    Amount
    
    
    Common
    
    
    Amount
    
    
    Common
    
    
    Amountshares
    
    
    
    
    
    shares
    
    
    
    
    
    shares**$**
    
    
    
    
    
    **$**
    
    
    
    
    
    **$**Balance, beginning of year
    
    119,266,432
    
    
    55,579,592
    
    
    114,167,867
    
    
    49,276,379
    
    
    96,373,367
    
    
    18,744,128In consideration of mining properties
    
    40,000
    
    
    34,400
    
    
    240,000
    
    
    416,840
    
    
    3,450,000
    
    
    6,745,500In cashPrivate placements
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    9,620,000
    
    
    20,298,200Flow-through private
      placements
    
    2,500,000
    
    
    2,500,000
    
    
    4,102,565
    
    
    8,000,002
    
    
    -
    
    
    -Exercise of stock options
    
    -
    
    
    -
    
    
    25,000
    
    
    9,500
    
    
    320,500
    
    
    171,050Exercise of warrants
    
    -
    
    
    -
    
    
    731,000
    
    
    188,200
    
    
    4,404,000
    
    
    5,573,500Amounts from contributed surplus(Note 13)Exercise of warrants
    
    -
    
    
    -
    
    
    -
    
    
    194,704
    
    
    -
    
    
    60,828Exercise of stock
      options
    
    -
    
    
    -
    
    
    -
    
    
    4,175
    
    
    -
    
    
    79,251Issue costsFuture income taxes
    
    -
    
    
    786,000
    
    
    -
    
    
    (2,152,000
    )
    
    -
    
    
    -Brokerage fees
    
    -
    
    
    (100,000
    )
    
    -
    
    
    (320,000
    )
    
    -
    
    
    (1,569,020
    )Warrants granted
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (701,875
    )Professional fees
    
    -
    
    
    (33,815
    )
    
    -
    
    
    (38,208
    )
    
    -
    
    
    (125,183
    )Balance, end of year
    
    121,806,432
    
    
    58,766,177
    
    
    119,266,432
    
    
    55,579,592
    
    
    114,167,867
    
    
    49,276,379 On January 31, 2007, the Company completed a brokered private
  placement of 9,620,000 units, including 1,920,000 units upon exercise of the
  firm underwriters option, at a price of $2.60 per unit for gross proceeds of
  $25,012,000. Each unit is comprised of one common share and one-half of one
  common share purchase warrant. Each warrant entitles the holder to purchase one
  common share at a price of $3.50 until January 31, 2009, provided that if the
  closing price of the common shares is equal to or greater than $4.50 for 20
  consecutive trading days at any time after June 1, 2007, upon 30 days notice
  from the Company, it may accelerate the expiry of the warrants. The fair value
  of the warrants was estimated using the Black-Scholes model with no expected
  dividend yield, an expected volatility of 110%, a risk-free 14    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007  11.
    CAPITAL STOCK (CONTD) interest rate of 2.80% and an expected life of warrants of 1
  year. An amount of $4,713,800 was recognized as a credit in the contributed
  surplus and has reduced the share capital. The firm underwriters received a cash commission equal to 6.0%
  of the gross proceeds of the offering. The firm underwriters also received
  compensation options equal to 6.0% of the total number of units sold pursuant to
  the offering (577,200 units), each compensation option entitling the
  underwriters to purchase one unit at the issue price until January 31, 2009. The
  fair value of the compensation options was estimated using the Black-Scholes
  model with no expected dividend yield, an expected volatility of 110%, a
  risk-free interest rate of 2.80% and an expected life of compensation options of
  1 year. An amount of $701,875 was recognized as share issue costs and credited
  to contributed surplus. On October 1st, 2008, the Company closed a
  non-brokered private placement of 4,102,565 flow-through shares at $1.95 per
  share for gross proceeds of $8,000,002. A $320,000 finder fees was paid. On December 8, 2009, the Company completed a non-brokered
  private placement of flow-through shares with one insider holding more than 10%
  of the share capital of the Company through one fund and one investor that is
  related for an aggregate amount of $2.4M and another investor for an amount of
  $100,000. The private placement consists of 2,500,000 flow-through common shares
  issued at the price of $1.00 per share for a total amount of $2.5 million. A
  $100,000 finder fees was paid. In 2009, new information permitted to reduce the future income
  taxes related to the issuance of flow-through shares in October 2008. WARRANTS 
  Each warrant entitles its holder to purchase one share of the
  Company. Changes to the outstanding warrants are shown in the following
  table: 2009
    
    
    2008Number
    
    
    Weighted-
    
    
    Fair value
    
    
    Number
    
    
    Weighted-
    
    
    Fair Valueaverage
    
    
    
    
    
    
    
    
    averagestrike
    
    
    
    
    
    
    
    
    strikeprice
    
    
    
    
    
    
    
    
    price**$**
    
    
    **$**
    
    
    
    
    
    **$**
    
    
    **$**Balance, beginning of
    
    5,387,200
    
    
    3.40
    
    
    5,415,675
    
    
    6,118,200
    
    
    3.03
    
    
    5,610,379yearExercised
    
    -
    
    
    -
    
    
    
    
    
    (731,000
    )
    
    0.26
    
    
    (194,704
    )Expired
    
    (5,387,200
    )
    
    3.40
    
    
    (5,415,675
    )
    
    -
    
    
    -
    
    
    -Balance, end of year
    
    -
    
    
    -
    
    
    -
    
    
    5,387,200
    
    
    3.40
    
    
    5,415,675  12.
    STOCK OPTION PLAN The Company has a stock option plan for its officers,
  directors, consultants and suppliers employees. The Board of Directors sets the
  conditions for acquiring the common stock options according to quantity and
  exercise price. The strike price of the options granted may not be less than the
  market price, which corresponds to the weighted average 15    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007  12.
    STOCK OPTION PLAN (CONTD) price based on the volume and price of the shares traded on the
  Toronto Stock Exchange for the five days preceding the option grant. The options
  granted are valid for a period established by the Board of Directors, not to
  exceed five years from the date the options are granted. The maximum number of
  common shares issuable under the plan is 10,654,586. The maximum number of
  options that can be granted to any participant may not exceed 5% of the issued
  and outstanding shares of the capital stock. The cost of the options will be
  recorded over the vesting period. Changes to the stock options under the plan are shown in the
  following table: 2009
    
    
    2008Weighted-
    
    
    
    
    
    Weighted-average
    
    
    
    
    
    averageNumber
    
    
    strike price
    
    
    Number
    
    
    strike price**$**
    
    
    
    
    
    **$**Balance, beginning of year
    
    3,314,500
    
    
    2.20
    
    
    2,106,500
    
    
    2.31Granted
    
    1,077,500
    
    
    1.00
    
    
    1,363,500
    
    
    2.05Exercised
    
    -
    
    
    -
    
    
    (25,000
    )
    
    0.38Cancelled
    
    (81,500
    )
    
    2.89
    
    
    (130,500
    )
    
    2.81Balance, end of
      year
    
    4,310,500
    
    
    1.89
    
    
    3,314,500
    
    
    2.20 Outstanding and exercisable stock options as at December 31,
  2009, are shown in the following table: Options outstanding
    
    
    Options exercisableRange of
    
    
    
    
    Weighted-average
    
    
    Weighted-average
    
    
    
    
    
    Weighted-averagestrike
      price
    
    Number
    
    
    lifespan (year)
    
    
    strike price
    
    
    Number
    
    
    lifespan (year)$
    
    
    
    
    
    
    
    **$**
    
    
    
    
    
    **$**0.20 à 0.40
    
    575,000
    
    
    1.00
    
    
    0.26
    
    
    575,000
    
    
    1.001.00
    
    1,077,500
    
    
    4.44
    
    
    1.00
    
    
    996,833
    
    
    4.442.04 à 2.38
    
    1,354,000
    
    
    3.30
    
    
    2.06
    
    
    1,284,000
    
    
    3.282.60 à 2.86
    
    400,000
    
    
    2.28
    
    
    2.75
    
    
    400,000
    
    
    2.283.00 à 3.37
    
    904,000
    
    
    2.31
    
    
    3.33
    
    
    904,000
    
    
    2.314,310,500
    
    
    2.98
    
    
    1.89
    
    
    4,159,833
    
    
    2.94 During the year ended December 31, 2009, the Company granted
  1,077,500 stock options (1,363,500 in 2008) at a strike price of $1.00 per share
  for 5 years to officers, directors, consultants and employees of service
  providers, of which 963,500 (420,000 in 2008) vested immediately and 114,000
  (657,500 in 2008) will vest in 3 tranches over 18 months. The fair value of each
  option granted was determined using the Black-Scholes option-pricing model. The
  weighted-average fair value of the stock options granted was $0.41 ($0.7627 in
  2008) per option. The market price of the Company share was lower than the
  strike price at the grant dates. The following weighted average assumptions were used in the
  calcultations: 2009
    
    
    2008Risk-free interest rate
    
    1,88%
    
    
    2.46%Expected life
    
    2 years
    
    
    1 yearExpected volatility
    
    97,09%
    
    
    101%Expected dividend
      yield
    
    0%
    
    
    0% 16    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007  12.
    STOCK OPTION PLAN (CONTD) In 2009, a stock-based compensation relating to the vested
  options of $543,199 ($1,089,533 in 2008) was recognized in the statement of
  operations and $169,945 was capitalized in the deferred expenditures, with the
  credit being recorded against the contributed surplus. 13.
    CONTRIBUTED SURPLUS  2009
    
    
    2008
    
    
    2007**$**
    
    
    **$**
    
    
    **$**(Restated)Balance, beginning of year
    
    3,413,518
    
    
    2,522,864
    
    
    1,285,595AttributionsWarrants
    
    -
    
    
    -
    
    
    -Stock options
    
    713,144
    
    
    1,089,533
    
    
    1,377,348Exercise of securitiesWarrants
    
    -
    
    
    (194,704
    )
    
    (60,828
    )Stock options
    
    -
    
    
    (4,175
    )
    
    (79,251
    )ExpirationWarrants
    
    5,415,675
    
    
    -
    
    
    -Futur tax on expiry of warrants
    
    (728,000
    )
    
    -
    
    
    -Balance, end of year
    
    8,814,337
    
    
    3,413,518
    
    
    2,522,864  14.
    CAPITAL DISCLOSURES In terms of capital management, the objectives of the Company
  are to preserve its ability to continue its mining exploration. The Company
  includes shareholder equity in the definition of capital for a total amount of
  $58,177,106 ($56,488,651 in 2008). Management reviews its capital management
  approach on an ongoing basis and believes that this approach, given the relative
  size of the Company, is reasonable. There were no significant changes in the Companys approach to
  capital management during the exercise ended December 31, 2009. The Company
  doesnt have any externally imposed capital requirements neither regulatory nor
  contractual requirements to which it is subject, unless the Company closes a
  flow-through private placement in which case the funds are restricted in use for
  exploration expenses. 15.
    FINANCIAL INSTRUMENTS AND RISK
      MANAGEMENT INTEREST RISK 
  Part of the cash and cash equivalents bear
  interest at a fixed rate and the Company is, therefore, exposed to the risk of
  changes in fair value resulting from interest rate fluctuations The obligation
  under capital lease bears interest at a fixed rate. A fluctuation of 1% of the
  interest rate would have an non-significant impact on the financial statements
  The Companys other financial assets and liabilities do not comprise any
  interest rate risk since they do not bear interest. MARKET RISK 
  The Company is exposed to fluctuations in the
  uranium price, as the uranium price influences the potential economics of the
  Companys mining properties and therefore has an effect on its exploration
  program and on the decision on whether or not to proceed with production. 17    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007  15.
    FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
      (CONTD) Also, market risk is the risk that the fair value of, or future
  cash flows from, the Companys financial instruments will significantly
  fluctuate because of changes in market prices. The Company is exposed to market
  risk in trading its investment in Pacific Bay, a TSX Venture issuer whose
  activities are in the exploration field. As of December 31, 2009, a 10% decrease
  (increase) in the price on the stock market would result in an estimated
  increase (decrease) in net after-tax loss of approximately $4,500. CREDIT RISK 
  The financial instruments which expose the
  Company to market risk and concentrations of credit risk include cash and cash
  equivalents, deposits on exploration work and exploration funds. The Company
  invests part of its cash and cash equivalents and exploration funds in
  guaranteed investment certificates guaranteed by and held with a Canadian
  chartered bank. Concerning the accounts receivable, the Company does not have
  any security, but mitigates its credit risk by only transacting with a
  diversified group of partners with strong financial conditions, and consequently
  does not anticipate any losses. LIQUIDITY RISKThe Company manages its liquidity
  risk by using budgets that enable it to determine the amounts required to fund
  its exploration programs. The Company also ensures that it has sufficient
  working capital available to meet its day-to-day commitments. As at December 31, 2009, the Company has a cash and equivalents
  balance of $321,065 ($5,847,120 as at December 31, 2008) and exploration funds
  of $2,473,260 (4,852,256 as at December 31, 2008) to settle current liabilities
  of $1,854,116 ($1,396,939 as at December 31, 2008). Given the Companys available liquid resources as compared to
  the timing of payments of the liabilities, management assesses the Companys
  liquidity risk to be high. Management seeks additional financing through the
  issuance of new equity instruments to continue its operations, and while it has
  been successful in doing so in the past, there can be no assurance it will be
  able to do so in the future. FAIR VALUE 
  The faire value of financial instruments is
  summarized as follows: 2009
    
    
    2008Carrying
    
    
    Fair
    
    
    Carrying
    
    
    Fairamount
    
    
    Value
    
    
    amount
    
    
    value**$**
    
    
    **$**
    
    
    **$**
    
    
    **$**Financial assetsHeld for tradingCash and cash equivalents
    
    321,065
    
    
    321,065
    
    
    5,847,120
    
    
    5,847,120Investment
    
    45,000
    
    
    45,000
    
    
    35,000
    
    
    35,000Exploration funds
    
    2,473,260
    
    
    2,473,260
    
    
    4,852,256
    
    
    4,852,256Financial liabilitiesOther liabilitiesAccounts payable and accrued liabilities
    
    1,697,302
    
    
    1,697,302
    
    
    1,396,939
    
    
    1,396,939Obligation under
      capital lease
    
    328,336
    
    
    328,336
    
    
    -
    
    
    - 18    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007  15.
    FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
      (CONTD) Fair value estimates are made at the balance sheet date, based
  on relevant market information and other information about financial
  instruments. The fair value of the investment is based on the last bid price
  on the stock market at the end of the period. Since this evaluation is based on
  quoted prices in active markets, its considered a level 1 in the fair value
  hierarchy. 16.
    ASSET RETIREMENT OBLIGATION  2009
    
    
    2008$
    
    
    $Balance, beginning of year
    
    -
    
    
    -Increase
    
    160,000
    
    
    -Balance, end of year
    
    160,000
    
    
    - The Company has recorded an asset retirement obligation, which
  reflects the present value of the estimated amount of undiscounted cash flow
  required to satisfy the asset retirement obligation in respect of the Matoush
  property. The primary component of this obligation is the removal of equipment
  currently used at the site. If the Company decides not to go into production on
  the property, it is assumed that the asset retirement obligation will be
  incurred in 2012. Should the Company decide to proceed with a production
  decision on the Matoush property, the obligation will be realized further into
  the future. The credit adjusted risk free rate at which the estimated cash flows
  have been discounted to arrive at the obligation is 9% and the discounted amount
  of inflation-adjusted estimated future cash flows is $160,000. 17.
    RELATED-PARTY TRANSACTIONS During the period ended December 31, 2009: a)
    BBH Geo-Management inc. (BBH) charged:i)
    consultant and subcontractor fees for $2,937,000
      ($2,572,000 in 2008) included in the deferred expenditures;ii)
    management fees:1)
    for $632,000 ($1,381,000 in 2008) included in deferred
      expenditures;2)
    for $12,000 ($128,000 in 2008) included in property and
      equipment;3)
    the management fee applicable to the Matoush property was
      reduced to 5% as of August 1st, 2008.iii)
    professional fees, legal and audit expenses, investor
      relations and rent for a total amount of $741,000 ($659,000 in
      2008);iv)
    legal fees of $2,000 ($11,000 in 2008) included in share
      issue cost.b)
    An officer, in function up until June 9, 2009, charged
      accounting fees of $7,000 ($38,000 in 2008) included in professional
      fees;c)
    A company controlled by an officer, in function since
      June 9, 2009, charged accounting fees of $35,000 included in professional
      fees;d)
    A limited partnership company in which an officer and
      director is also a partner, charged legal fees amounting to $21,000
      ($35,000 in 2008) included in legal and audit expenses and $27,000
      ($10,000 in 2008) included in capital stock as issue
      costs. BBH is a related party to the Company since: i)
    The president and director of BBH is also the president
      and a director of the Company;ii)
    An officer of BBH is also an officer and director of the
      Company. 19    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007  17.
    RELATED-PARTY TRANSACTIONS (CONTD) The Company renewed its service agreement with BBH
  Géo-Management Inc. on August 1, 2008, for a three-year period ending on July
  31, 2011. The agreement provides for a fixed monthly charge of $5,200 for office
  rent, office equipment and computers to be reviewed each year on July 31. At December 31, 2009, accounts payable and accrued liabilities
  include an amount of $397,000 ($157,000 in 2008) owed to related-parties. These
  transactions occurred in the normal course of business and were measured at the
  exchange amount, which is the amount of consideration established and agreed to
  by the related parties. The payment conditions are the same as for the other
  suppliers of the Company except for BBH for which the invoices are payable upon
  receipt. 18.
    INCOME TAXES The income tax allowance differs from the amount resulting from
  the application of the combined Canadian statutory income tax rate as
  follows: 2009
    
    
    2008
    
    
    2007**$**
    
    
    **$**
    
    
    **$**(Restated)
    
    
    (Restated)Loss before income taxes
    
    (2,008,274
    )
    
    (2,562,549
    )
    
    (2 127 900
    )Combined canadian
      statutory income tax rate
    
    30.9%
    
    
    30,9%
    
    
    31.52%Income tax benefit at the combined
      statutory income tax rate
    
    (620,600
    )
    
    (791,828
    )
    
    (670,714
    )Share issue costs
    
    (210,000
    )
    
    (219,251
    )
    
    (212,691
    )Stock-based compensation
    
    167,800
    
    
    336,666
    
    
    434,140Write-off of deferred expenditures and mining properties
    
    -
    
    
    110,217
    
    
    -Change in the fair value of the investment
    
    (3,100
    )
    
    81,885
    
    
    -Change in income tax rate
    
    420,562
    
    
    (186,749
    )
    
    -Non-capital losses expired
    
    157,000
    
    
    72,182
    
    
    53,225Change in valuation allowance
    
    -
    
    
    -
    
    
    (1,555,500
    )Adjustment pursuant to a notice of
      assessment
    
    -
    
    
    -
    
    
    582,245Non taxable mining duties credit (restatement)
    
    (860,000
    )
    
    (408,000
    )
    
    (368,000
    )Capital gain on warrants expired
    
    836,722
    
    
    -
    
    
    -Non-deductible and
      other expenses
    
    (413,384
    )
    
    (23,122
    )
    
    (236,026
    )Future income tax benefit
    
    (525,000
    )
    
    (1,028,000
    )
    
    (1,973,321
    ) The tax effects of temporary differences giving rise to
  material future income tax assets and liabilities as at December 31, 2009 and
  2008 are as follows: 2009
    
    
    2008**$**
    
    
    **$**Future income tax assetNet operating losses
    
    2,002,000
    
    
    1,860,800Financial expenses
    
    324,000
    
    
    470,600Property and
      equipment
    
    217,000
    
    
    140,3002,543,000
    
    
    2,471,700Future income tax liabilityMining properties and deferred expenditures
    
    (3,836,000
    )
    
    (4,347,700
    )Future income tax
      liability
    
    (1,293,000
    )
    
    (1,876,000
    ) 20    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007  18.
    INCOME TAXES (CONTD) At December 31, 2009, the Company had non-capital losses and
  unused share issue costs that could be deferred to later periods and used to
  reduce future taxable income. During 2009, the Company has not recognized a future income tax
  liability on the $2,500,000 private placement as the renunciations of the flow
  through financing were made subsequent to the year end. If the Company has
  sufficient unused tax loss carry forward to offset all or part of this future
  income tax liability and no future income tax assets have been previously
  recognized for these carry forwards, a portion of such unrecognized losses is
  recorded as share issue costs up to the amount of the future income tax
  liability that was previously recognized on the renounced expenditures. These non-capital losses expire as follows: Federal
    
    
    Provincial$
    
    
    $Non-capital losses:2010
    
    537,000
    
    
    517,0002011
    
    643,000
    
    
    643,0002015
    
    710,000
    
    
    654,0002026
    
    1,547,000
    
    
    1,547,0002027
    
    1,627,000
    
    
    1,627,0002028
    
    1,636,000
    
    
    1,636,0002029
    
    775,000
    
    
    775,0007.475,000
    
    
    7,399,000  19.
    CHANGES IN NON-CASH WORKING CAPITAL
      ITEMS  Supplemental cash flow information
    2009
    
    2008
    
    2007**$**
    
    **$**
    
    **$**(Restated)
    
    (Restated)Acquisition of mining properties in
      exchange of common shares
    34,400
    
    416,840
    
    6,745,500Tax credits receivable presented in reduction of deferred
      expenditures
    6,899,869
    
    8,851,668
    
    8,664,378Stock-based compensation included in
      deferred expenditures
    169,945
    
    -
    
    -Future income tax included in the cost of mining properties
    -
    
    -
    
    2,809,321Deferred expenditures included in accounts
      payable
    828,820
    
    1,159,377
    
    489,370Amortization of property and equipment included in deferred      expenditures
    540,336
    
    468,392
    
    321,810Future income tax included in common share
      issue costs
    786,000
    
    2,152,000
    
    -Common share issue costs paid for through the issuance of
      warrants
    -
    
    -
    
    701,875Property and equipment recorded pursuant to
      a capital lease obligation
    328,336
    
    -
    
    -Property and equipment recorded pursuant to an asset
      retirement obligation
    160,000
    
    -
    
    -Interest cashed
    69,145
    
    430,977
    
    963,895Tax credits
      payable presented in accounts payable
    438,547
    
    -
    
    - 21    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007  20.
    COMMITMENTS  2010
    
    
    2011
    
    
    2012
      andthereafter**$**
    
    
    **$**
    
    
    **$**Operating leases
    
    139,623
    
    
    61,120
    
    
    -  21.
    SUBSEQUENT EVENTS On January 27, 2010, the Company closed a private placement
  with Sentient Executive GP III, Limited acting for two funds from Cayman Islands
  ("Sentient") of 100,000 units for an amount of $95,000 and $14,905,000 of
  convertible notes accompanied by common share purchase warrants. Each unit
  consists of one common share and one-half of one warrant. Each tranche of $1,000
  in notes is accompanied by 527 warrants. Each warrant entitles its holder to
  purchase one share for $1.00 during a 24-month period following the closing, and
  for $1.05 during the subsequent period of 24 to 36 months after the closing. The
  notes do not bear interest and are unsecured. They mature five years plus one
  month after closing. They are convertible into shares by the holder during this
  period at a price of $0.95 per share, and are not redeemable by the Company,
  except under certain conditions. The Company has agreed to pay Sentient
  transaction fees equal to 5% of the gross proceeds of the private placement.
  These transaction fees in the amount of $750,000 will be paid in the
  corresponding number of units. 22.
    COMPARATIVE FIGURES Certain comparative figures have been restated to conform to
  the financial statements presentation adopted in the current year. 23.
    THE EFFECT OF APPLYING UNITED STATES
      GENERALLY ACCEPTED ACCOUNTING PRINCIPLES These financial statements have been prepared in accordance
  with generally accepted accounting principles (GAAP) in Canada. The effect of
  applying United States generally accepted accounting principles (U.S. GAAP) on
  net earnings would be as follows: 2009
    
    
    2008(Restated)
    
    
    2007(Restated)Net loss per Canadian GAAP as reported
    $
    1,483,274
    
    $
    1,534,549
    
    $
    154,579Deferred expenditures (1)
    $
    10,346,812
    
    $
    12,607,929
    
    $
    10,099,561Deferred tax expenses (recovery) (2)
    $
    (1,027,280
    )
    $
    (661,834
    )
    
    -Net loss and comprehensive income for the year,
      according to U.S. GAAP
    $
    10,802,806
    
    $
    13,480,644
    
    $
    10,254,140Net loss per share per Canadian GAAP, as
      reported
    $
    $ 0.012
    
    $
    0.013
    
    $
    0.001Effect of adjustments:Properties and deferred expenditures (1)
    $
    0.090
    
    $
    0.110
    
    $
    0.090Deferred tax expenses (recovery) (2)
    $
    (0.010
    )
    $
    (0.010
    )
    
    -Loss per share according to U.S. GAAP
    $
    0.092
    
    $
    $0.113
    
    $
    0.091 22    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007 (1) Properties and deferred expenditures are
  accounted for in accordance with Canadian GAAP as disclosed in note 3. Under
  Canadian GAAP, the propertys potential for development is sufficient to permit
  the capitalization of exploration expenditures incurred as property acquisition
  costs and deferred expenditures and the management intends to pursue the
  development. Under U.S. GAAP, a final feasibility study showing economically
  recoverable proven and probable reserves is required for capitalization of
  exploration expenditures. Accordingly, the exploration related costs must be
  expensed as incurred. (2)Under Canadian GAAP, shares issued as
  flow-through shares are recorded at their face value when issued. When the
  entity acquires assets the carrying value may exceed the tax basis as a result
  of the enterprise renouncing the deductions to the investors. The tax effect of
  the temporary difference is recorded as a share issue cost. Under US GAAP, the
  proceeds from issuance should be allocated between the offering of shares and
  the sale of tax benefits. The allocation is made based on the difference between
  the quoted price of the existing shares and the amount the investor pays for the
  shares. A liability is recognized for this difference. The liability is reversed
  when tax benefits are renounced and a deferred tax liability is recognized at
  that time. Income tax expense is the difference between the amount of the
  deferred tax liability and the liability recognized on issuance. Amounts
  received upon the issuance of flow-through shares and not spent on exploration
  costs are presented separately as exploration funds. Exploration funds must be
  excluded from cash in the statement of cash flows and presented in investing
  activities. Amounts raised by the issuance of flow-through shares and spent on
  exploration costs amounted to $4,878,996, $3,147,744, and $0 for the years ended
  December 31, 2009, 2008 and 2007, respectively. Amounts received for share
  issuances and not spent on exploration costs amounted to $2,473,260, $4,852,256,
  and $0 for the years ended December 31, 2009, 2008, and 2007, respectively. The effect of the application of the above adjustments on the
  balance sheet of the Company at December 31, 2008 and 2007 would be to decrease
  deferred expenditures by $36,304,887 to $0 in 2009 and $25,958,075 to $0 in 2008 (1). There would be an increase to liabilities in the ending amount
  of $653,188 as of December 31, 2009 and $1,020,218 as of December 31,
  2008.(2). This would result in an ending decrease to shareholders
  equity in the amounts of $36,958,075 and $26,978,293 for the years ended
  December 31, 2009 and 2008, respectively. The effect on cash flows would be to decrease cash flows from
  operating activities by $10,346,812 in 2009, $12,607,929 in 2008 and $10,099,561
  in 2007 and increase cash flows used in investing activities by $10,489,412 in
  2009, $12,607,929 in 2008 and $10,099,561 in 2007. Changes in U.S. GAAP Significant Accounting Policies and
  Restatement As a result of the restatement items identified in Note 4 and
  also the Companys internal review of the financial statements,the
  company determined to make the following accounting policy change under U.S.
  GAAP and has restated its financial statements for the years ended December 31,
  2008 and December 31, 2007 to conform to this change. Prior to this change, the Company had expensed the acquisition
  costs of mining properties, the mining rights and exploration fees for U.S. GAAP
  financial reporting. As codified in ASC Topic 805 Business Combinations, the
  Company has modified its accounting policy, and restated 2008 and 2007 in order
  to capitalize the acquisition of mining properties and mining rights until the
  mining property is sold, abandoned, or otherwise determined to be impaired. If
  the acquired mineral rights relate to unproven properties, the company does not
  amortize the capitalized mining costs, but evaluates them periodically for
  impairment. The impact of these restatements on previously issued U.S. GAAP
  financial information is as follows: 23    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007  Impact of
      restatements on previous US GAAP
    
    2008
    
    
    2007financial
      reporting :Reduction of net loss
    $
    1,446,402
    
    $
    9,953,314Reduction of loss per share
    $
    0.02
    
    $
    0.10Increase to Mining Properties
    $
    10,571,154
    
    $
    10,044,314Increase in Shareholders Equity
    $
    11,082,716
    
    $
    10,044,314Decrease in cash used in Operating
      Activities
    $
    1,038,402
    
    $
    8,983,338Increase in cash used in Investing Activities
    $
    1,038,402
    
    $
    8,983,338 Recently Issued U.S. Accounting Pronouncements The Company adopted the provisions of FIN 48 (as codified in
  ASC topic 740 Income Taxes) (ASC 740) for US GAAP purposes. ASC 740
  prescribes a recognition threshold and measurement attribute for the financial
  statement recognition and measurement of a tax position taken or expected to be
  taken in a tax return. ASC 740 requires that we recognize in the financial
  statements, only those tax positions that are more-likely-than-not of being
  sustained as of the adoption date, based on the technical merits of the
  position. As a result of the implementation of ASC 740, the Company performed a
  review of the material tax positions in accordance with recognition and
  measurement standards established by ASC 740. Based on this review the
  provisions of ASC 740 had no effect on the Companys financial position, cash
  flows or results of operations at either December 31, 2009 or December 31,
  2008. In May 2009, the FASB issued new standards for 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. The new standards are effective for
  interim and annual reporting periods ending after June 15, 2009. The Company
  adopted the new standards during the third quarter of fiscal 2009 and, as the
  pronouncement only requires additional disclosures, the adoption did not have an
  impact on the Companys financial position, results of operations or cash flows.
  We have evaluated events that occurred subsequently to December 31, 2009, for
  recognition or disclosure in the Companys financial statements and notes to its
  financial statements. In June 2009, the FASB issued amended standards for determining
  whether to consolidate a variable interest entity. These new standards amend the
  evaluation criteria to identify the primary beneficiary of a variable interest
  entity and require ongoing reassessment of whether an enterprise is the primary
  beneficiary of the variable interest entity. The provisions of the new standards
  are effective for annual reporting periods beginning after November 15, 2009 and
  interim periods within those fiscal years. These standards will be effective for
  the Company beginning in the first quarter of fiscal 2010. The adoption of the
  new standards will not have an impact on the Companys financial position,
  results of operations and cash flows. In June 2009, the FASB issued the FASB Accounting Standards
  Codification (the Codification) for financial statements issued for interim
  and annual periods ending after September 15, 2009, which was effective for the
  Company beginning in the fourth quarter of fiscal 2009. The Codification became
  the single authoritative source for GAAP. Accordingly, previous references to
  GAAP accounting standards are no longer used in the Companys disclosures,
  including these Notes to the Financial Statements. The codification in not
  expected to affect the Companys financial position, cash flows, or results of
  operations. In January 2010, the FASB issued Accounting Standards Update
  No. 2010-06, Fair Value Measurements Disclosures, which amends Subtopic
  820-10 of the FASB Accounting Standards Codification to require new disclosures
  for fair value measurements and provides clarification for existing disclosures
  requirements. More specifically, this update will require (a) an entity to
  disclose separately the amounts of significant transfers in and out of Levels 1
  and 2 fair value measurements and to describe the reasons for the transfers; and
  (b) information about purchases, sales, issuances and settlements to be
  presented separately (i.e. present the activity on a gross basis rather than
  net) in the reconciliation for fair value measurements using significant
  unobservable inputs (Level 3 inputs). This update clarifies existing
  disclosure 24    STRATECO RESOURCES INC., an exploration stage
      companyNotes to financial statementsYears ended December 31, 2009, 2008 and 2007 requirements for the level of disaggregation used for classes
  of assets and liabilities measured at fair value and requires disclosures about
  the valuation techniques and inputs used to measure fair value for both
  recurring and nonrecurring fair value measurements using Level 2 and Level 3
  inputs. The Company does not anticipate that the adoption of this statement will
  materially expand its financial statement footnote disclosures. 25