----

----

| “James Komadina”                     | “Tom S. Q. Yip” |
|-------------------------------------------------------|-----------------------------|
| James Komadina,                             | Tom S. Q. Yip,              |
| Chief Executive Officer      | Chief Financial Officer     |

----

| INDEX                                                                                                                                                          | Page          |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|
|                                                                                                                                                           |          |
| Audited Consolidated Financial Statements                                                                                                                      |          |
|                                                                                                                                                           |          |
| Independent Auditor’s Report                                                                                                                             |  4       |
|                                                                                                                                                           |  5       |
| Independent Auditor’s Report on Internal Controls under Standards of the Public Compan    Accounting Oversight Board (United States) |          |
|                                                                                                                                                           |          |
| Consolidated Statements of Financial Position                                                                                                                  |  6       |
|                                                                                                                                                           |          |
| Consolidated Statements of Comprehensive Loss                                                                                                                  |  7       |
|                                                                                                                                                           |          |
| Consolidated Statement of Changes in Shareholders’ Equity                                                                                                |  8 - 9   |
|                                                                                                                                                           |          |
| Consolidated Statements of Cash Flows                                                                                                                     |  10      |
|                                                                                                                                                           |          |
| Notes to the Consolidated Financial Statements                                                                                                            |  11 - 46 |

----

| CHARTERED ACCOUNTANTSMacKay  LLP | 1100 – 1177 West Hastings StreetVancouver, BC  V6E 4T5Tel:  (604) 687-4511Fax: (604) 687-5805Toll Free: 1-800-351-0426www.mackay.ca |   |
|---------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|

----

| CHARTERED ACCOUNTANTSMacKay  LLP | 1100 – 1177 West Hastings StreetVancouver, BC  V6E 4T5Tel:  (604) 687-4511Fax: (604) 687-5805Toll Free: 1-800-351-0426www.mackay.ca |   |
|---------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|

----

|                                                   |   | Note   |   |   | December 31,2011 |   |        | May 31,2011 |   |   | June 1,2010 |   |
|--------------------------------------------------------|--------|--------|--------|--------|------------------|--------|-------------|-------------|--------|--------|-------------|--------|
|                                                   |   |   |   |   |             |   |        | (note 18)   |   |   | (note 18)   |   |
| ASSETS                                                 |   |   |   |   |             |   |        |        |   |   |        |   |
|                                                   |   |   |   |   |             |   |        |        |   |   |        |   |
| Current                                                |   |   |   |   |             |   |        |        |   |   |        |   |
| Cash and cash equivalents                              |   |   | 4a     | a      |             | $      | 55,642,179  |        |   | $      | 111,165,126 |   |   | $ | 43,460,324 |   |
| Marketable securities                                  |   |   | 5      |   |             |   | 302,500     |        |   |   | 662,500     |   |   |   | 360,000 |   |
| Accounts receivable                                    |   |   |   |   |             |   | 468,806     |        |   |   | 185,733     |   |   |   | 110,214 |   |
| Prepaid expenses                                       |   |   |   |   |             |   | 185,854     |        |   |   | 378,492     |   |   |   | 274,246 |   |
| Current assets related to discontinued operations      |   |   | 2      |   |             |   | –     |        |   |   | –     |   |   |   | 13,663 |   |
| Total current assets                                   |   |   |   |   |             |   | 56,599,339  |        |   |   | 112,391,851 |   |   |   | 44,218,447 |   |
|                                                   |   |   |   |   |             |   |        |        |   |   |        |   |   |   |   |   |
| Property and equipment                                 |   |   | 6      |   |             |   | 124,744     |        |   |   | 143,571     |   |   |   | 80,040 |   |
| Exploration and evaluation assets                      |   |   | 7      |   |             |   | 158,041,441 |        |   |   | 71,103,123  |   |   |   | 39,500,278 |   |
| Long-term assets related to discontinued operations    |   |   | 2      |   |             |   | –     |        |   |   | –     |   |   |   | 11,672,708 |   |
|                                                   |   |   |   |   |             |   |        |        |   |   |        |   |   |   |   |   |
| Total assets                                           |   |   |   |   |             | $      | 214,765,524 |        |   | $      | 183,638,545 |   |   | $ | 95,471,473 |   |
|                                                   |   |   |   |   |             |   |        |        |   |   |        |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS’ EQUITY             |   |
|                                                   |   |   |   |   |             |   |        |        |   |   |        |   |   |   |   |   |
| Current liabilities                                    |   |   |   |   |             |   |        |        |   |   |        |   |   |   |   |   |
| Accounts payable and accrued liabilities               |   |   |   |   |             | $      | 10,495,049  |        |   | $      | 4,037,428   |   |   | $ | 1,187,865 |   |
| Current liabilities related to discontinued operations |   |   | 2      |   |             |   | –     |        |   |   | -           |   |   |   | 85,094 |   |
| Total current liabilities                              |   |   |   |   |             |   | 10,495,049  |        |   |   | 4,037,428   |   |   |   | 1,272,959 |   |
|                                                   |   |   |   |   |             |   |        |        |   |   |        |   |   |   |   |   |
| Non-current liabilities                                |   |   |   |   |             |   |        |        |   |   |        |   |   |   |   |   |
| Derivative liability                                   |   |   | 8      |   |             |   | 21,153,600  |        |   |   | –     |   |   |   | – |   |
|                                                   |   |   |   |   |             |   |        |        |   |   |        |   |   |   |   |   |
| Total liabilities                                      |   |   |   |   |             |   | 31,648,649  |        |   |   | 4,037,428   |   |   |   | 1,272,959 |   |
|                                                   |   |   |   |   |             |   |        |        |   |   |        |   |   |   |   |   |
| Shareholders’ equity                             |   |   |   |   |             |   |        |        |   |   |        |   |   |   |   |   |
| Share capital                                          |   |   | 10     |   |             |   | 215,865,086 |        |   |   | 215,544,180 |   |   |   | 124,277,370 |   |
| Contributed surplus                                    |   |   |   |   |             |   | 20,673,111  |        |   |   | 13,288,996  |   |   |   | 14,240,223 |   |
| Accumulated other comprehensive loss                   |   |   |   |   |             |   | 82,959      |        |   |   | (6,767,665  | )      |   |   | – |   |
| Deficit                                                |   |   |   |   |             |   | (53,504,281 | )           |   |   | (42,464,394 | )      |   |   | (44,319,079 | ) |
|                                                   |   |   |   |   |             |   |        |        |   |   |        |   |   |   |   |   |
| Total shareholders’ equity                       |   |   |   |   |             |   | 183,116,875 |        |   |   | 179,601,117 |   |   |   | 94,198,514 |   |
|                                                   |   |   |   |   |             |   |        |        |   |   |        |   |   |   |   |   |
| Total liabilities and shareholders’ equity       |   |   |   |   |             | $      | 214,765,524 |        |   | $      | 183,638,545 |   |   | $ | 95,471,473 |   |

| On behalf of the Board:               |            |                                 |            |
|---------------------------------------|-----------------|--------------------------------------|-----------------|
|                                  |            |                                 |            |
| “James Komadina” (signed) |   Director | “Anton Drescher”(signed) |   Director |
| Mr. James J. Komadina                 |            | Mr. Anton J. Drescher                |            |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Note   |   |   | December 31, 2011 |   |        | May 31, 2011 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|-------------------|--------|-------------|--------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |              |   |        | (note 18)    |   |
| Expenses                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |              |   |        |         |   |
| Administration                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   | $                 | 4,389  |        |         | $      | 31,544 |   |
| Charitable donations                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |              | 16,665 |        |         |   | 64,637 |   |
| Consulting fees                                                                                                                                         |   |   | 10, 11 |   |              |   | 1,807,563   |         |   |   | 1,570,146 |   |
| Depreciation                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |              |   | 21,789      |         |   |   | 42,375 |   |
| Insurance                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |              |   | 129,354     |         |   |   | 215,228 |   |
| Investor relations                                                                                                                                                     |   |   | 10, 11 |   |              |   | 322,777     |         |   |   | 1,239,208 |   |
| Office and miscellaneous                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |              |   | 133,177     |         |   |   | 281,840 |   |
| Professional fees                                                                                                                                                 |   |   | 10, 11 |   |              |   | 649,763     |         |   |   | 655,619 |   |
| Property investigations                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |   |   |              |   | –     |         |   |   | 2,557 |   |
| Regulatory                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |              |   | 133,829     |         |   |   | 188,121 |   |
| Rent                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |              |   | 144,660     |         |   |   | 167,697 |   |
| Telephone                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |              |   | 4,155       |         |   |   | 49,688 |   |
| Travel                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |              |   | 200,150     |         |   |   | 210,192 |   |
| Wages and benefits                                                                                                                                                                    |   |   | 10, 11 |   |              |   | 9,981,236   |         |   |   | 5,505,589 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |              |   |        |         |   |   |   |   |
| Loss before other items                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |   |   |              |   | (13,549,507 | )            |   |   | (10,224,441 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |              |   |        |         |   |   |   |   |
| Other items                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |   |   |              |   |        |         |   |   |   |   |
| Gain (loss) on foreign exchange                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |   |   |              |   | 72,624      |         |   |   | 91,552 |   |
| Interest income                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |   |   |              |   | 590,913     |         |   |   | 675,146 |   |
| Income from mineral property earn-in                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |              |   | –     |         |   |   | 311,312 |   |
| Spin-out cost                                                                     |   |   | 2      |   |              |   | (148,657    | )            |   |   | (593,754 | ) |
|      Unrealized gain on derivative liability                                                                                                                                                                                                                |   |   | 8      |   |              |   | 2,354,740   |         |   |   | – |   |
| Unrealized gain (loss) on marketable securities                                                                                                                                                                                                                                                                                                                 |   |   | 5      |   |              |   | (360,000    | )            |   |   | 182,500 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |              |   |        |         |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |              |   | 2,509,620   |         |   |   | 666,756 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |              |   |        |         |   |   |   |   |
| Loss from continuing operations                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |   |   |              |   | (11,039,887 | )            |   |   | (9,557,685 | ) |
| Loss from discontinued operations                                                                                                                                                                                                                 |   |   | 2      |   |              |   | –     |         |   |   | (934,157 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |              |   |        |         |   |   |   |   |
| Net loss for the period                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |   |   |              |   | (11,039,887 | )            |   |   | (10,491,842 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |              |   |        |         |   |   |   |   |
| Other comprehensive income (loss)                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |              |   |        |         |   |   |   |   |
| Exchange difference on translating foreign operations                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |              |   | 6,850,624   |         |   |   | (6,767,665 | ) |
| Total other comprehensive income (loss) for the period                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |              |   | 6,850,624   |         |   |   | (6,767,665 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |              |   |        |         |   |   |   |   |
| Comprehensive loss for the period                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |              | $      | (4,189,263  | )            |   | $ | (17,259,507 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |              |   |        |         |   |   |   |   |
| Basic and fully diluted loss per sharefrom continuing operations                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |              | $      | (0.13       | )            |   | $ | (0.12 | ) |
| Basic and fully diluted loss per share from discontinued operations                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |              | $      | –     |         |   | $ | (0.01 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |              |   |        |         |   |   |   |   |
| Weighted average number of shares outstanding                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |              |   | 86,683,919  |         |   |   | 77,550,644 |   |

----

|                                                                                   |   | Number ofshares (old) |        |   | Share capital (old) |   |         | Number ofshares (new) |   |   | Share capital (new) |   |   | Contributed surplus |        |   | Accumulated other comprehensive loss |   |        | Deficit |   |   | Total      |   |
|----------------------------------------------------------------------------------------|--------|-----------------------|-------------|--------|---------------------|--------|--------------|-----------------------|--------|--------|---------------------|--------|--------|---------------------|-------------|--------|--------------------------------------|--------|-------------|---------|--------|--------|------------|--------|
|                                                                                   |   |                  |        |   |                |   |         |                  |   |   |                |   |   |                |        |   |                                 |   |        |    |   |   |       |   |
| Balance, June 1, 2010  (note 18)                                             |   |                  | 66,117,922  |   |                | $      | 124,277,370  |                  |   |   | –             |   |   | $                   | –     |   |                                 | $      | 14,240,223  |    |   | $      | –    |   |   | $ | (44,319,079 | ) |   | $ | 94,198,514 |   |
| Exercise of warrants                                                                   |   |                  | 48,099      |   |                |   | 141,892      |                  |   |   | –             |   |   |                | –     |   |                                 |   | –     |    |   |   | –    |   |   |   | – |   |   |   | 141,892 |   |
| Exercise of options                                                                    |   |                  | 1,062,200   |   |                |   | 1,867,950    |                  |   |   | –             |   |   |                | –     |   |                                 |   | -–    |    |   |   | –    |   |   |   | – |   |   |   | 1,867,950 |   |
| Share-based payments                                                                   |   |                  | –     |   |                |   | –      |                  |   |   | –             |   |   |                | –     |   |                                 |   | 3,885,118   |    |   |   | –    |   |   |   | – |   |   |   | 3,885,118 |   |
| Reallocation from contributed surplus                                                  |   |                  | –     |   |                |   | 2,252,099    |                  |   |   | –             |   |   |                | –     |   |                                 |   | (2,252,099  | )       |   |   | –    |   |   |   | – |   |   |   | – |   |
| Share issuance costs                                                                   |   |                  | –     |   |                |   | (8,657       | )                     |   |   | –             |   |   |                | –     |   |                                 |   | –     |    |   |   | –    |   |   |   | – |   |   |   | (8,657 | ) |
| Transfer of Nevada and Other Alaska Business to Corvus                                 |   |                  | –     |   |                |   | –      |                  |   |   | –             |   |   |                | –     |   |                                 |   | (24,599,328 | )       |   |   | –    |   |   |   | 12,346,527 |   |   |   | (12,252,801 | ) |
| Working capital contribution to Corvus                                                 |   |                  | –     |   |                |   | –      |                  |   |   | –             |   |   |                | –     |   |                                 |   | (3,300,000  | )       |   |   | –    |   |   |   | – |   |   |   | (3,300,000 | ) |
| Distribution of the common shares of Corvus to ITH shareholders as a return of capital |   |                  | –     |   |                |   | (27,899,328  | )                     |   |   | –             |   |   |                | –     |   |                                 |   | 27,899,328  |    |   |   | –    |   |   |   | – |   |   |   | – |   |
| Exchange of old shares of ITH for new shares of ITH at a ratio of 1:1                  |   |                  | (67,228,221 | )      |                |   | (100,631,326 | )                     |   |   | 67,228,221          |   |   |                | 100,631,326 |   |                                 |   | –     |    |   |   | –    |   |   |   | – |   |   |   | – |   |
| Private placement                                                                      |   |                  | –     |   |                |   | –      |                  |   |   | 17,505,805          |   |   |                | 109,434,227 |   |                                 |   | –     |    |   |   | –    |   |   |   | – |   |   |   | 109,434,227 |   |
|   Exercise of options                                                        |   |                  | –     |   |                |   | –      |                  |   |   | 1,915,000           |   |   |                | 6,634,950   |   |                                 |   | –     |    |   |   | –    |   |   |   | – |   |   |   | 6,634,950 |   |
|   Share-based payments                                                       |   |                  | –     |   |                |   | –      |                  |   |   | –             |   |   |                | –     |   |                                 |   | 511,868     |    |   |   | –    |   |   |   | – |   |   |   | 511,868 |   |
| Adjustment due to rounding                                                             |   |                  | –     |   |                |   | –      |                  |   |   | (107                | )      |   |                | –     |   |                                 |   | –     |    |   |   | –    |   |   |   | – |   |   |   | – |   |
|   Reallocation of contributed surplus                                        |   |                  | –     |   |                |   | –      |                  |   |   | –             |   |   |                | 3,096,114   |   |                                 |   | (3,096,114  | )       |   |   | –    |   |   |   | – |   |   |   | – |   |
|   Share issuance costs                                                       |   |                  | –     |   |                |   | –      |                  |   |   | –             |   |   |                | (4,252,437  | )      |                                 |   | –     |    |   |   | –    |   |   |   | – |   |   |   | (4,252,437 | ) |
| Net loss                                                                               |   |                  | –     |   |                |   | –      |                  |   |   | –             |   |   |                | –     |   |                                 |   | –     |    |   |   | –    |   |   |   | (10,491,842 | ) |   |   | (10,491,842 | ) |
| Exchange difference on translating foreign operations                                  |   |                  | –     |   |                |   | –      |                  |   |   | –             |   |   |                | –     |   |                                 |   | –     |    |   |   | (6,767,665 | )      |   |   | – |   |   |   | (6,767,665 | ) |
|                                                                                   |   |                  |        |   |                |   |         |                  |   |   |                |   |   |                |        |   |                                 |   |        |    |   |   |       |   |   |   |   |   |   |   |   |   |
| Balance,  May 31, 2011                                                       |   |                  | –     |   |                | $      | –      |                  |   |   | 86,648,919          |   |   | $                   | 215,544,180 |   |                                 | $      | 13,288,996  |    |   | $      | (6,767,665 | )      |   | $ | (42,464,394 | ) |   | $ | 179,601,117 |   |

----

|                                                  |   | Number of shares (new) |       |   | Share capital (new) |   |        | Contributed surplus |   |   | Accumulated other comprehensive loss |   |   | Deficit |       |   | Total  |   |
|-------------------------------------------------------|--------|------------------------|------------|--------|---------------------|--------|-------------|---------------------|--------|--------|--------------------------------------|--------|--------|---------|------------|--------|--------|--------|
|                                                  |   |                   |       |   |                |   |        |                |   |   |                                 |   |   |    |       |   |   |   |
| Balance, May 31, 2011                                 |   |                   | 86,648,919 |   |                | $      | 215,544,180 |                |   | $      | 13,288,996                           |   |   | $       | (6,767,665 | )      |   | $      | (42,464,394 | ) |   | $ | 179,601,117 |   |
| Exercise of options                                   |   |                   | 35,000     |   |                |   | 229,950     |                |   |   | –                              |   |   |    | –    |   |   |   | – |   |   |   | 229,950 |   |
| Share-based payments                                  |   |                   | –    |   |                |   | –     |                |   |   | 7,475,071                            |   |   |    | –    |   |   |   | – |   |   |   | 7,475,071 |   |
| Reallocation from contributed surplus                 |   |                   | –    |   |                |   | 90,956      |                |   |   | (90,956                              | )      |   |    | –    |   |   |   | – |   |   |   | – |   |
| Share issuance costs                                  |   |                   | –    |   |                |   | –     |                |   |   | –                              |   |   |    | –    |   |   |   | – |   |   |   | – |   |
| Net loss                                              |   |                   | –    |   |                |   | –     |                |   |   | –                              |   |   |    | –    |   |   |   | (11,039,887 | ) |   |   | (11,039,887 | ) |
| Exchange difference on translating foreign operations |   |                   | –    |   |                |   | –     |                |   |   | –                              |   |   |    | 6,850,624  |   |   |   | – |   |   |   | 6,850,624 |   |
|                                                  |   |                   |       |   |                |   |        |                |   |   |                                 |   |   |    |       |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2011                            |   |                   | 86,683,919 |   |                | $      | 215,865,086 |                |   | $      | 20,673,111                           |   |   | $       | 82,959     |   |   | $      | (53,504,281 | ) |   | $ | 183,116,875 |   |

----

|                                                                                        |   | Note   |   |   | December 31, 2011 |        |        | May 31, 2011 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|-------------------|-------------|-------------|--------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |              |        |        |         |   |
| Operating Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |              |        |        |         |   |
| Loss for the period from continuing operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |   |   | $                 | (11,039,887 | )           |         | $      | (9,557,685 | ) |
| Add items not affecting cash:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |              |        |        |         |   |   |   |
| Depreciation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |              | 21,789      |        |         |   | 42,375 |   |
| Share-based payments                                                                                                                                                                                                                                                                      |   |   | 10     |   |              |        | 7,475,071   |         |   |   | 3,575,815 |   |
| Unrealized gain on derivative liability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |              |        | (2,354,740  | )            |   |   | – |   |
| Unrealized (gain) loss on marketable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |              |        | 360,000     |         |   |   | (182,500 | ) |
| Spin-out recovery                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |              |        | –     |         |   |   | (120,000 | ) |
| (Gain) loss on foreign exchange                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |              |        | (72,624     | )            |   |   | (91,552 | ) |
| Changes in non-cash items:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |   |   |              |        |        |         |   |   |   |   |
| Accounts receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |              |        | (283,073    | )            |   |   | (75,519 | ) |
| Prepaid expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |              |        | 183,793     |         |   |   | (108,943 | ) |
| Accounts payable and accrued liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |              |        | 126,387     |         |   |   | (152,916 | ) |
| Cash used in operating activities of continuing operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |   |   |              |        | (5,583,284  | )            |   |   | (6,670,925 | ) |
| Loss for the year from discontinued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |   |   |              |        | –     |         |   |   | (934,157 | ) |
| Add items not affecting cash:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |              |        |        |         |   |   |   |   |
| Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |              |        | –     |         |   |   | 756,202 |   |
| (Gain) loss on foreign exchange                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |              |        | –     |         |   |   | (20,318 | ) |
| Cash used in operating activities of discontinued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |              |        | –     |         |   |   | (198,273 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |              |        |        |         |   |   |   |   |
| Financing Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |              |        |        |         |   |   |   |   |
| Issuance of share capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |              |        | 229,950     |         |   |   | 118,079,019 |   |
| Share issuance costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |              |        | –     |         |   |   | (4,261,094 | ) |
| Cash provided by financing activities of continuing operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |   |   |              |        | 229,950     |         |   |   | 113,817,925 |   |
| Additional funding to Corvus                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |              |        | –     |         |   |   | (764,512 | ) |
| Cash transferred on Plan of Arrangement                                                                                                                                                                                                                                                                                                                                                                                |   |   | 2      |   |              |        | –     |         |   |   | (3,300,000 | ) |
| Cash used in financing activities of discontinued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |              |        | –     |         |   |   | (4,064,512 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |              |        |        |         |   |   |   |   |
| Investing Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |              |        |        |         |   |   |   |   |
| Expenditures on exploration and evaluation assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |              |        | (50,407,378 | )            |   |   | (35,896,786 | ) |
| Expenditures on property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |   |   |              |        | (2,962      | )            |   |   | (105,906 | ) |
| Cash used in investing activities of continuing operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |   |   |              |        | (50,410,340 | )            |   |   | (36,002,692 | ) |
| Expenditures on exploration and evaluation assets, net of costs recovered                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |              |        | –     |         |   |   | 616,684 |   |
| Cash provided by (used in) investing activities of discontinued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |   |   |              |        | –     |         |   |   | 616,684 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |              |        |        |         |   |   |   |   |
| Effect of foreign exchange on cash of continuing operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |              |        | 240,727     |         |   |   | 186,277 |   |
| Effect of foreign exchange on cash of discontinued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |              |        | –     |         |   |   | 20,318 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |              |        |        |         |   |   |   |   |
| (Decrease) increase in cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |              |        | (55,522,947 | )            |   |   | 67,704,802 |   |
| Cash and cash equivalents, beginning of period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |   |   |              |        | 111,165,126 |         |   |   | 43,460,324 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |              |        |        |         |   |   |   |   |
| Cash and cash equivalents, end of period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |              | $           | 55,642,179  |         |   | $ | 111,165,126 |   |

----

----

| 1.   | GENERAL INFORMATION, NATURE AND CONTINUANCE OF OPERATIONS |
|----------------|-----------------------------------------------------------|

| 2.   | DISCONTINUED OPERATIONS AND TRANSFER OF EXPLORATION AND EVALUATION ASSETS |
|----------------|---------------------------------------------------------------------------|

----

----

| 2.   | DISCONTINUED OPERATIONS AND TRANSFER OF EXPLORATION AND EVALUATION ASSETS (cont’d) |
|----------------|------------------------------------------------------------------------------------------|

|                     |   | December 31, 2011 |    |   | May 31, 2011 |   |
|--------------------------|--------|-------------------|---------|--------|--------------|--------|
|                     |   |              |    |   |         |   |
| Administration           |   | $                 | – |   |         | $      | 1,780 |   |
| Charitable donations     |   |              | – |   |         |   | 5,413 |   |
| Consulting fees          |   |              | – |   |         |   | 265,721 |   |
| Foreign exchange gain    |   |              | – |   |         |   | (20,318 | ) |
| Insurance                |   |              | – |   |         |   | 10,099 |   |
| Investor relations       |   |              | – |   |         |   | 130,737 |   |
| Office and miscellaneous |   |              | – |   |         |   | 7,214 |   |
| Professional fees        |   |              | – |   |         |   | 40,741 |   |
| Property investigations  |   |              | – |   |         |   | 291 |   |
| Regulatory               |   |              | – |   |         |   | 3,816 |   |
| Rent                     |   |              | – |   |         |   | 5,302 |   |
| Telephone                |   |              | – |   |         |   | 2,418 |   |
| Travel                   |   |              | – |   |         |   | 5,625 |   |
| Wages and benefits       |   |              | – |   |         |   | 475,318 |   |
|                     |   |              |    |   |         |   |   |   |
|                     |   | $                 | – |   |         | $      | 934,157 |   |

|                              |   | August 25, 2010 |       |
|-----------------------------------|--------|-----------------|------------|
|                              |   |            |       |
| Cash and cash equivalents         |   | $               | 1,203,240  |   |
| Accounts receivable               |   |            | 199        |   |
| Prepaid expenses                  |   |            | 3,200      |   |
| Exploration and evaluation assets |   |            | 12,392,408 |   |
| Accounts payable                  |   |            | (773,264   | ) |
|                              |   |            |       |   |
| Net assets transferred to Corvus  |   | $               | 12,825,783 |   |

----

----

| 3.   | SIGNIFICANT ACCOUNTING POLICIES |
|----------------|---------------------------------|

----

----

| 3.   | SIGNIFICANT ACCOUNTING POLICIES (cont’d) |
|----------------|------------------------------------------------|

|   |  a  | the fair value determination and inputs used in the valuation of the derivative liability;      |
|--------|----------|-------------------------------------------------------------------------------------------------|
|   |     |                                                                                            |
|   |  b) | the tax basis of assets and liabilities and related deferred income tax assets and liabilities; |
|   |     |                                                                                            |
|   |  c) | the fair value determination and inputs used in valuation of share-based payments;              |
|   |     |                                                                                            |
|   |  d) | amounts of provisions, if any, for environmental rehabilitation and restoration; and            |
|   |     |                                                                                            |
|   |  e) | the allocation of administrative expenses to discontinued operations.                           |

|   |  a) | the estimated useful lives of property and equipment;                                                                                                                                                                                      |
|--------|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |     |                                                                                                                                                                                                                                       |
|   |  b) | the determination of functional currencies; and                                                                                                                                                                                            |
|   |     |                                                                                                                                                                                                                                       |
|   |  c) | the analysis of resource calculations, drill results, labwork, etc. which can impact the Company’s assessment of impairments, calculation of depreciation, and provisions, if any, for environmental rehabilitation and restoration. |

----

----

| 3.   | SIGNIFICANT ACCOUNTING POLICIES (cont’d) |
|----------------|------------------------------------------------|

|         ● | Assets and liabilities are translated at period-end exchange rates prevailing at that reporting date; and |
|----------------------------------------------------|-----------------------------------------------------------------------------------------------------------|

|         ● | Income and expenses are translated at average exchange rates for the period. |
|----------------------------------------------------|------------------------------------------------------------------------------|

|   | a) | Financial assets |
|--------|----|------------------|

----

----

| 3.   | SIGNIFICANT ACCOUNTING POLICIES (cont’d) |
|----------------|------------------------------------------------|

|   | a) | Financial assets (cont'd_ |
|--------|----|---------------------------|

|   | b) | Financial liabilities |
|--------|----|-----------------------|

----

----

| 3.   | SIGNIFICANT ACCOUNTING POLICIES (cont’d) |
|----------------|------------------------------------------------|

|   | a) | Recognition and measurement |
|--------|----|----------------------------------|

|   | b) | Subsequent costs |
|--------|----|------------------|

|   | c) | Major maintenance and repairs |
|--------|----|-------------------------------|

|   | d) | Gains and losses |
|--------|----|------------------|

|   | e) | Depreciation |
|--------|----|--------------|

|   | Computer equipment  |  – | 30% declining balance |
|--------|--------------------------|---------------|-----------------------|
|   | Computer software        |  – | 3 years straight line |
|   | Furniture and equipment  |  – | 20% declining balance |
|   | Leasehold improvements   |  – |                  |

----

----

| 3.   | SIGNIFICANT ACCOUNTING POLICIES (cont’d) |
|----------------|------------------------------------------------|

|   | a) | Pre-exploration costs |
|--------|----|-----------------------|

|   | b) | Exploration and evaluation expenditures |
|--------|----|-----------------------------------------|

----

----

| 3.   | SIGNIFICANT ACCOUNTING POLICIES (cont’d) |
|----------------|------------------------------------------------|

----

----

| 3.   | SIGNIFICANT ACCOUNTING POLICIES (cont’d) |
|----------------|------------------------------------------------|

----

----

| 3.   | SIGNIFICANT ACCOUNTING POLICIES (cont’d) |
|----------------|------------------------------------------------|

----

----

| 3.   | SIGNIFICANT ACCOUNTING POLICIES (cont’d) |
|----------------|------------------------------------------------|

| 4. | RISK MANAGEMENT AND FINANCIAL INSTRUMENTS |
|----|-------------------------------------------|

| ●       | Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities |
|---------------------------------------------|------------------------------------------------------------------------------------------------|

| ●       | Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and, |
|---------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------|

| ●       | Level 3 – Inputs that are not based on observable market data. |
|---------------------------------------------|----------------------------------------------------------------------|

|                           |   | Financial assets and liabilities at fair value as at December 31, 2011 |       |
|--------------------------------|--------|------------------------------------------------------------------------|------------|
|                           |   | Level 1                                                                |       |   | Level 2 |   |   | Level 3 |   |
|                           |   |                                                                   |       |   |   |   |   |   |   |
| Financial assets:              |   |                                                                   |       |   |   |   |   |   |   |
| Cash and cash equivalents      |   | $                                                                      | 55,642,179 |   |   | $ | – |   |   | $ | – |   |
| Marketable securities (note 5) |   |                                                                   | 302,500    |   |   |   | – |   |   |   | – |   |
|                           |   | $                                                                      | 55,944,679 |   |   | $ | – |   |   | $ | – |   |
| Financial liabilities:         |   |                                                                   |       |   |   |   |   |   |   |   |   |   |
| Derivative liability (note 8)  |   | $                                                                      | –    |   |   | $ | 21,153,600 |   |   | $ | – |   |
|                           |   | $                                                                      | –    |   |   | $ | 21,153,600 |   |   | $ | – |   |

----

----

| 4. | RISK MANAGEMENT AND FINANCIAL INSTRUMENTS  (cont’d) |
|----|----------------------------------------------------------------|

|                           |   | Financial assets at fair value as at May 31, 2011 |        |
|--------------------------------|--------|---------------------------------------------------|-------------|
|                           |   | Level 1                                           |        |   | Level 2 |   |   | Level 3 |   |
|                           |   |                                              |        |   |   |   |   |   |   |
| Financial assets:              |   |                                              |        |   |   |   |   |   |   |
| Cash and cash equivalents      |   | $                                                 | 111,165,126 |   |   | $ | – |   |   | $ | – |   |
| Marketable securities (note 5) |   |                                              | 662,500     |   |   |   | – |   |   |   | – |   |
|                           |   | $                                                 | 111,827,626 |   |   | $ | – |   |   | $ | – |   |

|                           |   | Financial assets at fair value as at June 1, 2010 |       |
|--------------------------------|--------|---------------------------------------------------|------------|
|                           |   | Level 1                                           |       |   | Level 2 |   |   | Level 3 |   |
|                           |   |                                              |       |   |   |   |   |   |   |
| Financial assets:              |   |                                              |       |   |   |   |   |   |   |
| Cash and cash equivalents      |   | $                                                 | 43,460,324 |   |   | $ | - |   |   | $ | - |   |
| Marketable securities (note 5) |   |                                              | 360,000    |   |   |   | - |   |   |   | - |   |
|                           |   | $                                                 | 43,820,324 |   |   | $ | - |   |   | $ | - |   |

|   | a) | Credit risk |
|--------|----|-------------|

|                      |   | December 31,2011 |       |   | May 31,2011 |   |        | June 1,2010 |   |
|---------------------------|--------|------------------|------------|--------|-------------|--------|-------------|-------------|--------|
|                      |   |             |       |   |        |   |        |        |   |
| Cash and cash equivalents |   | $                | 55,642,179 |   |        | $      | 111,165,126 |        |   | $ | 43,460,324 |   |
| Accounts receivable       |   | $                | 468,806    |   |        | $      | 185,733     |        |   | $ | 110,214 |   |

|                            |   | Quantity |       | Maturity Date |           | Annual Yield |   |
|---------------------------------|--------|----------|------------|---------------|----------------|--------------|--------|
|                            |   |     |       |          |           |         |   |
| TD Mortgage Corporation (GIC)   |   | $        | 42,068,000 |          | April 16, 2012 |         |   | 1.36% |   |
| Advisor’s Advantage Trust |   |     | 3,000,000  |          | May 7, 2012    |         |   | 1.30% |   |
|                            |   |     |       |          |           |         |   |   |   |
|                            |   | $        | 45,068,000 |          |           |         |   |   |   |

----

----

| 4. | RISK MANAGEMENT AND FINANCIAL INSTRUMENTS  (cont’d) |
|----|----------------------------------------------------------------|

|   | a) | Credit risk (cont’d) |
|--------|----|----------------------------|

|   | b) | Liquidity risk |
|--------|----|----------------|

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

| (i)         | Interest rate risk |
|------------------------------------------------|--------------------|

| (ii)        | Foreign currency risk |
|-------------------------------------------|-----------------------|

----

----

| 4. | RISK MANAGEMENT AND FINANCIAL INSTRUMENTS  (cont’d) |
|----|----------------------------------------------------------------|

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

| (ii)        | Foreign currency risk (cont'd_ |
|-------------------------------------------|--------------------------------|

|                                     | CAD equivalent                                             | USD                                             |
|------------------------------------------|------------------------------------------------------------|-------------------------------------------------|
|                                     |                                                       |                                            |
| Cash                                     | $        8,709,370 | $       8,563,785 |
| Accounts payable and accrued liabilities | $      10,184,489            | $     10,014,246       |
| Derivative liability                     | $      21,153,600            | $     20,800,000       |

| (iii)       | Other price risk |
|--------------------------------------|------------------|

| 5.   | MARKETABLE SECURITIES |
|----------------|-----------------------|

|                      |   | December 31,2011 |    |   | May 31,2011 |   |    | June 1,2010 |   |
|---------------------------|--------|------------------|---------|--------|-------------|--------|---------|-------------|--------|
|                      |   |             |    |   |        |   |    |        |   |
| Millrock Resources Inc.   |   | $                | 214,500 |   |        | $      | 422,500 |        |   | $ | 273,000 |   |
| Ocean Park Ventures Corp. |   |             | 88,000  |   |        |   | 240,000 |        |   |   | 87,000 |   |
|                      |   |             |    |   |        |   |    |        |   |   |   |   |
|                      |   | $                | 302,500 |   |        | $      | 662,500 |        |   | $ | 360,000 |   |

----

----

| 6.   | PROPERTY AND EQUIPMENT |
|----------------|------------------------|

|                               |   | Furniture and Equipment |    |   | Computer Equipment |   |     | Computer Software |   |   | Leasehold Improvements |   |   | Total  |    |
|------------------------------------|--------|-------------------------|---------|--------|--------------------|--------|----------|-------------------|--------|--------|------------------------|--------|--------|--------|---------|
|                               |   |                    |    |   |               |   |     |              |   |   |                   |   |   |   |    |
| Cost                               |   |                    |    |   |               |   |     |              |   |   |                   |   |   |   |    |
| Balance at June 1, 2010            |   | $                       | 8,215   |   |               | $      | 125,576  |              |   | $      | 89,476                 |   |   | $      | 17,061  |   |   | $ | 240,328 |   |
| Additions                          |   |                    | 46,192  |   |               |   | 59,714   |              |   |   | –                |   |   |   | – |   |   |   | 105,906 |   |
| Disposals                          |   |                    | – |   |               |   | –  |              |   |   | –                |   |   |   | – |   |   |   | – |   |
| Balance at May 31, 2011            |   |                    | 54,407  |   |               |   | 185,290  |              |   |   | 89,476                 |   |   |   | 17,061  |   |   |   | 346,234 |   |
| Additions                          |   |                    | – |   |               |   | 2,962    |              |   |   | –                |   |   |   | – |   |   |   | 2,962 |   |
| Disposals                          |   |                    | – |   |               |   | –  |              |   |   | –                |   |   |   | – |   |   |   | – |   |
| Balance at Dec 31, 2011            |   | $                       | 54,407  |   |               | $      | 188,252  |              |   | $      | 89,476                 |   |   | $      | 17,061  |   |   | $ | 349,196 |   |
|                               |   |                    |    |   |               |   |     |              |   |   |                   |   |   |   |    |   |   |   |   |   |
| Depreciation and impairment losses |   |                    |    |   |               |   |     |              |   |   |                   |   |   |   |    |   |   |
| Balance at June 1, 2010            |   | $                       | (3,700  | )      |               | $      | (60,148  | )                 |   | $      | (89,476                | )      |   | $      | (6,964  | ) |   | $ | (160,288 | ) |
| Depreciation for the period        |   |                    | (5,313  | )      |               |   | (26,965  | )                 |   |   | –                |   |   |   | (10,097 | ) |   |   | (42,375 | ) |
| Disposals                          |   |                    | – |   |               |   | –  |              |   |   | –                |   |   |   | – |   |   |   | – |   |
| Balance at May 31, 2011            |   |                    | (9,013  | )      |               |   | (87,113  | )                 |   |   | (89,476                | )      |   |   | (17,061 | ) |   |   | (202,663 | ) |
| Depreciation for the period        |   |                    | (5,206  | )      |               |   | (16,583  | )                 |   |   | –                |   |   |   | – |   |   |   | (21,789 | ) |
| Disposals                          |   |                    | – |   |               |   | –  |              |   |   | –                |   |   |   | – |   |   |   | – |   |
| Balance at Dec 31, 2011            |   | $                       | (14,219 | )      |               | $      | (103,696 | )                 |   | $      | (89,476                | )      |   | $      | (17,061 | ) |   | $ | (224,452 | ) |

| Carrying amountsAt June 1, 2010 |   | $ | 4,515  |   |   | $ | 65,428 |   |   | $ | – |   |   | $ | 10,097  |   |   | $ | 80,040  |   |
|---------------------------------|--------|---|--------|--------|--------|---|--------|--------|--------|---|---------|--------|--------|---|---------|--------|--------|---|---------|--------|
| At May 31, 2011                 |   | $ | 45,394 |   |   | $ | 98,177 |   |   | $ | – |   |   | $ | – |   |   | $ | 143,571 |   |
| At Dec 31, 2011                 |   | $ | 40,188 |   |   | $ | 84,556 |   |   | $ | – |   |   | $ | – |   |   | $ | 124,744 |   |

----

----

| 7.   | EXPLORATION AND EVALUATION ASSETS |
|----------------|-----------------------------------|

|                               |   | Total  |        |
|------------------------------------|--------|--------|-------------|
|                               |   |   |        |
| Balance, June 1, 2010              |   | $      | 39,500,278  |   |
|                               |   |   |        |   |
| Acquisition costs:                 |   |   |        |   |
| Cash payments                      |   |   | 31,070      |   |
| Common shares issued               |   |   | -           |   |
|                               |   |   | 31,070      |   |
| Deferred exploration costs:        |   |   |        |   |
| Advance to contractors             |   |   | 276,555     |   |
| Aircraft services                  |   |   | 346,568     |   |
| Assay                              |   |   | 3,502,374   |   |
| Drilling                           |   |   | 13,633,947  |   |
| Equipment rental                   |   |   | 2,015,862   |   |
| Field costs                        |   |   | 5,281,089   |   |
| Geological/geophysical             |   |   | 9,984,494   |   |
| Land maintenance & tenure      |   |   | 2,660,912   |   |
| Legal                              |   |   | 58,075      |   |
| Transportation                     |   |   | 319,041     |   |
| Travel                             |   |   | 235,700     |   |
|                               |   |   | 38,314,617  |   |
|                               |   |   |        |   |
| Total expenditures for the year    |   |   | 38,345,687  |   |
| Cumulative translation adjustments |   |   | (6,742,842  | ) |
|                               |   |   |        |   |
| Balance, May 31, 2011              |   |   | 71,103,123  |   |
|                               |   |   |        |   |
| Acquisition costs:                 |   |   |        |   |
| Cash consideration (see note 8)    |   |   | 48,777,927  |   |
| Common shares issued               |   |   | –     |   |
|                               |   |   | 48,777,927  |   |
| Deferred exploration costs:        |   |   |        |   |
| Advance to contractors             |   |   | (411,865    | ) |
| Aircraft services                  |   |   | 2,223,419   |   |
| Assay                              |   |   | 1,769,256   |   |
| Drilling                           |   |   | 9,982,001   |   |
| Environmental                      |   |   | 2,838,071   |   |
| Equipment rental                   |   |   | 1,125,811   |   |
| Field costs                        |   |   | 7,460,642   |   |
| Geological/geophysical             |   |   | 5,670,982   |   |
| Land maintenance & tenure      |   |   | 565,799     |   |
| Legal                              |   |   | 164,488     |   |
| Surveying and mapping              |   |   | 405,680     |   |
| Transportation                     |   |   | 6,178       |   |
| Travel                             |   |   | (209        | ) |
|                               |   |   | 31,800,253  |   |
|                               |   |   |        |   |
| Total expenditures for the year    |   |   | 80,578,180  |   |
| Cumulative translation adjustments |   |   | 6,360,138   |   |
|                               |   |   |        |   |
| Balance, December 31, 2011         |   | $      | 158,041,441 |   |

----

----

| 7.   | EXPLORATION AND EVALUATION ASSETS (cont’d) |
|----------------|--------------------------------------------------|

| (i)         | Livengood Property |
|------------------------------------------------|--------------------|

| ●          | a lease of the Alaska State mineral rights having an initial term of three years, commencing July 1, 2004 (subject to extension for two extensions of three years each) and requires work expenditures of USD 10/acre/year in years 1 – 3, USD 20/acre/year in years 4 – 6 and USD 30/acre/year in years 7 – 9 and advance royalty payments of USD 5/acre/year in years 1 – 3, USD 15/acre/year in years 4 – 6 and USD 25/acre/year in years 7 – 9.  An NSR production royalty of between 2.5% and 5.0% (depending upon the price of gold) is payable to the lessor with respect to the lands subject to this lease.  In addition, an NSR production royalty of 1% is payable to the lessor with respect to the unpatented federal mining claims subject to the lease below. |
|---------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●          | a lease of State of Alaska mining claims for a term of ten years, commencing on September 11, 2006.  The lease requires payments of USD 75,000 on execution (paid), USD 50,000 in each of years 2 – 5 (paid to year 5) and USD 100,000 in each of years 6 – 10 and work expenditures of USD 100,000 in year one (incurred), USD 200,000 in each of years 2 – 5 (incurred to year 5) and USD 300,000 in each of years 6 – 10.  An NSR production royalty of between 2% and 5% is payable to the lessors (depending upon the price of gold).  During December 2011 the Company exercised its option to acquire all the interests in the 169 State of Alaska claims previously held under this lease.  Total cash consideration of USD 11,044,000 was paid by the Company for the acquisition of these claims.  There are no further outstanding or ongoing obligations to the sellers on these state claims. |
|---------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 7.   | EXPLORATION AND EVALUATION ASSETS (cont’d) |
|----------------|--------------------------------------------------|

| (i)         | Livengood Property (cont’d) |
|------------------------------------------------|-----------------------------------|

| ●          | a lease of US federal unpatented claims having an initial term of ten years, commencing on April 21, 2003 and for so long thereafter as mining related activities are carried out.  The lease requires a bonus payment of USD 5,000 on signing (paid), and advance royalties of USD 20,000 on execution (paid), USD 30,000 on or before April 21, 2004 (paid), USD 40,000 on or before April 21, 2005 (paid), USD 50,000 on or before April 21, 2006 (paid), USD 40,000 on or before April 21, 2007 (paid) and an additional USD 50,000 on or before each subsequent April 21 during the term (paid USD 200,000). An NSR production royalty of between 2% and 3% (depending on the price of gold) is payable to the lessors.  The Company may purchase 1% of the royalty for USD 1,000,000. |
|---------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●          | a lease of patented federal claims having an initial term of ten years, and for so long thereafter as the Company pays the lessors the minimum royalties required under the lease.  The lease requires a bonus payment of USD 10,000 on signing (paid), and minimum royalties of USD 10,000 on or before January 18, 2008 (paid), USD 10,000 on or before January 18, 2009 (paid), USD 10,000 on or before January 18, 2010 (paid) and an additional USD 20,000 on or before each of January 18, 2011 through January 18, 2016 (paid USD 40,000 in December 2010 and 2011) and an additional USD 25,000 on each subsequent January 18 thereafter during the term (all of which minimum royalties are recoverable from production royalties).  An NSR production royalty of 3% is payable to the lessors.  The Company may purchase all interest of the lessors in the leased property (including the production royalty) for USD 1,000,000 (less all minimum and production royalties paid to the date of purchase), of which USD 500,000 is payable in cash over four years following the closing of the purchase and the balance of USD 500,000 is payable by way of the 3% NSR production royalty. |
|---------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●          | a mining lease of unpatented federal lode mining and federal unpatented placer claims having an initial term of ten years, commencing on March 28, 2007, and for so long thereafter as mining related activities are carried out.  The lease requires payment of advance royalties of USD 3,000 on execution (paid), USD 5,000 on or before March 28, 2009 (paid), USD 10,000 on or before March 28, 2010 (paid) and an additional USD 15,000 on or before each subsequent March 28 thereafter during the initial term (all of which minimum royalties are recoverable from production royalties) (paid USD 15,000 on February 15, 2011).  The Company is required to pay the lessor the sum of USD 250,000 upon making a positive production decision.  An NSR production royalty of 2% is payable to the lessor.  The Company may purchase all interest of the lessor in the leased property (including the production royalty) for USD 1,000,000. |
|---------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 7.   | EXPLORATION AND EVALUATION ASSETS (cont’d) |
|----------------|--------------------------------------------------|

| (i)         | Livengood Property (cont’d) |
|------------------------------------------------|-----------------------------------|

| 8.   | DERIVATIVE LIABILITY |
|----------------|----------------------|

----

----

| 8.   | DERIVATIVE LIABILITY (cont’d) |
|----------------|-------------------------------------|

| 9.   | INCOME TAXES |
|----------------|--------------|

|                                                |   | December 31, 2011 |        |   | May 31, 2011 |   |
|-----------------------------------------------------|--------|-------------------|-------------|--------|--------------|--------|
|                                                |   |              |        |   |         |   |
| Loss from continuing operations before income taxes |   | $                 | (11,039,887 | )      |         | $      | (9,557,685 | ) |
| Statutory Canadian corporate tax rate               |   |              | 26.50       | %      |         |   | 27.67 | % |
|                                                |   |              |        |   |         |   |   |   |
| Income tax recovery at statutory rates              |   | $                 | (2,925,570  | )      |         | $      | (2,644,611 | ) |
| Share-based payments                                |   |              | 1,980,894   |   |         |   | 1,216,646 |   |
| Unrecognized items for tax purposes                 |   |              | (423,885    | )      |         |   | (282,595 | ) |
| Effect of tax rate change                           |   |              | 17,655      |   |         |   | 43,858 |   |
| Difference in tax rates in other jurisdictions      |   |              | (348,000    | )      |         |   | (690,466 | ) |
| Unrecognized amounts                                |   |              | 1,698,906   |   |         |   | 2,357,168 |   |
|                                                |   |              |        |   |         |   |   |   |
| Income tax recovery                                 |   | $                 | –     |   |         | $      | – |   |

|                                            |   | December 31, 2011 |        |   | May 31, 2011 |   |
|-------------------------------------------------|--------|-------------------|-------------|--------|--------------|--------|
|                                            |   |              |        |   |         |   |
| Deferred income tax assets (liabilities)        |   |              |        |   |         |   |
| Mineral properties                              |   | $                 | 656,948     |   |         | $      | 656,966 |   |
| Equipment                                       |   |              | (4,544      | )      |         |   | (5,345 | ) |
| Marketable securities                           |   |              | 22,188      |   |         |   | (22,813 | ) |
| Derivative liability                            |   |              | (510,979    | )      |         |   | - |   |
| Charitable donations                            |   |              | 92,481      |   |         |   | 85,249 |   |
| Share issue costs                               |   |              | 972,747     |   |         |   | 1,171,193 |   |
| Non-capital losses available for future periods |   |              | 12,321,366  |   |         |   | 9,966,068 |   |
|                                            |   |              |        |   |         |   |   |   |
|                                            |   |              | 13,550,207  |   |         |   | 11,851,318 |   |
| Unrecognized deferred tax assets                |   |              | (13,550,207 | )      |         |   | (11,851,318 | ) |
|                                            |   |              |        |   |         |   |   |   |
| Deferred income tax asset                       |   | $                 | –     |   |         | $      | – |   |

----

----

| 9.   | INCOME TAXES (cont’d) |
|----------------|-----------------------------|

|   |   | Canada |       |   | United States |   |
|--------|--------|--------|------------|--------|---------------|--------|
|   |   |   |       |   |          |   |
| 2025   |   | $      | 82,000     |   |          | $      | – |   |
| 2026   |   |   | 92,000     |   |          |   | – |   |
| 2027   |   |   | 1,031,000  |   |          |   | 1,423,000 |   |
| 2028   |   |   | 1,301,000  |   |          |   | 1,402,000 |   |
| 2029   |   |   | 2,378,000  |   |          |   | 2,982,000 |   |
| 2030   |   |   | 3,014,000  |   |          |   | 6,063,000 |   |
| 2031   |   |   | 5,475,000  |   |          |   | 8,817,000 |   |
|   |   |   |       |   |          |   |   |   |
|   |   | $      | 13,373,000 |   |          | $      | 20,687,000 |   |

| 10.   | SHARE CAPITAL |
|-----------------|---------------|

| a)      | Issued 35,000 common shares pursuant to the exercise of stock options for total proceeds of $229,950 and transferred related contributed surplus of $90,956. |
|-----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| a)      | Sold to AngloGold, on March 24, 2011, on a private placement basis, an aggregate of 230,764 common shares at a price of $8.13 per share for gross proceeds of $1,876,111 and, on August 26, 2010, sold to AngloGold, on a private placement basis, an aggregate of 415,041 common shares at a price of $5.26 per share for gross proceeds of $2,183,116.  These issuances were pursuant to AngloGold’s right to maintain its 13.2907% equity interest in the Company. |
|-----------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b)      | Closed a bought deal short form prospectus financing (“the Offering”) on November 10, 2010 through the issuance of 10,400,000 common shares at a price of $6.25 per common share for gross proceeds of $65,000,000.  The Underwriters also exercised their over-allotment option to acquire an additional 1,560,000 common shares for additional gross proceeds of $9,750,000.  Including the proceeds from the exercise of the over-allotment option, the total gross proceeds of the Offering were $74,750,000.  In connection with the |
|-----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 10.   | SHARE CAPITAL (cont’d) |
|-----------------|------------------------------|

| b)     | Offering, the Underwriters received a cash commission equal to 5% of the gross proceeds raised through the Offering, amounting to $3,737,500 in share issuance costs. |
|----------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c)      | Closed a non-brokered private placement through the issuance of 4,900,000 common shares at a price of $6.25 per common share for gross proceeds of $30,625,000 on November 10, 2010.  Included in the non-brokered private placement was the issuance of 754,765 common shares to AngloGold for gross proceeds of $4,717,281. |
|-----------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d)      | Issued 3,025,299 common shares for the exercise of 2,977,200 stock options and 48,099 warrants for proceeds of $8,644,792 and transferred related contributed surplus of $5,348,213. |
|-----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                  |   | December 31, 2011  |    |   | May 31, 2011                    |   |
|---------------------------------------|--------|--------------------|---------|--------|---------------------------------|--------|
|                                  |   | Number of Warrants |    |   | Weighted Average Exercise Price |   |   | Number of Warrants |   |   | Weighted Average Exercise Price |   |
|                                  |   |               |    |   |                            |   |   |   |   |   |   |   |
| Balance, beginning of the period      |   |               | – |   |                            | $      | – |   |   |   | 48,099 |   |   | $ | 2.95 |   |
| Issued – agent’s warrants |   |               | – |   |                            |   | – |   |   |   | - |   |   |   | – |   |
| Exercised                             |   |               | – |   |                            |   | – |   |   |   | (48,099 | ) |   |   | (2.95 | ) |
| Expired                               |   |               | – |   |                            |   | – |   |   |   | – |   |   |   | – |   |
|                                  |   |               |    |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Balance, end of the period            |   |               | – |   |                            | $      | – |   |   |   | – |   |   | $ | – |   |

----

----

| 10.   | SHARE CAPITAL (cont’d) |
|-----------------|------------------------------|

|                             |   | Seven Months Ended |      |   | Year Ended                      |   |
|----------------------------------|--------|--------------------|-----------|--------|---------------------------------|--------|
|                             |   | December 31, 2011  |      |   | May 31, 2011                    |   |
|                             |   | Number ofOptions   |      |   | Weighted Average Exercise Price |   |   | Number ofOptions |   |   | Weighted Average Exercise Price |   |
|                             |   |               |      |   |                            |   |   |   |   |
| Balance, beginning of the period |   |               | 4,600,000 |   |                            | $      | 7.24 |   |   |   | 5,822,200 |   |   | $ | 5.08 |   |
| Granted                          |   |               | 2,700,000 |   |                            | $      | 7.87 |   |   |   | 1,760,000 |   |   | $ | 6.96 |   |
| Exercised                        |   |               | (35,000   | )      |                            | $      | (6.57 | ) |   |   | (2,977,200 | ) |   | $ | (2.86 | ) |
| Cancelled/Expired                |   |               | (50,000   | )      |                            | $      | (6.96 | ) |   |   | (5,000 | ) |   | $ | (1.75 | ) |
| Balance, end of the period       |   |               | 7,215,000 |   |                            | $      | 7.48 |   |   |   | 4,600,000 |   |   | $ | 7.24 |   |

|              |   | December 31, 2011 |   |   | May 31, 2011      |   |
|-------------------|--------|-------------------|--------|--------|-------------------|--------|
| Expiry Date       |   | Exercise Price    |   |   | Number of Options |   |   | Exercisable |   |   | Exercise Price |   |   | Number of Options |   |   | Exercisable |   |
|              |   |              |   |   |              |   |   |   |   |   |   |   |
| January 12, 2012  |   | $                 | 7.95   |   |              |   | 250,000 |   |   |   | 250,000 |   |   | $ | 7.95 |   |   |   | 250,000 |   |   |   | 250,000 |   |
| April 14, 2012    |   | $                 | 7.34   |   |              |   | 2,635,000 |   |   |   | 2,635,000 |   |   | $ | 7.34 |   |   |   | 2,660,000 |   |   |   | 2,660,000 |   |
| August 19, 2012   |   | $                 | 6.57   |   |              |   | 1,365,000 |   |   |   | 1,365,000 |   |   | $ | 6.57 |   |   |   | 1,425,000 |   |   |   | 1,425,000 |   |
| January 10, 2013  |   | $                 | 9.15   |   |              |   | 265,000 |   |   |   | 198,750 |   |   | $ | 9.15 |   |   |   | 265,000 |   |   |   | 66,250 |   |
| July 28, 2013     |   | $                 | 7.47   |   |              |   | 950,000 |   |   |   | 950,000 |   |   | $ | – |   |   |   | – |   |   |   | – |   |
| May 9, 2016       |   | $                 | 8.35   |   |              |   | 1,000,000 |   |   |   | 333,333 |   |   | $ | – |   |   |   | – |   |   |   | – |   |
| August 23, 2016   |   | $                 | 8.07   |   |              |   | 650,000 |   |   |   | 216,667 |   |   | $ | – |   |   |   | – |   |   |   | – |   |
| November 15, 2016 |   | $                 | 5.64   |   |              |   | 100,000 |   |   |   | 33,333 |   |   | $ | – |   |   |   | – |   |   |   | – |   |
|              |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|              |   |              |   |   |              |   | 7,215,000 |   |   |   | 5,982,083 |   |   |   |   |   |   |   | 4,600,000 |   |   |   | 4,401,250 |   |

----

----

| 10.   | SHARE CAPITAL (cont’d) |
|-----------------|------------------------------|

|                     |   | December 31,2011 |   |   | May 31,2011 |   |
|--------------------------|--------|------------------|--------|--------|-------------|--------|
|                     |   |             |   |   |        |   |
| Expected life of options |   | 4 years          |   |   | 2 years     |   |
| Risk-free interest rate  |   |             | 1.77   | %      |        |   | 1.42 | % |
| Expected volatility      |   |             | 71.80  | %      |        |   | 68.91 | % |
| Dividend rate            |   |             | 0.00   | %      |        |   | 0.00 | % |
| Exercise price           |   | $                | 7.87   |   |        | $      | 6.96 |   |

| Seven months ended December 31, 2011 |   | Before allocation of share-based payment charges |      |   | Share-based payment charges |   |      | After allocation of share-based payment charges |   |
|--------------------------------------|--------|--------------------------------------------------|-----------|--------|-----------------------------|--------|-----------|-------------------------------------------------|--------|
|                                 |   |                                             |      |   |                        |   |      |                                            |   |
| Consulting                           |   | $                                                | 345,886   |   |                        | $      | 1,461,677 |                                            |   | $ | 1,807,563 |   |
| Investor relations                   |   |                                             | 253,048   |   |                        |   | 69,729    |                                            |   |   | 322,777 |   |
| Professional fees                    |   |                                             | 631,169   |   |                        |   | 18,594    |                                            |   |   | 649,763 |   |
| Wages and benefits                   |   |                                             | 4,056,165 |   |                        |   | 5,925,071 |                                            |   |   | 9,981,236 |   |
|                                 |   |                                             |      |   |                        |   |      |                                            |   |   |   |   |
|                                 |   |                                             |      |   |                        | $      | 7,475,071 |                                            |   |   |   |   |

----

----

| 10.   | SHARE CAPITAL (cont’d) |
|-----------------|------------------------------|

| Year ended May 31, 2011 |   | Before allocation of share-based payment charges |      |   | Share-based payment charges |   |      | After allocation of share-based payment charges |   |
|-------------------------|--------|--------------------------------------------------|-----------|--------|-----------------------------|--------|-----------|-------------------------------------------------|--------|
|                    |   |                                             |      |   |                        |   |      |                                            |   |
| Consulting              |   | $                                                | 559,252   |   |                        | $      | 1,010,894 |                                            |   | $ | 1,570,146 |   |
| Investor relations      |   |                                             | 781,692   |   |                        |   | 457,516   |                                            |   |   | 1,239,208 |   |
| Professional fees       |   |                                             | 580,049   |   |                        |   | 75,570    |                                            |   |   | 655,619 |   |
| Wages and benefits      |   |                                             | 3,473,754 |   |                        |   | 2,031,835 |                                            |   |   | 5,505,589 |   |
|                    |   |                                             |      |   |                        |   |      |                                            |   |   |   |   |
|                    |   |                                             |      |   |                        | $      | 3,575,815 |                                            |   |   |   |   |

| 11.   | RELATED PARTY TRANSACTIONS AND BALANCES |
|-----------------|-----------------------------------------|

|                                                                                                                                                                                                            |   | December 31, 2011 |      |   | May 31, 2011 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|-----------|--------|--------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |              |      |   |         |   |
| Fees, wages and benefits                                                                                                                                                                                                                                                                                  |   | $                 | 2,047,224 |   |         | $      | 2,029,370 |   |
| Share-based payments                                                                                                                                                                                                                     |   |              | 6,748,799 |   |         |   | 2,333,401 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |              |      |   |         |   |   |   |
|                                                                                                        |   | $                 | 8,796,023 |   |         | $      | 4,362,771 |   |

----

----

| 11.   | RELATED PARTY TRANSACTIONS AND BALANCES (cont’d) |
|-----------------|--------------------------------------------------------|

| 12.   | SEGMENTED INFORMATION |
|-----------------|-----------------------|

|                                                            |   | Canada |        |   | United States |   |        | Total  |   |
|-----------------------------------------------------------------|--------|--------|-------------|--------|---------------|--------|-------------|--------|--------|
|                                                            |   |   |        |   |          |   |        |   |   |
| December 31, 2011                                               |   |   |        |   |          |   |        |   |   |
| Exploration and evaluation assets – continuing operations |   | $      | –     |   |          | $      | 158,041,441 |   |   | $ | 158,041,441 |   |
| Property and equipment                                          |   |   | 16,514      |   |          |   | 108,230     |   |   |   | 124,744 |   |
| Current assets                                                  |   |   | 47,907,054  |   |          |   | 8,692,285   |   |   |   | 56,599,339 |   |
| Total assets                                                    |   | $      | 47,923,568  |   |          | $      | 166,841,956 |   |   | $ | 214,765,524 |   |
|                                                            |   |   |        |   |          |   |        |   |   |   |   |   |
| Current liabilities                                             |   | $      | 310,484     |   |          | $      | 10,184,565  |   |   | $ | 10,495,049 |   |
| Non-current liabilities                                         |   |   | –     |   |          |   | 21,153,600  |   |   |   | 21,153,600 |   |
| Total liabilities                                               |   | $      | 310,484     |   |          | $      | 31,338,165  |   |   | $ | 31,648,649 |   |
|                                                            |   |   |        |   |          |   |        |   |   |   |   |   |
| May 31, 2011                                                    |   |   |        |   |          |   |        |   |   |   |   |   |
| Exploration and evaluation assets – continuing operations |   | $      | –     |   |          | $      | 71,103,123  |   |   | $ | 71,103,123 |   |
| Property and equipment                                          |   |   | 16,753      |   |          |   | 126,818     |   |   |   | 143,571 |   |
| Current assets                                                  |   |   | 110,544,083 |   |          |   | 1,847,768   |   |   |   | 112,391,851 |   |
| Total assets                                                    |   | $      | 110,560,836 |   |          | $      | 73,077,709  |   |   | $ | 183,638,545 |   |
|                                                            |   |   |        |   |          |   |        |   |   |   |   |   |
| Current liabilities                                             |   | $      | 181,890     |   |          | $      | 3,855,538   |   |   | $ | 4,037,428 |   |
| Non-current liabilities                                         |   |   | –     |   |          |   | –     |   |   |   | – |   |
| Total liabilities                                               |   | $      | 181,890     |   |          | $      | 3,855,538   |   |   | $ | 4,037,428 |   |

----

----

| 12.   | SEGMENTED INFORMATION (cont’d) |
|-----------------|--------------------------------------|

| June 1, 2010                                                      |   |   |       |   |   |   |       |   |   |
|-------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
| Exploration and evaluation assets – continuing operations   |   | $      | 1          |   |   | $      | 39,500,277 |   |   | $ | 39,500,278 |   |
| Exploration and evaluation assets – discontinued operations |   |   | –    |   |   |   | 11,672,708 |   |   |   | 11,672,708 |   |
| Property and equipment                                            |   |   | 11,918     |   |   |   | 68,122     |   |   |   | 80,040 |   |
| Current assets                                                    |   |   | 43,227,795 |   |   |   | 990,652    |   |   |   | 44,218,447 |   |
| Total assets                                                      |   | $      | 43,239,714 |   |   | $      | 55,153,948 |   |   | $ | 95,471,473 |   |
|                                                              |   |   |       |   |   |   |       |   |   |   |   |   |
| Current liabilities                                               |   | $      | 386,246    |   |   | $      | 801,619    |   |   | $ | 1,187,865 |   |
| Current liabilities – discontinued operations               |   |   | –    |   |   |   | 85,094     |   |   |   | 85,094 |   |
| Non-current liabilities                                           |   |   | –    |   |   |   | –    |   |   |   | – |   |
| Total liabilities                                                 |   | $      | 386,246    |   |   | $      | 886,713    |   |   | $ | 1,272,959 |   |

|                                                                 |   |   | December 31, 2011  |   |   |   | May 31, 2011  |   |
|----------------------------------------------------------------------|--------|--------|-------------------------|--------|--------|--------|--------------------|--------|
| Net loss from continuing operations for the period – Canada    |   | $      | (8,490,228              | )      |   | $      | (5,218,523         | )      |
| Net loss from continuing operations for the period - United States   |   |   | (2,549,659              | )      |   |   | (4,339,162         | )      |
| Net loss from discontinued operations for the period – Canada  |   |   | –                 |   |   |   | (844,813           | )      |
| Net loss from discontinued operations for the period - United States |   |   | –                 |   |   |   | (89,344            | )      |
|                                                                 |   |   |                    |   |   |   |               |   |
| Net loss for the period                                              |   | $      | (11,039,887             | )      |   | $      | (10,491,842        | )      |

| 13.   | CAPITAL MANAGEMENT |
|-----------------|--------------------|

----

----

| 14.   | SUBSIDIARIES |
|-----------------|--------------|

|                      | Country of Incorporation | PrincipalActivity   | ITH’s effective interest for2011 and 2010 |
|---------------------------|--------------------------|---------------------|-------------------------------------------------|
|                      |                     |                |                                            |
| Tower Hill Mines, Inc.    | USA                      | Exploration company | 100%                                            |
| Tower Hill Mines (US) LLC | USA                      | Exploration company | 100%                                            |
|                      |                     |                |                                            |

| 15.   | COMMITMENTS |
|-----------------|-------------|

| a)      | Commitments for exploration and evaluation assets (note 7). |
|-----------------------------|-------------------------------------------------------------|

| b)      | The Company has entered into several office and warehouse lease agreements with options to renew expiring in July 2013.  Total rental to that date is $220,502 (USD 216,817).  Future minimum lease payments for the next five fiscal years and beyond are as follows: |
|-----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2012                |   | $      | 278,659 |   |
|---------------------|--------|--------|---------|--------|
| 2013                |   |   | 219,139 |   |
| 2014                |   |   | 107,000 |   |
| 2015                |   |   | 6,196   |   |
| 2016                |   |   | 6,196   |   |
| 2017 and thereafter |   |   | 12,392  |   |
|                |   |   |    |   |
|                |   | $      | 629,582 |   |

| 16.   | SUPPLEMENTAL CASH FLOW INFORMATION |
|-----------------|------------------------------------|

|                                                                                               |   | December 31, 2011 |       |   | May 31, 2011 |   |
|----------------------------------------------------------------------------------------------------|--------|-------------------|------------|--------|--------------|--------|
|                                                                                               |   |              |       |   |         |   |
| Interest paid                                                                                      |   | $                 | –    |   |         | $      | – |   |
| Income taxes paid                                                                                  |   | $                 | –    |   |         | $      | – |   |
|                                                                                               |   |              |       |   |         |   |   |   |
| Non-cash investing and financing transactions – continuing operations:                       |   |              |       |   |         |   |   |   |
| Accounts payable and accrued liabilities included in exploration and evaluation assets             |   | $                 | 10,012,833 |   |         | $      | 3,676,106 |   |
| Derivative liability included in exploration and evaluation assets                                 |   | $                 | 23,508,340 |   |         | $      | – |   |
|                                                                                               |   |              |       |   |         |   |   |   |
| Non-cash investing and financing transactions – discontinued operations:                     |   |              |       |   |         |   |   |   |
| Shares issued to acquire long-term assets related to discontinued operations                       |   | $                 | –    |   |         | $      | – |   |
| Accounts payable and accrued liabilities included in exploration and evaluation assets xpenditures |   | $                 | –    |   |         | $      | – |   |

----

----

| 17.   | SUBSEQUENT EVENTS |
|-----------------|-------------------|

| a)     | On January 3, 2012, the Company granted incentive stock options to an officer of the Company to purchase 650,000 common shares in the capital stock of the Company.  The options are exercisable on or before January 3, 2017 at a price of $4.43 per share and will vest as to 216,666 shares on January 3, 2012, as to 216,666 shares on January 3, 2013 and as to the balance on January 3, 2014. |
|-----------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b)     | On January 9, 2012 the Company granted incentive stock options to an employee of the Company to purchase 30,000 common shares in the capital of the Company.  The options are exercisable on or before January 9, 2017 at a price of $4.60 and will vest as to 10,000 shares on January 9, 2012, as to 10,000 shares on January 9, 2013 and the balance on January 9, 2014. |
|-----------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 18.   | TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS |
|-----------------|-----------------------------------------------------------|

| a)     | Share-based payment transactions |
|-----------------------|----------------------------------|

----

----

| 18.   | TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (cont’d) |
|-----------------|--------------------------------------------------------------------------|

|                                      |   | May 31,2011 |     |   | June 1,2010 |    |
|-------------------------------------------|--------|-------------|----------|--------|-------------|---------|
|                                      |   |        |     |   |        |    |
| Contributed surplus                       |   | $           | 321,000  |   |        | $       | – |   |
| Adjustment to deficit                     |   | $           | (321,000 | )      |        | $       | – |   |
| Adjustment to share-based payment charges | $      | 321,000     |     |   | $           | – |   |

| b)     | Business combinations |
|----------------------------|-----------------------|

| c)      | Marketable securities |
|-----------------------------|-----------------------|

| d)      | Cumulative translation differences |
|-----------------------------|------------------------------------|

| ●        | Assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at the date of that financial period end; |
|---------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 18.   | TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (cont’d) |
|-----------------|--------------------------------------------------------------------------|

|   | d) | Cumulative translation differences (cont’d) |
|--------|----|---------------------------------------------------|

|   | Group companies (cont’d) |
|--------|--------------------------------|

| ●        | Income and expenses for each Statement of Operations and Comprehensive Loss are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); |
|---------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●        | Equity transactions are translated using the exchange rate at the date of the transaction; and |
|---------------------------------------------------|------------------------------------------------------------------------------------------------|

| ●        | All resulting exchange differences are recognized in other comprehensive income and reported as a separate component of equity. |
|---------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|

|                                                |   | May 31,2011 |       |   | June 1,2010 |   |
|-----------------------------------------------------|--------|-------------|------------|--------|-------------|--------|
|                                                |   |        |       |   |        |   |
| Exploration and evaluation assets                   |   | $           | (9,066,545 | )      |        | $      | (2,349,207 | ) |
| Long-term assets related to discontinued operations |   | $           | –    |   |        | $      | (572,982 | ) |
| Accumulated to other comprehensive income           |   | $           | (6,767,665 | )      |        | $      | – |   |
| Adjustment to deficit                               |   | $           | (2,298,880 | )      |        | $      | (2,922,189 | ) |

| e)     | Fair value as deemed cost |
|-----------------------|---------------------------|

| f)     | Consolidated and Separate Financial Statements |
|-----------------------|------------------------------------------------|

----

----

| 18.   | TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (cont’d) |
|-----------------|--------------------------------------------------------------------------|

| g)     | Estimates |
|-----------------------|-----------|

| ●     | Transitional Consolidated Statement of Financial Position Reconciliation – June 1, 2010 |
|---------------------------------|-----------------------------------------------------------------------------------------------|

| ●     | Consolidated Statement of Financial Position Reconciliation – May 31, 2011. |
|---------------------------------|-----------------------------------------------------------------------------------|

| ●     | Consolidated Statement of Comprehensive Loss Reconciliation – May 31, 2011. |
|---------------------------------|-----------------------------------------------------------------------------------|

----

----

| 18.   | TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (cont’d) |
|-----------------|--------------------------------------------------------------------------|

|                                                |   | Canadian GAAP |        |   | Effect of Transition to IFRS |   |       | Ref    |   |   | IFRS   |   |
|-----------------------------------------------------|--------|---------------|-------------|--------|------------------------------|--------|------------|--------|--------|--------|--------|--------|
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |
| ASSETS                                              |   |          |        |   |                         |   |       |   |   |   |   |   |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |
| Current assets                                      |   |          |        |   |                         |   |       |   |   |   |   |   |
| Cash and cash equivalents                           |   | $             | 43,460,324  |   |                         | $      | –    |   |   |   |   |   | $ | 43,460,324 |   |
| Marketable securities                               |   |          | 360,000     |   |                         |   | –    |   |   |   |   |   |   | 360,000 |   |
| Accounts receivable                                 |   |          | 110,214     |   |                         |   | –    |   |   |   |   |   |   | 110,214 |   |
| Prepaid expenses                                    |   |          | 274,246     |   |                         |   | –    |   |   |   |   |   |   | 274,246 |   |
| Current assets related to discontinued operations   |   |          | 13,663      |   |                         |   | –    |   |   |   |   |   |   | 13,663 |   |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |
| Total current assets                                |   |          | 44,218,447  |   |                         |   | –    |   |   |   |   |   |   | 44,218,447 |   |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |
| Property and equipment                              |   |          | 80,040      |   |                         |   | –    |   |   |   |   |   |   | 80,040 |   |
| Exploration and evaluations assets                  |   |          | 41,849,485  |   |                         |   | (2,349,207 | )      |   |   | d)     |   |   |   | 39,500,278 |   |
| Long-term assets related to discontinued operations |   |          | 12,245,690  |   |                         |   | (572,982   | )      |   |   | d)     |   |   |   | 11,672,708 |   |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Total assets                                        |   | $             | 98,393,662  |   |                         | $      | (2,922,189 | )      |   |   |   |   |   | $ | 95,471,473 |   |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                |   |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Current liabilities                                 |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Accounts payable and accrued liabilities            |   | $             | 1,187,865   |   |                         | $      | –    |   |   |   |   |   |   | $ | 1,187,865 |   |
| Current liabilities of discontinued operations      |   |          | 85,094      |   |                         |   | –    |   |   |   |   |   |   |   | 85,094 |   |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Total liabilities                                   |   |          | 1,272,959   |   |                         |   | –    |   |   |   |   |   |   |   | 1,272,959 |   |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Shareholders' equity                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Share capital                                       |   |          | 124,277,370 |   |                         |   | –    |   |   |   |   |   |   |   | 124,277,370 |   |
| Contributed surplus                                 |   |          | 14,240,223  |   |                         |   | –    |   |   |   |   |   |   |   | 14,240,223 |   |
| Accumulated other comprehensive loss                |   |          | –     |   |                         |   | –    |   |   |   |   |   |   |   | - |   |
| Deficit                                             |   |          | (41,396,890 | )      |                         |   | (2,922,189 | )      |   |   | d)     |   |   |   | (44,319,079 | ) |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Total shareholders’ equity                    |   |          | 97,120,703  |   |                         |   | (2,922,189 | )      |   |   |   |   |   |   | 94,198,514 |   |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Total liabilities and shareholders’ equity    |   | $             | 98,393,662  |   |                         | $      | (2,922,189 | )      |   |   |   |   |   | $ | 95,471,473 |   |

----

----

| 18.   | TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (cont’d) |
|-----------------|--------------------------------------------------------------------------|

|                                                |   | Canadian GAAP |        |   | Effect of Transition to IFRS |   |       | Ref    |   |   | IFRS   |   |
|-----------------------------------------------------|--------|---------------|-------------|--------|------------------------------|--------|------------|--------|--------|--------|--------|--------|
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |
| ASSETS                                              |   |          |        |   |                         |   |       |   |   |   |   |   |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |
| Current assets                                      |   |          |        |   |                         |   |       |   |   |   |   |   |
| Cash and cash equivalents                           |   | $             | 111,165,126 |   |                         | $      | –    |   |   |   |   |   | $ | 111,165,126 |   |
| Marketable securities                               |   |          | 662,500     |   |                         |   | –    |   |   |   |   |   |   | 662,500 |   |
| Accounts receivable                                 |   |          | 185,733     |   |                         |   | –    |   |   |   |   |   |   | 185,733 |   |
| Prepaid expenses                                    |   |          | 378,492     |   |                         |   | –    |   |   |   |   |   |   | 378,492 |   |
| Current assets related to discontinued operations   |   |          | –     |   |                         |   |       |   |   |   |   |   |   | - |   |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |
| Total current assets                                |   |          | 112,391,851 |   |                         |   | –    |   |   |   |   |   |   | 112,391,851 |   |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |
| Property and equipment                              |   |          | 143,571     |   |                         |   | –    |   |   |   |   |   |   | 143,571 |   |
| Exploration and evaluations assets                  |   |          | 80,169,668  |   |                         |   | (9,066,545 | )      |   |   | d      | )      |   |   | 71,103,123 |   |
| Long-term assets related to discontinued operations |   |          | –     |   |                         |   | –    |   |   |   |   |   |   |   | - |   |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Total assets                                        |   | $             | 192,705,090 |   |                         | $      | (9,066,545 | )      |   |   |   |   |   | $ | 183,638,545 |   |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                |   |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Current liabilities                                 |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Accounts payable and accrued liabilities            |   | $             | 4,037,428   |   |                         | $      | –    |   |   |   |   |   |   | $ | 4,037,428 |   |
| Current liabilities of discontinued operations      |   |          | -           |   |                         |   | –    |   |   |   |   |   |   |   | – |   |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Total liabilities                                   |   |          | 4,037,428   |   |                         |   | –    |   |   |   |   |   |   |   | 4,037,428 |   |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Shareholders' equity                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Share capital                                       |   |          | 215,544,180 |   |                         |   | –    |   |   |   |   |   |   |   | 215,544,180 |   |
| Contributed surplus                                 |   |          | 12,967,996  |   |                         |   | 321,000    |   |   |   | a      | )      |   |   | 13,288,996 |   |
| Accumulated other comprehensive loss                |   |          | –     |   |                         |   | (6,767,665 | )      |   |   | d      | )      |   |   | (6,767,665 | ) |
| Deficit                                             |   |          | (39,844,514 | )      |                         |   | (2,619,880 | )      |   |   | a      | ) d)   |   |   | (42,464,394 | ) |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Total shareholders’ equity                    |   |          | 188,667,662 |   |                         |   | (9,066,545 | )      |   |   |   |   |   |   | 179,601,117 |   |
|                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Total liabilities and shareholders’ equity    |   | $             | 192,705,090 |   |                         | $      | (9,066,545 | )      |   |   |   |   |   | $ | 183,638,545 |   |

----

----

| 18.   | TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (cont’d) |
|-----------------|--------------------------------------------------------------------------|

|                                                                |   | Canadian GAAP |        |   | Effect of Transition to IFRS |   |       | Ref    |   |   | IFRS   |   |
|---------------------------------------------------------------------|--------|---------------|-------------|--------|------------------------------|--------|------------|--------|--------|--------|--------|--------|
|                                                                |   |          |        |   |                         |   |       |   |   |   |   |   |
| Expenses                                                            |   |          |        |   |                         |   |       |   |   |   |   |   |
| Administration                                                      |   | $             | 31,544      |   |                         | $      | –    |   |   |   |   |   | $ | 31,544 |   |
| Charitable donations                                                |   |          | 64,637      |   |                         |   | –    |   |   |   |   |   |   | 64,637 |   |
| Consulting fees                                                     |   |          | 1,570,146   |   |                         |   | –    |   |   |   |   |   |   | 1,570,146 |   |
| Depreciation                                                        |   |          | 42,375      |   |                         |   | –    |   |   |   |   |   |   | 42,375 |   |
| Insurance                                                           |   |          | 215,228     |   |                         |   | –    |   |   |   |   |   |   | 215,228 |   |
| Investor relations                                                  |   |          | 1,148,359   |   |                         |   | 90,849     |   |   |   | a)     |   |   |   | 1,239,208 |   |
| Office and miscellaneous                                            |   |          | 281,840     |   |                         |   | –    |   |   |   |   |   |   |   | 281,840 |   |
| Professional fees                                                   |   |          | 667,405     |   |                         |   | (11,786    | )      |   |   | a)     |   |   |   | 655,619 |   |
| Property investigations                                             |   |          | 2,557       |   |                         |   | –    |   |   |   |   |   |   |   | 2,557 |   |
| Regulatory                                                          |   |          | 188,121     |   |                         |   | –    |   |   |   |   |   |   |   | 188,121 |   |
| Rent                                                                |   |          | 167,697     |   |                         |   | –    |   |   |   |   |   |   |   | 167,697 |   |
| Telephone                                                           |   |          | 49,688      |   |                         |   | –    |   |   |   |   |   |   |   | 49,688 |   |
| Travel                                                              |   |          | 210,192     |   |                         |   | –    |   |   |   |   |   |   |   | 210,192 |   |
| Wages and benefits                                                  |   |          | 5,263,652   |   |                         |   | 241,937    |   |   |   | a)     |   |   |   | 5,505,589 |   |
|                                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Loss before other items                                             |   |          | (9,903,441  | )      |                         |   | (321,000   | )      |   |   |   |   |   |   | (10,224,441 | ) |
|                                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Other items                                                         |   |          |        |   |                         |   |       |   |   |   |   |   |   |
| Gain on foreign exchange                                            |   |          | 41,225      |   |                         |   | 50,327     |   |   |   | d)     |   |   |   | 91,552 |   |
| Interest income                                                     |   |          | 675,146     |   |                         |   | –    |   |   |   |   |   |   |   | 675,146 |   |
| Income from mineral property earn-in                                |   |          | 311,312     |   |                         |   | –    |   |   |   |   |   |   |   | 311,312 |   |
| Spin-out cost                                                       |   |          | (593,754    | )      |                         |   | –    |   |   |   |   |   |   |   | (593,754 | ) |
| Unrealized gain on marketable securities                            |   |          | 182,500     |   |                         |   | –    |   |   |   |   |   |   |   | 182,500 |   |
|                                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
|                                                                |   |          | 616,429     |   |                         |   | 50,327     |   |   |   |   |   |   |   | 666,756 |   |
|                                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Loss from continuing operations                                     |   |          | (9,287,012  | )      |                         |   | (270,673   | )      |   |   |   |   |   |   | (9,557,685 | ) |
| Loss from discontinued operations                                   |   |          | (934,157    | )      |                         |   | –    |   |   |   |   |   |   |   | (934,157 | ) |
|                                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Net loss for the year                                               |   |          | (10,221,169 | )      |                         |   | (270,673   | )      |   |   |   |   |   |   | (10,491,842 | ) |
|                                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Other comprehensive loss                                            |   |          |        |   |                         |   |       |   |   |   |   |   |   |
| Exchange difference on translating foreign operations               |   |          | –     |   |                         |   | (6,767,665 | )      |   |   | d)     |   |   |   | (6,767,665 | ) |
|                                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Total other comprehensive loss                                      |   |          | –     |   |                         |   | (6,767,665 | )      |   |   |   |   |   |   | (6,767,665 | ) |
|                                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Comprehensive loss for the year                                     |   | $             | (10,221,169 | )      |                         | $      | (7,038,338 | )      |   |   |   |   |   | $ | (17,259,507 | ) |
|                                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Basic and fully diluted loss per share from continuing operations   |   | $             | (0.12       | )      |                         | $      | –    |   |   |   |   |   |   | $ | (0.12 | ) |
| Basic and fully diluted loss per share from discontinued operations |   | $             | (0.01       | )      |                         | $      | –    |   |   |   |   |   |   | $ | (0.01 | ) |
|                                                                |   |          |        |   |                         |   |       |   |   |   |   |   |   |   |   |   |
| Weighted average number of shares outstanding                       |   |          | 77,550,644  |   |                         |   | –    |   |   |   |   |   |   |   | 77,550,644 |   |

----