OMB APPROVALOMB Number: 3235-0288
Expires: January 31, 2012
Estimated average burden hours per response.2611.00  UN1TED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549  Form 20-F/A-2 Amendment No. 2 (Mark One)  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934  OR  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended  OR  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition period from February 1, 2009to December 31, 2009_  OR  SHELLCOMPANYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report.......................  Commission file 0-31100  Kiska Metals Corporation (fka Rimfire Minerals Corporation) (Exact name of Registrant as specified in its charter)  Not Applicable (Translation of Registrant’s name into English)  Yukon (Jurisdiction of incorporation or organization)  Suite 575 – 510 Burrard Street, Vancouver, British Columbia, Canada, V6C 3A8 (Address of principal executive offices)   -0- Jason S. Weber Telephone (604) 669-6660 Fax (604) 669-0898 (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact  Securities registered or to be registered pursuant to Section 12(b) of the Act.  NONE.  Title of each class Name of each exchange on which registered  Securities registered or to be registered pursuant to Section 12(g) of the Act.  Common Shares without par value (Title of Class)  Securities for which there is a reporting obligation pursuant to Section 15(d)of the Act.  Not Applicable (Title of Class) Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the transition report. 56,741,361  Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  No If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes  No Note —Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.  Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):  Large accelerated filer Accelerated filer Non-accelerated filer   -1- Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:


|          |                                                                                                       |      
|--------- | ----------------------------------------------------------------------------------------------------- | -----
|U.S. GAAP | International Financial Reporting Standards as issued by the International Accounting Standards Board | Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item l7  Item l8  If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No  (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)  Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes  No      Currency: All dollar amounts set forth in this report are in Canadian dollars, except where otherwise indicated.    -2- EXPLANATORY NOTE  This Amendment No. 2 to the Registrant’s Transition Report on Form 20-F for the transition period from February 1 to December 31, 2009 is filed in response to comments from the Commission’s Staff of the Division of Corporation Finance with respect to the Registrant’s disclosures under Item 8 (Financial Information), Item 15 (Controls and Procedures), Item 16F (Change in Registrant’s Certifying Accountant), Item 17 (Financial Statements) and Item 19 (Exhibits). Pursuant to Rule 12b-15 under the Exchange Act, this Amendment No. 2 sets forth the complete text of the above-referenced Items and all amendments thereto (except for the disclosures under Items 8 and 15, which remain as before), and includes new letters to the Commission from the Registrant’s former principal accountants attached hereto as Exhibits 15.1 and Exhibit 15.2 and new certifications pursuant to Rules 13a-14(a) or 15d-14(a) and Rules 13a-14(b) or 15d-14(b) under the Exchange Act attached hereto as Exhibits 12.1, 12.2, 13.1 and 13.2.   -3- FORWARD-LOOKING STATEMENTS  This Transition Report contains forward looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Certain statements in this Report constitute forward looking statements. These forward looking statements are not guarantees of the Corporation’s future operational or financial performance and are subject to risks and uncertainties. When used in this Transition Report, the words “estimate”, “intend”, “expect”, “anticipate” and similar expressions are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on these statements, which speak only as of the date of this Transition Report. These statements are subject to risks and uncertainties that could cause results to differ materially from those contemplated in such forward-looking statements.  Actual operational and financial results may differ materially from the Corporation’s expectations contained in the forward looking statements as a result of various factors, many of which are beyond the control of the Corporation. These factors include, but are not limited to, the need for additional financing to fully execute the Corporation’s business plan, the risk factors as set forth in more detail in Item 3 - Key Information - Risk Factors, adverse technical factors associated with exploration and development of the Corporation’s properties, changes in Canadian or U.S. tax or other laws or regulations, and material changes in capital expenditures.  All mineral resources referenced in this transition report on Form 20-F have been estimated in accordance with the definition standards on mineral resources and mineral reserves of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in NI 43-101. U.S. reporting requirements for disclosure of mineral properties are governed by the SEC Industry Guide 7 ("Guide 7"). NI 43-101 and Guide 7 standards are substantially different. The terms "mineral reserve", "proven mineral reserve" and "probable mineral reserve" are Canadian mining terms as defined in accordance with NI 43-101. These definitions differ from the definitions of "proven (measured) reserves" and "probable (indicated) reserves" in Guide 7. Under Guide 7 standards, a "final" or "bankable" feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.  This transition report on Form 20-F may include the terms "mineral resource," "indicated mineral resource" and "inferred mineral resource". We advise investors that these terms are defined in and required to be disclosed by NI 43-101. However, these terms are not defined terms under Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. "Inferred mineral resources" have a great amount of uncertainty as to their existence and economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable.  Please consult the Corporation's public filings at www.sedar.com and www.sec.gov for further, more detailed information concerning these matters.


|        |                                                                        |     
|------- | ---------------------------------------------------------------------- | ----
|        | TABLE OF CONTENTS                                                      |     
|        |                                                                        |     
|        | PART I                                                                 | Page
|        |                                                                        |     
|ITEM 1  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not amended      |     
|ITEM 2  | OFFER STATISTICS AND EXPECTED TIMETABLE
Not amended                    |     
|ITEM 3  | KEY INFORMATION
Not amended                                            |     
|ITEM 4  | INFORMATION ON THE CORPORATION
Not amended                             |     
|ITEM 5  | OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Not amended               |     
|ITEM 6  | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
Not amended                 |     
|ITEM 7  | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
Not amended          |     
|ITEM 8  | FINANCIAL INFORMATION
Not amended                                      |     
|ITEM 9  | THE OFFER AND LISTING
Not amended                                      |     
|ITEM 10 | ADDITIONAL INFORMATION
Not amended                                     |     
|ITEM 11 | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not amended |     
|ITEM 12 | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not amended     |     




|         |                                                                                          |     
|-------- | ---------------------------------------------------------------------------------------- | ----
|         | TABLE OF CONTENTS                                                                        |     
|         |                                                                                          |     
|         | PART II                                                                                  | Page
|         |                                                                                          |     
|ITEM 13  | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not amended                              |     
|ITEM 14  | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not amended |     
|ITEM 15  | CONTROLS AND PROCEDURES
Not amended                                                      |     
|ITEM 16A | AUDIT COMMITTEE FINANCIAL EXPERT
Not amended                                             |     
|ITEM 16B | CODE OF ETHICS
Not amended                                                               |     
|ITEM 16C | PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not amended                                       |     
|ITEM 16D | EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not amended                    |     
|ITEM 16E | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not amended       |     
|ITEM 16F | CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT                                             | 9   
|ITEM 16G | CORPORATE GOVERNANCE
Not amended                                                         |     




|        |                      |   
|------- | -------------------- | --
|        | PART III             |   
|        |                      |   
|ITEM 17 | FINANCIAL STATEMENTS | 12
|ITEM 18 | FINANCIAL STATEMENTS | 12
|        | Not amended          |   
|ITEM 19 | EXHIBITS             | 13
|        |                      |   

-6- PART I  ITEM 1IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS Not Applicable.  ITEM 2OFFER STATISTICS AND EXPECTED TIMETABLE Not Applicable.  ITEM 3KEY INFORMATION Not Amended  ITEM 4   INFORMATION ON THE CORPORATION  Not Amended  ITEM 5OPERATING AND FINANCIAL REVIEW AND PROSPECTS  Not Amended  ITEM 6   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES  Not Amended  ITEM 7    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS  Not Amended  ITEM 8FINANCIAL INFORMATION  Not Amended  ITEM 9   THE OFFER AND LISTING  Not Amended  ITEM 10ADDITIONAL INFORMATION  Not Amended  ITEM 11QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK  Not Amended  ITEM 12DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES  Not Amended   -7- PART II  ITEM 13DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES  Not Amended  ITEM 14MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERSAND USE OF PROCEEDS  Not Amended  ITEM 15   CONTROLS AND PROCEDURES  Not Amended  ITEM 16AAUDIT COMMITTEE FINANCIAL EXPERT  Not Amended  ITEM 16BCODE OF ETHICS  Not Amended  ITEM 16CPRINCIPAL ACCOUNTANT FEES AND SERVICES  Not Amended  ITEM 16DEXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES  Not applicable  ITEM 16EPURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS  Not applicable  ITEM 16FCHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT Ernst & Young LLP Chartered Accountants (“E&Y”) resigned as the Corporation’s principal accountant effective June 11, 2008. The Audit Committee and the Board of Directors of the Corporation considered and approved the decision to change accountants.  The report of E&Y on the Corporation’s consolidated financial statements for the fiscal year ended December 31, 2007 did not contain an adverse opinion or a disclaimer of opinion. However, E&Y added a paragraph, required by reporting standards in the United States, but not by reporting standards in Canada if the doubts about the Corporation's ability to continue as a going concern is included in the notes to the consolidated financial statements, explaining that the Corporation’s financial statements are affected by conditions and events that cast substantial doubt on its ability to continue as a going concern, such as those described in Note 1 to the Corporation’s consolidated financial statements for the fiscal year ended December 31, 2007.   -8- During the Corporation’s two most recent fiscal years and any subsequent interim period preceding such resignation, there were no disagreements with E&Y on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of E&Y, would have caused it to make reference to the subject matter of the disagreements in connection with its report.  The Board of Directors appointed McGovern, Hurley, Cunningham, LLP Chartered Accountants (“MHC”) to be the Corporation’s principal accountant effective June 11, 2008.  The report of MHC on the Corporation’s consolidated financial statements for the fiscal year ended December 31, 2008 did not contain an adverse opinion or a disclaimer of opinion. However, MHC added a paragraph, required by reporting standards in the United States, but not by reporting standards in Canada if the doubts about the Corporation's ability to continue as a going concern is included in the notes to the consolidated financial statements, explaining that the Corporation’s financial statements are affected by conditions and events that cast substantial doubt on its ability to continue as a going concern, such as those described in Note 1 to the Corporation’s consolidated financial statements for the fiscal year ended December 31, 2008.  During the Corporation’s two most recent fiscal years and any subsequent interim period prior to engaging MHC, the Corporation did not consult MHC regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Corporation’s financial statements, or (ii) any matter that was either the subject of a disagreement or a reportable event as described in Item 16F(a)(1)(v) of Form 20-F.  MHC resigned as the Corporation’s principal accountant on October 20, 2009. The Audit Committee and the Board of Directors of the Corporation considered and approved the decision to change accountants.  During the Corporation’s two most recent fiscal years and any subsequent interim period preceding such resignation, there were no disagreements with MHC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of MHC would have caused it to make reference to the subject matter of the disagreement(s) in connection with its report.  The Corporation engaged Hay & Watson Chartered Accountants (“H&W”) as its principal accountant to audit its financial statements effective October 15, 2009. H&W remains the Corporation’s principal accountant.  During the Corporation’s two most recent fiscal years and any subsequent interim period prior to engaging H&W, the Corporation did not consult H&W regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Corporation’s financial statements, or (ii) any matter that was either the subject of a disagreement or a reportable event as described in Item 16F(a)(1)(v) of Form 20-F.  The Corporation has provided Ernst & Young LLP and McGovern, Hurley, Cunningham, LLP with a copy of its disclosures under Item 16F of this amended transition report on Form 20-F/A-2 (Amendment No. 2). The Corporation has requested that Ernst & Young LLP and McGovern, Hurley, Cunningham, LLP each furnish the Corporation with an updated letter addressed to the Commission stating whether it agrees with the statements made by the Corporation in response to this Item 16F(a) and if not, stating the respects in which it does not agree. The Corporation has filed each letter from Ernst & Young LLP and McGovern, Hurley, Cunningham, LLP as Exhibits 15.1 and 15.2 to this amended transition report on  -9- Form 20-F/A-2 (Amendment No. 2).   ITEM 16G   CORPORATE GOVERNANCE  Not applicable   -10- PART III  ITEM 17FINANCIAL STATEMENTS  The following financial statements are attached and incorporated herein:


|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Description of Statement

Consolidated Balance Sheets for the fiscal years ended December 31, 2009 and 2008
Consolidated Statements of Operations, Consolidated Statements of Cash Flows,
Consolidated Statements of Comprehensive Loss,
Consolidated Statements of Shareholders’ Equity, and
Consolidated Statements of Mineral Property Expenditures
all for the fiscal years ended December 31, 2009, 2008, and 2007
Notes to Consolidated Financial Statements
Management Discussion and Analysis for the year ended December 31, 2009
Schedule II – Valuation Allowance | 

ITEM 18FINANCIAL STATEMENTS  Not Amended   -11- ITEM 19EXHIBITS


|               |                                                                                                                                                 |         
|-------------- | ----------------------------------------------------------------------------------------------------------------------------------------------- | --------
|Exhibit Number | Description                                                                                                                                     | Footnote
|1.1            | Amended Articles of Incorporation effective August 5, 2009                                                                                      | (2)     
|3.1            | Voting Agreements between Geoinformatics shareholders, Geoinformatics Exploration Inc. and Rimfire Minerals Corporation effective June 11, 2009 | (3)     
|4.30           | Management Contract between Equity Exploration Consultants Ltd. and Kiska Metals Corporation effective January 1, 2010                          | (2)     
|4.31           | Line of Credit Agreement between Geologic Resource Partners LLP and Geoinformatics Exploration Inc. effective March 9, 2009.                    | (2)     
|4.32           | Partial Termination Agreement and First Amendment Thereto between
Kennecott Exploration Company and the Corporation effective May 15, 2009      | (2)     
|4.33           | Acquisition Agreement between Geoinformatics Exploration Inc. and Rimfire Minerals Corporation effective June 11, 2009                          | (4)     
|4.34           | Amended Standardization Agreement between Geoinformatics Exploration Inc.
And Kennecott Exploration Company effective June 12, 2009             | (2)     
|8.1            | List of Subsidiary Companies of Kiska Metals Corporation                                                                                        | (2)     
|12.1           | Sarbanes-Oxley Section 302 Certification by Chief Executive Officer                                                                             | (1)     
|12.2           | Sarbanes-Oxley Section 302 Certification by Chief Financial Officer                                                                             | (1)     
|13.1           | Sarbanes-Oxley Section 906 Certification by Chief Executive Officer                                                                             | (1)     
|13.2           | Sarbanes-Oxley Section 906 Certification by Chief Financial Officer                                                                             | (1)     
|15.1           | Updated Letter from former principal accountant Ernst & Young LLP                                                                               | (1)     
|15.2           | Updated Letter from former principal accountant McGovern, Hurley, Cunningham, LLP                                                               | (1)     

(1) Filed as exhibits to this amended transition report on Form 20-F/A-2 for the fiscal year ended December 31, 2009.  (2) Filed as exhibits to the transition report on Form 20-F for the fiscal year ended December 31, 2009 as filed on April 23, 2010.  (3) Filed under cover of Form 6-K on EDGAR effective June 22, 2009.  (4) Filed under cover of Form 6-K on EDGAR effective June 19, 2009.





-12-


KISKA METALS CORPORATION  Schedule II - Valuation Allowance   SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this amended Transition Report on its behalf.   KISKA METALS CORPORATION  By:“Jason S. Weber”Jason S. WeberPresident, CEO & Director  Date: November 21, 2011


|                                            |  |                              |                                             |               |           |                       
|------------------------------------------- |  | ---------------------------- | ------------------------------------------- | ------------- | --------- | ----------------------
|Classification                              |  | Balance at beginning of year | Additions charged to costs and expenses [1] | Deductions[2] | Other[3]  | Balance at end of year
|                                            |  |                              |                                             |               |           |                       
|ValuationAllowance for Deferred Tax Assets: |  |                              |                                            
|Year Ended                                  |  |                              |                                             |               |           |                       
|2009                                        |  | $(14,304,581)                | $(3,847,795)                                | $1,088,589    | $(71,062) | $(17,134,849)         
|2008                                        |  | (10,175,459)                 | (4,470,053)                                 | 1,019,800     | (678,869) | (14,304,581)          

[1] The 2008 and 2009 increases in the valuation allowance for deferred tax assets are related to the tax effect of current period losses and deductible temporary differences. [2] The decrease in valuation allowance for deferred tax assets reflects changes in the enacted tax rate applicable to the Corporation. [3] Other changes reflect the tax effect of fair value of marketable securities.


[ksksecondamendedtransitio001.jpg]   -14-  Kiska Metals Corporation (formerly Geoinformatics Exploration Inc.)   Consolidated Financial Statements Years Ended December 31, 2009, 2008 and 2007  AMENDED AND RESTATED     Amended and Restated KISKA METALS CORPORATION   MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING  The accompanying consolidated financial statements of Kiska Metals Corporation and all information in this annual report are the responsibility of management. The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles and, where appropriate, include management’s best estimates and judgments. Management has reviewed the financial information presented throughout this report and has ensured it is consistent with the consolidated financial statements.  Management maintains a system of internal controls designed to provide reasonable assurance that assets are safeguarded from loss or unauthorized use, and that financial information is timely and reliable.  The Board of Directors is responsible for ensuring that management fulfils its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the consolidated financial statements. The Board carries out this responsibility principally through its Audit Committee.  The Board of Directors appoints the Audit Committee, and all of its members are independent directors. The Audit Committee meets periodically with management and the shareholders’ auditors to review the financial statements and reports prepared by management, internal controls, audit results, accounting policies and related matters. The Board of Directors approves the consolidated financial statements on recommendation from the Audit Committee.  Hay and Watson, a firm of Independent Registered Chartered Accountants, was appointed by the shareholders at the last annual meeting to examine the consolidated financial statements and provide the independent professional opinion which follows. “Jason S. Weber” “Dorothy G. Miller”  Jason S. Weber, P.Geo Dorothy G. Miller President & Chief Executive Officer Chief Financial Officer  November 24, 2010      Suite 575, 510 Burrard St., Vancouver, BC, Canada V6C 3A8 Tel: 604.669.6660 | Fax: 604.669.0898 | www.kiskametals.com   [ksksecondamendedtransitio003.gif]  -16- Amended and Restated REPORT OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS  To the Shareholders of Kiska Metals Corporation We have audited the amended and restated consolidated balance sheet of Kiska Metals Corporation (the “Company”) as at December 31, 2009 and the amended and restated consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows for the year then ended (all expressed in Canadian dollars). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these amended and restated consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2009 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. Our previous report dated March 29, 2010 on the original consolidated financial statements as at and for the year ended December 31, 2009 has been withdrawn as those  financial statements have been revised for the change in the recording of goodwill on the balance sheet arising from the acquisition of Rimfire Minerals Corporation, the recording of mineral property impairment on the statement of operations and the disclosure of differences between generally accepted accounting principles in Canada and the United States.  For further explanation of the revisions, see Note 3 to the amended and restated consolidated financial statements. Canadian generally accepted accounting principles vary in certain significant respects from accounting principles generally accepted in the United States of America. The effect of the application of United States generally accepted accounting principles on the net loss for each year and the total assets and shareholders’ equity at the end of each year in these consolidated financial statements is summarized in Note 19 to the amended and restated consolidated financial statements. The consolidated financial statements as at December 31, 2008 and for the years ended December 31, 2008 and 2007 were, except as to Note 19, audited by other auditors who expressed an opinion without reservation on those statements in their reports dated November 21, 2011.  We have audited the information in Note 19 for the years ended December 31, 2008 and 2007 and, in our opinion, such information is presented fairly in all material respects. “Hay & Watson” Independent Registered Chartered Accountants Vancouver, Canada November 21, 2011  Comment by Independent Registered Chartered Accountants on Canada – United States of America Reporting Difference  The standards of the Public Company Oversight Board (United States) for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the Company's ability to continue as a going concern, such as those  -17- Amended and Restated described in Note 1 to the financial statements. Our report to the shareholders dated November 21, 2011, is expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions in the report of the independent registered chartered accountants when these are adequately disclosed in the financial statements. “Hay & Watson” Independent Registered Chartered Accountants Vancouver, Canada November 21, 2011  [ksksecondamendedtransitio005.gif]   -18- Amended and Restated REPORT OF INDEPENDENT AUDITORS  To the Shareholders of Kiska Metals Corporation (formerly “Geoinformatics Exploration Inc.”)   We have audited the consolidated balance sheet of Kiska Metals Corporation (formerly, “Geoinformatics Exploration Inc.”) (the “Company”) as at December 31, 2008 and the consolidated statements of operations and comprehensive loss, cash flows and shareholders’ equity for the year then ended, excluding Note 19. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.  We conducted our audit in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.  In our opinion, these consolidated financial statements referred to above, excluding Note 19, present fairly, in all material respects, the financial position of the Company as at December 31, 2008 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.  The consolidated financial statements as at December 31, 2007 and for the year then ended were audited by other auditors who expressed an opinion without reservation on those statements in their report dated November 21, 2011.  /s/  McGOVERN, HURLEY, CUNNINGHAM, LLP Chartered Accountants Licensed Public Accountants TORONTO, Canada November 21, 2011   Comments by Auditors for U.S. Readers on Canada – U.S. Reporting Difference  In the United States, reporting standards for auditors require the addition of an explanatory paragraph following the opinion paragraph when the financial statements are affected by conditions and events that cast substantial doubt on the Company’s ability to continue as a going concern, such as those described in Note 1 to the consolidated financial statements. Our report to the Shareholders dated November 21, 2011 is expressed in accordance with Canadian reporting standards which do not permit a reference to such events when they are adequately disclosed in the financial statements.  /s/  McGOVERN, HURLEY, CUNNINGHAM, LLP Chartered Accountants Licensed Public Accountants TORONTO, Canada November 21, 2011   -19-   ERNST & YOUNG Ernst & Young LLP Chartered Accountants  Amended and Restated REPORT OF INDEPENDENT AUDITORS  To the Board of Directors of Kiska Metals Corporation (formerly Geoinformatics Explorations Inc.)   We have audited the consolidated statements of operations and comprehensive loss, statements of shareholders’ equity, and cash flows of Kiska Metals Corporation (the “Company”) for the year ended December 31, 2007, excluding Note 19.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements, excluding Note 19, based on our audit.  We conducted our audit in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  We were not engaged to perform an audit of the Company’s internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.  In our opinion, the consolidated financial statements referred to above, excluding Note 19, present fairly, in all material aspects, the results of the operations and the cash flows of Kiska Metals Corporation for the year ended December 31, 2007 in conformity with Canadian generally accepted accounting principles.  Toronto, Canada  November 21, 2011 “Ernst & Young LLP” Chartered Accountants  Licensed Public Accountants   -20-  ERNST & YOUNG Ernst & Young LLP Chartered Accountants  Amended and Restated Comments by Auditors for U.S. Readers on Canada – U.S. Reporting Difference  In the United States, reporting standards for auditors require the addition of an explanatory paragraph [following the opinion paragraph] when the financial statements are effected by conditions and events that cast substantial doubt of the Company’s ability to continue as a going concern, such as those described in note 1 to the consolidated financial statements.  Our report to the Board of Directors dated November 21, 2011 is expressed in accordance with Canadian reporting standards which do not permit a reference to such events when they are adequately disclosed in the financial statements.      Toronto, Canada  November 21, 2011 “Ernst & Young LLP” Chartered Accountants  Licensed Public Accountants





-21-


Amended and Restated KISKA METALSCORPORATION Consolidated Statements of Operations and Comprehensive Loss Years Ended December 31 (Expressed in Canadian Dollars)  Mineral Property OperationsNote2009
Restated Note 320082007RevenueOption proceeds$           157,951$                       -$                       -Project management fees115,100897,3151,358,045273,051897,3151,358,045ExpensesAcquisition expenditures330,598158,990198,500Exploration expenditures5,853,5377,205,24811,664,530Exploration tax credits(9,798)--Reclamation obligations13355,829--Impairment loss on mineral properties37,817,78814,347,9547,364,23811,863,030Loss from mineral property operations(14,074,903)(6,466,923)(10,504,985)Other OperationsSalaries and employee benefits680,8281,615,6442,549,385Consulting and outsourced services1,073,104507,815940,586Marketing services164,340--General and administrative473,9061,126,2001,736,104Depreciation and amortization240,496251,303211,426Share-based compensation14(b)424,51676,461761,4823,057,1903,577,4236,198,983Operating loss before the following(17,132,093)(10,044,346)(16,703,968)Financing expense10(a)/11(59,660)(3,565,047)(2,359,900)Interest income26,18324,702381,149Equity loss in investment8(1,176,145)(916,181)(217,161)(Loss) gain on sale of investment6(240,285)(3,760)112,619Impairment loss on investment6(130,000)--Loss on disposal of assets(44,026)--Dilution gain8--1,646,124Gain on repayment of convertible loan11-279,859-Foreign exchange gain (loss)1168,760(3,130,547)1,137,511Loss before income taxes(18,687,266)(17,355,320)(16,003,626)Recovery of income taxes152,7631,094,5791,528,991Net loss(18,684,503)(16,260,741)(14,474,635)Unrealized foreign exchange loss on investment-(7,668)(18,538)Realized loss on sale of investment240,285--Impairment loss on available-for-sale investment130,000--Net change in unrealized gains (losses) on available for sale investment52,167(656,525)455,347Tax effect of changes in other comprehensive income (loss)(2,763)19,807(96,014)Comprehensive loss$   (18,264,814)$    (16,905,127)$   (14,133,840)Basic and dilutednetloss per share$              (0.51)$               (1.84)$              (3.73)Basic and diluted weighted average number of shares outstanding during theyear36,876,4918,831,9303,859,409


-22-


Amended and Restated KISKA METALSCORPORATION Consolidated Balance Sheets December 31 (Expressed in Canadian Dollars)  Note2009
Restated Note 32008AssetsCurrent assetsCash and cash equivalents$                 1,071,695$                  762,560Restricted cash5202,70782,228Marketable securities6370,417120,532Amounts receivable51,756258,337Prepaid expenses and deposits152,03869,545Total current assets1,848,6131,293,202Mineral property interests7--Equity investment8-765,747Property, plant and equipment, net9479,282580,811Other assets-5,583Goodwill3--Total Assets$               2,327,895$              2,645,343Liabilities and Shareholders’ EquityAccounts payable and accrued liabilities$241,097$                 416,071Due to related party10(c)11,340225,000Joint venture partner deposits32,314-Current liabilities284,751641,071Reclamation obligations13401,391-Total liabilities686,142641,071Shareholders’ EquityShare capital14(a)65,659,03850,048,042Contributed surplus14(b,c)5,581,4943,290,195Accumulated other comprehensive income (loss)15,443(404,246)Accumulated deficit(69,614,222)(50,929,719)Total shareholders’ equity1,641,7532,004,272Total Liabilities and Shareholders’ Equity$               2,327,895$               2,645,343APPROVED BY THE BOARD“David A. Caulfield”Director“Jason S. Weber”Director  The accompanying notes are an integral part of these consolidated financial statements


-23-


Amended and Restated KISKA METALSCORPORATION Consolidated Statements of Cash Flows Years Ended December 31 (Expressed in Canadian Dollars)  2009Restated Note 320082007Cash Flows Used for Operating ActivitiesNet loss$    (18,684,503)$    (16,260,741)$ (14,474,635)Add (deduct) items not involving cash:Mineral property option proceeds(99,665)--Mineral property acquisition cost156,500--Reclamation obligation expense355,829--Impairment loss on mineral properties7,817,788Depreciation and amortization240,496251,303211,426Dilution gain--(1,646,124)Equity loss in investment1,176,145916,181217,161Financing expense59,6603,427,5701,157,426Foreign exchange loss(68,760)3,313,734-Future income tax recovery(2,763)(1,063,300)(1,528,991)Gain on settlement of convertible loan facility-(279,859)-Loss (gain) on sale of investments and assets284,3113,760(112,619)Impairment loss on available-for-sale investment130,000--Share-based compensation expense544,87176,461761,482(8,090,091)(9,614,891)(15,414,874)Reclassify interest income(26,183)(24,702)(381,149)Net change in non-cash working capital balances related to operations:Amounts receivable258,499569,905(202,308)Prepaid expenses and deposits166,009552,569(468,133)Accounts payable and accrued liabilities(638,934)(1,042,070)311,898(8,330,700)(9,559,189)(16,154,566)Cash FlowsFrom (Used for)Investing ActivitiesRestricted cash(10,923)2,577,9991,637,581Proceeds from sale of marketable securities90,099-59,879Interest income received52,46624,702381,149Purchase of equity investment(410,398)-(59,403)Purchase of property, plant and equipment(85,168)(523,057)(32,595)(363,924)2,079,6441,986,611Cash Flows From(Used for)Financing ActivitiesProceeds from issuance of shares and warrants5,009,74729,430,6753,503,381Payment of share issue costs(438,496)(172,421)(91,896)Proceeds from sale of assets-20,980-Proceeds from note payable / convertible loan1,750,000-23,319,000Cash acquired on acquisition (Note 1)4,463,269--Repayment of note payable / convertible loan(1,821,712)(23,828,000)(9,000,000)Repayment of capital lease obligations-(18,228)(35,075)8,962,8085,433,00617,695,410Effects of foreign currency translation on cash and cash equivalents40,95183,677(2,531,932)


-24-


Amended and Restated KISKA METALSCORPORATION Consolidated Statements of Cash Flows Years Ended December 31 (Expressed in Canadian Dollars)   2009Restated Note 320082007Increase (Decrease)in CashandCash Equivalents309,135(1,962,862)995,523Cash and Cash Equivalents, Beginning of Year762,5602,725,4221,729,899Cash and Cash Equivalents, End of Year$    1,071,695$         762,560$     2,725,422Cash and Cash Equivalentsare comprised of:Cash$571,695$    712,560$    2,725,422Term deposits500,00050,000-$1,071,695$   762,560$    2,725,422Supplemental InformationIncome taxes paid$541$         104,463$         54,253Flow-through penalty tax paid84,067--Interest paid74,65934,502206,670Non-cash transactionsMarketable securities received for mineral property interest option proceeds99,665-220,000Shares issued for fees and interest on convertible loan-1,440,336704,764Shares and options issued for the acquisition of Rimfire Minerals Corporation (Note 1)12,786,175--


-25-


Amended and Restated KISKA METALSCORPORATION Consolidated Statements of Shareholders’ Equity Years Ended December 31 (Expressed in Canadian Dollars)   Note2009Restated Note 320082007Share capital14(a)Balance, beginning of year$   50,048,042$     20,342,562$    17,751,886Issued in satisfaction of convertible loan commitment fee and interest11-1,440,335704,764Issued for corporate acquisition112,412,717--Issued for cash in private placement4,950,00029,328,000-Value attributable to warrants issued in private placement(1,267,650)--Issued upon exercise of stock options/warrants59,747102,6753,503,381Transfer from contributed surplus on exercise of stock options46,80070,19117,764Share issue costs(590,618)(1,235,721)(1,635,233)Balance, end of year65,659,03850,048,04220,342,562Equity component of convertibleloan11Balance, beginning of year-4,523,973-Equity component of convertible loan-(4,523,973)4,523,973Balance, end of year--4,523,973Contributed surplus14(b,c)Balance, beginning of year3,290,1953,283,9262,540,208Options issued for corporate acquisition1373,458--Share-based compensation544,87276,461761,482Transfer to common shares on exercise of options(46,800)(70,192)(17,764)Value attributable to warrants issued in private placement1,267,650--Value attributable to brokers’ warrants issued in private placement152,119--Balance, end of year5,581,4943,290,1953,283,926Accumulated DeficitBalance, beginning of year(50,929,719)(37,313,241)(22,838,606)Impact of repayment of convertible loan11-(2,644,263)-Net loss(18,684,503)(16,260,741)(14,474,635)Balance, end of year(69,614,222)(50,929,719)(37,313,241)Accumulated other comprehensive income(loss)Balance, beginning of year(404,246)240,140(100,655)Unrealized foreign exchange loss on available-for-sale investment-(7,668)(18,538)Realized loss on disposal of available-for-sale investments240,285--Impairment loss on available-for-sale-investments130,000--Net change in unrealized gains (losses) on available-for-sale investments52,167(656,525)455,347Tax effect of changes in other comprehensive income (loss)(2,763)19,807(96,014)Balance, end of year15,443(404,246)240,140Total shareholders’ equity (deficiency)$   1,641,754$    2,004,272$   (8,922,640) The accompanying notes are an integral part of these consolidated financial statements


-26- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    1. ORGANIZATION AND OPERATIONS  These consolidated financial statements have been prepared in accordance with accounting principles generally accepted (“GAAP”) in Canada, which, with respect to the Company, conform in all material respects with accounting principles generally accepted in the United States of America, except as described in Note 19 to the consolidated financial statements.  Operations and Basis of Consolidation Kiska Metals Corporation (formerly Geoinformatics Exploration Inc. or "Geoinformatics”) and its wholly-owned subsidiaries (collectively the “Company” or “Kiska”) is a global resources company which has developed a unique and innovative approach to mineral exploration. Geoinformatics was incorporated on March 21, 1980 under the laws of the Province of British Columbia. On August 29, 1996, Geoinformatics was continued in the Yukon Territory from the Province of British Columbia. On August 5, 2009, the Company completed the 100% acquisition of Rimfire Minerals Corporation (“Rimfire”), and changed its name to Kiska Metals Corporation. As a result of the acquisition, the consolidated statements of operations and comprehensive loss and cash flows for the year ended December 31, 2009 includes the results of operations and cash flows of Geoinformatics until August 5 and the combined entity from August 6 to December 31, 2009. The comparative consolidated annual statements of operations and comprehensive loss and cash flows for the years ended December 31, 2008 and 2007 include only the results of operations and cash flows of Geoinformatics in accordance with generally accepted accounting principles for business combinations.  The Company acquired 100% of Rimfire by issuing 22,365,258 common shares and issuing 1,905,300 options to purchase common shares, for an aggregate fair value of $12,786,175. The fair value of the common shares, amounting to $12,412,717, was based on the bid price of the common shares on the date of acquisition, and the fair value of the options issued, amounting to $373,458, was determined using the Black-Scholes option pricing model using the following weighted average assumptions: volatility of 89%, risk free interest rate of 1.8%, an expected life of 2.7 years, and a dividend yield of 0%.  The Company accounted for this transaction using the acquisition method. The fair value of the net assets acquired was:  Cash and cash equivalents$     4,463,269Amounts receivable51,918Marketable securities162,630Prepaid expenses and deposits358,058Property, plant and equipment104,188Mineral property interests (restated – Note 3)7,974,288Future income tax assets-Goodwill-Accounts payable and accrued liabilities(282,614)Reclamation obligations(45,562)Consideration paid$   12,786,175  -27- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    1. ORGANIZATION AND OPERATIONS (continued)  The fair value of the amounts receivable are equivalent to the gross contractual amounts receivable. Acquisition costs of $633,875 were expensed and included in consulting and outsourced services ($592,743), general and administrative ($39,864) and marketing services ($1,268) in the Consolidated Statement of Operations for the year ended December 31, 2009. Acquisition costs of $18,000 were included in the current year’s share issue costs.  Total revenues of $60,644 and the net loss of $1,578,442 of Rimfire have been included in the consolidated statement of operations and comprehensive loss since the date of acquisition.  Had the acquisition of Rimfire occurred at the beginning of the year, the revenue of the combined entity would have been $301,241 (2008 - $1,146,902) with a net loss of $19,636,744 (2008 - $19,234,879).  The Company is in the development stage as defined by the Canadian Institute of Chartered Accountants (“CICA”) Accounting Guideline 11 - Enterprises in the Development Stage and it is in the process of exploring its mineral properties. As such, the Company has not yet determined whether these properties contain reserves that are economically recoverable. Due to the nature of mineral exploration and the Company’s business strategy, the Company expenses all acquisition and exploration expenditures as incurred until such time as the Company does establish that the property contains such reserves, at which time ongoing exploration and development expenditures will be capitalized. The acquisition of Rimfire resulted in an allocation of $7,974,288 to the fair value of the acquisition costs of the mineral property interests. Subsequent to the acquisition, a re-evaluation of the fair value of the mineral property interests was conducted, and an impairment loss of $7,817,788 was recognized as at September 30, 2009 to reduce the carrying value of the properties acquired to their estimated fair values (Note 3).  The business of mining and exploring for minerals involves a high degree of risk and there can be no assurance that current exploration programs will result in profitable mining operations. Some of the Company’s mineral property interests are located outside of Canada and are subject to the risks associated with foreign investment, including increases in taxes and royalties, renegotiations of contracts, currency exchange fluctuations and political uncertainty. Although the Company has taken steps to verify title to the properties on which it is conducting exploration and in which it has an interest, these procedures do not guarantee the Company’s title. Property title may be subject to unregistered prior agreements and non-compliance with regulatory requirements.   -28- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    1. ORGANIZATION AND OPERATIONS (continued)  The Company’s subsidiaries and their respective jurisdictions consist of the following:


|                                             |                                    |             |             
|-------------------------------------------- | ---------------------------------- | ----------- | ------------
|                                             | Year of incorporation/
acquisition | % Ownership | Jurisdiction
|Geoinformatics Exploration Australia Pty Ltd | 2002                               | 100%        | Australia   
|Rimfire Australia Pty Ltd.                   | 2009                               | 100%        | Australia   
|2012860 Ontario Limited                      | 2002                               | 100%        | Canada      
|Geoinformatics Exploration Canada Limited    | 2005                               | 100%        | Canada      
|Rimfire Minerals Corporation                 | 2009                               | 100%        | Canada      
|Geoinformatics Explorations Ireland Limited  | 2002                               | 100%        | Ireland     
|Minera Geoinformatica S.A de C.V.            | 2004                               | 100%        | Mexico      
|Geoinformatics Alaska Exploration, Inc.      | 2003                               | 100%        | USA         
|GXL USA, Inc.                                | 2007                               | 100%        | USA         
|Rimfire Alaska, Ltd.                         | 2009                               | 100%        | USA         
|Rimfire Nevada Ltd.                          | 2009                               | 100%        | USA         

Going Concern  These consolidated financial statements have been prepared on the basis that the Company is a going concern, which contemplates the realization of its assets and the settlement of its liabilities in the normal course of operations. However, the Company has no significant source of revenue and has experienced recurring losses. The Company’s ability to continue as a going concern is dependent on the Company’s ability to obtain additional debt or equity financing to successfully advance the exploration and development of mineral property interests in its exploration portfolio and to be able to derive material proceeds from the sale or divesture of those properties and/or other assets such as royalty rights and equity interests (see Note 20 Subsequent Events). These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. Such adjustments and classifications could be material.  -29- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    2. SIGNIFICANT ACCOUNTING POLICIES  These consolidated financial statements reflect the following other significant accounting policies:  Foreign Currency Translation The functional currency of the Company is the Canadian dollar. The Company and its subsidiaries operate in Canada, the United States, Mexico, and Australia.  The Company’s subsidiaries are considered integrated foreign operations. Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at exchange rates prevailing at the balance sheet date, and non-monetary assets and liabilities are translated at exchange rates prevailing at the transaction date. Revenue and expense items are translated at exchange rates prevailing at the time of the transaction. Foreign exchange gains and losses are included in operations.  Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions about future events that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from these estimates.  Significant estimates used in these financial statements include, amongst others, estimates of reclamation expense, the recoverability of amounts receivable, the calculation of stock based compensation, the fair value of marketable securities and warrants issued, and the recoverability of property, plant and equipment, goodwill and future income tax assets.  Cash and Cash Equivalents Cash and cash equivalents includes cash and highly-liquid term deposits that are readily convertible to known amounts of cash.  Restricted cash Restricted cash consists of term deposits in favour of regulatory authorities held as site restoration deposits or performance bonds for mineral properties (see Note 5).  Marketable securities Marketable securities consist of investments in common shares of publicly listed companies that are designated as available-for-sale. Unrealized gains and losses related to available-for-sale investments are excluded from operations and are included in Accumulated Other Comprehensive Income (Loss) until such gains and losses are realized or an other-than-temporary decline in value is determined to have occurred.     -30- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    2. SIGNIFICANT ACCOUNTING POLICIES (continued)  Equity investments Investments in shares of incorporated companies in which the Company has significant influence are accounted for using the equity method. Significant influence is the ability to influence the strategic operating, investing and financing policies of the investee, but where control does not exist.  Under the equity method, investments are carried at cost as adjusted for the Company’s proportionate share of the earnings or losses of the investee, less any loss in value of the investment that is other than temporary.  Financial Assets and Financial Liabilities The Company’s financial assets, other than cash and cash equivalents (including restricted cash), and financial liabilities are classified as follows: · Amounts receivable are classified as “loans and receivables”. They are measured at amortized cost. At December 31, 2009 and 2008, the recorded amounts approximate fair value. · Marketable securities are classified as “available for sale”. Available for sale assets and liabilities are measured at fair value with unrealized gains and losses recorded in other comprehensive income (loss) until the instrument is either sold or suffers an impairment that is other than temporary. · Accounts payable, due to related party, and joint venture partner deposits are classified as “other financial liabilities” and are measured at amortized cost. At December 31, 2009 and 2008, the recorded amounts approximate fair value.  Transaction costs directly attributable to the acquisition or issue of a financial asset or financial liability are added to the carrying amount of the financial asset or financial liability, and are amortized to operations using the effective interest rate method.  Mineral Property Interests The Company’s mineral property interests are composed of mineral properties owned by the Company and rights to ownership of mineral properties which the Company can earn through cash or share payments, incurring exploration expenditures and combinations thereof. The Company’s property ownership and rights to property ownership are described in Note 7.   -31- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    2. SIGNIFICANT ACCOUNTING POLICIES (continued)  Mineral Property Interests (continued) The Company accounts for its mineral property interests whereby all acquisition and exploration costs are charged to operations as incurred, and all property sales and option proceeds received are credited to operations. The Company expenses the acquisition costs as there are currently no identifiable mineral reserves on its property interests and, therefore, there is no basis on which to estimate future cash flows for purposes of assessing the recoverability of those costs. When the existence of a mineral reserve on a property has been established, future acquisition, exploration and development costs will be capitalized for that property. After commercial production on a property commences, the net capitalized costs will be charged to future operations using the unit of production method based on estimated recoverable reserves on the property.  Property, Plant and Equipment Property plant and equipment are recorded at cost, and sub-divided into component parts where applicable based on their estimated useful lives. Depreciation is provided at annual rates considered sufficient to amortize the cost of the assets over their estimated useful lives as follows: Appliances3 yearsCamp structures3 yearsComputer software2 yearsComputer equipment3.5 yearsField equipment5 yearsLeasehold improvementsTerm of leaseMobile equipment2.5 yearsNiton Analyzer3.5 yearsOffice equipment and furniture8 years  The Company reviews the carrying values of its property, plant and equipment whenever events or changes in circumstances indicate that their carrying values may exceed their estimated net recoverable amounts determined by reference to estimated future operating results and undiscounted net cash flows. An impairment loss is recognized when the carrying value of those assets is not recoverable and exceeds their fair value.   -32- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    2. SIGNIFICANT ACCOUNTING POLICIES (continued)  Mineral Property Reclamation Obligations The Company recognizes the fair value of a liability for a reclamation obligation on mineral property interests when the obligation is incurred and the fair value can be reasonably estimated. The fair value of the obligation is based on the estimated cash flow required to settle the obligation, discounted using the prime lending rate of the Company’s primary financial institution adjusted for the Company’s credit rating. The fair value of the obligation is recorded as a liability and charged to mineral property expenses. The liability is adjusted for accretion expense representing the increase in the fair value of the obligation due to the passage of time. Changes resulting from revisions to the timing or the amount of the original estimate of undiscounted cash-flows are recognized as an increase or a decrease to the carrying amount of the liability and charged to mineral property expenses. When the existence of a mineral reserve on a property has been established, future reclamation obligation costs will be capitalized to that property.  Flow-Through Shares In prior years the Company financed a portion of its exploration activities through the issuance of flow-through shares pursuant to which the Company renounced the right to claim the exploration expenditures for tax purposes in an amount equal to the gross proceeds of the flow-through share issue, and the tax deductibility of the exploration expenditures was effectively transferred to the investors.  Proceeds received from such issuance have been credited to share capital and the related exploration expenditures are expensed as incurred. The Company records the related future income tax liability as a cost of issuing the flow-through shares to the investors when the flow-through share expenditures are renounced. When the Company has loss carry-forwards and/or deductible temporary differences that it has not recognized in previous years, the Company reverses the valuation allowance against that portion of its unrecognized future tax assets as a recovery of income taxes in the consolidated statements of operations.   -33- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    2. SIGNIFICANT ACCOUNTING POLICIES (continued)  Revenue recognition Revenue is recognized as services are performed and client-reimbursable expenses are incurred in respect of each project. Services performed can take the form of project management and execution or other management services. Option payments are recognized when they become due, pursuant to binding agreements with exploration joint venture partners. In addition to these revenues earned, the Company may become entitled to future revenue streams, under contracts with these partners deriving from:  · net smelter royalties once mining production has commenced or the sale of the rights to these royalties; · free-carried or joint venture interests in projects that become producing mines or the sale of such free-carried or joint venture interests; and · direct equity interests in mining operations or operating companies or the sale of such interests in mineral properties or share interests in operating companies.  Revenue is not recognized in respect of these future potential revenue streams until earned and the Company can reasonably estimate the related amounts.  Exploration Tax Credits The Company may receive refundable exploration tax credits and grants from provincial jurisdictions in Canada equal to a specified rate of qualifying exploration expenditures incurred on mineral property interests located within that jurisdiction. The Company records these exploration tax credits or grants as it incurs the related exploration expenditures.  Share-Based Compensation The Company issues options to purchase shares under the terms of an incentive plan described in Note 13. When options to purchase shares are issued to employees, officers or directors, the fair value of the options on the date of the grant is recognized as compensation expense, with a corresponding increase in contributed surplus, over the period during which the related options vest. The proportion of the share-based compensation attributable to employee activity on each mineral property is charged to exploration expense. When options to purchase shares are issued to non-employees in return for goods and services, the fair value of the options issued is recognized as an expense, with a corresponding increase in contributed surplus, in the period in which the goods or services are received or are expected to be received.  The consideration received on the exercise of share options is credited to share capital. When options are exercised, previously recorded compensation expense is reclassified from contributed surplus to share capital to fully reflect the consideration for the shares issued.   -34- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    2. SIGNIFICANT ACCOUNTING POLICIES (continued)  Income Taxes The Company follows the asset and liability method of accounting for income taxes. Under this method, future income tax assets and liabilities are recorded based on temporary differences between the carrying amount of balance sheet items and their corresponding tax bases. In addition, the future tax benefits of unused tax losses and other deductions carried forward are recognized, subject to a valuation allowance, to the extent that it is more likely than not that such future benefits will ultimately be realized. Future income tax assets and liabilities are measured using enacted or substantively enacted tax rates and laws expected to apply when the tax liabilities or assets are to be either settled or realized.  Loss per Share The basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the year. The diluted loss per share reflects the potential dilution of common share equivalents, such as the outstanding share purchase options and warrants, in the weighted average number of common shares outstanding during the year, if dilutive. For this purpose, the “treasury stock method” is used for the assumed proceeds upon the exercise of share purchase options and warrants that are used to purchase common shares at the average market price during the year. Common share equivalents (Note 14) have been excluded from the computation of the diluted loss per share for the periods presented as including them would have been anti-dilutive. All comparative figures have been reclassified to reflect the changes in the number of common shares outstanding due to share consolidations.  Comprehensive Income (Loss) Comprehensive income (loss) comprises the Company’s net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) represents changes in shareholders’ equity during a period arising from non-owner sources and, for the Company, principally includes unrealized gains and losses on available for sale financial assets, net of income taxes. The Company’s comprehensive income (loss), components of other comprehensive income (loss), and accumulated other comprehensive income (loss) are presented in the Consolidated Statements of Operations and Comprehensive Loss and the Consolidated Statements of Shareholders’ Equity.     -35- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    3. RESTATEMENT  Background  The Company acquired all the outstanding shares of Rimfire Minerals Corporation (“Rimfire”) on August 5, 2009, for the purpose of obtaining:  · sufficient cash to continue and materially advance the exploration of the Whistler Project in Alaska owned by the Company. · an enhanced precious metals portfolio of properties located in stable, mining-friendly jurisdictions; Alaska, Nevada, British Columbia, Yukon, and Australia. · a strong post-acquisition board of directors who have expertise in capital markets and project advancement, and an enhanced management team which is skilled in leveraging the potential of exploration properties through strong project management and strategic partnerships.  At the time of the acquisition, the Company accounted for this transaction as the purchase of assets, allocating the fair value of the consideration (trading shares of the Company) to the assets acquired. When preparing the information circular relating to the acquisition of Rimfire, the Company described the allocation of the estimated fair value of the consideration to the acquired assets of Rimfire as:  Net assets acquired:Cash and cash equivalents$              5,345,582Restricted cash108,406Accounts receivable128,691Marketable securities139,968Prepaid expenses44,937Lease deposits21,234Property and equipment22,600Mineral properties7,146,311Accounts payable and accrued liabilities(518,831)Mineral property reclamation obligations(47,552)Consideration paid$            12,391,346  This allocation was subsequently revised to include the updated information available to the Company at the conclusion of the acquisition. The revised figures were also disclosed in the interim financial statements for the nine months ended September 30, 2009.  Following the completion of the acquisition, the changes planned in the composition of the board of directors and the transfer of the management of the Company to the former management of Rimfire were completed.  -36- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    3. RESTATEMENT (continued)  Background (continued)  The new board and management team conducted a detailed review of the Company’s properties and operations, and concluded that, considering the market conditions for obtaining additional funding at the time of the detailed review and the short and long-term potential of its portfolio of mineral properties, it was prudent to devote the majority of the Company’s existing resources to the development of the Whistler Project.  Based on this evaluation, the new management revised the fair value of the mineral properties acquired, based on expected minimal future expenditures on these properties, to $156,500. The new management consequently reallocated the balance of the acquisition fair value of $7,817,788 previously allocated to the mineral properties, to “Goodwill”, representing the estimated fair value of “a strong post-acquisition board of directors who have expertise in capital markets and project advancement and an enhanced management team which is skilled in leveraging the potential of exploration properties through strong project management and strategic partnerships”.  These revised estimated fair values were used in the preparation of the Company’s amended consolidated financial statements for the nine months ended September 30, 2009 (as amended and filed May 25, 2010) and the year ended December 31, 2009 (filed on April 26, 2010), and the assets acquired were reported therein as:  Cash and cash equivalents$     4,463,269Amounts receivable51,918Marketable securities162,630Prepaid expenses and deposits358,058Property, plant and equipment104,188Mineral property interests156,500Future income tax assets-Goodwill7,817,788Accounts payable and accrued liabilities(282,614)Reclamation obligations(45,562)Consideration paid$   12,786,175  Restatement  Based on further analysis and review conducted after April 26, 2010, the Company has concluded that that the characterization of $7,817,788 as goodwill was inappropriate under Canadian GAAP. The Company has determined that the appropriate method of accounting for the events which occurred after the completion of the acquisition transaction, including the change in the board and management, and the detailed review of the Company’s properties and operations, is on a prospective basis.  -37- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    3. RESTATEMENT (continued)  These consolidated financial statements have therefore been restated to present the $7,817,788, which was previously presented as “Goodwill”, as a cost of the acquired mineral property interests of Rimfire consistent with the allocation previously disclosed in the Company’s information circular prepared in connection with the acquisition. In addition, a subsequent impairment loss of $7,817,788 was recognized on re-evaluation of the fair value of the mineral property interests acquired and was charged to operations. In accordance with the Company’s accounting policy for mineral properties, the other acquisition costs were then expensed in the period in which they were incurred. The previously reported amounts in the consolidated financial statements for the year ended December 31, 2009 have therefore been changed to:  Previously ReportedChangesRestatedConsolidated Statement of Operations and Comprehensive LossImpairment loss recognized on mineral properties$                  -7,817,788$   7,817,788Net loss(10,866,715)(7,817,788)(18,684,503)Comprehensive loss(10,447,026)(7,817,788)(18,264,814)Basic and diluted net loss per share(0.29)(0.22)(0.51)Consolidated Balance SheetGoodwill$      7,817,788$  (7,817,788)$                     -Accumulated deficit(61,796,434)(7,817,788)(69,614,222)Consolidated Statement of Cash FlowsNet loss$  (10,866,715)$  (7,817,788)$ (18,684,503)Impairment loss on mineral properties-7,817,7887,817,788Consolidated Statement of Shareholders’ EquityNet loss$  (10,866,715)$  (7,817,788)$ (18,684,503)Accumulated deficit, end of year(61,796,434)(7,817,788)(69,614,222)  4. NEW ACCOUNTING STANDARDS  Current Accounting Changes  Section 3064 – Goodwill and Intangible Assets The Canadian Institute of Chartered Accountants (“CICA”) has issued Handbook Section 3064, Goodwill and Intangible Assets, which replaced Section 3062, Goodwill and Intangible Assets. The new standard is applicable for interim and annual financial statements relating to fiscal years beginning on or after October 1, 2008. Section 3064 establishes revised standards for the recognition, measurement, presentation and disclosure of goodwill subsequent to its initial recognition, and of intangible assets. Section 3064 also provides guidance for the treatment of preproduction and start-up costs and generally requires that these costs be expensed as incurred. The Company adopted Section 3064 as of January 1, 2009, and its adoption had no impact on the Company’s consolidated financial statements. 4. NEW ACCOUNTING STANDARDS (continued)   -38- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    Current Accounting Changes(continued)  Business Combinations – Section 1582 In January 2009, the CICA issued Handbook Section 1582, Business Combinations, which will provide the Canadian equivalent to International Financial Reporting Standards (“IFRS”) 3, Business Combinations and replace the existing Handbook Section 1581, Business Combinations. The new standard will apply prospectively to business combinations for which the acquisition date is on or after January 1, 2011. Earlier adoption is permitted as of the beginning of a fiscal year, in which case an entity would also be required to early adopt Handbook Section 1601, Consolidated Financial Statements and Handbook Section 1602, Non-controlling Interests. The Company adopted these sections as of January 1, 2009, and accounted for its acquisition of Rimfire in accordance with Section 1582 (Note 1).  Consolidated Financial Statements – Section 1601 In January 2009, the CICA also issued Handbook Section 1601, Consolidated Financial Statements, which establishes standards for the preparation of consolidated financial statements and, along with Section 1602, will replace the existing Handbook Section 1600, Consolidated Financial Statements. The new standard is effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. Earlier adoption is permitted as of the beginning of a fiscal year, in which case an entity would also be required to early adopt Handbook Section 1582, Business Combinations and Handbook Section 1602, Non-Controlling Interests.  The Company adopted these sections as of January 1, 2009, and the adoption of Section 1601 had no impact on the Company’s consolidated financial statements.  Non-Controlling Interests – Section 1602 In January 2009, the CICA also issued Handbook Section 1602, Non-Controlling Interests, which establishes standards for accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. It is equivalent to the corresponding provisions of International Accounting Standard IAS 27, Consolidated and Separate Financial Statements. The new standard is effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. Earlier adoption is permitted as of the beginning of a fiscal year, in which case an entity would also be required to early adopt Handbook Section 1582, Business Combinations and Handbook Section 1601, Consolidated Financial Statements. The Company adopted these sections as of January 1, 2009, and the adoption of Section 1602 had no impact on the Company’s consolidated financial statements.   -39- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    4. NEW ACCOUNTING STANDARDS (continued)  Current Accounting Changes (continued)  Credit Risk and Fair Value of Financial Assets and Financial Liabilities – EIC 173 In January 2009, the Emerging Issues Committee (“EIC”) of the CICA issued Emerging Issues Committee Abstract 173, Credit Risk and the Fair Value of Financial Assets and Financial Liabilitieswhich provides guidance on the implications of credit risk in determining the fair value of an entity’s financial assets and financial liabilities. The guidance clarifies that an entity’s own credit risk and the credit risk of counterparties should be taken into account in determining the fair value of financial assets and financial liabilities, including derivative instruments, for presentation and disclosure purposes.  The Company’s fair value disclosures incorporate this new guidance.  Accounting Changes – Section 1506 In June 2009, the CICA amended Handbook Section 1506 Accounting Changes. The amendment excludes changes in accounting policies upon the complete replacement of an entity’s primary basis of accounting, as will occur when an entity adopts IFRSs for the first time, from the scope of Section 1506.  Financial Instruments - Disclosures – Section 3862 In June 2009, the CICA also amended Handbook Section 3862, Financial Instruments – Disclosures to provide the Canadian equivalent to amendments made to IFRS 7, Financial Instruments: Disclosures. The amendments require enhanced disclosure requirements, which include:  · classifying and disclosing fair value measurements based on a three-level hierarchy · Level 1 – inputs are unadjusted quoted prices in active markets for identical assets or liabilities; · Level 2 – inputs other than quoted prices in Level 1 that are observable for the asset or liability, either directly or indirectly; and · Level 3 – inputs for the asset or liability that are not based on observable market data. · reconciling beginning balances to ending balances for Level 3 measurements · identifying and explaining movements between levels of the fair value hierarchy · providing a maturity analysis for derivative financial liabilities based on how the entity manages liquidity risk, and · disclosing the remaining expected maturities of non-derivative financial liabilities if liquidity risk is managed on that basis.  These amendments are applicable to financial statements for fiscal years ending after September 30, 2009 and comparative information is not required in the year these amendments are first implemented. Applicable disclosures have been included in Note 6 to the consolidated financial statements.   -40- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    4. NEW ACCOUNTING STANDARDS (continued)  Current Accounting Changes (continued)  Equity – Section 3251 In August 2009, the CICA issued amendments to Handbook Section 3251, Equity as a consequence of issuing Section 1602, Non-controlling Interests. The amendments require non-controlling interests to be recognized as a separate component of equity.  The new standard is effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. Earlier adoption is permitted as of the beginning of a fiscal year, in which case an entity would also be required to early adopt Handbook Section 1602, Non-Controlling Interests. The Company adopted these sections as of January 1, 2009, and their adoption had no impact on the Company’s consolidated financial statements.  Financial Instruments – Recognition and Measurement – Section 3855 In August 2009, the CICA also amended Handbook Section 3855, Financial Instruments — Recognition and Measurement, bringing greater consistency between Canadian GAAP, IFRSs and US GAAP on the timing of impairment recognition for debt instruments. Companies that have classified financial assets as held-to-maturity investments are now required to assess those financial assets using the impairment requirements of Handbook Section 3025, Impaired Loans. Section 3025 was consequentially amended to accommodate the changes to Section 3855. The amendments allow more debt instruments to be classified as loans and receivables. This allows those instruments to be evaluated for impairment using Section 3025. In addition, the amendments require reversal of previously recognized impairment losses on available-for-sale financial assets in specified circumstances and require that loans and receivables that an entity intends to sell immediately or in the near term be classified as held for trading.  These amendments did not affect the recognition or measurement of the Company’s financial instruments.  Future Accounting Changes  Convergence with International Financial Reporting Standards In 2006, the Accounting Standards Board of the CICA ratified a strategic plan that will result in Canadian GAAP, as used by public companies, evolving and being converged with International Financial Reporting Standards over a transitional period currently expected to be completed by 2011. The International Accounting Standards Board currently has projects underway that should result in new pronouncements which will be included in the convergence process.  The Company is in the process of completing a detailed assessment of the requirements of the transition to IFRS, with the intention of identifying: (i) the timing of the implementation of the transition, (ii) major differences from existing accounting policies (iii) new accounting policies which are appropriate for the Company, (iv) the appropriate disclosures in financial statements prepared under IFRS and (v) developing an implementation plan.  -41- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    4. NEW ACCOUNTING STANDARDS (continued)  Future Accounting Changes (continued)  Comprehensive Revaluation of Assets and Liabilities – Section 1625 In August 2009, the CICA also amended Handbook Section 1625, Comprehensive Revaluation of Assets and Liabilities for consistency with new Handbook Section 1582, Business Combinations. The amendments require that, when push-down accounting is used following the acquisition of an enterprise, the assets and liabilities are to be measured at the values used in accounting for the purchase transaction or transactions in accordance with Section 1582. The amendments also require that, when a future income tax asset that arose prior to the date of a comprehensive revaluation and that was not recognized in the comprehensive revaluation is subsequently recognized; the benefit should be recognized in accordance with Section 1582 and Handbook Section 3465, Income Taxes.  The amendments apply prospectively to comprehensive revaluations of assets and liabilities occurring in fiscal years beginning on or after January 1, 2011. Early adoption is permitted as of the beginning of a fiscal year. An entity adopting this Section for a fiscal year beginning before January 1, 2011 would also be required to adopt Section 1582.  5. RESTRICTED CASH  Restricted cash of $202,707 (2008 - $82,228) represents project reclamation deposits in favour of regulatory authorities held as site restoration deposits. The amount of the deposit is determined at the time the exploration program is planned and a notice of work is submitted to the regulatory authority. If the work is more extensive than previously planned, the amount of the deposit will be increased. When reclamation work is completed on a project, the deposit is released to the Company.   -42- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    6. MARKETABLE SECURITIES  The following table summarizes the components of available-for-sale financial instruments reported as marketable securities at December 31:  Number of SharesCost2009Fair Value2008Fair ValueAfrican Consolidated Resources plc-$                -$              -$    80,532Arcus Development Group Inc.150,00021,00017,250-Capstone Mining Corporation8,70726,73024,467-Island Arc Exploration Corporation200,00018,00021,000-It's Your Nickel Exploration200,000---Laurion Minerals Exploration Inc.2,000,00090,00090,00040,000Millrock Resources Inc.250,00057,50050,000-Plutonic Power Corporation30,00096,90095,700-Silver Quest Resources Ltd.180,00042,08072,000-Balance$   352,210$370,417$  120,532  African Consolidated Resources shares were sold during the year for gross proceeds of $90,099, on which the Company realized a loss of $240,285. The Company has also recorded an impairment loss in the statement of operations of $130,000 on the Laurion Minerals Exploration Inc. shares as subsequent to the year end they were sold at a loss for gross proceeds of $90,000.  The following table summarizes the classification of the Company’s marketable securities within the fair value hierarchy at December 31, 2009:  Quoted prices in active markets for identical assets (Level 1)Significant other observable inputs (Level 2)Significant unobservable inputs (Level 3)TotalPublic securities$  370,417$                -$               -$     370,417Private security----$  370,417$                -$               -$     370,417  There were no transfers between levels of the fair value hierarchy during the year.   -43- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    6. MARKETABLE SECURITIES(continued)  The aggregate fair value of investments with unrealized losses and the aggregate amount of the unrealized losses are:  Unrealized Loss Position for Less than 12 monthsFair ValueUnrealized LossesPublic securities$    187,417$   (14,713)  There are four investment positions in an unrealized loss position, all of which are publicly traded securities. These investments have been in an unrealized loss position for less than 12 months, and the temporary impairment has been determined to be due to current market conditions and therefore is included in other comprehensive loss  . 7. MINERAL PROPERTY INTERESTS  Some of the property commitments listed below were assumed at the time of the acquisition of Rimfire and relate to prior property option or purchase agreements.  The Company’s commitments to earn or acquire its mineral property interests and commitments by exploration joint venture partners to option mineral property interests from the Company are included in the Company’s Annual Information Form which is filed with regulatory authorities along with these financial statements. Summaries of each property agreement are included below.  British Columbia  Gillis Property The Company signed an option agreement to earn a 100% interest in the Gillis property, subject to a 2% Net Smelter Return (“NSR”), 1.5% of which can be purchased for $1.5 million. The Company is required to complete aggregate exploration expenditures of $300,000, make cash payments of 2.5% of mineral exploration expenditures and other cash payments totaling $165,000 on or before September 5, 2012 and issue 217,500 common shares within 10 days of announcing a National Instrument 43-101 compliant gold resource of at least 435,000 ounces.  RDN Property The Company acquired a 100% interest in the RDN mineral claims, subject to a 1.34% NSR. The Company may purchase one-half of the NSR for $666,666. The Company signed an option agreement with Northgate Minerals Corporation (“Northgate”) which provides that Northgate can earn a 51% interest in the RDN Property on completion of aggregate exploration expenditures of $5,000,000 and cash payments of $200,000. The Company is the project operator until Northgate has earned its 51% interest. Northgate may earn an additional 9% interest by completing a feasibility study and funding all expenditures up to completion of the feasibility study. This agreement was amended to suspend the terms of the option agreement until such time as road access to the RDN property is constructed.  The Company (40%) and Northgate (60%) purchased 100% of the LL property, which is contiguous with the RDN property, for $30,000 cash, subject to an NSR of 2%. This royalty can be purchased at any time for $2,000,000.  Redton Project Under the terms of an option agreement, the Company has an option to fund $4.75 million in exploration expenditures to earn an 85% interest in the Alkali Gold Project (“Redton”) located in British Columbia, with such expenditures to be incurred over the five-year period ending June 3, 2010. As at December 31, 2008, the Company had incurred in excess of $4.75 million in exploration expenditures and earned its 85% interest in Redton. Redton Resources Inc. holds the other 15% interest.  Thorn Property The Company holds a 100% interest in the Thorn mineral property, subject to a 3.5% NSR. The Company can purchase 2% of the NSR for $3,000,000. The Company is required to issue an additional 174,000 shares upon commencement of commercial production from the property. Cangold Limited (“Cangold”) subsequently earned a 51% interest in the Thorn property. The Company signed a purchase agreement to acquire Cangold’s interest in the property by making a cash payment of $100,000 and issuing 100,000 shares. In the event a third party partner becomes involved in the exploration and development of the property, the Company will pay Cangold 25% of any cash or share payments received from the third party partner.  Tide Property The Company purchased the Tide mineral property from Newmont Canada Limited subject to a 1.5% NSR in the event the property becomes commercially feasible to mine. American Creek Resources Ltd. (“American Creek”) has earned a 51% interest in the property subject to a 1% NSR upon their interest in favour of Serengeti Resources Inc. The Company signed a letter of agreement with American Creek for a second option whereby American Creek can earn an additional 9% interest by funding a further $3.5 million in exploration on or before December 31, 2010; an additional 5% interest by funding a bankable feasibility study, and, at the Company’s election, another 5% interest (for a total of 70%) by providing 100% of the initial project development financing. Williams Property The Company acquired a 100% interest in the Williams property, subject to a 1.25% NSR. The Company is required to issue an additional 43,500 common shares upon commencement of commercial production from the property. The Company can purchase 0.75% of the NSR for $1,000,000. Advance royalty payments of $5,000 per year are payable to the underlying vendor.  Yukon  Boulevard Property (Northgate Alliance) The Boulevard Property was staked on behalf of an alliance with Northgate Minerals, who earned a 60% interest in the property. The Company signed an option agreement with Silver Quest Resources Ltd. (“Silver Quest”) whereby Silver Quest can acquire the Company’s 40% interest in the property by making staged cash payments totaling $80,000, issuing an aggregate of 400,000 shares and completing exploration expenditures of $3,000,000 over a five year period. The Company retains a 1% net smelter royalty (“NSR”) on the property, with Silver Quest having the right to buy back 0.5% of the NSR for $375,000. If additional claims are staked within the areas of interest, Silver Quest will issue additional shares and the NSR will be extended to the new claims.  Wernecke Breccia Property The Company signed an agreement with Fronteer Development Group Inc. (“Fronteer”) to acquire 700 mineral claims and a proprietary geoscience dataset covering a large region of the northern Yukon known as the “Wernecke Breccias”, from Newmont Exploration Canada Limited and NVI Mining Ltd., a subsidiary of Breakwater Resources Ltd. Fronteer is the operator of the project and funded 100% of the required $2 million in exploration expenditures to earn an 80% interest, with the Company earning the remaining 20% interest. Newmont and NVI retain a total 2% NSR. There is a 7.5% to 15% Net Profits Interest (“NPI”) payable to the underlying vendors. A Joint Venture has been formed between Fronteer and the Company, and ongoing exploration expenses will be shared pro-rata subject to dilution for non-participation. Should either party’s interest fall below 5%, their interest will be converted to a 3% NPI after payback of capital.  Alaska  Goodpaster Properties The Company signed an option agreement with Rubicon Minerals Corporation (“Rubicon”). The terms of the agreement provide that Rubicon is required to fund a total of USD$4.8 million in exploration expenditures over 6 years to earn a 60% interest in the properties. Upon vesting, Rubicon may acquire a further 10% interest in the properties by completing a feasibility study, and, at the Company’s election, may acquire an additional 5% interest (for a total of 75%) by providing a project financing loan to be repaid from the Company’s free cash flow upon production. Uncle Sam Property On November 2, 2009, the Company signed an option agreement with Millrock Resources Inc. (“Millrock”) giving Millrock the option to earn a 100% interest in the Uncle Sam property in Alaska. Under the terms of the agreement Millrock is required to make cash payments totaling US$200,000 over four years with US$40,000 being paid upon the TSX Venture Exchange’s approval of the agreement. In addition, Millrock is required to issue 1,000,000 shares to Kiska over fours years and has made a commitment to spend US$2,700,000 on exploration over four years. There is an underlying 2% NSR payable to International Royalty Corporation.  Whistler Property Under the terms of a letter agreement dated June 2007 with Kennecott Exploration Company (“Kennecott”), the Company spent a total of US$5.0 million by December 31, 2008 and earned a 100% interest in the Whistler Project subject to a back-in right in favor of Kennecott or a 2% NSR if the back-in right is not exercised. An amendment to the agreement effective June 18, 2009 defines the required program which must be completed prior to Kennecott exercising the back in right. If Kennecott exercises its back-in rights it must refund two times the aggregate of the Company’s exploration expenditures on the property and fund the Whistler exploration through a positive pre-feasibility study to achieve a 51% interest. Kennecott can elect to fund the project through to a positive development decision to earn a 60% interest.  Australia  Lachlan Fold Belt Project The Company signed a farm-in agreement with Inmet Mining (Australia) Pty. Ltd. (“Inmet Australia”) to explore the Barmedman licence. Inmet Australia can earn a 60% interest in the project by funding exploration expenditures of Australian (“A”) $5,000,000 over four years and making cash payments to the Company of A$250,000. The Company will be operator until completion of the option requirements. The property is subject to an underlying agreement which requires payment of fees based on exploration expenditures and includes a 2% NSR.  Victoria Goldfields Effective June 27, 2008, the Company signed a letter of agreement for a farm-in and joint venture with Northgate Australian Ventures (“Northgate Ventures”) for three mining tenements in the Stawell Corridor of the Victoria Goldfields. The Company can earn a 50% interest in one or all of the three properties by funding an additional A$500,000 per property by March 31, 2011 with a minimum expenditure of A$150,000 per property per year.  Upon the Company earning a 50% interest in one or more properties, Northgate Ventures will have the option to earn a 60% interest in the property by funding an additional A$1.5 million in exploration expenditures within 3 years, to form a 50:50 joint venture with the Company or elect not to contribute and allow the Company to earn a 100% interest in the property by funding an additional A$2 million in exploration expenditures over 4 years.  Mexico  At year end, the company held an interest in fifteen projects in Sonora, Durango and Sinaloa States in Mexico. Twelve projects were held in a 60/40 Joint Venture with Azure Minerals Limited (60%). All projects were subject to certain back in rights held by Minera Kennecott Exploration S.A. de C.V. (“MKE”) with the exception of La Noria in Sinaloa State where MKE has relinquished its back in rights and now holds a 2% Net Smelter Royalty. Subsequent to year end, MKE relinquished its back in rights and now holds a 2% Net Smelter Royalty on all projects. At the same time, an agreement was concluded with Azure Minerals Limited terminating the joint venture. The Company retains 100% interest in a total of nine properties, subject to the 2% NSR in favour of MKE, including six of the former joint venture properties.     -44- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    8. EQUITY INVESTMENT  As at December 31, 2009, the Company owned 28,506,883 ordinary shares of Clancy Exploration Limited (“Clancy”), which represents 37.9% of Clancy’s issued and outstanding shares.  On March 9, 2007, Clancy completed a stock split of 100:1, resulting in the Company owning 12,000,000 shares in Clancy, representing 100% of the outstanding shares. On March 7, 2007 and May 8, 2007, Clancy issued 2,600,000 and 800,000 shares, respectively, to Clancy’s then-parent company, Geoinformatics Exploration Australia Pty Ltd ("GEA"), a subsidiary of the Company, in partial satisfaction of an inter-company loan arising from services provided and expenditures incurred from December 1, 2007 to April 30, 2007. On May 8, 2007, Clancy issued 4,600,000 shares to GEA as consideration for the acquisition of a 100% interest in the share capital of Geoinformatics Exploration Tasmania Pty Ltd. (“Tasmania”). On May 8, 2007, Clancy issued 2,643,750 shares to GEA as consideration for the acquisition of 911,250 shares in Bass Metals Limited and an additional 161,756 shares were issued to GEA as consideration for the acquisition of 250,000 unlisted options and 56,250 listed options, in Bass Metals Limited.  On May 22, 2007, Clancy filed its prospectus with the Australian Stock Exchange (“ASX”) for an initial public offering of common shares (“IPO”). Clancy’s shares began trading on the ASX on July 7, 2007 under the trading symbol “CLY”. On the same date, Clancy closed its IPO of 25,000,000 common shares at a price of Australian dollars $0.20 per common share for gross proceeds of A$5,000,000. The Company did not participate in the public offering and as a result its ownership interest decreased from 100% to 47.7%.  Prior to July 1, 2007, the Company consolidated the accounts of Clancy and Tasmania. Effective July 1, 2007, the Company commenced accounting for its investment in Clancy on an equity basis, and as a result, the following assets and liabilities were deconsolidated at that date: cash of A$381,465, current assets of A$41,667 and current liabilities of A$803,736. Following the dilution of the Company’s shareholding interest in Clancy, the Company recognized a dilution gain and equity loss on its investment in Clancy.  During June 2009, Clancy completed a rights offering whereby Clancy ordinary shares were offered at A$0.08 per share (the “Rights Offering”) raising approximately A$1,000,000. Pursuant to the Rights Offering the Company acquired an additional 5,701,377 ordinary shares for a total cash consideration of A$456,110 (C$410,398). In December 2009, Clancy completed a share purchase plan in which the Company did not participate. Including private placements during the year, Clancy issued 14,621,793 shares. As a result the Company’s interest decreased from 47.7% to 37.9%.   -45- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    8.EQUITY INVESTMENT (continued)  For the years ended December 31, 2009, 2008 and 2007, the Company recorded an equity loss on its investment on Clancy as follows:  200920082007Balance,beginning of year$765,747$    1,681,928$        252,965Acquisition of ordinary shares410,398--Dilution gain on issuance of shares by Clancy--1,646,124Equityinloss of Clancy(1,176,145)(916,181)(217,161)Balance,end of year$                       -$       765,747$     1,681,928  For the years ended December 31, the Company had the following transactions with Clancy.  2009A$2008         A$2007   A$Revenue earned from services provided to Clancy$             -$    137,268$   154,746Revenue earned from equipment sold to Clancy1964,246-Expenses paid by the Company on behalf of Clancy--10,000Services purchased from Clancy-6,24015,619Expenses paid by Clancy on behalf of the Company2,60811,3903,310Amounts received from Clancy in settlement of trade and other receivables116158,682-Amounts paid to Clancy on trade and other payables-26,156-Loan repayment by Clancy, on behalf of it’s subsidiary, Geoinformatics Exploration Tasmania Pty Ltd.-1,649-  The average foreign exchange rate for the year ended December 31, 2009 for $1 Canadian dollar was A$1.1003 (2008 –A$1.1269, 2007 - A$1.1160).  The carrying value and market value of the Clancy shares held by the Company and accounted for using the equity basis are as follows:  20092008Investment in Clancy on an equity basis$                          -$               765,747Market value of Clancy shares3,767,8691,169,922   -46- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    9. PROPERTY PLANT AND EQUIPMENT  December 31, 2009CostAccumulated depreciationNet book valueAppliances$          98,094$          (37,593)$          60,501Camp structures286,309(109,937)176,372Computer software36,456(24,103)12,353Computer equipment122,843(87,713)35,130Field equipment73,548(15,249)58,299Leasehold improvements20,502(6,407)14,095Mobile equipment121,821(75,739)46,082Niton Analyzer43,586(20,149)23,437Office equipment and furniture62,124(9,111)53,013$       865,283$        (386,001)$       479,282  December 31, 2008CostAccumulated depreciationNet book valueAppliances$          92,019$          (2,343)$          89,676Camp structures275,097(7,012)268,085Computer software43,039(30,591)12,448Computer equipment480,337(421,530)58,807Field equipment64,361(20,488)43,873Leasehold improvements28,697(25,332)3,365Mobile equipment84,699(40,156)44,542Niton Analyzer43,586(5,732)37,855Office equipment and furniture59,019(36,859)22,160$      1,170,854$        (590,043)$       580,811  10. RELATED PARTY TRANSACTIONS  The following transactions are measured at the exchange amount, which is the amount of the consideration established and agreed to by the related parties.   -47- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    10. RELATED PARTY TRANSACTIONS (continued)  (a) Note Payable On March 9, 2009, the Company announced it had negotiated a line of credit with Geologic Resource Partners LP (“GRP”), a company with directors in common, allowing it to draw down, as necessary, a maximum amount of $2.6 million. The line of credit bore interest at an annual rate of 15%, payable at maturity. On March 27, 2009 and June 8, 2009, the Company drew $1,000,000 and $750,000, respectively, under the line of credit. The entire amount of note payable including accrued interest of $71,712 was repaid on August 5, 2009.  On October 10, 2008, the Company closed a $5.5 million short-term bridge loan (the “Bridge Loan”) with GRP, allowing it to draw down, as necessary, the full amount of the Bridge Loan. The Company had drawn a total of US$2.5 million under the Bridge Loan as at October 10, 2008. GRP is the investment manager for Geologic Resource Opportunities Fund LP and Geologic Resource Fund LP (collectively “GRF”). GRF owned approximately 17% of the outstanding common shares of the Company as at October 10, 2008.  Advances under the Bridge Loan bore interest at a rate equal to 12% per annum. As security for the Bridge Loan, the Company pledged all of the shares of its direct material subsidiary. Advances under the Bridge Loan were used by the Company to fund its exploration activities and for general working capital purposes. On October 17, 2008, the Company closed a private placement with GRF and used a portion of those proceeds to repay the US$2.5 million outstanding balance of the Bridge Loan. The Company incurred a total of $33,014 in interest charges during the term of the Bridge Loan which is included in its statement of operations.  (b) ZED Financial Partners (“ZED”) ZED is a financial advisory firm which provided certain services to the Company and a former director of the Company is a principal of ZED. The Company engaged ZED, commencing April 1, 2006, on a monthly retainer of $13,000 which was terminated October 31, 2007. During the years ended December 31, 2009 and 2008, no amounts were paid to ZED (2007 - $130,000).  (c) Due to related party Some of the Company’s mineral property evaluation and exploration projects are managed by Equity Exploration Consultants Ltd. and Equity Geoscience, Ltd. (collectively “Equity”), companies partially owned (indirectly) by a director of the Company. Balances payable to Equity for fees and reimbursement of costs incurred on behalf of the Company have been separately disclosed as part of “Due to Related Party”. Fees charged to the Company by Equity are on the same basis as those charged by Equity to unrelated third parties. It is anticipated that Equity will continue to provide geological consulting and administrative support services to the Company from time to time, and will be remunerated for such services at the rate charged by Equity to all its customers.   -48- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    10.RELATED PARTY TRANSACTIONS (continued)  (c) Due to related party At December 31, 2009, the Company was indebted to Equity in the amount of $11,340 (2008 - $nil) for project expenses and consulting services provided by Equity to the Company. During the year ended December 31, 2009, the Company paid Equity $54,000 (2008 - $nil, 2007 - $nil) for providing management services, which has been included in consulting and outsourced services on the Statement of Operations and Comprehensive Loss.  Included in due to related party at December 31, 2008 is an amount of $225,000 representing the severance payment due to an officer upon a change of control of the Company.  (d) Mineral property interests One of the directors indirectly owns 11% of a 7.5% to 15% Net Profits Interest (“NPI”) in the Wernecke Breccia property. The claims were originally staked and explored by a company in which he holds an interest. When the property was sold to the Newmont and NVI Mining Ltd, that company retained an NPI of varying amounts depending on the claim group.  (e) Fractal Technologies Pty Ltd. (“Fractal”) Fractal is a wholly-owned subsidiary of Fractal Holdings Pty Ltd., which held a 15.6% interest in Geoinformatics up until June 30, 2007. On June 30, 2007, Fractal Holdings Pty Ltd. distributed its holding of 20 million Geoinformatics common shares to its two shareholders pursuant to a corporate reorganization. The shares were transferred equally to Geocrust Pty Ltd., a corporation controlled by Geoinformatics’ previous Chief Executive Officer and his spouse, and Geo Holdings (IIF) Pty Ltd., a corporation controlled by Foundation IIF Partnership, an Australian venture capital fund.  Fractal is a developer of database software which licenses its commercial software to mining and resource industry users. Geoinformatics entered into a software licensing agreement with Fractal in 2002, under which Geoinformatics was charged a monthly licensing fee of AUD$3,500 by Fractal for use of its software. During the years ended December 31, 2009 and 2008, the Company did not have any transactions with Fractal, other than the payment of the monthly licensing fee, which is no longer considered a related party transaction.  Transactions with Fractal for the six months ended June 30, 2007, the date at which Fractal ceased to be a related party, are summarized as follows:


|                                                          |                  |                  |             
|--------------------------------------------------------- | ---------------- | ---------------- | ------------
|Description of transaction                                | 2009             | 2008             | 2007        
|Software licensing fees incurred by Geoinformatics        | $              - | $              - | $     21,152
|Services provided by Fractal to Geoinformatics            | -                | -                | 1,674       
|Expenses incurred by Geoinformatics reimbursed by Fractal | -                | -                | 6,255       

-49- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    11. CONVERTIBLE LOAN FACILITY  On February 12, 2006, the Company entered into a binding letter agreement with Geologic Resource Fund LP (“GRF”) in which GRF agreed to make available to the Company a US$20 million unsecured convertible loan facility (the “Facility”) in two tranches, subject to certain terms and conditions. On August 29, 2006, the Company and GRF executed formal loan documentation amending and implementing the February 2006 letter agreement, pursuant to which GRF made the Facility available to the Company, on a secured basis.  On January 17, 2007, the Company completed the initial drawdown of US$10 million (Cdn$11,746,000) under the Facility and, on April 3, 2007, the Company completed the second drawdown of US$10 million (Cdn$11,573,000). Advances under the Facility bore interest at 5% per annum payable semi-annually and was convertible into common shares of the Company at the option of GRF at a conversion rate of $0.25 per share until August 28, 2008 and thereafter at a conversion rate of $0.275 per share. The Facility was to mature on August 28, 2009.  The Chief Investment Officer of GRF was a member of the Board of Directors of the Company. GRF owned a 40.4% interest in the Company as at December 31, 2009 (2008 - 84.9%, 2007 – 15.4%).  The Company paid a commitment fee of 5% per annum in respect of the funds available under the second tranche of the Facility from August 29, 2006 until it was drawn upon on April 3, 2007. The Company had the option of paying both interest and the commitment fee on the Facility in either cash or shares with the effective issue price of the shares equal to the average closing price of the Company’s shares for the 20 trading days ending 5 business days prior to such payment date.  On January 16, 2007, the Company issued 39,878 common shares at a price of $5.00 to GRF in satisfaction of a commitment fee of $199,793 for the period August 29, 2006 to December 31, 2006. On August 2, 2007, the Company issued 72,553 common shares at a price of $6.96 to GRF in satisfaction of (i) the commitment fee of $134,270 from January 1, 2007 to the drawdown of the second tranche and (ii) interest of $370,701 for the period January 17, 2007 to June 30, 2007.  On January 16, 2007 and April 3, 2007, the dates of the draw downs of the first and second tranches, respectively, the gross proceeds of US$10 million (Cdn$11,746,000) and US$10 million (Cdn$11,573,000) were allocated to the relative fair values of the loan (US$8,141,300 and US$7,981,192) and the holder’s option to convert the principal balance into common shares (US$1,858,700 and US$2,018,808) (the “Conversion Option”). The US$16,122,492 (Cdn$16,876,642) fair value of the loans was classified as a liability, while the US$3,877,508 (Cdn$4,523,973) allocated to the Conversion Option was classified as a separate component within shareholders’ equity.   -50- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    11. CONVERTIBLE LOAN FACILITY(continued)  On January 28, 2008, the Company issued 112,509 common shares at a price of $4.42 to GRF in satisfaction of accrued interest in the amount of $497,008 for the period July 1, 2007 to December 31, 2007.  Over their term, the loans were accreted to their face value through a periodic charge to accretion expense with a corresponding credit to the liability component. The accretion expense was based on the effective interest rate method.  For the year ended December 31, 2008, the Company recorded accretion expense of $2,465,774 (2007 - $1,157,426) related to the loans, which is included in financing expense.  On October 20, 2008, the Company closed an equity financing and used a portion of the proceeds to repay the outstanding balance of US$20 million under the convertible loan facility. The Company recorded a settlement gain of $279,859 upon repayment and a realized foreign exchange loss of $2,885,734. In addition, the Company issued 1,065,907 common shares to GRF in satisfaction of the interest of $943,327 on the convertible loan facility for the period from January 1, 2008 to October 16, 2008.  12. LEASE OBLIGATIONS  The Company has a sublease, which expires November 30, 2010, for office space occupied by its head office. The Company has made a prepayment of the final two months lease payments. At December 31, 2009, the Company has future minimum annual lease commitments as follows:  December 31, 2010December 31, 2011 and beyondLease payment$    54,603$               -Operating costs (estimate)40,952-Total$   95,555$               -   -51- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    13. RECLAMATION OBLIGATIONS  The Company’s exploration activities are subject to various federal, provincial and state laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company conducts its operations so as to protect public health and the environment, and believes its operations are materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations. Management’s current estimate of reclamation and other future site restoration costs to be incurred for existing mineral property interests has been included in these financial statements as reclamation obligations. The undiscounted amount of the estimated cash flows required to settle the obligations, which are expected to be paid over the next four years, is $392,118.  The discount rate used to determine the present value of the estimated cash flows is 2.25%.  Balance, December 31, 2007 and 2008$                     -Reclamation obligations assumed on acquisition (Note 1)45,562Reclamation obligations recognized355,829Balance, December 31, 2009$         401,391  14. SHARE CAPITAL  (a) Common shares  Authorized: Unlimited common shares without par value Issued and fully paid common shares Number of SharesAmountDecember 31, 20063,789,822$17,751,886Issued in satisfaction of convertible loan interest and commitment fee112,432704,764Issued upon exercise of options including transferfrom contributed surplus3,26734,914Issued upon exercise of flow-through warrants581,0393,486,231Share issue costs-(1,635,233)December 31, 20074,486,56020,342,562Issued for cash on private placement19,552,00029,328,000Issued in satisfaction of interest on convertible loan1,178,4161,440,335Issued upon exercise of options including transferfrom contributed surplus18,300172,866Share issue costs-(1,235,721)December 31, 200825,235,27650,048,042  -52- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    14.SHARE CAPITAL (continued)  (a) Common shares  December 31, 200825,235,27650,048,042Issued for acquisition (Note 1)22,365,25812,412,717Issued for cash on private placement9,000,0004,950,000Allocation to fair value of warrants issued in private placement-(1,267,650)Issued upon exercise of options including transferfrom contributed surplus140,827106,547Share issue costs-(590,618)December 31, 200956,741,361$65,659,038  On December 22, 2008, the Company completed a 1 for 10 stock consolidation which had been approved at a special meeting of shareholders held on October 15, 2008. On August 5, 2009, the Company completed a further 1 for 3 stock consolidation which had been approved at a special meeting of shareholders held on July 30, 2009. All share amounts in these consolidated financial statements have been revised to reflect the effects of the stock consolidations.  On September 16, 2009 the Company closed a private placement upon which it issued 9,000,000 common shares at $0.55 for proceeds of $4,950,000, and granted warrants for the purchase of 4,500,000 common shares at $0.80 per share, expiring on March 16, 2011. The Company also granted broker warrants for the purchase of 540,000 common shares at $0.80 per share, expiring on March 16, 2011.  The Company issues share purchase options to directors, officers and employees of the Company and persons who provide ongoing services to the Company under an incentive stock option plan. The aggregate number of shares of the Company that may be granted pursuant to the Plan is limited to 10% of the issued and outstanding shares of the Company. The Plan is administered by the Board of Directors, which determines individual eligibility under the Plan, the number of shares optioned to each grantee and the vesting period. The exercise price of share purchase options will be no less than the closing price of the shares on the TSX Venture Exchange on the date on which the option is granted. Options will expire no later than five years from the grant date, except that they will expire within thirty days when the holder is no longer qualified to hold the option (other than for cause, when the option will expire immediately). Individual grants vest over two years with one-half vesting immediately, one-quarter vesting on the first anniversary date of the grant and the remaining one-quarter vesting on the second anniversary date. Individual grants of up to 25,000 shares vest immediately.   -53- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    14.SHARE CAPITAL (continued)  (b) Incentive stock options (continued)  Details of outstanding share purchase options are as follows:


| |                                    |                   |                                 |                   |                  |                                
| | ---------------------------------- | ----------------- | ------------------------------- | ----------------- | ---------------- | -------------------------------
| |                                    | December 31, 2009 |                                 | December 31, 2008
| |                                    | Number of shares  | Weighted average exercise price |                   | Number of shares | Weighted average exercise price
| | Outstanding at beginning of year   | 134,808           | $         8.61                  |                   | 337,783          | $         7.47                 
| | Granted                            | 3,353,328         | 0.65                            |                   | 3,600            | 7.50                           
| | Issued on acquisition (Note 1)     | 1,905,300         | 1.51                            |                   | -                | -                              
| | Exercised                          | (140,827)         | 0.42                            |                   | (20,200)         | 6.90                           
| | Expired                            | (169,650)         | 1.33                            |                   | (18,300)         | 5.40                           
| | Forfeit/Cancelled                  | (699,115)         | 1.87                            |                   | (168,075)        | 6.66                           
| | Outstanding at end of year         | 4,383,844         | $         1.06                  |                   | 134,808          | $         8.61                 
| | Options exercisable at end of year | 2,771,982         | $         1.30                  |                   | 125,318          | $          7.32                

The following share purchase options are outstanding at December 31, 2009.


| |                   |                                       |                                       |                 |                                
| | ----------------- | ------------------------------------- | ------------------------------------- | --------------- | -------------------------------
| | Expiry Date       | Options Outstanding(number of shares) | Options Exercisable(number of shares) | Exercise price  | Weighted Average Remaining Life
| | March 10, 2010    | 1,333                                 | 1,333                                 | $          9.30 | 0.19                           
| | December 22, 2010 | 87,000                                | 87,000                                | 1.36            | 0.98                           
| | June 27, 2011     | 7,500                                 | 7,500                                 | 7.50            | 1.49                           
| | July 17, 2011     | 556,800                               | 556,800                               | 1.90            | 1.54                           
| | January 11, 2012  | 100,050                               | 100,050                               | 2.29            | 2.03                           
| | July 16, 2012     | 287,100                               | 287,100                               | 2.24            | 2.54                           
| | August 1, 2012    | 14,331                                | 14,331                                | 6.90            | 2.59                           
| | December 10, 2012 | 208,800                               | 208,800                               | 1.84            | 2.95                           
| | July 16, 2013     | 78,300                                | 78,300                                | 0.98            | 3.54                           
| | December 19, 2013 | 208,800                               | 193,575                               | 0.17            | 3.97                           
| | March 1, 2014     | 130,500                               | 65,250                                | 0.25            | 4.17                           
| | March 19, 2014    | 1,183,330                             | 394,443                               | 0.45            | 4.22                           
| | December 15, 2014 | 1,520,000                             | 777,500                               | 0.90            | 4.96                           
| |                   | 4,383,844                             | 2,771,982                             |                 | 3.81                           

-54- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    14.SHARE CAPITAL (continued)  (b) Incentive stock options (continued)  The weighted average grant-date fair value of share purchase options granted during the year ended December 31, 2009 was $0.41 per share (2008 - $0.37; 2007 - $0.53). The Company determines the fair value of the options for the purposes of determining share-based compensation expense using the Black-Scholes option pricing model and used the following weighted average assumptions:


| |                         |                   |  |                   |  |                  
| | ----------------------- | ----------------- |  | ----------------- |  | -----------------
| |                         | December 31, 2009 |  | December 31, 2008 |  | December 31, 2007
| | Volatility              | 96%               |  | 105%              |  | 78.32% & 105%    
| | Risk-free interest rate | 2.02%             |  | 2.88%             |  | 3.68% & 4.3%     
| | Expected life           | 4.3 years         |  | 5 years           |  | 5 years          
| | Expected dividend yield | -                 |  | -                 |  | -                

The expected life of options is determined using historical records comparing grate date to exercise or forfeiture date for each of the option groups (employees, officers and directors). The volatility is calculated using the closing price of the common shares over the same period as the expected life of the option granted. The risk–free interest rate is determined from the latest zero-coupon yield rate as published by the Bank of Canada for the period which most closely matches the expected life of the option.  The total share-based compensation expense charged against operations for the year ended December 31, 2009 was $544,872 (2008 - $76,461, 2007 - $761,482), of which $120,356 has been allocated to exploration expenditures (2008 - $nil, 2007 - $nil). The total share-based compensation cost related to non-vested awards not yet recognized is $640,616, to be recognized over a weighted-average 1.1 years.   -55- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    14.SHARE CAPITAL (continued)  (c) Warrants  Details of outstanding warrants are as follows:


| |                                  |                   |                                 |                   |                  |                                
| | -------------------------------- | ----------------- | ------------------------------- | ----------------- | ---------------- | -------------------------------
| |                                  | December 31, 2009 |                                 | December 31, 2008
| |                                  | Number of shares  | Weighted average exercise price |                   | Number of shares | Weighted average exercise price
| | Outstanding at beginning of year | -                 | $               -               |                   | -                | $               -              
| | Issued on equity financing       | 5,040,000         | 0.80                            |                   | -                | -                              
| | Exercised                        | -                 | -                               |                   | -                | -                              
| | Expired                          | -                 | -                               |                   | -                | -                              
| | Outstanding at end of year       | 5,040,000         | $        0.80                   |                   | -                | $               -              

The following warrants are outstanding at December 31, 2009.  Number ofIssue PriceSharesPer ShareExpiry DateBroker Warrants540,000$       0.80March 16, 2011Share Purchase Warrant4,500,0000.80March 16, 20115,040,000  15. INCOME TAXES  The Company’s future income tax assets and liabilities are:


| |                                        |                                 |                          |                                 |                          
| | -------------------------------------- | ------------------------------- | ------------------------ | ------------------------------- | -------------------------
| |                                        |                                 | December 31             
| |                                        |                                 | 2009                     |                                 | 2008                     
| | Future income tax assets (liabilities) |                                 |                          |                                
| |                                        | Mineral property interests      | $              2,483,279 |                                 | $                 830,749
| |                                        | Other assets                    | 3,572                    |                                 | 571,067                  
| |                                        | Marketable securities           | 669                      |                                 | 131,196                  
| |                                        | Investments                     | 168,938                  |                                 | (37,183)                 
| |                                        | Tax loss carry-forwards         | 14,478,391               |                                 | 12,808,752               
| |                                        |                                 | 17134,849                |                                 | 14,304,581               
| |                                        | Valuation allowance             | (17,134,849)             |                                 | (14,304,581)             
| | Net future income tax assets           | $                             - |                          | $                             -

-56- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    15.INCOME TAXES(continued)  A reconciliation of the provision for income taxes is as follows:


| |                                                                |                                                             |                                    |                  |             |                      |             |          
| | -------------------------------------------------------------- | ----------------------------------------------------------- | ---------------------------------- | ---------------- | ----------- | -------------------- | ----------- | ---------
| |                                                                |                                                             | Year ended December 31            
| |                                                                |                                                             | 2009                               |                  | 2008        |                      | 2007       
| | Loss before income taxes                                       | $     (18,687,266)                                          |                                    | $   (17,355,320) |             | $    (16,003,626)   
| |                                                                |                                                             |                                    |                  |             |                     
| | Combined Canadian and provincial statutory tax rates           | 30.0%                                                       |                                    | 32.5%            |             | 36.12%              
| |                                                                |                                                             |                                    |                  |             |                     
| | Recovery of income taxes based on combined statutory tax rates | $         5,606,180                                         |                                    | $   5,640,479    |             | $          5,780,510
| |                                                                |                                                             |                                    |                  |             |                      |            
| | Add (deduct):                                                  |                                                             |                                    |                  |             |                     
| |                                                                | Higher (lower) effective tax rates in foreign jurisdictions | 67,116                             |                  | 127,074     |                      | (108,081)  
| |                                                                | Impact of renunciation of flow-through expenditures         |                                    |                  |             |                      | 1,543,338  
| |                                                                | Non-deductible expenses                                     |                                    |                  |             |                      |            
| |                                                                |                                                             | Share-based compensation           | (130,217)        |             | (24,850)             |             | (275,047)
| |                                                                |                                                             | Equity investment dilution gain    | -                |             | -                    |             | 594,580  
| |                                                                |                                                             | Accretion expense                  |                  |             | (801,377)            |             | (418,063)
| |                                                                |                                                             | Mineral property acquisition costs | (2,392,286)      |             | -                    |             | -        
| |                                                                |                                                             | Other                              | (546,570)        |             | 319,594              |             | 90,786   
| |                                                                | Tax effect of current period losses not recognized          | (2,604,223)                        |                  | (4,166,341) |                      | (5,679,032)
| |                                                                | Future income tax asset not previously recognized           | 2,763                              |                  | -           |                      |            
| | Income tax recovery                                            | $                2,763                                      |                                    | $1,094,579       |             | $        1,528,991  

-57- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    15.INCOME TAXES(continued)  At December 31, 2009, the Company has unrecognized losses for income tax purposes of approximately $50,074,000 which may be used to offset taxable incomes of future years. If unused, these losses will expire as follows:  2010$3,304,0002014933,00020152,460,000202310,000202423,0002025177,00020265,323,000202712,217,000202818,122,00020297,505,000$50,074,000  The Company also has unrecognized resource related tax deductions of approximately $8,042,000 available for deduction against future Canadian taxable income, which can be carried forward indefinitely.  In assessing the Company’s ability to utilize future tax assets, management considers whether it is more likely than not that some portion or all of the future tax assets will be realized. The ultimate realization of future tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are or become deductible or during the periods before expiry of the loss carryforwards. Management considers the scheduled reversal of future tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which tax assets are deductible, management currently believes it is more likely than not that the Company will not realize the benefits of the future income tax assets.   -58- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    16. CAPITAL MANAGEMENT  The Company’s objective when managing capital, which is unchanged from prior years, is to safeguard the Company’s ability to continue as a going concern so that it can continue to provide returns to shareholders and benefits for other stakeholders in the development of its mineral properties. The Company considers its capital to include the components of shareholders’ equity.  The Company’s capital structure reflects that of a company focused on mineral exploration and financing both internal and external growth opportunities. The exploration for and development of mineral deposits involves significant risk which even a combination of careful evaluation, experience and knowledge may not adequately mitigate.  The Company manages and adjusts its capital structure when changes to the risk characteristics of the underlying assets or changes in economic conditions occur. To maintain or adjust the capital structure, the Company may issue new shares or acquire or dispose of mineral property interests. The Company is not subject to externally imposed capital requirements.  In order to facilitate the management of its capital requirements, the Company prepares annual expenditure budgets which are revised periodically based on the results of its exploration programs, availability of financing and industry conditions. Annual and materially updated budgets are approved by the Board of Directors.  In order to maximize ongoing development efforts, the Company does not pay out dividends. The Company’s investment policy is to invest any excess cash in liquid short-term interest-bearing instruments with maturities of one year or less. When utilized, these instruments are selected with regard to the expected timing of expenditures from continuing operations.  -59- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    17. RISK MANAGEMENT  The Company’s activities expose it to a variety of financial risks, which include market risk, foreign currency risk, interest rate risk, credit risk and liquidity risk. The Company’s risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial performance.  Market Risk The Company’s financial instruments include marketable securities which are publicly traded and therefore are subject to the market risks that affect all publicly traded securities. Some of these investments are thinly traded which could result in lower quoted market values. The Company monitors the market of these securities and sells appropriate portions of the portfolio when price and market conditions permit. When the value of individual marketable securities is determined to have suffered impairment due to investee circumstances or project developments, the resulting loss is reported in the statement of operations as a loss on marketable securities.  Foreign Currency Risk The Company incurs certain expenses in currencies other than the Canadian dollar which is the functional currency for the Company. The Company is subject to foreign exchange risk as a result of fluctuations in exchange rates. The Company manages this risk by maintaining bank accounts in US Dollars, Australian Dollars and Mexican Pesos related to its United States, Australian and Mexican operations, to pay these foreign currency expenses as they arise. Receipts in foreign currencies are maintained in those currencies. The Company does not undertake currency hedging activities. The Company also does not attempt to hedge the net investment and equity of integrated foreign operations. During the year ended December 31, 2009, as a result of fluctuations of the Canadian dollar, the Company recognized a foreign exchange gain of $68,760 in operations. During the year ended December 31, 2008, the Company recognized a foreign exchange loss of $3,130,547 (2007 – gain of $1,137,511) which was mainly attributable to the US denominated convertible loan facility as described in Note 11.  Interest Rate Risk The Company’s financial instruments may include bankers’ acceptances and treasury bills. These instruments bear a fixed rate of interest and a fixed maturity date of one year or less. If the Company is required to liquidate them prior to the maturity date, there is a risk that interest rates will have increased such that the market value of the instrument is less than the carrying or face value. As at December 31, 2009, the Company did not hold any of this type of financial instrument. The Company maintains term deposits with varying maturity dates to take advantage of changing interest rates and to ensure that sufficient funds are available when required.   -60- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    17.RISK MANAGEMENT (continued)  Credit Risk Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. To reduce credit risk, cash and cash equivalents are on deposit at major financial institutions. Credit risk relating to amounts receivable arises from the possibility that any counterparty to an instrument fails to perform. The majority of the Company’s receivables relate to recoveries of the Goods and Services Tax, and the Company is not aware of any counterparty risk that could have an impact on the fair value of such receivables.  Liquidity Risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. Accounts payable and accruals are due within the current operating period. The Company manages liquidity risk through the management of its capital structure (Note 16).  The Company uses sensitivity analysis to measure the effect on total assets or total receipts of reasonably foreseen changes in interest rates and foreign exchange rates. The analysis is used to determine if these risks are material to the financial position of the Company. On the basis of current market conditions, the Company has determined that a 1% change in interest rates would affect the expected total receipts by 4.6% and a 10% change in foreign exchange rates would affect the fair value of total assets by 4.0%. Actual financial results for the coming year will vary since the balances of financial assets are expected to decline as funds are used for Company expenses.  18. OPERATING SEGMENTS  The Company operates in one industry segment, mineral exploration, within four geographic areas: Canada, United States, Australia, and Mexico. All subsidiaries are operated as one entity with management in common located at the Company’s head office. There is an inactive subsidiary in Ireland.   -61- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    18. OPERATING SEGMENTS (continued)  The following table shows the assets attributable to each geographical area at the balance sheet dates:


|                  |                                    |               |             |            |               |                     |             
|----------------- | ---------------------------------- | ------------- | ----------- | ---------- | ------------- | ------------------- | ------------
|December 31, 2009 | Canada                             | United States | Australia   | Mexico     | Ireland       | Total              
|                  | (Restated – Note 3)                |               |             |            |               | (Restated – Note 3)
|Current Assets    |                                    |               |             |            |               |                    
|                  | Cash and cash equivalents          | $     665,016 | $    51,966 | $  325,760 | $  28,837     | $           116     | $  1,071,695
|                  | Restricted cash                    | 106,346       | 27,500      | 18,882     | -             | 49,979              | 202,707     
|                  | Marketable securities              | 370,417       | -           | -          | -             | -                   | 370,417     
|                  | Amounts receivable                 | 40,116        | 2           | 2,156      | 9,482         | -                   | 51,756      
|                  | Prepaid expenses and deposits      | 78,650        | 69,623      | 3,765      | -             | -                   | 152,038     
|                  | 1,260,545                          | 149,091       | 350,563     | 38,319     | 50,095        | 1,848,613          
|                  |                                    |               |             |            |               |                     |             
|                  | Equity investment                  | -             | -           | -          | -             | -                   | -           
|                  | Property, plant and equipment, net | 116,915       | 341,696     | 1,450      | 19,221        | -                   | 479,282     
|                  | Goodwill                           | -             | -           | -          | -             | -                   | -           
|Total Assets      | $  1,377,459                       | $  490,787    | $  352,013  | $   57,540 | $      50,095 | $  2,327,895       
|                  |                                    |               |             |            |               |                    




|                  |                                    |               |              |             |               |                |              
|----------------- | ---------------------------------- | ------------- | ------------ | ----------- | ------------- | -------------- | -------------
|December 31, 2008 | Canada                             | United States | Australia    | Mexico      | Ireland       | Total         
|Current Assets    |                                    |               |              |             |               |               
|                  | Cash and cash equivalents          | $    603,139  | $      9,651 | $   68,819  | $   33,230    | $       47,721 | $     762,560
|                  | Restricted cash                    | 41,559        | 40,669       | -           | -             | -              | 82,228       
|                  | Marketable securities              | 120,532       | -            | -           | -             | -              | 120,532      
|                  | Amounts receivable                 | 219,527       | -            | 22,304      | 16,506        | -              | 258,337      
|                  | Prepaid expenses and deposits      | 52,606        | -            | 12,771      | 4,168         | -              | 69,545       
|                  | 1,037,363                          | 50,320        | 103,894      | 53,904      | 47,721        | 1,293,202     
|                  |                                    |               |              |             |               |                |              
|                  | Equity investment                  | 765,747       | -            | -           | -             | -              | 765,747      
|                  | Property, plant and equipment, net | 68,423        | 476,169      | 8694        | 27,525        | -              | 580,811      
|                  | Other assets                       | 5,583         | -            | -           | -             | -              | 5,583        
|Total Assets      | $ 1,877,116                        | $  526,489    | $  112,588   | $    81,429 | $      47,721 | $  2,645,343  

-62- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    18. OPERATING SEGMENTS (continued)  Revenues are derived from option receipts and the management of exploration programs for joint venture partners and are allocated to the jurisdiction based on where the underlying agreement and services were delivered. During 2009, four customers individually comprised 37% ($111,956), 33% ($99,871), 19% ($58,080) and 10% (28,566), respectively, of total revenues across all geographic segments. During 2008, four customers individually comprised 33% (300,000), 26% ($236,775), 20% ($182,421) and 13% ($116,229), respectively, of total revenues. During 2007, four customers represented 44% ($596,814), 19% ($262,753), 13% ($182,302) and 12% ($161,720), respectively, of total revenues.   Year endedYear endedYear ended200920082007RevenuesCanada$            170,036$            719,196$               779,115United States99,871--Australia3,144161,239424,516Mexico-16,880104,414Ireland--50,000$            273,051$            897,315$            1,358,045


|                                              |                                                  |                    |                    |                    |           |               |                   
|--------------------------------------------- | ------------------------------------------------ | ------------------ | ------------------ | ------------------ | --------- | ------------- | ------------------
|                                              |                                                  | Canada             | United States      | Australia          | Mexico    | Ireland       | Total             
|                                              |                                                  | (Restated –Note 3) | (Restated –Note 3) | (Restated –Note 3) |           |               | (Restated –Note 3)
|Net Loss for the year ended
December 31, 2009 | $(9,616,209)                                     | $(6,844,866)       | $(1,677,528)       | $(499,080)         | $(46,820) | $(18,684,503)
|Included in Net Loss                          |                                                  |                    |                    |                    |           |              
|                                              | Mineral property revenue                         | 170,036            | 99,871             | 3,144              | -         | -             | 273,051           
|                                              | Mineral property expenditure                     | (5,825,476)        | (6,361,696)        | (1,813,376)        | (347,406) | -             | (14,347,954)      
|                                              | Interest income                                  | 23,308             | 259                | 2,585              | 31        | -             | 26,183            
|                                              | Loss on sale of marketable securities            | (240,285)          | -                  | -                  | -         | -             | (240,285)         
|                                              | Impairment loss on available for sale investment | (130,000)          | -                  | -                  | -         | -             | (130,000)         
|                                              | Future income tax recovery                       | 2,763              | -                  | -                  | -         | -             | 2,763             
|                                              | Equity loss in investment                        | (1,176,145)        | -                  | -                  | -         | -             | (1,176,145)       
|                                              | Depreciation and amortization                    | (25,809)           | (190,900)          | (15,021)           | (8,766)   | -             | (240,496)         
|                                              | Share-based compensation                         | (397,273)          | -                  | -                  | (27,243)  | -             | (424,516)         
|                                              | Foreign exchange gain/(loss)                     | 70,691             | (1,015)            | -                  | (916)     | -             | 68,760            

-63- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    18. OPERATING SEGMENTS (continued)


|                                              |                                       |              |               |              |             |                |            
|--------------------------------------------- | ------------------------------------- | ------------ | ------------- | ------------ | ----------- | -------------- | -----------
|                                              |                                       | Canada       | United States | Australia    | Mexico      | Ireland        | Total      
|                                              |                                       |              |               |              |             |                |            
|Net Loss for the year ended
December 31, 2008 | $ (8,561,353)                         | $(4,394,496) | $ (1,819,236) | $(1,440,493) | $(45,163)   | $ (16,260,741)
|Included in Net Loss                          |                                       |              |               |              |             |               
|                                              | Mineral property revenue              | 719,196      | -             | 161,239      | 16,880      | -              | 897,315    
|                                              | Mineral property expenditure          | (1,906,110)  | (4,407,266)   | -            | (1,050,862) | -              | (7,364,238)
|                                              | Interest income                       | 23,087       | 548           | 1,067        | -           | -              | 24,702     
|                                              | Loss on sale of marketable securities | (3,760)      | -             | -            | -           | -              | (3,760)    
|                                              | Future income tax recovery            | 1,094,579    | -             | -            | -           | -              | 1,094,579  
|                                              | Equity loss in investment             | (180,726)    | -             | (735,455)    | -           | -              | (916,181)  
|                                              | Financing expense                     | (3,565,047)  | -             | -            | -           | -              | (3,565,047)
|                                              | Gain on repayment of convertible loan | 279,859      | -             | -            | -           | -              | 279,859    
|                                              | Depreciation and amortization         | (55,939)     | (17,579)      | (159,596)    | (18,189)    | -              | (251,303)  
|                                              | Share-based compensation              | (76,461)     | -             | -            | -           | -              | (76,461)   
|                                              | Foreign exchange gain/(loss)          | (3,406,389)  | 12,951        | 225,348      | 30,023      | 7,520          | (3,130,547)




|                                              |                                       |              |               |              |             |                |             
|--------------------------------------------- | ------------------------------------- | ------------ | ------------- | ------------ | ----------- | -------------- | ------------
|                                              |                                       | Canada       | United States | Australia    | Mexico      | Ireland        | Total       
|                                              |                                       |              |               |              |             |                |             
|Net Loss for the year ended
December 31, 2007 | $ (5,844,463)                         | $(4,893,561) | $ (1,104,695) | $(2,660,184) | $  28,268   | $ (14,474,635)
|Included in Net Loss                          |                                       |              |               |              |             |               
|                                              | Mineral property revenue              | 779,115      | -             | 424,516      | 104,414     | 50,000         | 1,358,045   
|                                              | Mineral property expenditure          | (4,276,852)  | (4938,434)    | (412,424)    | (2,235,320) | -              | (11,863,030)
|                                              | Interest income                       | 380,870      | -             | 279          | -           | -              | 381,149     
|                                              | Loss on sale of marketable securities | -            | -             | 112,619      | -           | -              | 112,619     
|                                              | Future income tax recovery            | 1,583,244    | -             | (54,253)     | -           | -              | 1,528,991   
|                                              | Equity loss in investment             | -            | -             | (217,161)    | -           | -              | (217,161)   
|                                              | Financing expense                     | (2,353,130)  | -             | (6,770)      | -           | -              | (2,359,900) 
|                                              | Dilution gain                         | -            | -             | 1,646,124    | -           | -              | 1,646,124   
|                                              | Depreciation and amortization         | (59,759)     | (387)         | (134,991)    | (16,289)    | -              | (211,426)   
|                                              | Share-based compensation              | (761,482)    | -             | -            | -           | -              | (761,482)   
|                                              | Foreign exchange gain/(loss)          | 767,576      | 295,951       | 53,551       | 22,478      | (2,044)        | 1,137,511   

-64- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    19. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES INCANADAAND THE UNITED STATES  These financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) which, with respect to the Company, differ in certain material respects from United States generally accepted accounting principles (“U.S. GAAP”).  The Financial Accounting Standards Board (FASB) has published the Accounting Standards Codification ("ASC") as the sole source of authoritative non-governmental U.S. GAAP.  The references to the standards reflect the new ASC, which is not intended to change U.S. GAAP but rather reorganize existing guidance by accounting topic to allow easier identification of applicable standards.  The following discussion focuses on material differences between Canadian GAAP and US GAAP which affect presentation of financial Information for the Company. The following tables summarize the differences in the consolidated statements of operations and the consolidated balance sheets:  Consolidated Statements of Operations200920082007(Restated –Note 3)Net loss under Canadian GAAP$   (18,684,503)$   (16,260,741)$ (14,474,635)Mineral property acquisition costs330,598158,990198,500Impairment of mineral property acquisition costs(98,221)--Net mineral property interest acquisition costs (a)232,377158,990198,500Equity loss in investment (a)274,750--Future income tax recovery (b)-(1,063,300)(1,543,338)Deferred tax benefit (b)-52,29347,476507,127(852,017)(1,297,362Net loss under U.S. GAAP$(18,177,376)$   (17,112,758)$ (15,771,997)Basic and diluted loss per share under U.S. GAAP$(0.49)$              (1.94)$             (4.09)Comprehensive loss under Canadian GAAP$   (18,264,814)$   (16,905,127)$ (14,133,840)Net adjustments to consolidated statements of operations per above507,127(852,017)(1,297,362)Comprehensive loss under U.S. GAAP$   (17,757,687)$   (17,757,144)$  (15,431,202)  -65- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    19.DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTINGPRINCIPLES INCANADAAND THE UNITED STATES (continued)  Consolidated Balance Sheets2009Canadian GAAPAdjustmentsU.S. GAAP(Restated – Note 3)Mineral property interests (a)$                       -$       884,973$         884,973Equity investment (a)-274,750274,750Share capital (b)65,659,0382,895,51668,554,554Deficit (a,b)(69,614,222)(1,735,793)(71,350,015)2008Mineral property interests (a)$                       -$     652,596$         652,596Share capital (b)50,048,0422,895,51652,943,558Deficit (a,b)(50,929,719)(2,242,920)(53,172,639)  Consolidated Statements of Cash Flows200920082007Cash Flows Used for Operating Activities under Canadian GAAP$  (8,330,700)$  (9,559,189)$  (16,154,566)Net mineral property interest acquisition costs (a)232,377158,990198,500Cash Flows Used for Operating Activities under U.S. GAAP$  (8,098,327)$  (9,400,199)$  (15,956,066)Cash Flows Used for Investing Activities
under Canadian GAAP$     (363,924)$    2,079,644$      1,986,611Net adjustments to consolidated statements of operations(232,377)(158,990)(198,500)Cash Flows Used for Investing Activities
under U.S. GAAP$(596,301)$    1,920,654$     1,788,111   -66- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    19.DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTINGPRINCIPLES INCANADAAND THE UNITED STATES (continued)  (a) Acquisition costs of mineral property interests The Company's accounting policy under Canadian GAAP is to expense the acquisition of mineral properties as incurred until there are identifiable reserves on a property, when they will be capitalized and amortized over production from the property. With the introduction of Emerging Issues Task Force (“EITF”) Abstract 04-2, effective April 30, 2004, now contained within ASC 930-805, mineral property acquisition costs are capitalized under U.S. GAAP, unless there is evidence that they are impaired and not recoverable, when they are written off. This difference has also been reflected in the equity loss in investment, as Clancy also expenses the acquisition costs of mineral property interests.  (b) Flow-through shares Under Canadian income tax legislation, the Company is permitted to issue shares whereby the Company agrees to incur qualifying expenditures and renounce the related income tax deductions to the investors. Under Canadian GAAP, the Company has recorded the full amount of the proceeds received on issuance as share capital.  Upon renouncing the income tax deductions, share capital is reduced by the amount of the future income tax benefits recognized.  Under U.S. GAAP, the recognition of this future income tax benefit is limited to the extent that the issue price of the flow-through shares exceeds the fair value of the Company’s shares on the date that the flow-through shares are sold.  Impact of recently adopted United States accounting pronouncements:  ASC 805 Business Combinations (FAS141R)  This standard establishes principles and requirements for how the acquirer (1) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree, (2) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and (3) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.  This standard is to be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first reporting period after December 15, 2008.  This standard is consistent with the CICA Handbook Section 1582, Business Combinations, which the Company adopted during the year.   -67- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    19.DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTINGPRINCIPLES INCANADAAND THE UNITED STATES (continued)  ASC 815 Derivatives and Hedging (FAS161)  This standard was issued in March 2008 and is effective for financial statements issued for fiscal years beginning after November 15, 2008, with early adoption encouraged.  The intent is to improve financial instruments standards for derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. Since the Company does not apply hedge accounting and has no derivatives, the adoption of this standard has no material impact on the Company’s financial statement presentation.  ASC 855 Subsequent Events (FAS165)  The standard sets out the period after the balance sheet date during which management should evaluate events that occur for potential recognition or disclosure in the financial statements. An entity should apply the requirements of this statement to interim and annual financial periods ending after June 15, 2009. The adoption of this standard has no material impact on the Company’s financial statement presentation.  AccountingStandardsUpdates("ASU")  ASU2010-06 Fair Value Measurements and Disclosures  The new disclosure requirements regarding inputs and valuation techniques for Level 2 fair value measurements are effective for interim and annual reporting periods beginning after December 15, 2009, and are consistent with IFRS 7 Financial Instruments: Disclosures. The Company uses Level 1 inputs (Quoted prices in active market) for determination of fair value of available-for-sale securities. The Company uses Level 2 inputs (significant observable inputs) to estimate the fair value of incentive stock options when determining compensation expense to be recognized. It is not anticipated that there will be a change in the nature of inputs or in the valuation techniques applied so there will be no material impact on the Company's financial statements. The Company is assessing the required disclosure to prepare for implementation for the first interim period of the fiscal year ending December 31, 2010.  ASU2010-02 Consolidation  This standard update addresses recognition of changes in a parent’s ownership interest in a subsidiary and is effective for interim and annual reporting periods beginning after December 15, 2009. The standard requires that all changes which occur while the parent retains its controlling financial interest in the subsidiary shall be accounted for as equity transactions with no gain or loss recognized in either consolidated net income or comprehensive income. The Company is assessing the impact of this update on the financial statements.  -68- KISKA METALS CORPORATION  Notes to the Consolidated Financial Statements December 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    20. COMPARATIVE AMOUNTS  The comparative amounts have been reclassified where necessary to conform to the presentation used in the current year.  21. SUBSEQUENT EVENTS  On February 22, 2010, the Company announced a non-brokered private placement of up to 9,000,000 units at a price of $0.66 per unit, for gross proceeds of up to $5.94 million. Each unit will consist of one common share and one-half of one non-transferable share purchase warrant. Each whole warrant entitles the holder to purchase, for a period of one year from the closing of the private placement (the "Closing"), one common share at a price of $0.92 per share. The warrants will contain a provision that will enable the Company to force exercise of the warrants if, during the term of any unexercised warrant commencing four months after the Closing, the common shares of the Company trade on any exchange for a period of 20 consecutive trading days at a price of $1.40 per share or greater. The funds raised will be used to further exploration of the Whistler Project and for general corporate purposes.  The first tranche of the placement closed on March 2, 2010. There were 6,720,000 common shares issued and 3,360,000 share purchase warrants, each of which permits the holder to purchase one common share at $0.92 before March 2, 2011. The shares are subject to a four-month hold period expiring on July 3, 2010. In addition, a cash commission of $114,840 was paid and 24,000 broker warrants were issued. The broker warrants have the same exercise provisions as the share purchase warrants. The value ascribed to the broker warrants in this tranche was $5,309 which was charged against share issue costs. Net cash proceeds from this placement were $4,320,360.  The second tranche of the placement closed on March 11, 2010. There were 2,372,500 common shares issued and 1,186,250 share purchase warrants, each of which permits the holder to purchase one common share at $0.92 before March 11, 2011. The shares are subject to a four-month hold period expiring on July 12, 2010. In addition, a cash commission of $73,458 was paid and 111,300 broker warrants were issued. The broker warrants have the same exercise provisions as the share purchase warrants. The value ascribed to the broker warrants in this tranche was $28,415 which was charged against share issue costs. The net cash proceeds from this placement were $1,492,392.





-69-


70  KISKA METALS CORPORATION  (formerly Geoinformatics Exploration Inc.)   Management’s Discussion and Analysis of Financial Results  AMENDED AND RESTATED  For the year ended December 31, 2009        70   KISKA METALS CORPORATION (formerly GEOINFORMATICS EXPLORATION INC.) MANAGEMENT’S DISCUSSION AND ANALYSIS For the year ended December 31, 2009  This Management’s Discussion and Analysis (“MD&A”) of financial position and results of Kiska Metals Corporation (formerly Geoinformatics Exploration Inc.) (the “Company” or “Kiska”) was revised subsequent to year end to conform to the restated audited consolidated financial statements and related notes for the year ended December 31, 2009. Refer to Note 3 in the financial statements for details of the restatement.  The Company re-evaluated the allocation of part of the purchase price for the acquisition of Rimfire Minerals Corporation to goodwill  The principal changes are to recognize an impairment loss of $7,817,788 as at September 30, 2009 to reduce the carrying value of the properties acquired as part of the acquisition of Rimfire Minerals Corporation to their estimated fair values. This resulted in an increase in the net loss for the year ended December 31, 2009 and for the quarter ended September 30, 2009. Reclassifications have been made to the consolidated balance sheets as at December 31, 2009 and the consolidated statements of operations and cash flows for the year ended December 31, 2009. Other information, not affected by the restatement, has not been updated.  This MD&A has been prepared based on information available to the Company April 10, 2010 and should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the year ended December 31, 2009. Readers are cautioned that the MD&A contains forward-looking statements and that actual events may vary from management’s expectations. Readers are encouraged to read the Forward Looking Statement included with this MD&A The consolidated financial statements and MD&A are presented in Canadian dollars and have been prepared in accordance with Canadian generally accepted accounting principles (‘‘CDN GAAP’’).  About Kiska  Kiska is a mineral exploration company with a large portfolio of assets anchored by the Whistler Project, a multi-million ounce gold resource in Alaska. In addition to Alaska, the Company has additional properties in British Columbia, Mexico and Australia. The Company strives for the highest technical expertise in exploration combining an innovative targeting approach developed by the Company since inception with more traditional exploration methods. One of the unique aspects of the Company’s approach is the use of probabilistic models to rank potential exploration drill targets. Kiska is listed on the TSX Venture Exchange, trading under the symbol KSK.  Over the past five years, the Company has evolved from a technology service company to a pure exploration company through its alliances with strategic partners within the mining and exploration industry. Over the past several years, the Company has acquired a large portfolio of exploration projects from its own exploration activities and under the Master Strategic Alliance Agreement (“MSAA”) with Kennecott Exploration Company (“Kennecott”).   Effective August 5, 2009, Kiska acquired all of the outstanding shares of Rimfire Minerals Corporation (“Rimfire”). Under the agreement, the Company completed a 3 for 1 share consolidation and name change from Geoinformatics Exploration Inc. to Kiska Metals Corporation. The Company then acquired all of the issued and outstanding shares of Rimfire at an agreed exchange ratio of 0.87 Kiska shares for each Rimfire share. The transaction was completed by way of a statutory plan of arrangement following the approval of shareholders from Kiska and Rimfire. The shareholder meetings were held on July 30, 2009 with shareholders of each company voting overwhelmingly to approve the Transaction. Rimfire management and staff have been integrated into the Company. The Company expects there will be synergies in exploration in those areas where Geoinformatics and Rimfire were both active, and a reduction of overhead costs.  1.2  Overview  During the first half of 2009, the Company focused on corporate opportunities in order to secure future funding for the Company to ensure the advancement of its key projects. Following the acquisition of Rimfire, Toronto office functions were moved to a combined Kiska-Rimfire office in Vancouver under the direction of the newly appointed management team. This consolidation has resulted in significant savings and efficiencies. This trend is expected to continue in future months.  Kiska’s technical staff has examined each project in the combined portfolio to determine the best way to derive value from the portfolio of exploration properties. Shareholder value will be optimized through strategic partnerships, option/joint ventures and property dispositions. The final decision on most of the projects depends on results of data compilation from site visits and technical reviews. During the fourth quarter, the Company entered into discussions with potential joint venture partners for some of the properties and prepared plans for advancing other projects.  During the summer of 2009, the Company commenced an exploration program on the Whistler project located approximately 160 kilometres northwest of Anchorage. The exploration program consisted of 275 line-kilometres of Induced Polarization (IP) geophysical surveys of which 235 line-kilometres being carried out in a three-dimensional array. In conjunction with the geophysical surveys, surface geological mapping and sampling of the grid were completed. Additional targets on the property were evaluated to define drill targets. The first phase of a helicopter supported drill program was completed and the second phase commenced in March 2010. This drill program will test a combination of geophysical targets defined by the IP survey and targets defined by the surface work program and earlier drill program.  On September 16, 2009, the Company completed a brokered private placement consisting of 9,000,000 units at $0.55 for gross proceeds of $4,950,000. Each unit consisted of one common share and one half of one non-transferable share purchase warrant. Each whole warrant entitles the holder to purchase one common share at a price of $0.80 per share until March 16, 2011. The terms of the warrants provide that if, during the term of any unexercised warrant commencing on January 17, 2010, the closing price of the common shares of the Company on any exchange is greater than $1.10 for a period of 20 consecutive trading days the Company may, at its option and by notice in writing to each holder, require the holder of the warrant to exercise such warrant within 30 days, failing which the warrant will be deemed to have expired. The units issued under the offering are subject to a four-month hold period expiring on January 17, 2010.  The funds from this placement will be utilized to continue the exploration of the Whistler project and for general corporate purposes.  1.3  Selected Annual Performance  2009
(restated)20082007Mineral Property Revenues$  273,051$    897,315$    1,358,045Net Income (Loss)(18,684,503)(16,260,741)(14,474,635)Per Share(0.51)(1.84)(3.73)Total assets2,327,8952,645,3439,655,372Long-Term Liabilities401,391-16,914,189Shareholder’s Equity (deficit)1,641,7532,004,272(8,922,640)Cash dividends declaredNILNILNIL  Restatement  Based on further analysis and review subsequent to April 26, 2010, the Company has concluded that that the characterization of $7,817,788 as goodwill was inappropriate under Canadian GAAP. The Company has determined that the appropriate method of accounting for the events which occurred after the completion of the acquisition transaction, including the change in the board and management, and the detailed review of the Company’s properties and operations, is on a prospective basis. The consolidated financial statements have therefore been restated to present the $7,817,788, that was previously presented as “Goodwill”, as a cost of the acquired mineral properties of Rimfire Minerals Corporation consistent with the allocation disclosed in the information circular. In accordance with the Company’s accounting policy for mineral properties, these costs were then expensed in the period in which they were incurred.  1.4  Results of Operations Exploration Projects Alaska Whistler Project  As part of the amended Kennecott Agreement negotiated in June 2009, the Company agreed to complete a specified work program with defined amounts of geophysics and drilling on several targets within the Whistler project area. Once the full program is completed, Kennecott will decide whether to exercise its right to back in or relinquish back-in rights and revert to a royalty. The program will consist of:  - Up to 341 line kilometers of 2D and 3D Induced Polarization geophysics on regional targets. - Drilling of a minimum of 20 holes with a minimum depth of 200m per hole, for at least 7000m in aggregate.  The work program will be supervised by a technical committee comprised of two geoscientists from each of Kiska and Kennecott.  Upon completion of the program and presentation of a report, Kennecott must either elect to: Within 90 days, relinquish its back-in right and revert to a 2% NSR, or - Within 90 days, exercise its back-in right on the project to earn an initial 51% interest by refunding two times Geoinformatics' total qualifying exploration expenditures. Kennecott may then elect to increase its interest to 60% by funding all programs and budgets until the project reaches a development decision, or - Within 30 days, agree to fund a supplemental exploration drill program. Within 30 days of receiving the results from the completed supplemental program, Kennecott must make a final decision on whether to exercise or relinquish its back-in rights as described above. If Kennecott elects to back in after the supplemental program, Kennecott can offset the costs of the supplemental program to a maximum of 6% of two times Geoinformatics' total exploration costs. The supplemental program shall not exceed 180 days.  On August 6, 2009 Kiska commenced a regional Induced Polarization (IP) geophysical survey totaling 341 line kilometres. The program involved geophysical crews from Aurora Geosciences (Alaska) Ltd. of Anchorage and SJ Geophysics of Vancouver and used a combination of 2D and 3D IP techniques. The 2D portion of the IP survey was completed on September 24th 2009. The 3D portion of the survey was approximately 78% complete in early November when it was terminated due to frozen ground conditions. The survey will be used to further refine targets in thin gravel-covered areas to prioritize targets for drilling as part of agreed program during 2010.  A five hole diamond drill program totaling approximately 1500 metres was completed at Whistler during the third quarter as part of the agreed program. Five targets were tested. Alaska Whistler Project (continued)  · Lightning - outcropping quartz veins hosted by diorite porphyry located approximately 0.9 kilometers southwest of the Whistler Deposit. No significant results were returned from this hole (WH09-001). · Raintree West - follow-up on the 2008 discovery where the only hole to-date returned 160 metres averaging 0.59g/t gold, 6.02g/t silver, 0.10% copper including 24 meters averaging 1.37g/t gold, 6.32g/t silver and 0.13% copper located 1.5 kilometres east of the Whistler Deposit. One hole drilled at this target in 2009 (WH09-002) returned a 471.6 meter intersection that averaged 0.38g/t gold, 4.7g/t silver, 0.09% copper, 0.15% lead, and 0.35% zinc (0.93g/t gold-equivalent). The hole ends in mineralization and this intersection represents the entire length of the hole · Digger - a magnetic anomaly approximately 500 meters in diameter with no outcrop exposure located approximately 3.5 kilometres southeast of the Whistler Deposit. Soil sampling results at Digger returned anomalous results comparable to soil sampling over the Whistler Deposit. No significant results were returned from this hole (WH09-003). · Island Mountain Breccia - a 150 meter diameter intrusive breccia body hosted by diorite porphyry located approximately 23.5 kilometers southwest of the Whistler Deposit.  The first and only hole in this target (IM09-001) returned 0.68 g/t gold over 382.9 meters, including an upper copper and silver-bearing interval and a lower gold-only intersection. The upper interval of 150.0 metres in drilled length averaged 0.72 g/t gold, 2.37 g/t silver and 0.16% copper (1.06 g/t gold equivalent). A second interval averaged 1.22 g/t gold, 0.69 g/t silver and 0.05% copper over the bottom 106.9 metres of the drill hole · Island Mountain Cirque - an extensive outcrop of gossanous monzonite porphyry located approximately 22 kilometers southwest of the Whistler Deposit. Hole IM09-002 was drilled to test this target returning 0.13 g/t gold over 202.3 metres. Although anomalous in gold over its entire length, the hole was lost due to technical reasons prior to reaching target depth  A further 15 holes are planned to test regional targets as part of the current spring 2010 program and will be targeted on the basis of the Induced Polarization geophysical survey as well as geological mapping, geochemistry and previously collected airborne magnetic data. Including the completed drilling, a total of 7,000 metres in at least 20 drill holes is planned for completion by mid-2010.  The IP and drill program constitute the entire work program required for Kennecott Exploration to make a decision regarding its back-in rights on the project.  The mineral resource model presented in the technical report prepared by SRK Consulting Canada Inc. and filed on SEDAR on February 22, 2008 represents the first resource evaluation for the Whistler copper-gold deposit. This initial mineral resource model was prepared to provide an initial assessment of copper and gold sulphide zones delineated by drilling on this project and to provide management an independent assessment to justify additional exploration and development work. The resource estimate was completed by George H. Wahl, P.Geo an independent qualified person as this term is defined in National Instrument 43-101. The effective date of this resource estimate is December 31, 2007.  Alaska Whistler Project (continued)  Mineral Resource Statement for the Whistler Gold Deposit, Alaska Prepared by SRK Consulting (Canada) Inc. December 31, 2007


|                        |                   |                       |              |            |             |            |              |              |              
|----------------------- | ----------------- | --------------------- | ------------ | ---------- | ----------- | ---------- | ------------ | ------------ | -------------
|                        | Tonnes and Grades | Total Contained Metal
|Resource Category       | Tonnage (Mt)      | Gold (g/t)            | Silver (g/t) | Copper (%) | Gold Eq3g/t | Gold (Moz) | Silver (Moz) | Copper (Mlb) | Gold Eq3(Moz)
|Indicated (open-pit1)   | 30                | 0.87                  | 2.46         | 0.24       | 1.35        | 0.84       | 2.37         | 159          | 1.31         
|Total Indicated         | 30                | 0.87                  | 2.46         | 0.24       | 1.35        | 0.84       | 2.37         | 159          | 1.31         
|Inferred (open-pit1)    | 123               | 0.59                  | 2.07         | 0.19       | 0.98        | 2.33       | 8.19         | 515          | 3.86         
|Inferred (underground2) | 11                | 1.16                  | 3.55         | 0.24       | 1.66        | 0.41       | 1.26         | 58           | 0.59         
|Total Inferred4         | 134               | 0.64                  | 2.18         | 0.20       | 1.05        | 2.74       | 9.44         | 573          | 4.44         

1. Reported within a conceptual pit shell and based at a cut-off grade of 0.3 g/t gold equivalent adjusted for metallurgical recovery. 2. Reported based on an underground bulk mining method using a cut-off grade of 1.1 g/t gold equivalent adjusted for metallurgical recovery; 3. Gold equivalent grade estimated based on 75 percent recovery for gold and silver; 85 percent recovery for copper; US$550 per ounce gold, US$8 per ounce silver and US$1.50 per pound of copper; 4. Totals may vary due to rounding.  The SRK technical report and NI 43-101 resource estimate statements on the Whistler Project are available on SEDAR at www.sedar.com under the Kiska Metals Corporation filing profile. The Qualified Person for this project is Mark Baknes, P.Geo, Vice President Exploration for the Company.  Uncle Sam Project  The Uncle Sam Gold Project is an intrusion-related gold target, located approximately 76 kilometres southeast of Fairbanks. The Uncle Sam project consists of extensive anomalous surface gold geochemistry highlighted by a drill intersection of 10.6 metres averaging 6.1g/t gold.  On November 2, the Company signed an option agreement with Millrock Resources Inc. (“Millrock”) giving Millrock the option to earn a 100% interest in the Uncle Sam property in Alaska. Under the terms of the agreement Millrock will make cash payments totaling US$200,000 over four years with US$40,000 being paid upon TSX approval. In addition, Millrock will issue 1,000,000 shares to Kiska over four years and has made a commitment to spend US$2,700,000 on exploration over four years. There is an underlying 2% NSR payable to International Royalty Corporation.  Alaska Goodpaster Properties  The Goodpaster Properties, located 65 kilometres northeast of Delta Junction, Alaska consist of four claim groups totaling 183,920 acres (74,430 hectares). Rubicon Minerals Corporation (“Rubicon”) has an option agreement to explore the properties. Rubicon will fund a total of USD$4.8 million in exploration over 6 years to earn a 60% interest in the Alaska properties. Upon vesting, they may obtain a further 10% interest in the properties by completing a feasibility study, and at the Company’s election, may obtain an additional 5% (for a total of 75% interest) by providing a project financing loan to be repaid from the Company’s free cash flow upon production.  The ER-Ogo-Fire and portions of the Eagle-Hawk claim groups are subject to a 2% NSR in favour of AngloGold Ashanti (U.S.A.) Exploration Inc. Portions of the California-Surf are subject to a 1.75% NSR in favour of Capstone Mining Corp. Bou-Swede is wholly owned by Rimfire Alaska, Ltd., a wholly-owned subsidiary of the Company.  As operator Rubicon completed a US $750,000 program in 2008 that included property-wide reconnaissance exploration including geological mapping, prospecting and soil sampling with limited drilling on the ER-Ogo-Fire property. Drilling targeted new mineralization found approximately 300 metres northwest of an area drilled in 2003 and 2004 by then-partner AngloGold Ashanti. Three holes, totaling 300 metres, were completed to test this mineralization. Rubicon has not conducted an exploration program for these properties in 2009. Australia Lachlan Fold Belt Properties  The Company holds two exploration licences covering 27,513 hectares in the Lachlan Fold Belt, New South Wales, Australia. The Lachlan Fold Belt is richly endowed with a diversity of deposit types that host in excess of 150 million ounces of gold. Deposit types include copper gold porphyry, epithermal gold, volcanogenic massive sulphide (VMS), gold-copper skarn, sediment-hosted disseminated gold and intrusion-related gold deposits.  Effective December 12, 2008, the Company signed a Farm-in agreement for the Barmedman exploration licence with Inmet Mining (Australia) Pty. Ltd. Under the terms of the agreement, Inmet can earn a 60% interest by funding at least A$5 million in exploration on the property over four years, including A$400,000 in the first year. Inmet will make staged cash payments totalling A$250,000 over the earn-in period.  In the first quarter of 2009, the Company completed a soil sampling survey and diamond drilling program on the Barmedman exploration licence, targeting IP anomalies and Mobile Metal Ion (MMI) geochemical anomalies identified during the 2008 exploration program. This program, operated by the Company, had a total budget of A$400,000 and was funded 100% by Inmet. The program consisted of eight line-kilometres of partial leach soil geochemistry over the IP anomaly. Partial leach geochemistry is a specialized geochemical method utilized to detect buried mineralization under transported cover. The diamond drilling program consisted of five diamond drill holes for a total of 1508 metres. Drilling targeted coincident IP and partial leach geochemical anomalies. Australia Lachlan Fold Belt Properties (continued)  Additional geochemical soil surveys, funded by Inmet, were completed in late November and December to expand on the work programs conducted earlier in the year. The program targeted two new areas of anomalous copper geochemistry. Both target areas were identified via partial leach geochemical analyses. A drill program started in early March consisting of approximately 900 metres of aircore/diamond drilling in three holesto target the copper geochemical anomalies. Victoria Goldfields Properties  Effective July 28th 2008, the Company entered into a new exploration partnership with Northgate Minerals Corporation, which granted the Company an option on its Stawell Corridor gold exploration properties in the State of Victoria, Australia. The Company will be exploring three licences, Murtoa, Ararat South and Dundonnell, totaling 120 km of the corridor length, representing all ground outside of a 50 km buffer around the Stawell Gold Mine. In addition to greenfields opportunities, more advanced targets exist including the 10 kilometre-long Murtoa target, which surrounds the Kewell gold resource.  The Stawell Corridor is a 240 km long belt bound by the Congee and Moyston faults and is anchored by Northgate's five million ounce Stawell Gold Mine (20 Mt at 8 g/t gold). Mineralization at Stawell consists of gold-bearing quartz veins in iron-rich sediments associated with basalt centres. This deposit has been studied extensively, resulting in the identification of large-scale characteristics that can be used in the exploration for similar deposits elsewhere in the district. Geophysical techniques such as gravity and magnetics surveys have proven effective in targeting basalt centres associated with mineralization. These techniques will be important in evaluating the rest of the Stawell Corridor and refining targets for drilling.  British Columbia and Yukon Projects  The Company controls an extensive property portfolio in British Columbia and the Yukon. Projects include:  " Boulevard Property, consisting of 238 claims, is located approximately 135 kilometres south of Dawson City, Yukon. Silver Quest Resources Ltd. (“Silver Quest”) can acquire the Company’s 40% interest in the property by making staged cash payments totaling $80,000, issuing an aggregate of 400,000 shares and completing exploration expenditures of $3,000,000 over a five year period. Northgate receives the other 60% of the property payments. The Company retains a 1% net smelter royalty (“NSR”) on the property, with Silver Quest having the right to buyback 0.5% of the NSR for $375,000.  British Columbia and Yukon Projects (continued)  " Gillis Property, covering 6,182 hectares, is located in the Nicola Mining Division of British Columbia, approximately 30 kilometres southwest of Merritt. The Company signed an option agreement effective September 5, 2008 to earn a 100% interest in the property by funding a total of $300,000 in exploration and making cash payments totalling $165,000 by the third anniversary. The vendor will also be paid 2.5% of annual exploration expenditures until a positive decision to mine. Upon a public announcement by the Company of a NI 43-101 compliant gold resource of at least 500,000 oz, the Company will issue 217,500 shares to the vendors.  " Grizzly Property, covering 2,652 hectares, is located in the Liard Mining Division of British Columbia, approximately 50 kilometres east of the Galore Creek project and within four kilometres of the partially completed Galore Creek access road. The Company owns a 100% interest in these claims, subject to an underlying 2% NSR, 100% of which can be purchased for $2 million.  " Kliyul Property, covering 3,656 hectares, is located in the Omineca Mining Division of British Columbia, approximately 115 kilometres north of Takla Landing. The Company has a 30% interest in the Kliyul property in a joint venture with Kennecott holding 45% and Daylight Energy Ltd. holding the remaining 25%.  " Poker Creek Property, covering 2,516 hectares, is located in the Liard Mining Division of British Columbia, approximately 16 kilometres west of Telegraph Creek. The Company owns 100% of these claims.  " RDN Property, covering approximately 8,576 hectares, is located in the Liard Mining Division of British Columbia, approximately 120 kilometres northwest of Stewart, British Columbia. This property is currently optioned to Northgate Minerals Corporation, subject to an underlying NSR. On February 21, 2007, the Company signed an amendment suspending the terms of the Joint Venture Option agreement until such time as the Galore Creek road access is constructed across the RDN property.  " Redton Project is located in the Quesnel Trough in northern British Columbia. The project adjoins the Kwanika property and is within 1,500 metres of the recent discovery made by Serengeti Resources Inc. on the Kwanika property Kiska has earned an 85% interest, subject to underlying royalties, in the project by spending in excess of $4.75 million. Redton Resources Inc. holds the other 15% interest.  British Columbia and Yukon Projects (continued)  " Quesnel Trough Project, covering 34,570 hectares, is located in the Cariboo Mining Division of British Columbia. A total of seven properties comprise the project and are located from 15 kilometres south of Prince George to 40 kilometres north of Fort St. James. The Company owns 100% of these claims. Xstrata Canada Corporation signed an option agreement to earn a 51% interest in the property by completing a preliminary assessment and spending $3,000,000 by December 31, 2013. In addition, Xstrata must spend no less than $250,000 in each calendar year commencing in 2010. Xstrata may earn an additional 24% (total 75%) by completing a feasibility study and incurring no less than $20 million in feasibility study expenditures which must be completed before the tenth anniversary of Xstrata earning its 51% interest. Xstrata completed MMI soil geochemical surveys on the properties in 2009. Follow up work is expected to be undertaken in 2010.  " Thorn property, covering 14,689 hectares is located in the Atlin Mining Division of British Columbia, approximately 120 kilometres northwest of Telegraph Creek. The Company owns 100% of this property subject to payments to Cangold Limited in the event a third party partner becomes involved and an underlying NSR. The Company engaged Mira Geosciences Ltd. to complete 3-D modeling of the airborne geophysical data and ground Induced Polarization data to generate targets similar to the geophysical signature of known mineralization on the property.  " Tide Property, covering 2,964 hectares, is located in the Skeena Mining Division of British Columbia, approximately 36 kilometres north of Stewart, British Columbia. American Creek Resources Ltd. has earned 51% of the project. American Creek can earn an additional 9% interest by funding a further $3.5 million in exploration on or before December 31, 2010. Their interest can be increased to 65% interest by funding a bankable feasibility study, and, at the Company’s election, to a 70% interest by providing 100% of the initial project development financing. American Creek is operator and did not conduct exploration on the property in 2009.  " Wernecke Breccia Project, consisting of 1926 claims, is situated in the Wernecke Mountains approximately 180 kilometers northeast of Mayo in east-central Yukon Territory. During 2007, the field program focused on a series of high priority drill targets designed to test iron-oxide-copper-gold systems +/- uranium and stand alone uranium targets, all of which are characterized by coincident geophysical, geological and geochemical anomalies. Many of these targets were newly defined in 2006, while some were historical targets that remain open for expansion. No exploration was undertaken in 2009. Fronteer, who owns 80% of the project, and the Company will be seeking joint venture partners to continue exploration of the property.  " Williams Property, covering 26,136 hectares, is located in the Liard Mining Division of British Columbia, approximately 150 kilometres southeast of Dease Lake, British Columbia and 330 kilometres north of Smithers. The Company owns 100% of the property subject to underlying royalties and is actively seeking a joint venture partner for the Williams Property.  Mexico  The company held an interest in fifteen projects in Sonora, Durango and Sinaloa States in Mexico. Twelve projects were held in a 60/40 Joint Venture with Azure Minerals Limited (60%).  All projects were subject to certain back in rights held by Minera Kennecott S.A. de C.V., (“MKE”) a subsidiary of Rio Tinto. Subsequent to year end, the Joint Venture was terminated and MKE relinquished its back in rights on all projects. The Company now holds 100% interest in nine projects each of which is subject to a 2% NSR held by MKE including six of the former joint venture properties.  The majority of the projects have been targeted for their porphyry copper–gold–molybdenum potential, while some projects show potential for epithermal gold–silver–base metal mineralization. The projects span a range from grassroots to exploration drilling levels of advancement.  The Company conducted property examinations of all the Mexican projects in October to assess the potential for development and to determine the next steps in deriving value from each project in the future.  Nevada and New Mexico Properties  The Company controls three projects which include:  " Colorback Property, consisting of 202 claims, located in Lander County, Nevada approximately 100 kilometers southwest of Elko.  " Hilltop Property, consisting of 82 claims, located in Lander County, Nevada approximately 100 kilometers southwest of Elko.  " San Juan Property,consisting of 51 claims and 5 state mining leases, located in Socorro County, New Mexico approximately 42 kilometers southwest of San Antonio. The San Juan claims contain gold-molybdenum-silver targets that are untested by drilling.  Expenditures for the year ended December 31, 2009 are summarized in the following table: (all amounts in Canadian dollars)


|                                      |                   |                      |                      |             |                   |                 
|------------------------------------- | ----------------- | -------------------- | -------------------- | ----------- | ----------------- | ----------------
|                                      | Alaska
(restated) | Australia
(restated) | BC &Yukon
(restated) | Mexico      | Nevada&New Mexico | Total
(restated)
|Acquisition costs                     | $     816,834     | $ 1,798,632          | $ 5,527,714          | $     4,929 | $        277      | $  8,148,386    
|                                      |                   |                      |                      |             |                   |                 
|Exploration costs                     |                   |                      |                      |             |                   |                 
|Aircraft and helicopter               | 1,733,842         | -                    | 5,397                | -           | -                 | 1,739,239       
|Camp and support                      | 331,085           | 1,770                | 5,692                | 14,848      | 1,087             | 354,482         
|Chemical analysis                     | 26,244            | 247                  | 5,502                | 17,235      | 730               | 49,958          
|Data management and maps              | 308               | 30                   | 610                  | 6,008       | 23                | 6,979           
|Drilling & trenching                  | 291,603           | -                    | -                    | -           | -                 | 291,603         
|Geological and engineering            | 774,182           | 10,415               | 96,715               | 158,453     | 18,523            | 1,058,288       
|Geophysical surveying                 | 1,403,373         | -                    | 19,182               | -           | -                 | 1,422,555       
|Materials and supplies                | 205,648           | 635                  | 971                  | 3,337       | 1,704             | 212,295         
|Project management                    | 9,490             | -                    | 65,149               | -           | -                 | 74,639          
|Reclamation expense                   | -                 | -                    | 5,769                | -           | 3,835             | 9,604           
|Recording and filing                  | 273,887           | -                    | 75,349               | 129,601     | 49,350            | 528,187         
|Travel                                | 93,526            | 1,647                | 1,603                | 8,563       | 369               | 105,708         
|                                      | 5,143,188         | 14,744               | 281,939              | 338,045     | 75,621            | 5,853,537       
|                                      |                   |                      |                      |             |                   |                 
|Exploration tax credits               | -                 | -                    | (9,798)              | -           | -                 | (9,798)         
|Joint venture payments                | -                 | -                    | -                    | -           | -                 | -               
|Reclamation obligation                | 306,746           | -                    | 25,622               | 4,432       | 19,029            | 355,829         
|                                      | 5,449,934         | 14,744               | 297,763              | 342,477     | 94,650            | 6,199,568       
|                                      |                   |                      |                      |             |                   |                 
|Total Acquisition & Exploration Costs | 6,266,768         | 1,813,376            | 5,825,477            | 347,406     | 94,927            | 14,347,954      
|Option proceeds                       | (99,871)          | -                    | (58,080)             | -           | -                 | (157,951)       
|Net Expenditures                      | $ 6,166,897       | $ 1,813,376          | $ 5,767,397          | $ 347,406   | $    94,927       | $ 14,190,003    

Financial Results  For the year ended December 31, 2009 Kiska incurred a net loss of $18,684,503 ($0.51 per share) compared to a net loss of $16,260,741 ($1.84 per share) in the previous year, after taking into account the three for one share consolidation. The most significant factor contributing to the net loss is the mineral property acquisition costs associated with the acquisition of Rimfire Minerals Corporation. These costs were expensed during the year increasing the net loss by $7,974,288. Mineral property revenues decreased by 70% from $897,315 to $273,051 while interest revenue remained steady at $26,138 compared to $24,702. Exploration expenditures decreased by 12% ($6,530,166) from the previous year ($7,364,238). In the first half of the year, strenuous efforts were made to limit exploration to strategic initiatives in order to conserve cash. General and administrative expenses were reduced by 50% from the previous year, primarily related to the repayment of debt with significant reductions in financing expense.  For the three months ended December 31, 2009, the Company incurred a net loss of $3,369,393 ($0.06 per share) compared with a net loss of $5,131,640 (or $0.25 per share) for the three months ended December 31, 2008. There was a significant increase in exploration expenditures during the third and fourth quarters of 2009 as exploration programs commenced on the Whistler project. During the same period of 2008, the Company was completing drill programs on both the Whistler and Redton properties.  Mineral property revenues decreased in the current year ($273,051) compared to the previous year ($897,315) as the Company concentrated on exploration of the Whistler property rather than managing exploration programs for other companies. In the first half of the year, management was seeking an agreement for the Company as a whole instead of negotiating joint venture and option agreements for individual properties. The process of disposition of mineral properties was commenced in the second half of the year resulting in recognition of option proceeds.  The most significant change in general and administrative expense is financing expense. During the year ended December 31, 2009 all remaining debt was paid off resulting in total financing expense of $59,660 compared to the previous year figure of $3,565,047. The other significant changes were in salaries which were reduced from $1,615,644 in 2008 to $680,828 in 2009 and outsourced services which increased from $507,815 in 2008 to $1,073,104. Most of the increase in outsourced services relates to the corporate acquisition costs associated with the acquisition of Rimfire Minerals Corporation in August 2009. This is not expected to be a recurring cost.  Exploration expenditures, excluding those by joint-venture partners, totaled $5,853,537 ($7,204,248), and property acquisition expenditures totaled $8,148,386 ($158,990). These costs were offset by exploration tax credits totaling $9,798 ($Nil). The majority of the exploration expenditures were made on the Whistler property in Alaska.  At the acquisition date, the mineral properties acquired from Rimfire Minerals were valued at $7,974,288. These costs were expensed in accordance with the Company’s accounting policies.  At the end of the fiscal year, reclamation obligations for active properties were estimated and an expense of $355,829 was included in mineral property expenditures.  The British Columbia Mineral Exploration Tax Credit Program will reimburse the Corporation for 20% of eligible expenditures in that jurisdiction. For the fiscal year ended December 31, 2009 exploration tax credits are $9,798. The severity of the Mountain Pine Beetle infestation in British Columbia has resulted in designation of an area where the tax credit will be 30% rather than the previous 20%. Most of the Company’s active mineral properties fall within the designated zone.  1.5  Summary of Quarterly Results  Selected quarterly information for each of the eight most recently completed financial periods isset out below: (figures in thousands)


|                      |             |                    |               |               |             |            |             |            
|--------------------- | ----------- | ------------------ | ------------- | ------------- | ----------- | ---------- | ----------- | -----------
|                      | Q4
2009     | Q3
2009
(restated) | Q2
2009       | Q1
2009       | Q4
2008     | Q3
2008    | Q2
2008     | Q1
2008    
|Revenues              | $       205 | $         68       | $           - | $           - | $       542 | $       20 | $       249 | $        86
|Loss from operations  | (3,234)     | (12,353)           | (817)         | (728)         | (1,645)     | (3,948)    | (1,717)     | (2,734)    
|Net loss              | (3,369)     | (12,226)           | (1,618)       | (1,221)       | (5,152)     | (5,924)    | (2,718)     | (2487)     
|Loss per common share | $   (0.07)  | $   (0.31)         | $   (0.06)    | $   (0.05)    | $   (0.25)  | $   (0.45) | $   (0.60)  | $   (0.54) 

Expenditures generally exhibit a seasonal variation being lower in the first and last quarters and higher during the second and third quarters of each year. This variation is due to the climate where exploration is taking place, which restricts exploration to the summer months.  1.6  Liquidity  The Company’s cash and cash equivalents balance at December 31, 2009 was $1,071,695 compared with $762,560 at December 31, 2008. The cash and cash equivalents were comprised of term deposits and cash as in the previous year. In addition, the Company has restricted cash of $202,707 (2008-$82,228) representing reclamation and performance deposits for mineral properties. The Company had working capital of $1,563,862 at December 31, 2009 compared with working capital of $652,131 at December 31, 2008. The increase in working capital is attributable to the acquisition of Rimfire Minerals and completion of a brokered private placement during the third quarter of 2009.  During the year, cash used in operating activities was $8,330,702 (2008-$9,559,189, 2007-$16,154,566). This reflects the emphasis on exploration activity subsequent to the corporate acquisition and the acquisition expenses which totaled $633,875. Non-cash costs associated with the acquisition were primarily the exchange of Kiska shares for Rimfire shares and the conversion of existing employee stock options to new stock options.  The Company increased cash resources by $90,099 from the sale of marketable securities received as mineral property option proceeds. The Corporation issued 9,000,000 shares for cash proceeds of $4,950,000 pursuant to a brokered private placement. An additional 140,827 shares were issued upon exercise of options for proceeds of $59,747. Total share issue costs were $438,496. As of December 31, 2009, consolidated cash amounted to $1,071,695, an increase of $309,135 from the beginning of the year. 1.6  Liquidity (continued)  The Company’s financial instruments are all fully cashable at any time so there are no restrictions on availability of funds. There is no long-term debt. The Company’s current obligations include lease commitments for office space. The lease expires November 30, 2010. Lease commitments for the remainder of the current fiscal year total $95.555. The other current obligations are statutory withholding and payroll taxes.  1.7  Capital Resources  The Company’s number of issued and outstanding shares was 56,741,361 at December 31, 2009. The one for three consolidation and issue of 22,365,258 shares to Rimfire shareholders, effective August 5, 2009, as part of the corporate acquisition accounts for most of the difference from 25,235,276 common shares that were issued and outstanding at the previous fiscal year-end. During the year, 3,353,328 employee stock options were granted at a weighted average strike price of $0.65 and 1,520,896 options expired or were forfeited. 140,827 options were exercised at a weighted average price of $0.42. At the end of the year, the balance of options outstanding is 4,383,844 with expiry dates up to December 2014.  The Company acquired 100% of Rimfire by issuing 22,365,258 common shares and issuing 1,905,300 options to purchase common shares, for an aggregate fair value of $12,786,175. The fair value of the common shares, amounting to $12,412,717, was based on the bid price of the common shares on the date of acquisition, and the fair value of the options issued, amounting to $373,458, was determined using the Black-Scholes option pricing model using the following weighted average assumptions: volatility of 89%, risk free interest rate of 1.8%, an expected life of 2.7 years, and a dividend yield of 0%.  The Company accounted for this transaction using the acquisition method. The fair value of the net assets acquired was:  Cash and cash equivalents$     4,463,269Amounts receivable51,918Marketable securities162,630Prepaid expenses and deposits358,058Property, plant and equipment104,188Mineral property interests (restated)7,974,288Future income tax assets-Goodwill-Accounts payable and accrued liabilities(282,614)Reclamation obligations(45,562)Consideration paid$   12,786,175  The mineral property interest acquisition costs were expensed during the year. Transaction costs of $633,875 were expensed and included in consulting and outsourced services ($592,743), general and administrative ($39,864) and marketing services ($1,268) in the Consolidated Statement of Operations for the year ended December 31, 2009. Acquisition costs of $18,000 were included in the current year’s share issue costs. 1.7  Capital Resources (continued)  On September 16, 2009, the Company completed a brokered private placement consisting of 9,000,000 units at $0.55 for gross proceeds of $4,950,000. Each unit consisted of one common share and one half of one non-transferable share purchase warrant. Each whole warrant entitles the holder to purchase one common share at a price of $0.80 per share until March 16, 2011. The terms of the warrants provide that if, during the term of any unexercised warrant commencing on January 17, 2010, the closing price of the common shares of the Company on any exchange is greater than $1.10 for a period of 20 consecutive trading days the Company may, at its option and by notice in writing to each holder, require the holder of the warrant to exercise such warrant within 30 days, failing which the warrant will be deemed to have expired. The units issued under the offering were subject to a four-month hold period expiring on January 17, 2010. The funds from this placement will be utilized to continue the exploration of the Whistler project and for general corporate purposes.  A cash commission of 6% of the total gross proceeds realized from the placement was payable in cash together with 540,000 agent’s warrants, equal to 6% of the number of units placed. Each agent’s warrant will entitle the holder to purchase one common share at a price of $0.80 per share until March 16, 2011.  Subsequent to year end, the Corporation arranged a non-brokered private placement of 9,092,500 units at a price of $0.66 per unit, for gross proceeds of $6 million. Each unit consisted of one common share and one-half of one non-transferable share purchase warrant. Each whole warrant entitles the holder to purchase, for a period of one year from the closing of the private placement (the "Closing"), one common share at a price of $0.92 per share. The warrants will contain a provision that will enable the Company to force exercise of the warrants if, during the term of any unexercised warrant commencing four months after the Closing, the common shares of the Company trade on any exchange for a period of 20 consecutive trading days at a price of $1.40 per share or greater. This placement closed in two tranches on March 2 and March 11, 2010. The Company paid share issue costs of $218,300 and issued 135,300 Broker’s Warrants in connection with the financing. Net cash proceeds were $5,782,750. A total of 9,092,500 shares were issued subject to a four-month hold and 4,546,250 share purchase warrants exercisable at $0.92 for one year from the Closing. The funds raised will be used to further exploration of the Whistler Project and for general corporate purposes.  Contractual Obligations  Kiska has future obligations under various contracts relating to operating leases and minimum conditional and non-conditional exploration commitments to keep properties and tenements in good standing. The obligations for any conditional exploration expenditures are non-binding, as the Company has the option to relinquish these licenses and tenements and any rights to the properties at any time.  1.7  Capital Resources (continued)  The table below provides a summary of these contractual obligations (based on undiscounted cash flows) as at December 31, 2009:


|                                     |                   |                   |                        |                    |                  
|------------------------------------ | ----------------- | ----------------- | ---------------------- | ------------------ | -----------------
|                                     | Total             | Less than 1 year  | 1 – 3 years            | 3 – 5 years        | More than 5 years
|Operating leases                     | $          95,555 | $          95,555 | $                    - | $                - | $              - 
|Conditional exploration expenditures | 4,236,880         | 757,178           | 1,496,227              | 910,203            | 1,073,272        
|Total contractual obligations        | $     4,332,435   | $        852,733  | $     1,496,227        | $    910,203       | $1,073,272       

1.8  Off-Balance Sheet Arrangements  As a policy, the Company does not enter into off-balance sheet arrangements with special-purpose entities in the normal course of its business, nor does it have any unconsolidated affiliates.  1.9  Transactions with Related Parties  (a) Note Payable  On March 9, 2009, the Company announced it had negotiated a line of credit with Geologic Resource Partners LP (“GRP”), allowing it to draw down, as necessary a maximum amount of $2.6 million. The line of credit bore interest at an annual rate of 15%, payable at maturity. On March 27, 2009 and June 8, 2009, the Company drew $1,000,000 and $750,000, respectively, under the line of credit. The entire amount of note payable including accrued interest was repaid on August 5, 2009.  (b) Due to related party  Due to related party at December 31, 2009 includes amounts payable to Equity Exploration Consultants Ltd. Some of the Company’s mineral property evaluation and exploration projects are managed by Equity Exploration Consultants Ltd. and Equity Geoscience, Ltd. (collectively “Equity”), companies partially owned (indirectly) by a director of the Company. Balances payable to Equity for fees and reimbursement of costs incurred on behalf of the Company have been separately disclosed as “Due to related party”. Fees charged to the Company by Equity are on the same basis as those charged by Equity to unrelated third parties. It is anticipated that Equity will continue to provide geological consulting and administrative support services to the Company from time to time, and will be remunerated for such services at the rate charged by Equity to all its customers.  1.9  Transactions with Related Parties (continued)  (b) Due to related party (continued)  As at December 31, 2009, the Corporation was indebted to Equity, in the amount of $11,340 for management services provided by Equity During the year ended December 31, 2009, the Corporation paid Equity $54,000 (2008 - $Nil, 2007 - $Nil) for providing management services. There were no other transactions with Equity during the year.  Included in due to related party at December 31, 2008 is an amount of $225,000 representing the severance payment due to an officer upon a change of control of the Company.  (c) Mineral property interests  One of the directors indirectly owns 11% of a 7.5 to 15% Net Profits Interest (“NPI”) in the Wernecke Breccia property. The claims were originally staked and explored by a company in which he holds an interest. When the property was sold to the Newmont and NVI Mining Ltd, their company retained an NPI of varying amounts depending on the claim group.  1.10  Fourth Quarter  The Company has an incentive stock option plan for directors and employees. During the fourth quarter, the directors authorized the granting of stock options to directors, officers and employees. Since the company has adopted a policy of accounting for share-based compensation at fair market value, this resulted in a significant increase in expense for the fourth quarter. Expenditures for salaries and support during the fourth quarter were slightly higher than average since unused compensatory time off is paid in cash at the end of each calendar year.  Reclamation obligations for each property with substantial exploration programs under the direction of the Company were re-evaluated to determine if allowances which had been previously estimated were still valid. Several properties had significant changes in exploration undertaken or reclamation work completed during 2009 which resulted in changes to the estimates for reclamation obligations. The new figures are reflected in the financial statements as a liability for the Company. When the reclamation activities are completed, this liability will be reduced by the actual costs incurred with any variance reported as reclamation obligation expense in that period. Several properties do not have reclamation obligations accrued as yet since no exploration work has been undertaken.  The Company is committed to sustainable resource development and ensures all its activities comply with regulatory requirements and strives to meet or exceed industry best practices. During the last quarter of 2009, the Company commenced a community consultation and engagement process for the Whistler project. In addition, completion of exploration work and compilation of the data derived from the geophysical surveys increased exploration expenditures in a period which typically would have lower exploration costs.  1.11  Proposed Transactions  The Company has a business plan that includes identifying exploration projects, conducting initial exploration then optioning the project to a partner. Acquisitions and dispositions are an essential and on-going part of this plan.  1.12  Critical Accounting Estimates  Not applicable  1.13  Changes in Accounting Policies including Initial Adoption  The Canadian Institute of Chartered Accountants (“CICA”) has issued Handbook Section 3064, Goodwill and Intangible Assets, which replaced Section 3062, Goodwill and Intangible Assets. The new standard is applicable for interim and annual financial statements relating to fiscal years beginning on or after October 1, 2008. Section 3064 establishes revised standards for the recognition, measurement, presentation and disclosure of goodwill subsequent to its initial recognition, and of intangible assets. Section 3064 also provides guidance for the treatment of preproduction and start-up costs and generally requires that these costs be expensed as incurred. The Company adopted Section 3064 as of January 1, 2009, and its adoption had no impact on the Company’s consolidated financial statements.  In January 2009, the CICA issued Handbook Section 1582, Business Combinations, which will provide the Canadian equivalent to International Financial Reporting Standards (“IFRS”) 3, Business Combinations and replace the existing Handbook Section 1581, Business Combinations. The new standard will apply prospectively to business combinations for which the acquisition date is on or after January 1, 2011. Earlier adoption is permitted as of the beginning of a fiscal year, in which case an entity would also be required to early adopt Handbook Section 1601, Consolidated Financial Statements and Handbook Section 1602, Non-controlling Interests. The Company adopted these sections as of January 1, 2009, and accounted for its acquisition of Rimfire in accordance with Section 1582.  In January 2009, the CICA also issued Handbook Section 1601, Consolidated Financial Statements, which establishes standards for the preparation of consolidated financial statements and, along with Section 1602, will replace the existing Handbook Section 1600, Consolidated Financial Statements. The new standard is effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. Earlier adoption is permitted as of the beginning of a fiscal year, in which case an entity would also be required to early adopt Handbook Section 1582, Business Combinations and Handbook Section 1602, Non-Controlling Interests.  The Company adopted these sections as of January 1, 2009, and the adoption of Section 1601 had no impact on the Company’s consolidated financial statements.  1.13  Changes in Accounting Policies including Initial Adoption (continued)  In January 2009, the CICA also issued Handbook Section 1602, Non-Controlling Interests, which establishes standards for accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. It is equivalent to the corresponding provisions of International Accounting Standard IAS 27, Consolidated and Separate Financial Statements. The new standard is effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. Earlier adoption is permitted as of the beginning of a fiscal year, in which case an entity would also be required to early adopt Handbook Section 1582, Business Combinations and Handbook Section 1601, Consolidated Financial Statements. The Company adopted these sections as of January 1, 2009, and the adoption of Section 1602 had no impact on the Company’s consolidated financial statements.  In January 2009, the Emerging Issues Committee (“EIC”) of the CICA issued Emerging Issues Committee Abstract 173, Credit Risk and the Fair Value of Financial Assets and Financial Liabilitieswhich provides guidance on the implications of credit risk in determining the fair value of an entity’s financial assets and financial liabilities. The guidance clarifies that an entity’s own credit risk and the credit risk of counterparties should be taken into account in determining the fair value of financial assets and financial liabilities, including derivative instruments, for presentation and disclosure purposes. The Company’s fair value disclosures incorporate this new guidance.  In June 2009, the CICA amended Handbook Section 1506 Accounting Changes. The amendment excludes changes in accounting policies upon the complete replacement of an entity’s primary basis of accounting, as will occur when an entity adopts IFRSs for the first time, from the scope of Section 1506.  In June 2009, the CICA also amended Handbook Section 3862, Financial Instruments – Disclosures to provide the Canadian equivalent to amendments made to IFRS 7, Financial Instruments: Disclosures. The amendments require enhanced disclosure requirements, which include: · classifying and disclosing fair value measurements based on a three-level hierarchy o Level 1 – inputs are unadjusted quoted prices in active markets for identical assets or liabilities; o Level 2 – inputs other than quoted prices in Level 1 that are observable for the asset or liability, either directly or indirectly; and o Level 3 – inputs for the asset or liability that are not based on observable market data. · reconciling beginning balances to ending balances for Level 3 measurements · identifying and explaining movements between levels of the fair value hierarchy · providing a maturity analysis for derivative financial liabilities based on how the entity manages liquidity risk, and · disclosing the remaining expected maturities of non-derivative financial liabilities if liquidity risk is managed on that basis.  These amendments are applicable to financial statements for fiscal years ending after September 30, 2009 and comparative information is not required in the year these amendments are first implemented. Applicable disclosures have been included in Note 5 to the consolidated financial statements. 1.13  Changes in Accounting Policies including Initial Adoption (continued)  In August 2009, the CICA issued amendments to Handbook Section 3251, Equity as a consequence of issuing Section 1602, Non-controlling Interests. The amendments require non-controlling interests to be recognized as a separate component of equity.  The new standard is effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. Earlier adoption is permitted as of the beginning of a fiscal year, in which case an entity would also be required to early adopt Handbook Section 1602, Non-Controlling Interests. The Company adopted these sections as of January 1, 2009, and their adoption had no impact on the Company’s consolidated financial statements.  In August 2009, the CICA also amended Handbook Section 3855, Financial Instruments — Recognition and Measurement, bringing greater consistency between Canadian GAAP, IFRSs and US GAAP on the timing of impairment recognition for debt instruments. Companies that have classified financial assets as held-to-maturity investments are now required to assess those financial assets using the impairment requirements of Handbook Section 3025, Impaired Loans. Section 3025 was consequentially amended to accommodate the changes to Section 3855. The amendments allow more debt instruments to be classified as loans and receivables. This allows those instruments to be evaluated for impairment using Section 3025. In addition, the amendments require reversal of previously recognized impairment losses on available-for-sale financial assets in specified circumstances and require that loans and receivables that an entity intends to sell immediately or in the near term be classified as held for trading. These amendments did not affect the recognition or measurement of the Company’s financial instruments.  Future Accounting Changes  Convergence with International Financial Reporting Standards  In 2006, the Accounting Standards Board of the CICA ratified a strategic plan that will result in Canadian GAAP, as used by public companies, evolving and being converged with International Financial Reporting Standards over a transitional period currently expected to be completed by 2011. The International Accounting Standards Board currently has projects underway that should result in new pronouncements which will be included in the convergence process.  The Company is in the process of completing a detailed assessment of the requirements of the transition to IFRS, with the intention of identifying: (i) the timing of the implementation of the transition, (ii) major differences from existing accounting policies (iii) new accounting policies which are appropriate for the Company, (iv) the appropriate disclosures in financial statements prepared under IFRS and (v) developing an implementation plan. The Company has put some systems in place to ensure adequate data collection and is developing disclosure templates to ensure compliance with the standards at the transition date.  1.14 Financial Instruments and Other Instruments  The company does not employ a hedging strategy or a foreign exchange protection strategy. The majority of the Company’s income and expenses are denominated in Canadian dollars. The income which is received in U.S. Dollars is preserved in a U.S. Dollar account for use in paying U.S. Dollar denominated expenses.  1.15  Other Requirements  Risks Factors and Uncertainties Overview  The Company is subject to many risks that may affect future operations over which the Company has little control. These risks include, but are not limited to, market conditions and the Company’s ability to access new sources of capital, the results from property exploration and development activities, and currency fluctuations. Access to Capital  The exploration and subsequent development of mineral properties is capital intensive. Should it not be possible to raise additional equity funds when required, the Company may not be able to continue to fund its operations which would have a material adverse effect on the Company’s potential profitability and ability to continue as a going concern. Speculative Nature of Mineral Exploration and Development  The exploration for and development of mineral deposits involves significant risk which even a combination of careful evaluation, experience and knowledge may not adequately mitigate.  While the discovery of an ore body may result in substantial rewards, few properties which are explored are ultimately developed into producing mines.  There is no assurance that commercial quantities of ore will be discovered on any of Kiska’s sole-risk or ventured properties. Even if commercial quantities of ore are discovered, there is no assurance that the mineral property will be brought into production.  Whether a mineral deposit will be commercially viable depends on a number of factors, including the particular attributes of the deposit, such as its size, grade and proximity to infrastructure; commodity prices, which have fluctuated widely in recent years; and government regulations, including those relating to taxes, royalties, land tenure, land use, aboriginal rights, importing and exporting of minerals and environmental protection.  The exact effect of these factors cannot be accurately predicted, but Kiska’s business may be adversely affected by the inability of Kiska or those companies with which Kiska forms exploration or development alliances, to bring projects into commercial production. Risks Factors and Uncertainties (continued) Commodity Prices  The prices of gold, copper, zinc and other minerals have fluctuated widely in recent years and are affected by a number of factors beyond the control of Kiska, including international economic and political conditions, expectations of inflation, international currency exchange rates, consumption patterns, and levels of supply and demand.  Fluctuations in commodity prices will influence the willingness of investors to fund mining and exploration companies and the willingness of such companies to participate in joint ventures with Kiska and the level of their financial commitment. Similarly, the ability of Kiska to monetize assets may also be affected by fluctuations in commodity prices. Competition  Other exploration and geoscience technology companies, including those with greater financial resources than Kiska, could adopt or may have adopted the business strategies of Kiska and thereby compete directly with Kiska, or may seek to acquire and develop mineral claims in areas targeted by Kiska. While the risk of direct competition may be mitigated by Kiska’s experience and technological capabilities, there can be no assurance that competition will not increase or that Kiska will be able to compete successfully. Conflicts of Interest  Certain directors and officers of Kiska also serve as directors, officers and advisors of other companies involved in natural resource exploration and development. To the extent that such companies may participate in ventures with Kiska, such directors and officers may have conflicts of interest in negotiating and concluding the terms respecting the extent of such participation.  Such other companies may also compete with Kiska for the acquisition of mineral property rights.  In the event that any such conflict of interest arises, Kiska’s policy is that such director or officer will disclose the conflict to the board of directors and, if the conflict involves a director, such director will abstain from voting on the matter. In accordance with the Business Corporations Act (Yukon), the directors and officers of Kiska are required to act honestly, in good faith with a view to the best interests of Kiska.  Government Regulation  The Company operates in an industry which is governed by environmental regulations as well as occupation health and safety regulations. Most of the Company’s mineral properties are subject to government tenure requirements. At present, the Company fully complies with all regulations and holds clear title to the mineral property interests. However, it is possible that regulations or tenure requirements could be changed by the respective government resulting in additional costs or barriers to development of the properties. This would adversely affect the value of properties and ability to hold onto them without incurring significant additional costs.  Other Information  The Company files technical reports on all material properties, press releases and material change reports on SEDAR at www.sedar.com. The company is a foreign private issuer as defined by the Securities and Exchange Commission in the United States. As such, the Company files an annual report on Form 20-F and interim reports and other filings on Form 6-K. These reports are available on EDGAR at www.sec.gov/edgar. Additional information about the company can be accessed at the company’s website (www.kiskametals.com)  Forward-Looking Statements  This document includes certain forward looking statements concerning the future performance of Kiska’s business, its operations and its financial performance and condition, as well as management’s objectives, strategies, beliefs and intentions. Forward-looking statements are frequently identified by such words as “may”, “will”, “plan”, “expect”, “anticipate”, “estimate”, “intend” and similar words referring to future events and results.  Forward-looking statements are based on the current opinions and expectations of management.  All forward-looking information is inherently uncertain and subject to a variety of assumptions, risks and uncertainties. Factors that may cause actual results to vary include, but are not limited to, the Company’s ability to access capital, the speculative nature of mineral exploration and development, fluctuating commodity prices, competitive risks and reliance on key personnel, as described in more detail in this document under “Risk Factors and Uncertainties”.  Statements relating to estimates of reserves and resources are also forward-looking statements as they involve risks and assumptions (including but not limited to assumptions with respect to future commodity prices and production economics) that the reserves and resources described exist in the quantities and grades estimated and are capable of economic extraction. Actual events or results may differ materially from those projected in the forward-looking statements and we caution against placing undue reliance thereon.  All mineral resources referenced in the technical report filed for the Whistler Property have been estimated in accordance with the definition standards on mineral resources and mineral reserves of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in NI 43-101. U.S. reporting requirements for disclosure of mineral properties are governed by the SEC Industry Guide 7 ("Guide 7"). NI 43-101 and Guide 7 standards are substantially different. The terms "mineral reserve", "proven mineral reserve" and "probable mineral reserve" are Canadian mining terms as defined in accordance with NI 43-101. These definitions differ from the definitions of "proven (measured) reserves" and "probable (indicated) reserves" in Guide 7. Under Guide 7 standards, a "final" or "bankable" feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.  The technical report uses or may use the terms "mineral resource," "indicated mineral resource" and "inferred mineral resource". We advise investors that these terms are defined in and required to be disclosed by NI 43-101. However, these terms are not defined terms under Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. "Inferred mineral resources" have a great amount of uncertainty as to their existence and economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Endnotes Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated  Amended and Restated


-71-