UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C.  20549





FORM 20-F


Annual Report





[ ]
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934




OR




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


For the fiscal year ended March 31, 2011




OR




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


For the transition period from ____________ to __________




OR




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


Date of event requiring this shell company report __________





KEEGAN RESOURCES INC.


(Exact name of Registrant as specified in its charter)





British Columbia, Canada


(Jurisdiction of incorporation or organization)





600 - 1199 West Hastings Street, Vancouver, British Columbia, V6E 3T5


(Address of principal executive offices)





Greg McCunn, (604) 683-8193greg.mccunn@keeganresources.com


(Name, telephone and email of company contact)





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


None





Securities 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: None





Indicate the number of outstanding shares of each of the Company’s classes of capital or common stock as of the close of the period covered by the annual report. 74,884,588 common shares at March 31, 2011.





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





If this report is an annual or transitional report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes [  ]   No [X]





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12 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 ninety days.


Yes [X]   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.





Large accelerated filer [  ]  Accelerated filer [X ]  Non-accelerated filer [ ]





Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:





US GAAP    o                             International Financial Reporting Standards as issued


by the International Accounting Standards Board     o                                                                                     Other  x





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 17 [X]  Item 18 [  ]





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    [X]








ii


KEEGAN RESOURCES INC.


FORM 20-F ANNUAL REPORT


TABLE OF CONTENTS




PART I

1ITEM 1
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
1ITEM 2
OFFER STATISTICS AND EXPECTED TIMETABLE
1ITEM 3
KEY INFORMATION
1ITEM 4
INFORMATION ON THE COMPANY
8ITEM 4A
UNRESOLVED STAFF COMMENTS
33ITEM 5
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
33ITEM 6
DIRECTORS, SENIOR MANAGEMENT, AND EMPLOYEES
38ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
51ITEM 8.
FINANCIAL INFORMATION
52Esaase Lawsuit
52ITEM 9.
THE OFFER AND LISTING
53ITEM 10.
ADDITIONAL INFORMATION
58ITEM 11
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
68ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
70PART II

70ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
70ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
70ITEM 15.
CONTROLS AND PROCEDURES
70ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT
71ITEM 16.B
CODE OF ETHICS
71ITEM 16C.
PRINCIPAL ACCOUNTING FEES AND SERVICES
72ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
72ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY KEEGAN/AFFILIATED PURCHASERS
72ITEM 16F.
CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
72ITEM 16G.
CORPORATE GOVERNANCE
72PART III

73ITEM 17.
FINANCIAL STATEMENTS
73ITEM 18.
FINANCIAL STATEMENTS
73ITEM 19.
EXHIBITS
107


iii




FINANCIAL AND OTHER INFORMATION




In this Annual Report, (i) references to “we”, “us”, “our”, the “Company” or “Keegan” mean Keegan Resources Inc. and its subsidiaries, unless the context requires otherwise; (ii) we use the Canadian dollar as our reporting currency and, unless otherwise specified, all dollar amounts are expressed in Canadian dollars and references to “CDN$” or “$” mean Canadian dollars; and (ii) our financial statements are prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) and Note 15 to these financial statements provides a reconciliation of our financial statements to United States generally accepted accounting principles (“U.S. GAAP”).




FORWARD-LOOKING STATEMENTS




Certain statements in this document constitute “forward-looking statements”.  Forward-looking statements can be identified by the use of words such as “anticipate”, “believe”, “plan”, “estimate”, “expect”, and “intend”, statements that an action or event “may”, “might”, “could”, “should”, or “will” be taken or occur, or other similar expressions.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Registrant, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the risks associated with outstanding litigation, risks associated with project development; the need for additional financing; operational risks associated with mining and mineral processing; fluctuations in metal prices; title matters; uncertainties and risks related to carrying on business in foreign countries; environmental liability claims and insurance; reliance on key personnel; the potential for conflicts of interest among certain officer, directors or promoters of the registrant with certain other projects; the absence of dividends; currency fluctuations; competition; dilution; the volatility of the Company’s common share price and volume; and tax consequences to U.S. Shareholders; and other risks and uncertainties set out under “Risk Factors” in this Annual Report.  Except as required by applicable law, we do not intend to update any of the forward-looking statements included herein to conform those statements to actual results.


iv




NOTE TO US READERS - DIFFERENCES REGARDING THE DEFINITIONS OF RESOURCE AND RESERVE ESTIMATES IN THE U.S. AND CANADA


Mineral

Reserve
The terms “mineral reserve,” “proven mineral reserve” and “probable mineral reserve” used in Keegan Resources Inc.’s (“Keegan” or the “Company”) disclosure are Canadian mining terms that are defined in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) Best Practice Guidelines for the Estimation of Mineral Resource and Mineral Reserves (the “CIM Standards”), adopted by the CIM Council on November 23, 2003. These definitions differ from the definitions in the United States Securities and Exchange Commission (the “SEC”) Industry Guide 7 under the Securities Act of 1933, as amended (the “Securities Act”). Under Industry Guide 7 standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made.  Under Industry 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.Mineral

Resource
The terms “mineral resource,” “measured mineral resource,” “indicated mineral resource” and “inferred mineral resource” used in the Registrant’s disclosure are Canadian mining terms that are defined in accordance with NI 43-101 under the guidelines set out in the CIM Standards; however, these terms are not defined terms under Industry 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 great uncertainty as to their economic 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 mineable.




Accordingly, information contained in this report containing descriptions of the Company’s mineral deposits may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.





v







PART I




ITEM 1
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS




Item 1.A                 Directors and Senior Management




No disclosure required.




Item 1.B                 Advisers




No disclosure required.




Item 1.C                 Auditors




No disclosure required.




ITEM 2
OFFER STATISTICS AND EXPECTED TIMETABLE




Not Applicable.




ITEM 3
KEY INFORMATION




Item 3.A                 Selected Financial Data




The following table presents selected financial data derived from our audited financial statements for the fiscal years ended March 31, 2011, 2010, 2009, 2008 and 2007.  You should read this information in conjunction with our audited financial statements and related notes, as well as Item 4: “Information on the Company” and Item 5: “Operating and Financial Review and Prospects” of this annual report.




Our financial statements have been prepared in accordance with Canadian GAAP in Canadian dollars.  Note 16 to the annual financial statements included herein provides descriptions of material measurement differences between Canadian GAAP and US GAAP as they relate to us and a reconciliation of our financial statements to US GAAP.




1





Table No. 3


Selected Financial Data


(CDN$ in 000, except per share data)




Year Ended

March 31, 2011
Year Ended

March 31, 2010
Year Ended

March 31, 2009
Year Ended

March 31, 2008
Year Ended

March 31, 2007CANADIAN GAAPRevenue
Nil
Nil
Nil
Nil
NilExpenses
($12,785)
($6,943)
($3,619)
($4,170)
($3,641)Other Income (Expenses)
($126)
($30)
($557)
($146)
($740)Loss for the Period
($12,910)
($6,973)
($4,176)
($4,316)
($4,381)Loss Per Share
($0.26)
($0.18)
($0.15)
($0.17)
($0.28)Wtg. Avg. Shares (000)
49,178
38,019
28,233
24,605
15,595Period-End Shares (000)
74,885
45,047
28,505
27,468
22,808Working Capital
$224,459
$47,995
$2,504
$15,064
$13,907Resource Properties
$74,843
$41,123
$30,358
$19,105
$7,198Long-Term Debt
Nil
Nil
Nil
Nil
NilCapital Stock
314,408
$104,887
$43,096
$40,489
$25,459Shareholders’ Equity
$295,077
$89,386
$33,065
$34,293
$21,142Total Assets
$304,916
$90,534
$33,718
$34,670
$21,494US GAAPNet Loss
($44,988)
($17,738)
($15,234)
($14,549)
($9,661)Loss Per Share
($0.91)
($0.47)
($0.54)
($0.59)
($0.62)Resource Properties
$4,165
$2,975
$2,975
$2,779
$1,105Shareholders’ Equity
$224,379
$51,238
$5,682
$17,968
$15,049Total Assets
$234,218
$52,386
$6,335
$18,344
$15,401




We have not declared or paid any dividends in the past and also do not expect to do so in the foreseeable future.




Exchange Rates




The following tables present for the periods indicated, certain rates of exchange for Canadian dollars in terms of U.S. dollars (based on the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York):




Table No. 4


U.S. Dollar/Canadian Dollar




Period
Average
High
Low
CloseFiscal Year Ended March 31, 2011
$0.93
$1.03
$1.00
$1.02Fiscal Year Ended March 31, 2010
$1.09
$1.26
$1.01
$1.02Fiscal Year Ended March 31, 2009
$1.13
$1.30
$0.98
$1.26Fiscal Year Ended March 31, 2008
$1.03
$1.16
$0.92
$1.03Fiscal Year Ended March 31, 2007
$1.14
$1.19
$1.10
$1.15








2




Dec. 2010
Jan. 2011
Feb. 2011
Mar. 2011
Apr. 2011
May 2011Average
$1.01
$0.99
$0.99
$0.98
$0.96
$0.97High
$1.02
$1.00
$1.00
$0.99
$0.97
$0.98Low
$1.00
$0.99
$0.97
$0.97
$0.96
$0.95Close
$1.00
$1.00
$0.97
$0.97
$0.95
$0.97




The rate of exchange for the Canadian dollar to the U.S. dollar on May 31, 2011 was US$1.00 = 0.97 Cdn$.




Item 3.B.                Capitalization and Indebtedness




No disclosure required.




Item 3.C.                Reasons for the Offer and Use of Proceeds




No disclosure required.




Item 3.D.                Risk Factors




Before making an investment decision, you should carefully consider the risks and uncertainties described below as well as the other information contained and incorporated by reference in this annual report.  These risks and uncertainties are not the only ones facing us, additional risks and uncertainties not presently known to us or that we currently consider immaterial may also impair our business operations.  If any of such risks actually occur, our business, prospects, financial condition, cash flows and operating results could be materially adversely affected.




A lawsuit is on-going in Ghana wherein the plaintiff seeks to reclaim Keegan Ghana’s interests in its principal mineral property, the Esaase Concession.




As more particularly described under “Item 8.A.7 Legal Proceedings – Esaase Lawsuit”, Sametro Company Limited (“Sametro”), a predecessor in interest of Keegan Ghana to the Esaase Concession, has commenced a lawsuit in Ghana seeking to recover Sametro’s interests in the Esaase Concession.  While Keegan Ghana is confident in its legal position, lawsuits are inherently uncertain, an unfavourable ruling in the lawsuit could deprive Keegan Ghana of its most material asset, which would have severe adverse consequences on the value of the Company.




Should Sametro succeed with the interlocutory application, Keegan Ghana would be required to halt exploration activities on the Esaase Property, delaying Keegan’s exploration program.  Such delay could have a material adverse effect on the value of the Company.




Market Conditions may affect Keegan’s ability to raise further capital.




Capital market disruptions, as recently experienced in 2008 and 2009, have a significant material adverse impact on companies in many sectors of the economy and can significantly limit access to capital and credit.  These disruptions could, among other things, make it more difficult for the Company to obtain, or increase the Company’s cost of obtaining, financing for its operations.  Failure to raise capital when needed or on reasonable terms may have a material adverse effect on the Company’s business, financial condition and results of operations.




Additionally, these factors, as well as other related factors, may cause decreases in asset value and create solvency concerns, which may result in impairment losses.




The Company is also exposed to liquidity risks in meeting its operating and capital expenditure requirements in instances where cash positions are unable to be maintained or appropriate financing is unavailable. These factors may impact the ability of the Company to obtain loans and other credit facilities in the future and on favourable terms.




3


Keegan’s mineral properties may not contain any ore reserves or any known body of economic mineralization.




While there are bodies of mineralization on the Esaase Property, and although Keegan has completed core drilling programs within, and adjacent to, the deposits to determine measured, indicated and inferred mineral resources there are currently no known reserves or body of commercially viable ore and the Esaase Property must be considered an exploration prospect only.  Extensive additional work will be required before Keegan can ascertain if any mineralization may be economic and hence constitute “ore”.  Engineering, socioeconomic and environmental studies are ongoing.  Exploration for minerals is a speculative venture necessarily involving substantial risk.  If the expenditures that Keegan incurs on the Esaase Property do not result in discovery and development of commercial quantities of ore, the value of exploration and acquisition expenditures will be totally lost and the value of Keegan stock negatively impacted.




Mineral Resources disclosed by Keegan for the Esaase Property are estimates only.




Keegan has disclosed mineral resource estimates that have been made in accordance with NI 43-101.  These resources estimates are classified as “measured resources”, “indicated resources” and “inferred resources”.  Investors are cautioned not to assume that any part or all of mineral deposits classified as “measured resources” or “indicated resources” will ever be converted into ore reserves.  Furthermore, “inferred 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.  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 part or all of an inferred resource exists, or is economically or legally mineable.




All amounts of mineral resources are estimates only, and Keegan cannot be certain that any specified level of recovery of metals from the mineralized material will in fact be realized or that the Esaase Property or any other identified mineral deposit will ever qualify as a commercially mineable (or viable) ore-body that can be economically exploited.  Mineralized material that is not mineral reserves does not have demonstrated economic viability.  In addition, the quantity of mineral reserves and mineral resources may vary depending on, among other things, metal prices and actual results of mining.




If it is determined that a commercially mineable ore-body exists and it can be economically exploited, Keegan will require significant additional financing in order to complete the potential development of the Esaase Property.




Keegan will need to raise additional financing to fund the costs of developing the Esaase Property into commercial production if warranted.  If the costs of Keegan’s planned exploration programs are greater than anticipated, Keegan may have to seek additional funds through public and private share offerings, arrangements with corporate partners, or debt financing.  There can be no assurance that Keegan will be successful in its efforts to raise these required funds, or that it will be able to raise the funds on terms that do not result in high levels of dilution to shareholders.




Keegan has no earnings and may never achieve profitability or pay dividends.




Keegan has a long history of losses and there can be no assurance that Keegan will ever be profitable or be able to secure funds to develop profitable mining operations.  Keegan has paid no dividends on its shares since incorporation.  Keegan presently has no ability to generate earnings as its mineral properties are in the exploration stage.  If Keegan is successful in developing the Esaase Property, Keegan anticipates that it will retain cash resources for the future operation and development of its business.  Keegan does not intend to declare or pay any cash dividends in the foreseeable future.  Payment of any future dividends is solely at the discretion of Keegan’s Board of Directors, which will take into account many factors including Keegan’s operating results, financial conditions and anticipated cash needs.  For these reasons, Keegan may never achieve profitability or pay dividends.




If price for gold declines, Keegan may not be able to raise the additional financing required to fund its exploration and potential development activities for the Esaase Property.




The ability of Keegan to raise financing to fund its activities and, if warranted, development of the Esaase Property, will be significantly affected by changes in the market price of the metals it mines or for which it explores.  The price of gold is volatile, and is affected by numerous factors beyond Keegan’s control.  The level of interest rates, the rate of inflation, the world supplies of and demands for gold and the stability of exchange rates can all cause fluctuations in these prices.  Such external economic factors are influenced by changes in international investment patterns and monetary systems and political developments.  The price of gold has fluctuated in recent years, and future significant price declines could cause investors to be unprepared to finance exploration of gold.




4


Compliance with environmental requirements will take large resources and changes to these requirements could significantly increase the costs to Keegan of developing the Esaase Property and could delay these activities.




Keegan must comply with stringent environmental legislation in carrying out work on the Esaase Property.  Environmental legislation is evolving in a manner that will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees.  Changes in environmental legislation could increase the cost to Keegan of carrying out its exploration and, if warranted, development of the Esaase Property.  Further, compliance with new or additional environmental legislation may result in delays to Keegan’s exploration and, if warranted, development activities.




Changes in government regulations and the presence of unknown environmental hazards on Keegan’s mineral properties may result in significant unanticipated compliance and reclamation costs.




Government regulations relating to mineral rights tenure, permission to disturb areas and the right to develop and operate a mine can adversely affect the operations of Keegan.  Keegan may not be able to obtain all necessary licenses and permits that may be required to carry out exploration and, if warranted, development of its projects.  Any changes in regulations or shift in political attitude are beyond the control of Keegan and may adversely affect its business.




Keegan is subject to many risks that are not insurable and, as a result, Keegan will not be able to recover losses through insurance should such uninsurable liabilities occur.




Hazards such as unusual or unexpected geological formations and other conditions are involved in mineral exploration and development.  Keegan may become subject to liability for pollution, cave-ins or hazards against which it cannot insure.  The payment of such liabilities could result in a material adverse effect on Keegan’s financial position and its results of operations.  Although Keegan maintains liability insurance in an amount which it considers adequate, the nature of these risks is such that the liabilities might exceed policy limits and the liabilities and hazards might not be insurable against.




Gold exploration is highly speculative, involves substantial expenditures, and is frequently non-productive.




Gold exploration, including the exploration of the Esaase Property and other projects, involves a high degree of risk.  Exploration projects are frequently unsuccessful.  Few prospects that are explored are ultimately developed into producing mines.  The Company cannot be certain that its gold exploration efforts will be successful.  The success of gold exploration is dependent in part on the following factors:




·
unanticipated adverse geotechnical conditions;




·
incorrect data on which engineering assumptions are made;




·
costs of constructing and operating a mine in a specific environment;




·
cost of processing and refining;




·
availability of economic sources of power;




·
availability of qualified staff;




·
adequacy of water supply;




·
adequate access to the site including competing land uses (such as agriculture and illegal mining);




·
unanticipated transportation costs and shipping incidents and losses;




·
significant increases in the cost of diesel fuel, cyanide or other major components of operating costs;





5




·
government regulations (including regulations relating to prices, royalties, duties, taxes, permitting, restrictions on production, quotas on exportation of minerals, as well as the costs of protection of the environment and agricultural lands);




·
fluctuations in gold prices;




·
accidents, labour actions and force majeure events;




·
the identification of potential gold mineralization based on superficial analysis;




·
availability of prospective land;




·
availability of government-granted exploration and exploitation permits;




·
the quality of our management and our geological and technical expertise; and




·
the funding available for exploration and development.




Substantial expenditures are required to determine if a project has economically mineable mineralization.  It could take several years to establish Proven and Probable Mineral Reserves and to develop and construct mining and processing facilities.  As a result of these uncertainties, the Company cannot guarantee that current and future exploration programs will result in the discovery of Mineral Reserves, the expansion of existing Mineral Reserves and the development of mines.




The market price of Keegan’s common shares is subject to high volatility and could cause investor loss.




The market price of a publicly traded stock, especially a resource issuer like Keegan, is affected by many variables in addition to those directly related to exploration successes or failures.  Such factors include the general condition of market for resource stocks, the strength of the economy generally, the availability and attractiveness of alternative investments and the breadth of the public market for the stock.  The effect of these and other factors on the market price of Keegan’s common shares suggests Keegan’s shares will continue to be volatile.  Therefore, investors could suffer significant losses if Keegan’s shares are depressed or illiquid when an investor seeks liquidity and needs to sell Keegan shares.




Keegan must comply with the laws and regulations of a foreign jurisdiction.




Keegan has focused its operations on the properties in Ghana.  Nearly all mining projects require government approval regardless of the country.  There can be no certainty that these approvals will be granted in a timely manner, or at all.  The laws in foreign countries tend to differ significantly from North America and are subject to change.  Mining operations, development and exploration activities are generally subject to extensive laws and regulations governing prospecting, development, production, exports, taxes, labour standards, occupational health, waste disposal, environmental protection and remediation, protection of endangered and protected species, mine safety, toxic substances and other matters.




Mining is also subject to potential risks and liabilities associated with pollution of the environment and the disposal of waste products occurring as a result of mineral exploration and production.  The costs of discovering, evaluating, planning, designing, developing, constructing, operating and closing mines and other facilities in compliance with such laws and regulations are significant.




Acquisitions of properties in foreign countries are subject to the risks normally associated with conducting business in foreign countries.  Some of these risks are more prevalent in countries which are less developed or have emerging economies, including uncertain political and economical environments, as well as risks of war and civil disturbances or other risks which may limit or disrupt a project, restrict the movement of funds or result in the deprivation of contract rights or the taking of property by nationalization or appropriation without fair compensation, risk of adverse changes in laws or policies of particular countries, increases in foreign taxation, delays in obtaining or the inability to obtain necessary governmental permits, limitations on ownership and repatriation of earnings and foreign exchange controls and currency devaluations.




In addition, Keegan may face import and export regulations, including restrictions on the export of gold, disadvantages of competing against companies from countries that are not subject to Canadian and U.S. laws, including foreign corrupt practices legislation, restrictions on the ability to pay dividends offshore, and risk of loss due to disease and other potential endemic health issues.  Although Keegan is not currently experiencing any significant or extraordinary problems arising from such risks in the foreign country that we have properties in, there can be no assurance that such problems will not arise in the future.




6


Competition




Keegan operates in a competitive industry and compete with other more well established companies which have greater financial resources.  Keegan faces strong competition from other mining companies in connection with exploration and the acquisition of properties producing, or capable of producing precious metals.  Many of these companies have greater financial resources, operational experience and technical capabilities than us.  As a result of this competition, Keegan may be unable to maintain or acquire attractive mining properties on terms we consider acceptable or at all.  Consequently, our operations and financial condition could be materially adversely affected.




Keegan’s operations are subject to fluctuations in currency exchange rates, which could materially adversely affect its financial position.




Keegan maintains most of its working capital in Canadian dollars with a reserve of six months of projected expenditures in US dollars.  Keegan converts Canadian funds to foreign currencies in anticipation of foreign currency denominated obligations.  Accordingly, Keegan is subject to fluctuations in the rates of currency exchange between Canadian dollar and these foreign currencies, and these fluctuations could materially affect the Company’s financial position and results of operations. A significant portion of the operating costs at Esaase and Asumura is based on the US dollar and the Ghanaian currency, the Cedi.




Dilution through employee/director/consultant options could adversely affect Keegan’s stockholders.




Because the success of Keegan is highly dependent upon its respective employees, the Company has granted to some or all of its key employees, Directors and consultants options to purchase common shares as non-cash incentives.  To the extent that significant numbers of such options may be granted and exercised, the interests of the other stockholders of the Company may be diluted. There are 6,213,750 share purchase options outstanding as at March 31, 2011, which, if exercised, would result in an additional 6,213,750 common shares being issued and outstanding. (See “Table No. 8 Stock Option Grants under Item 6.B Compensation”).




Keegan is dependent on key personnel and the absence of any of these individuals could result in the Company having to cease operations.




While engaged in the business of exploring mineral properties, the nature of Keegan’s business, its ability to continue its exploration of potential exploration projects, and to develop a competitive edge in the marketplace, depends, in large part, on its ability to attract and maintain qualified key management personnel.  Competition for such personnel is intense and the Company may not be able to attract and retain such personnel.  Keegan’s growth will depend, on the efforts of its Senior Management, particularly its Executive Chairman, Shawn Wallace, its Chief Executive Officer and President, Maurice Tagami, its Chief Financial Officer, Greg McCunn and its Board of Directors that includes Marcel DeGroot, Daniel McCoy, Robert McLeod, Gordon Fretwell, and Keith Minty in addition to Shawn Wallace and Maurice Tagami. Keegan does not carry key-man insurance on any individuals.




U.S. investors may not be able to enforce their civil liabilities against us or our directors, controlling persons and officers.




It may be difficult to bring and enforce suits against Keegan.  Keegan is a corporation incorporated in the province of British Columbia under the British ColumbiaBusiness Corporations Act.  A majority of the Company's directors must be residents of Canada, and all or substantial portions of their assets are located outside of the United States, predominantly in Ghana and Canada.  As a result, it may be difficult for U.S. holders of our common shares to effect service of process on these persons within the United States or to realize in the United States upon judgments rendered against them.  In addition, a shareholder should not assume that the courts of Canada (i) would enforce judgments of U.S. courts obtained in actions against us or such persons predicated upon the civil liability provisions of the U.S. federal securities laws or other laws of the United States, or (ii) would enforce, in original actions, liabilities against us or such persons predicated upon the U.S. federal securities laws or other laws of the United States.




7


As a foreign private issuer, Keegan and its insiders are exempt from certain requirements of the Exchange Act, which may result in shareholders having access to less information or information on a less timely basis in comparison to U.S. domestic issuers.




As a foreign private issuer, Keegan is exempt from the proxy solicitation rules promulgated under section 14 of the Exchange Act, and its insiders are exempt from the requirement to file statements of beneficial ownership of the Company’s securities under section 16 of the Exchange Act.  Although Keegan is required to prepare proxy materials in connection with meetings of its shareholders under applicable Canadian securities laws, the disclosure in such materials may not be comparable to disclosure required to be included proxy statements prepared by U.S. domestic issuers on Schedule 14A.  Any proxy materials prepared by Keegan are required to be filed with applicable securities commissions or similar regulatory authorities in Canada on the System for Electronic Document Analysis and Retrieval (commonly known as “SEDAR”), an electronic database maintained on behalf of the Canadian provincial securities regulators, but are only required to be furnished to the SEC on Form 6-K.




Keegan’s insiders are required to file insider reports with applicable securities commissions or similar regulatory authorities in Canada on the System for Electronic Disclosure by Insiders (commonly known as “SEDI”), an electronic database maintained on behalf of the Canadian provincial securities regulators.  However, the disclosure in such insider reports may not be comparable to, nor as timely as, disclosure contained in statements of beneficial ownership of securities on Forms 3 and Form 4 prescribed pursuant to section 16 of the Exchange Act.




The Company is likely a “passive foreign investment company” which will likely have adverse U.S. federal income tax consequences for U.S. shareholders.




U.S. shareholders should be aware that the Company believes it was classified as a passive foreign investment company (“PFIC”) during the tax year ended March 31, 2011, and may be a PFIC in future tax years.  If the Company is a PFIC for any year during a U.S. shareholder’s holding period, then such U.S. shareholder generally will be required to treat any gain realized upon a disposition of common shares, or any so-called “excess distribution” received on its common shares, as ordinary income, and to pay an interest charge on a portion of such gain or distributions, unless the shareholder makes a timely and effective “qualified electing fund” election (“QEF Election”) or a “mark-to-market” election with respect to the common shares.  A U.S. shareholder who makes a QEF Election generally must report on a current basis its share of the Company's net capital gain and ordinary earnings for any year in which the Company is a PFIC, whether or not the Company distributes any amounts to its shareholders.  However, U.S. shareholders should be aware that there can be no assurance that the Company will satisfy record keeping requirements that apply to a qualified electing fund, or that the Company will supply U.S. shareholders with information that such U.S. shareholders require to report under the QEF Election rules, in the event that the Company is a PFIC and a U.S. shareholder wishes to make a QEF Election.  Thus, U.S. shareholders may not be able to make a QEF Election with respect to their common shares.  A U.S. shareholder who makes the mark-to-market election generally must include as ordinary income each year the excess of the fair market value of the common shares over the taxpayer’s basis therein.  This paragraph is qualified in its entirety by the discussion below under the heading “Certain United States Federal Income Tax Considerations.”  Each U.S. shareholder should consult its own tax advisor regarding the PFIC rules and the U.S. federal income tax consequences of the ownership and disposition of common shares.




ITEM 4
INFORMATION ON THE COMPANY




Item 4.A                 History and Development of the Company




Incorporation and Name Changes




The Company was incorporated as “Quicksilver Ventures Inc.” on September 23, 1999 under the Company Act (British Columbia) (now the British Columbia Business Corporation Act). Pursuant to a resolution passed at a meeting of the shareholders of the Company that was held on August 13, 2004, the Company changed its name from Quicksilver Ventures Inc. to Keegan Resources Inc.




Keegan’s executive office is located at Suite 600, 1199 West Hastings Street, Vancouver, British Columbia, Canada V6E 3T5, Telephone: (604) 683-8193, Facsimile: (604) 683-8194, Website: www.keeganresources.com, Email: info@keeganresources.com.  Keegan’s registered office is located at 1500 Royal Centre, 1055 West Georgia Street, P.O. Box 11117, Vancouver, BC V6E 4N7.




8





On January 2, 2008, the Company’s common shares began trading on the American Stock Exchange (now the NYSE Amex Equities Exchange). On December 22, 2008, the Company graduated from the TSX Venture Exchange (the “TSX-V”) to the Toronto Stock Exchange (the “TSX”) and commenced trading under the trading symbol “KGN”.




For the purposes of the United States regulatory requirements and United States Generally Accepted Accounting Principles, Keegan is considered to be an exploration stage company.




As at March 31, 2011, the Company has mining interests in West Africa (see “Item 4.D Property, Plant and Equipment”).




Corporate Development




Keegan became a public company on June 22, 2001 as a “Capital Pool Company”.




Under the TSX-V Policy 2.4, a company with only minimal working capital is allowed to list on the TSX-V for the purposes of negotiating an acquisition of, or the participation in, assets or businesses, known as a Qualifying Transaction (“QT”). Such companies are classified as a “Capital Pool Company”, or “CPC”, and are governed by a specific set of rules and regulations.




The sole purpose of a CPC is to identify and evaluate existing businesses or assets for possible acquisition, which if acquired, would provide the company for a full listing on the TSX-V. The only business a CPC is allowed to conduct prior to its Initial Public Offering and listing on the TSX-V is to prepare for its offering. This typically consists of raising a limited amount of seed capital, establishing a management team and board of directors, as well as hiring professionals to assist in the offering, including an auditor, legal counsel, and an agent for the offering.




As Keegan had not completed a “QT” by December 2003, the directors of the Company scheduled an extraordinary general meeting of its shareholders to request shareholder approval to the proposed listing of Keegan’s shares on the NEX Exchange. The NEX Exchange is a separate board of the TSX-V for companies previously listed on the TSX-V or the TSX, which have failed to maintain compliance with the ongoing financial listing standards of either of these stock exchanges. Shareholder approval was obtained and Keegan’s common shares began trading on the NEX Exchange on February 12, 2004.




On September 7, 2004, Keegan entered into agreements with the Hunter Dickinson Group, Inc. (“HDG”), Anaconda Gold Corp. and Barrick Gold Exploration Inc. whereby it acquired the right to earn an interest in the Horse Mountain Project located in Nevada.




On January 31, 2005, Keegan announced that the TSX-V had accepted the transaction pertaining to the Horse Mountain Project as the “Qualifying Transaction” for the Company and that it no longer considered Keegan to be a Capital Pool Company.  Keegan was reclassified by the TSX-V as a “Gold Ore Mining” company.  On March 1, 2005, the Company began trading on the TSX-V under the name “Keegan Resources Inc.” with the stock symbol of “KGN”.




On March 11, 2005, Keegan announced that it had entered into an option agreement with GTE Ventures Limited, an unrelated privately held Ghanaian company, to acquire the Asumura gold project located in West Ghana (the “Asumura Property”).  The option agreement allowed Keegan to acquire 100% of the private interest in the Asumura Property, subject to a 3.5% net smelter return (“NSR”) royalty, 50% of which could be purchased by Keegan for US$2,000,000, Keegan’s interest could be earned by performing work expenditures totaling US$1,000,000, delivering cash payments totaling US$100,000 and delivering shares of Keegan totaling US$100,000 in value over a period of three years.  During the year ended March 31, 2008, the Company acquired an option to purchase the remaining 50% of the NSR royalty for an additional US$4,000,000.  Keegan’s interest in the Asumura Property is also subject to the government of Ghana’s 10% carried interest. See “Item 4.D Property, Plant and Equipment - Asumura Property”.




9





During the fiscal year ended March 31, 2006, management announced that it had decided not to pursue the Company’s option to earn an interest in the Horse Mountain Claims and, as a result, $1,018,587 in acquisition and deferred exploration expenditures associated with the property were written-off. Management took this action because, due to limited financial resources, it determined to concentrate the Company’s efforts on its Ghana properties.




On May 3, 2006, Keegan entered into an option agreement, as amended on June 1, 2006, to purchase a 100% interest in the mining lease for the “Esaase Concession” on the Company’s material property in Ghana, known as the “Esaase Property”, subject to certain royalties and government obligations (see “Item 4.D Property, Plant and Equipment - Esaase Gold Property”). Under this option agreement, Keegan made payments of US$700,000 during 2006 and 2007, including an advance payment of US$200,000 due upon production at the Esaase Property.  Keegan also agreed to issue 780,000 common shares over a three year period, and 40,000 shares were issued in 2006.The balance of the shares to be issued under the option agreement was renegotiated, and a tripartite agreement was signed on May 29, 2007 (see “Item 4.D Property, Plant and Equipment - Esaase Gold Property”).  In June 2006, the Company entered into an agreement whereby the Company paid US$10,000 and issued 4,000 common shares to Eric Ewen as a finder's fee with respect to the acquisition of Esaase Concession.  In May 2007, the Company paid another finder's fee of US$85,000 and issued 4,000 common shares to Eric Ewen in connection with the renegotiation of the option agreement.




In 2007, Keegan terminated its interests under two option agreements that it had entered into in 2005 with respect to mineral properties in Nevada, in order to focus on its properties in Ghana.  During the fiscal year ended March 31, 2006, Keegan had terminated its option on a third mineral property in Nevada, also acquired in 2005, after the results of preliminary exploration work indicated that further work was not warranted on the property.




In March 2008, Keegan acquired a 100% interest in the mining lease for the Jeni River Concession for consideration of US$50,000 to the Bonte Liquidation Committee and US$50,000 paid to the Minerals Commission of Ghana to transfer title, subject to a 3.5% NSR royalty and the government of Ghana’s 10% carried interest (see “Item 4.D Property, Plant and Equipment - Esaase Property”).




The Company entered into an option agreement dated March 27, 2008 with Mt. Olives Goldfields, Ltd. to earn a 100% ownership of the Mt. Olives Reconnaissance Concession, which is contiguous to the Asumura Property.  During the year ended March 31, 2009, the Company decided not to pursue its option on the Mt. Olives concession and as a result, $170,596 in acquisition and deferred exploration expenditures were written-off.




Financings




The Company has financed its operations through funds raised in public/private placements of common shares and shares issued upon exercise of stock options and share purchase warrants. Over the past three fiscal years, the Company raised funds through the issuance of the following common shares:




10





Fiscal Year
Nature of Share Issuance
Number of Shares
AmountFiscal 2008
Private Placement, net of share issue costs
3,300,000
$12,358,089Exercise of share purchase warrants
1,115,470
$2,033,528Exercise of share purchase options
200,000
$184,000Fiscal 2009
Exercise of share purchase warrants
773,000
$1,982,700Exercise of share purchase options
263,905
$242,793Fiscal 2010
Bought deal share offering, net of share issue costs
8,000,000
$18,059,533Brokered private placement, net of share issue costs
7,015,000
$39,003,739Exercise of share purchase warrants
162,667
$504,268Exercise of share purchase options
1,289,903
$2,301,880Fiscal 2011
Bought deal share offering, net of share issue costs
28,405,000
$202,184,925Exercise of share purchase warrants
237,333
735,732Exercise of share purchase options
1,195,132
3,704,178





Capital Expenditures




The Company’s principal capital expenditures (there have been no material divestitures) over the three fiscal years ended March 31, 2011 are as follows:




Year
Resource property

acquisition costs
Deferred exploration

costs
Furniture, equipment

and leasehold

improvements
Total2009
$237,161
$10,901,528
$119,631
$11,258,3202010

2011
$nil

$639,220
$9,319,015

$21,238,903
$214,751

$320,843
$9,533,766

$22,198,966




Item 4.B                 Business Overview




Keegan is a natural resource company currently engaged in the acquisition and exploration of mineral resources in West Ghana.




Our Properties




All of Keegan’s properties are currently in the exploration stage.  Although its Esaase Property has been determined to contain mineral resources, none of the Company’s properties have been determined to contain any known reserves of minerals.  There can be no assurance that any of Keegan’s properties will be determined to contain reserves of any minerals.




The Company’s material properties currently consist of the Asumura Property and the Esaase Property, both in West Ghana, Africa.  See Item 4.D “Property, Plant and Equipment” below for more information relating to these properties.




Plan of Operations




Our plan of operations for the next 12 months is to:




(a)
complete the pre-feasibility and feasibility studies for the Esaase Gold project;




11







(b)
continue exploration at Esaase to add to the existing resource estimates and convert additional resources to an indicated resources category.  Exploration will consist of reverse circulation and core drilling of current exploration and resource extension targets including down dip on the deposit, with-in the Dawohodo concession and along the B and D zones to the north east of the deposit;




(c)
commence detailed engineering studies for the ultimate design and operation of facilities at Esaase and review potential purchases for long-lead capital purchases;




(d)
continue working with local communities, the Ghanaian government and the EPA to both advance community relations and the permitting of the Esaase project.




Source of Funds for Fiscal 2012




Keegan’s primary source of funds since incorporation has been through the issuance of common shares.




As at March 31, 2011, the Company had cash and cash equivalents of $229,144,989. The Company believes it currently has sufficient working capital on hand to meet its expected capital requirements for fiscal 2012 and 2013.  Additional funds may be received through the exercise of currently outstanding common stock warrants and options or through the sale of additional common shares either as a private placement or public common stock offering.




Additional capital may also be obtained through the exercise of outstanding share purchase options and share purchase warrants. There is no guarantee, however, that any of these share purchase options and share purchase warrants will be exercised.




Keegan has sufficient funds to pursue its business plans for the next 24 months.  Additional financing will be required going forward.  However, there can be no assurance that any such financing will be obtained.




Use of Funds for Fiscal 2012




For the Fiscal 2012, the Company has budgeted $5,800,000 for general and administrative expenses and $29,800,000 for property development, exploration and acquisition costs predominantly on the Esaase gold project.




Anticipated Changes to Facilities/Employees




Management of Keegan anticipates adding employees and facilities in the near future as the Company further advances the development of its Esaase Gold project.




Material Effects of Government Regulations




The current and anticipated future operations of Keegan including further exploration activities, require permits from various Ghanaian governmental agencies.  Such operations are subject to various laws governing land use, the protection of the environment, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, well safety and other matters.  Unfavorable amendments to current laws, regulations and permits governing operations and activities of resource exploration companies, or more stringent implementation thereof, could have a materially adverse impact on Keegan and cause increases in capital expenditures which could result in a cessation of operations by Keegan.  Keegan has had no material costs related to compliance and/or permits in recent years, and anticipates no material costs in the next year.




Competition




Keegan competes with other mineral resource exploration companies for financing, for the acquisition of new mineral properties and for the recruitment and retention of qualified employees and other personnel.  Many of the mineral resource exploration and development companies with which Keegan competes have greater financial and technical resources.  Accordingly, these competitors maybe able to spend greater amounts on acquisitions of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties.  In addition, they may be able to afford more geological expertise in the targeting and exploration of mineral properties.  This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration and development.  This competition could have an adverse impact on our ability to finance further exploration and to achieve the financing necessary for us to develop our properties.




12


Item 4.C                      Organization Structure




The consolidated financial statements include the accounts of the Company and the following subsidiaries:





Subsidiary name
Jurisdiction
Ownership




Keegan Resources Ghana Limited
Ghana
90%


Keegan International (Barbados) Inc.
Barbados
100%


Keegan Ghana (Barbados) Inc.
Barbados
100%


Quicksilver Ventures (Nevada) Inc.
Nevada, USA
100%







During the three months ended March 31, 2011, the Company incorporated Keegan International (Barbados) Inc. and Keegan Ghana (Barbados) Inc. as its wholly-owned subsidiaries for the purposes of international tax planning.







Item 4.D                      Property, Plant and Equipment




Although mineral resources have been determined on the Company’s Esaase Property, Keegan’s properties are only exploration stage properties and a substantial amount of capital will have to be spent on each property before management will know if they contain commercially viable mineral deposits.




Keegan’s executive offices are located in rented premises of approximately 10,000 sq. ft. at Suite 600, 1199 West Hastings Street, Vancouver, British Columbia, Canada, V6E 3T5.  Keegan began occupying these facilities on December 1, 2008.




On May 20, 2010, the Company negotiated the cancellation their existing lease commitment set to expire on November 30, 2013.  In its place, the Company signed an extension of the lease to May 31, 2015 that includes the 5,000 additional sq.ft. The monthly rent payments plus operating costs over the term of the lease are approximately $30,000.




1.           The Asumura Property




The Asumura Property is without known reserves and the work being done by Keegan is exploratory in nature. Keegan’s interest in this property stemmed from earlier exploration work, as described below, that was done in the area.




Acquisition of Interest




Keegan entered into an agreement with GTE Ventures Ltd. (“GTE”), an unrelated privately held Ghanaian company, which allows Keegan to acquire 100% of the Asumura Property by performing work expenditures totaling US$1 million, deliver cash payments adding together US$100,000 and delivering shares of Keegan totaling US$100,000 in value over a period of three years, under the following schedule:




pay US$100,000 as follows:





-
US$10,000 upon signing the agreement (paid);


-
US$30,000 on or before October 8, 2006 (paid through the issuance of 16,775 shares)


-
US$60,000 on or before October 8, 2007. (paid through the issuance of 20,087 shares)




13


issue common shares of the Company with a value of US$100,000 to GTE as follows:





-
common shares with a value of US$10,000 upon regulatory approval (issued  13,899 shares);




-
common shares with a value of US$30,000 based on the 10 day average closing price prior to issuance on or before October 8, 2006 (issued 16,775 shares); and,




-
common shares with a value of US$60,000 based on the 10 day average closing price prior to issuance on or before October 8, 2007 (issued 20,088 shares).




complete US$1,000,000 of exploration work on the Asumura Property as follows:




-
US$80,000 on or before July 31, 2005, (incurred);




-
an additional US$400,000 on or before July 31, 2006 (incurred); and




-
an additional US$520,000 on or before July 31, 2007 (incurred).




The Company has met all the above commitments and now has an undivided 100% private interest in the Asumura Property subject to a 3.5% NSR royalty, 50% of which may be purchased for US$2,000,000. If the property is converted to a Mining License, it may become subject to a 5% gross revenue royalty and 10% ownership by the Ghanaian government. 11,270 shares were issued to Hunter Dickinson Inc. as finder’s fees with respect to the original option agreement.




During the year ended March 31, 2008, the Company acquired an option to purchase the remaining 50% of the GTE NSR royalty for an additional US$4,000,000.







14




Location











The Asumura Property is located in the southwestern part of Ghana and is divided into two parts by the Bia River. The western part of the property is within the Western Region of Ghana in the Juabeso Bia District and the eastern part is in the Brong Ahafo Region of Ghana.




Accessibility, Climate, Infrastructure and Physiography




Asumura Property is accessible from the town of Kumasi by road, the majority of which is asphalt. The last 22 miles is a laterite road. Laterite is a surface formation, found mostly in tropical areas, which is enriched in iron and aluminum. Within the property, there is a good network of laterite roads and foot trails, which provide access for the exploration crews.




Annual rainfall is between 58 inches and 78 inches and temperatures vary between 72 degrees and 97 degrees Fahrenheit with an average of about 84 degrees Fahrenheit. A major rainy season occurs from April to July followed by a minor one from September through October.




The closest town, Goaso, is about 24 miles away. It contains hotels, markets and restaurants, hospitals and medical clinics, a cell phone tower, a network of land phones connected to the Ghana Telephone system via radio, and an internet café with satellite dish.




The Asumura Property is sparsely populated.




15





Land Status, Existing Agreements and Permits to Work




The Asumura Property currently consists of two exploration concessions:  Fosukrom and Asumura, which together equal 279.4 sq km.  Keegan entered into an agreement with GTE , which allows Keegan to acquire 100% of the private interest in the Asumura Property by performing work expenditures totaling US$1 million, deliver cash payments adding together US$100,000 and delivering shares of Keegan totaling US$100,000 in value over a period of three years. GTE will retain a 3.5% Net Smelter Return, 50% of which may be purchased for US$2 million by Keegan.  The Ghanaian government is also entitled to claim a 5% revenue royalty after the property is converted to a mining license; a 3% has been standard in recent history.  The Ghanaian government is also entitled to participate up to 10% in the project.  During the year ended March 31, 2008, the Company acquired an option to purchase the remaining 50% of the GTE NSR royalty for an additional US$4,000,000.




The exploration license allows Keegan permission to trench and drill on the property, providing Keegan obtains a permit from the EPA.  Keegan obtained its permits for 2006 in January 2006 and has renewed these permits annually from 2007 up to 2011.




Regional and Property Geology




The Asumura Property is located in Southwest Ghana which is dominated by the Birmian Supergroup of metasedimentary and metavolcanic rocks with various granitoid intrusions. Within the Birmian Supergroup, northeast striking mafic metavolcanic belts are separated from intervening metasedimentary basins by major faults. The Asumura Property is situated on the NW edge of the Sefwi-Bibiani Greenstone Belt along a well-defined zone of gold occurrences. It covers a 6 kilometer segment of grandiorite-metasediment contact and a 5 kilometer segment of a metavolcanic-metasediment contact.




Through surface geochemistry and aeromagnetic and EM studies, three major gold bearing regional structures have been located on the property, one of which is the belt bounding structure mentioned in the previous paragraph.




History




The Asumura Property was once licensed by Anglo American Plc., an unrelated public company. Keegan is unaware of any surface exploration that Anglo American carried out in the area.  There are no recorded mineral resources, reserves, or production from this property.  When Keegan entered into the option agreement with GTE, there were no known exploration samples of any kind taken from the property.  Zaknet, Inc.,  a private Ghanaian company unrelated to Keegan, acquired a reconnaissance concession from the Ghanaian government in 2003.  They quit, claimed the property to GTE in 2004 and Keegan entered into an option agreement with GTE in 2005.




Recent Activities by Keegan




Keegan initially explored the concession using stream sediment techniques.  After discovering significant stream sediment anomalies, Keegan conducted reconnaissance soil sampling in the drainages, which showed anomalous gold in the stream sediments.  Keegan subsequently used grid sampling soil techniques at approximately 100 meter line spacing and 25 meter sample spacing together with induced polarization (“IP”) geophysical surveying.  The end result was the discovery of three distinct anomalies in the Twiapasi, Wagyakrom and Mangoase areas. The Twiapasi and Wagyakrom anomalies are on the southern side of a large topographic depression that hosts the Bia River and one of its major tributaries.  The Mangoase anomaly is on the north side of the trough and parallels the east north east trend. The next phase will include further soil sampling, induced polarization geophysical studies and augur drilling.




Keegan received approval from the Ghanaian government during the latter part of 2005 to convert its holdings from reconnaissance to exploration concessions. This conversion allowed exploration trenching and drilling to proceed after successful permitting from the EPA in early 2006.




The Company began drilling at the Asumura Property shortly after receiving the approval from the Ghanaian government. Keegan drilled 124 shallow (30-102 meter) reverse circulation holes and 13 core holes.  Keegan discovered from 10-30 meter widths of 0.5-1.68 g/t Au mineralization at the Wagyakrom and Mangoase anomalies.




16





Subsequent to the initial drilling, Keegan was able to obtain aeromagnetic geophysical data for the entire property that caused Keegan to prioritize the existing Mangoase area and to identify a new potential mineralized structure: the Bia structure, which underlies the previously described topographic depression transcending the length of the property.  This zone had not been previously explored due to alluvial cover.




In July 2007, the Company discovered the NW anomaly, which coincides with a large regional north east trending fault coincident with an aeromagnetic break in the northwestern portion of the property. The anomaly is over 5.5 km long and varies from 300 -- 500 meters wide and is defined very consistently by Au values obtained in the low lying, deeply lateritic soils.   In January of 2008 the company released auger results of up to 5900 ppb Au from the NW zone, following up on the previously mentioned soil anomalies




In March of 2008, the company conducted a small reverse circulation reconnaissance drilling program.  An intercept of 14 meters of 14.48 g/t Au was intersected on the NW structure.




In April of 2008, Keegan obtained the contiguous Mt. Olives reconnaissance concession, which tripled the size of the Asumura Property. The Company completed surface exploration during April and September of 2008 comprising stream sediment and soil sampling on the Mt. Olives reconnaissance concession along with a continuous program of soil and auger sampling on the Asumura exploration concessions. During the year ended March 31, 2009, the Company terminated its option agreement on the Mt. Olives concession.




The fiscal 2010 exploration program consisted of auger sampling and testing of soil anomalies along the NW, Mangoase, Wagyakrom Spur and Bia anomalies and a regional gravity survey (conducted by Newmont Mining Corporation under a confidentiality agreement) in order to obtain a gravity map for the entire concession. These programs identified drill worthy targets and Keegan designed a drill program and has since proceeded to drill.





During the second quarter of the fiscal year ending March 31, 2011, the Company initiated its drill program on the Asumura Gold Property. The company spent $1.5 million on Asumura Gold Property for the year ended March 31, 2011 compared to $0.4 million in the same period of the previous fiscal year. A summary of the expenditures for the year ended March 31, 2011 is presented as follows:





Asumura Gold Property Deferred Costs
Three Months

June 30, 2010
Three Months

Sept 30, 2010
Three Months

Dec 31, 2010
Three Months

March 31, 2011
Year

March 31, 2011Camp Operations
$78,450
$42,991
$27,498
$32,836
$181,775Equipment and Infrastructure Costs
6,936
6,351
9,901
6,241
29,429Exploration Support Costs
67,278
83,046
89,773
56,090
296,187Exploration Drilling
140,965
320,910
351,214
209,890
1,022,979Total for the period:
$293,629
$453,298
$478,386
$305,057
$1,530,370Beginning balance:
6,391,911
6,685,540
7,138,838
7,617,224
6,391,911Ending balance:
$6,685,540
$7,138,838
$7,617,224
$7,922,281
$7,922,281





Company’s annual budget for the fiscal year ending March 31, 2011 for the Asumura Gold Property was US$1.3 million. At the completion of the program, the Company had incurred expenses in the amount of $143k over the budget due to an extension in the program’s timeline resulting in higher that anticipated overhead costs.





With the completion of the field program in March 2011, management is in the process of reviewing its technical data to determine the next phase for the project.




The budget for the fiscal 2012 exploration program at the Asumura Property is US$72,000. Rock Formations and Mineralization of Potential Economic Significance




17





The Asumura Property is located on the Ahafo structure, a major fault bounding structure on the NW edge of the Sefwi-Bibiani Greenstone Belt, a well-defined aeromagnetic feature along which many gold occurrences occur. Volcanic and granitic rocks dominate the belts, while basin sedimentary rocks occur outboard to the belt. Approximately 15 km of this tectonic-depositional boundary is contained within the Asumura Concession.  Parallel faults that divide sedimentary and metaclastic rocks of the basin, such as the NW fault are also gold bearing.  The geophysical and gravity maps show that these may be outbound basinal faults related to the same event which formed the Ahafo fault.




Condition and Description of Equipment, Plants and Infrastructure




There are no existing equipment, plants or infrastructure on the Asumura Property.




Potential Sources of Power and Water




The closest town, Goaso, is about 24 miles away from the Asumura Property. It contains hotels, markets and restaurants, hospitals and medical clinics, a cell phone tower, a network of land phones connected to the Ghana telephone system via radio, and high voltage, high tension power lines connected to the national power grid.




2.           Esaase Gold Property




The Esaase Gold Property is without known reserves and the work being done by Keegan is exploratory in nature.  However, the property has been determined to contain mineral resources.




Unless stated otherwise, information of a technical or scientific nature related to the Esaase Gold Property contained herein is summarized or extracted from a technical report entitled “Esaase Gold Deposit Resource Estimation” dated April 24, 2009 (the “Technical Report”), prepared by Brian Wolfe, MAusIMM. Mr. Wolfe is independent to Keegan.




Acquisition of Interest




On May 3, 2006, the Company entered into an option agreement with Sametro Co. Ltd. (“Sametro”) to purchase a 100% interest in the Esaase gold property in southwest Ghana, subject to the underlying 10% interest, 3% NSR of the Ghanaian government in all mining projects in Ghana, and a 0.5% NSR owed to the Bonte Liquidation Committee. Under the terms of the agreement, the Company was to make a series of cash payments totaling US$890,000, issue 780,000 common shares and incur minimum exploration expenditures of US$2,250,000 over a three year period.




During the year ended March 31, 2008, after having already made cash payments of US$500,000, issued 40,000 common shares and completed the full exploration expenditure requirement, the Company renegotiated the option agreement so that all further cash and share payments were no longer owed. In lieu of these payments, the Company paid $850,000 to a creditor of Sametro and issued 40,000 additional common shares to Sametro. Subsequent to these payments, the Company was granted the full Esaase Mining Lease by the Minerals Commission and Minister of Mines, Lands and Forestry with no further obligation to any party aside from the NSR and government commitments.




During the year ended March 31, 2008, the Company purchased 100% private ownership of the Jeni Concession mining lease and exploration rights. The Jeni Concession lies directly to the southwest and contiguous to the Esaase Gold property. In consideration for the acquisition of the mining lease, Keegan paid US$50,000 to the Bonte Liquidation Committee (“BLC”) and US$50,000 to the Minerals Commission of Ghana for the title transfer. The Ghanaian government retains a standard 10% carried interest and 5% revenue royalty and the BLC retains a 0.5% NSR.







Both concessions are governed by mining leases that grant the Ghanaian government a standard 10% carried interest and a 5% royalty and the Bonte Liquidation Committee a 0.5% royalty. Subsequent to the granting of these mining leases, the Ghanaian government amended the royalty scheme in Ghana. (See Ghanaian mining royalties in this section).





18





For the year ended March 31, 2011, the Company incurred $25.9 million of exploration and development costs on its Esaase Gold Property compared with $10.3 million for the year ended March 31, 2010. These costs were spent on continuing the exploration drill program, further defining the existing resource through infill and exploration drilling and engineering, geotechnical and metallurgical drill programs and development and engineering studies in support of the Company’ pre-feasibility and feasibility studies. In addition, the Company incurred $1.2 million in acquisition costs related to acquiring of a 100% interest in the Dawohodo prospecting concession, an adjacent mineral concession to the Esaase Gold property, and recorded $5.1 million of asset retirement obligation in relation to Jeni concession.  A summary of the expenditures (including non-cash stock-based compensation) for the year ended March 31, 2011 is presented as follows:








Esaase Gold Property Deferred Costs
Three Months
Three Months
Three Months
Three Months
Year30-Jun-10
30-Sep-10
31-Dec-10
31-Mar-11
31-Mar-11Acquisition Costs
$-
$-
$149,861
$1,020,578
$1,170,439Asset retirement obligation



5,126,210
5,126,210Camp operations
132,755
166,457
169,878
157,068
626,158Development support costs
379,072
266,496
537,049
714,175
1,896,792Equipment and infrastructure costs
457,788
283,859
306,135
194,255
1,242,037Exploration support costs
1,030,532
954,109
1,137,147
1,633,108
4,754,896Exploration drilling
1,180,405
2,333,914
1,272,341
207,158
4,993,818Engineering studies
219,296
314,962
630,065
870,150
2,034,473Health, safety and environmental studies
174,589
295,013
192,050
537,900
1,199,552Technical and In-fill Drilling
671,062
293,077
1,005,373
3,651,870
5,621,382Stock-based compensation
650,555
450,711
814,139
1,608,350
3,523,755Total for the period:
$4,896,054
$5,358,598
$6,214,038
$15,720,822
$32,189,512Beginning balance:
34,731,217
39,627,271
44,985,869
51,199,907
34,731,217Ending balance:
$39,627,271
$44,985,869
$51,199,907
$66,920,729
$66,920,729





The Company continues to rapidly advance its project development studies with the goal to begin mine construction in the calendar year 2012. The Company’s Pre-Feasibility Study on the Esaase Gold Project is planned for completion prior to September 30, 2011; the Company has also initiated field and development work to support a full Feasibility Study to be undertaken with completion expected prior to March 31, 2012.




19


Acquisition
 
 During the year ended March 31, 2011, the Company made a payment of $ 591,660 (US$ 600,000) plus certain acquisition costs to acquire a 100% interest in the Dawohodo prospecting concession, an adjacent mineral concession to the Esaase Gold property. A further payment of US$ 500,000 is payable pursuant to the agreement.
 
 Free carried interest to the Ghanaian government
  
 Pursuant to the provisions of the Ghanaian statute, effective in the forth quarter of the fiscal year 2011, the Ghanaian government acquired, for zero proceeds, a 10% free carried interest in the rights and obligations of the mineral operations of both Esaase Gold Property and Keegan Resources Ghana Limited (“Keegan Ghana”). Keegan Ghana has reserved for issue 10% of its common shares to the Ghanaian government, and one government representative was appointed to its Board of Directors. The 10% ownership stake represents a non-participating interest where the Ghanaian Government has rights to 10% of the net economic benefits of the Esaase Gold Project but does not have to contribute to its capital investment.
 
 Ghanaian mining royalties
 
 On March 19th, 2010, the government of Ghana amended section 25 of the Minerals and Mining Act of 2006 (Act 703), which stipulates the royalty rates on mineral extraction payable by mining companies in Ghana. The section now states that a holder of a mining lease, restricted mining lease, or small-scale mining license shall pay royalty in respect of minerals obtained from its mining operations to the Republic of Ghana at the rate of 5% of the total revenue earned from minerals obtained by the holder. Currently, uncertainty exists on how this amendment will affect the Esaase gold property’s existing mining lease and whether this rate will change as the Company goes through negotiations with the government with respect to a stability agreement on the project.
 
 Esaase option agreement suit
 
  To date, there has been no material progress with respect to the outstanding lawsuit against the Company and the Ghana Minerals Commission pertaining to the title on the Esaase property. The Company continues to view the allegations as being without merit and are being defended vigorously. (See financial statements for details.)
  
  Project Description and Location
  The Esaase Property is located in southwest Ghana, West Africa.  It is located in the Amansi East District, in the Ashanti Region, approximately 35km south west of the regional capital Kumasi (Figure 1).
  
  20
 
  Figure 1:  Location of Esaase Property
 Graphic
 
 Source:  Technical Report
  The Esaase Property consists of two mining concessions, named the Esaase Concession and Jeni River Concession.  The Esaase Concession is approximately 10km in a north east direction by 4km in a north west direction covering 42.32km2.  The centre of the Esaase Concession is located at 1o 53’ west, 6o 34’ north.  The Jeni River Concession is approximately 10 km in an east west direction and 5 km in a north south direction.  The centre of the Jeni River Concession is located at 1o 98’ west 6 o 52’ north and covers an area of 49.74 km2.  The boundaries of the Esaase Concession and the Jeni River Concession have not been legally surveyed, but are described by latitude and longitude via decree (see Figure 2).
  
  21
 
  Figure 2:  Esaase Concession and Jeni Concession
  Source:  Technical Report
  Mining leases to the Esaase Concession and the Jeni River Concession have been granted to Keegan by the Ministry of Mines and Energy.  The government maintains a 10% carried interest in all mining leases within Ghana, which does not occur until production (i.e. the government receives 10% of all net profits from mining operations).  The surface rights on the Esaase Property are owned by the Ashanti stool (a local ethnic group), and at the production stage the Ashanti stool may apply for the right for compensation.  The amount of the compensation is subject to the approval of the Minister of Mines in consultation with the Land Valuation Board.
  The Esaase Concession and Jeni River Concession leases are classified as mining permits, which allow the company to carry out mining provided certain conditions and fee payments are maintained with the Ministry of Mines and Energy.  The Esaase Jeni River Concession lease was granted in 1990 to Jeni River Development Company Limited and the Esaase Concession lease was granted to Bonte Gold Mining in 1990.  Both the Esaase Concession and the Jeni River Concession leases are valid until September 4, 2020.  Both Jeni River Development Company Limited and Bonte Gold Mining went into bankruptcy in 2002.
  The Government of Ghana is entitled to acquire a special or “golden share” in any Ghana mining company at any time for no consideration.  This special share may constitute a separate class of shares with such rights and restrictions as the Government of Ghana and the mining company may agree.  In the absence of such agreement, the special share has the following rights:  the special share is a preference share and carries no voting rights, but the holder is entitled to receive notice of and attend and speak at any general meeting of the members or any separate meeting of the holders of any class of shares;  the special share may only be issued to, be held by, or transferred to the Government of Ghana or another person acting on behalf of the Government of Ghana and duly authorized;  the written consent of the holder of the special share is required for all amendments to the organizational documents of the company, the voluntary winding-up or liquidation of the company or the disposal of any mining lease or the whole or any material part of the assets of the company;  the special share does not confer a right to participate in the dividends, profits or assets of the company or a return of assets in a winding-up or liquidation of the company;  and the holder of a special share may require the company to redeem the special share at any time for no consideration or for an amount determined by the company. Keegan Ghana has not issued or, to date, been requested to issue a special share to the Government of Ghana.
  The Government of Ghana has a pre-emptive right to purchase all gold and other minerals produced by Keegan Ghana.  The purchase price would be determined by (a) agreement between Government of Ghana and Keegan Ghana, (b) the price established by any gold hedging arrangement between Keegan Ghana and any third party
  22
  approved by the Government of Ghana, and (c) the publicly quoted market price prevailing for the minerals or products delivered at the mine where the pre-emptive right was exercised.
 
 History of the Esaase Concession
 
 The Government of Ghana by mining lease (the “Esaase Mining Lease”) dated September 4, 1990 granted the Esaase Concession to Bonte Gold Mines Limited (“BGM”) for a term of 30 years.  Subsequently, in 2003, Bonte Mines Limited, as BGM was subsequently called, went into official liquidation under Section 7 of the Bodies Corporate Official Liquidation Act, 1963 (Act 180) and the Registrar of Companies of the Republic of Ghana was appointed the Official Liquidator of BGM.  By such appointment, the Official Liquidator became legally vested with power and authority to deal with BGM assets, including the Esaase Mining Lease. The Official Liquidator, for valuable consideration, assigned the unexpired (remaining) term of the Bonte Mining Lease to Sametro pursuant to a Deed of Agreement dated July 4, 2005.
 
 The key consideration for the assignment of the Esaase Concession by the Official Liquidator to Sametro was the agreement of Sametro to pay US$800,000 in two instalments of $400,000, the first as deposit and the last instalment of US$400,000 to be paid within 12 months from the effective date of the assignment.  The Esaase Mining Lease, contains provisions for a 10% government carried interest, a 3% NSR to the government, and a 0.5% NSR to the Official Liquidator.
 
 Subsequently, pursuant to the Option Agreement, as amended on June 1, 2006, Sametro granted Keegan the option to acquire 100% interest and title in the Esaase Concession subject to the terms and conditions of the Option Agreement, including cash payments, share issuances to be made and work obligations to be incurred by Keegan.
 
 Under the Option Agreement, Keegan made payments of US$700,000 during 2006 and 2007, including an advance payment of US$200,000 due upon production at the Esaase Concession.  The advance payment was made in order to extinguish the interest of the Official Liquidator in the Esaase Concession.  Keegan also agreed to issue 780,000 common shares over a three year period, of which 40,000 shares were issued in 2006, and the balance of the shares to be issued were renegotiated under the May 29, 2007 tri-partite agreement described below.
 
 The Option Agreement was ratified by a resolution of the Board of Directors of Sametro dated May 18, 2006.  At the material time of entering into the Option Agreement, Sametro had only paid the initial cash deposit of US$400,000 to the Official Liquidator and was in default of paying the 2nd instalment amounting to US$400,000.  On April 10, 2007, or thereabouts, it came to Keegan’s attention through a letter of demand from solicitors purporting to act on behalf K.O. Consortium that Sametro was indebted to one Kwame Owusu (trading under the name and style of K.O. Consortium) under a loan agreement, the proceeds of which were used to pay part of the initial deposit of US$400,000, being part of the consideration for the Esaase Concession to the Official Liquidator.
 
 The same letter from the solicitors noted that K.O. Consortium had obtained a High Court judgment enforcing the assignment of the Esaase Concession to K.O. Consortium (the creditors) upon default by Sametro to pay the debt.  To retrieve and protect its interests in the Esaase Concession, Keegan went into tripartite negotiations with K.O. Consortium and Sametro as a result of which Keegan entered into a tripartite agreement dated May 29, 2007, pursuant to which Keegan paid $850,000 to K.O. Consortium through their solicitors to liquidate the debt of Sametro and issued 40,000 common shares to Sametro, in full satisfaction of Keegan’s obligations to Sametro under the Option Agreement.
 
 Pursuant to the tripartite agreement dated May 29, 2007 (and announced June 14, 2007 after Ministerial Approval) Sametro assigned the Esaase Concession to Keegan Ghana by Deed of Assignment (the “Deed of Assignment”) dated May 26, 2007 and stamped as No. LVB 12/91/07.  Based upon an application made by Ekow Amua-Sekyi on behalf of Sametro, the Deed of Assignment further received Ministerial approval as required by the Ghana Mining Act, 2006 (Act 703) as per letter of the Minister of Lands Forestry and Mines dated June 8, 2007.  Thereafter, Keegan, acting through Keegan Ghana, entered into possession of the Esaase Concession to commence active gold prospecting operations thereon.
 
 In July 2008, Sametro commenced a legal proceeding against Keegan Ghana and the Minerals Commission, the statutory regulators of the mining industry in Ghana, claiming the Deed of Assignment was obtained on the basis of fraud.  The Company is vigorously defending against this claim.
 
 23
 In March 2008, Keegan acquired the Jeni River Mining lease for consideration of US$50,000 which was paid to the BLC on behalf of Jeni River Gold Mines and US$50,000 paid to the Minerals Commission of Ghana to transfer title.  The Ghanaian government retained a standard 10% carried interest and 3% NSR, and the BLC retained a 0.5% NSR on behalf of BGM.
 
 The Bonte Gold Mining alluvial operation resulted in a large silting of the associated drainage system utilised by the dredging operation.  Under the agreement with the liquidation committee acting on behalf of the Ghanaian Government, Keegan assumes no environmental liability to any resulting environmental liabilities arising from the operations of Bonte Gold Mines on the Esaase Concession.  On the Jeni River Concession, Keegan agreed to reclaim the tailings as part of any large scale mining operation in the drainage.
 
 All resources and areas of more significant exploration potential defined to date lie within the area covered by the lease to the Esaase Concession and the lease to the Jeni River Concession.  Permits to explore on the Esaase Property are obtained from the EPA on a yearly basis.  Keegan currently has an EPA permit to explore up until December 31, 2010.  Keegan also has the right to mine under the existing mining leases;  however, a mine plan will need to be submitted to the EPA who would subsequently issue a mining permit.
 
 Accessibility, Climate, Local Resources, Infrastructure and Physiography
 
 The Esaase Property is accessed from Kumasi city by taking an asphalt road west 10km to the Bibiani Junction at Asenemuso and then southwest 10km to the village of Wioso.  At Wioso a secondary asphalt road is taken 8km south to the village of Amankyea then by secondary gravel roads a further 11km via the villages of Ahewerwa and Tetrem.  The Esaase Property itself is accessed by a series of secondary roads constructed either by the former Bonte Gold Mines or by Keegan.  Other parts of the Esaase Property are currently undergoing surface exploration and are accessed by both dirt roads and by footpaths.
 
 The annual rainfall is in the range of 1500mm to 2000mm with temperatures ranging from 22°C to 36°C.  A major rainy season occurs from April to July followed by a minor one from September through to October.  Keegan has operated without cessation or delay throughout both rainy seasons.
 
 The Esaase Property is drained by the Bonte River.  The Bonte River is bounded on both sides by steep hills.  The area is predominantly subsistence farmland producing mainly food crops and about 50% of this land is covered with secondary forest and thick brush.  The valley floor has been extensively placer mined and now consists primarily of placer tailings.
 
 The exploration camp on the Esaase Property and surrounding villages are connected to the national electrical grid.  Mobile phone communication is accessible in most parts of the Esaase Property, and a satellite dish is installed in the exploration camp for internet access.  The nearest medical clinic and police station are located at Toase-Nkawie, on the Bibiani Highway, 20km from the exploration camp.  Hospitals and most government offices are available in Kumasi.  Food and general supplies are also purchased in Kumasi.  High voltage power lines run along the Bibiani Highway eight kilometres from the Esaase Property.
 
 History
 
 The Bonte area has a long history of artisanal mining, associated with the Ashanti Kingdom.  There is also evidence of adits driven by European settlers, between the period from 1900 to 1939, although no documented records remain of this activity.  Drilling was conducted on the Bonte river valley alluvial sediments during 1966 and 1967 to determine alluvial gold potential, however the Company has no reliable information on any production during this time.  In 1990, the Bonte mining lease was granted to Akrokerri-Ashanti Gold Mines (“AAGM”) and was later transferred to BGM, a local subsidiary of AAGM.  BGM reportedly recovered some alluvial gold on the Esaase Property, however this past gold production is of no relevance to Keegan’s exploration program as Keegan is focused on the discovery of hard rock resources on the Esaase Property.
 
 Geological Setting
  The geology of Ghana is comprised predominantly of rocks of the Birimian and to a lesser extent of units of the Tarkwaian.  The Birimian consists of narrow greenstone (volcanic) belts, which can be traced for hundreds of
 
 
 24
 kilometres along strike but are usually only 20 to 60km wide, separated by wider basins of mainly marine clastic sediments.  Along the margins of the basins and belts there appears to be considerable interbedding of basin sediments and volcanoclastic and pyroclastic units of the volcanic belts.  Thin but laterally extensive chemical sediments, consisting of cherts (type of sedimentary rock), fine-grained manganese-rich and graphitic sediments, often mark the transitional zones.  The margins of the belts commonly exhibit faulting on local and regional scales.  These structures are fundamentally important in the development of gold deposits for which the region is well known.
 
 The Tarkwaian rocks consist of a distinctive sequence of metasediments (quartzite, conglomerate and phyllite) occurring within a broad band along the interior of the Ashanti Belt.  They host important paleoplacer gold deposits in the Tarkwa district.  Equivalent rock types occur in other belts of the region but in relatively restricted areas.  In the type locality at Tarkwa, the sequence is in the order of 2.5km thick, whereas in the Bui belt, comparable units are about 9km thick sediments that mark a rapid period of erosion and proximal deposition during the late-stage of an orogenic cycle.
 
 The Esaase Property area contains a system of gold-bearing quartz veins hosted by tightly folded Birimian-age sedimentary rocks.  Geological units on the Esaase Property have been interpreted by a combination of airborne geophysical resistivity mapping, resource definition drilling and associated outcrop mapping.  The rocks of the Esaase Property can be divided into metasedimentary units with high electrical and electromagnetic resistivity and highly conductive rocks.  Within the resource zone, the host rocks can be divided between phyllite and siltstone (ore zone predominant in hanging wall of resistivity break) and sandstone/greywacke (predominant in footwall of resistivity break).  Host rocks to ore range from massive thinly layered phyllite through interlayered phyllite and siltstone, to massive silt and sandstone.  Although recognizable stratigraphy appears to be present, the similarity of rock types, folding and faulting precludes correlation of individual stratigraphic units at this stage of core drill and outcrop density.  The structural architecture of the Esaase Property area is dominated by fold-thrust patterning followed by a late stage strike-slip deformation event.
 
 The metasediments are intruded post-kinematically by dikes and small stocks of intermediate to felsic composition, i.e. tonalite to granodiorite.  In the southern portion of the deposit on the Esaase Property, these intrusions are intensely brecciated and mineralized and occur at or near the footwall of mineralization and are themselves mineralized.  The existence of weathering profile on the Esaase Property is strongly influenced by topography.  The typical weathering horizon in tropical settings in West Africa consists of laterite (+- duracrust), saprolite, oxidized bedrock, and bedrock (there is often a gradational zone, “saprock” between the saprolite and oxidized bedrock).  At the higher elevations at the Esaase Property, the laterite and saprolite, and much of the saprock has been weathered away, leaving behind oxidized bedrock.  At intermediate elevations the weathering profile is mostly intact and may be covered by transported colluvium.  At the lowest elevations, the entire profile is covered by either alluvium or residual tailings from previous alluvial operations.
 
 Exploration
 
 No modern-style lode exploration was completed on the Esaase Property prior to the commencement of exploration by Keegan in mid 2006.  Since mid 2006, Keegan has undertaken an aggressive exploration program combining soil geochemistry, Induced Polarization (“IP”) geophysical surveys, VTEM airborne geophysics,  followed by trenching, diamond and reverse circulation exploration, and resource drilling.
 
 Soil Sampling Program
 
 Keegan commenced a soil-sampling program upon acquisition of the Esaase Concession in June 2006 and has received assay results from over 4,000 soil samples.  Sampling was undertaken on north east oriented lines spaced 100-400 meters apart with samples taken at 25 meter intervals along the lines.  This program extended the initial soil sampling completed in March 2006 as part of initial due diligence on the Esaase Concession.  After the acquisition of the Jeni River Concession, Keegan expanded its soil program to the Jeni River Concession and has obtained over 2,100 samples from this concession using an identical sampling regime.
  Soil samples were obtained wherever there was not an obvious alluvial disturbance or alluvial material, and care was taken to sample below the organic horizon.  The material below the organic horizon on ridge tops or steep slopes from higher elevations is weathered bedrock, whereas that taken nearer to the alluvial creek bottoms is underlain by
 
 
 
 25
 colluvium, laterite, and/or saprolite.  Drilling and trenching indicate that soil samples from weathered bedrock, on average, have gold levels within an order of magnitude of the underlying rock values.  Soil samples from non bedrock sources (ie alluvial) tend to have much lower gold values than the underlying bedrock.  As a result of this observation, Keegan has begun an auger sampling program in order to get samples at or closer to the bedrock/soil interface.
 
 Geophysical Programs
 
 An IP program was completed in 2006 which successfully identified significant faults that are interpreted as significant mineralization boundaries.  In order to identify other such structures, Keegan contracted Geotech Ltd. to perform an airborne versatile time domain electromagnetic system geophysical program on the Esaase Property in October 2007, and a total of 2,266 line-km were flown.  In-field data processing involved quality control and compilation of data collected during the acquisition stage using the in-field processing centre established in Ghana.  The survey was flown at nominal traverse line spacing of 200m.  Flight line directions were N130°E/N50°W.  The helicopter maintained a mean terrain clearance of 122m.
 
 The data was processed and interpreted by Condor Consulting, Inc., who performed analysis on line data in order to determine the best time delay channels to use.  Condor performed Layered Earth Inversions, generated depth slices for the survey and characterized the 2D and 3D nature of the survey.  It was found that significant breaks changes in the resistivity values of the rocks along what are interpreted as north east oriented structures occur.  These breaks correlate with the position and orientation of gold anomalies, which are expressed both in the surface soils that overlie these breaks and in the subsurface as indicated by drilling
 
 Mineralization
 
 Gold mineralization on the Esaase Property occurs in quartz - carbonate veins hosted within parallel north east trending, moderately to steeply west dipping bodies of extremely deformed siltstone shale.  One form of disseminated alteration most commonly noted in oxidized rocks is quartz-sericite-pyrite alteration.  This alteration type is not distinctly different in coloration in fresh core and is thus difficult to detect in that state.  Surface weathering converts the sericite to white kaolinite creating a bright white color alteration distinguishable even at great distance when exposed in trenches, road cuts, and drill pads.  At closer scale, pyrite pseudomorphs can be distinguished.  The second stage consists of pervasive carbonate alteration in the form of carbonate porphyroblasts, particularly after andalusite in phyllitic rocks.  Carbonate flooding is more prevalent in siltstone where precursor andalusite porphyroblasts did not form.
 
 Quartz veining occurred within the mineralization envelopes over most of the duration of the extensive fold and thrust and strike slip deformation events on the Esaase Property.  Four stages of veins can be identified, which include an early unmineralized quartz only vein stage which has undergone deformation and brecciation.  A second vein stage consists of myriad fine spider-web-like quartz-carbonate veins.  These veins are also early and are consistently deformed and offset.  The third stage consists of quartz-carbonate±sulfide veins with visible free gold.  The associated sulfide is generally pyrite, but up to 15% of it can be chalcopyrite and minor arsenopyrite variably occurs as well.  Finally, late stage post-mineral calcite veins crosscut all previous features.
 
 Veins that contain visible gold overwhelmingly strike, have sub vertical dips and are either planar or S-shaped.  Thus they are oblique in orientation to the overall strike and dip of mineralization and appear to be bounded by aforementioned thrust faults and can thus be described as en echelon vein sets form en-echelon sets, which were likely emplaced during a transition from fold thrust deformation to left lateral strike slip deformation.
 
 Drilling
 
 Drilling at the Esaase Property has been managed by Keegan and Coffey Mining Pty Ltd. geologists and to date has been constrained geographically to the south central portion of the Esaase Concession.  Surface RC and Diamond Core (“DC”) drilling has been completed, and the ongoing drill program is designed to test the mineralized corridor delineated from soil sampling, trenching, drilling and geophysical interpretations.
 
 The initial 33 diamond drillholes were completed by Eagle Drilling contractors with the remainder completed by Geodrill Ltd. contractors.  Both of these drilling companies are reputable Ghana based companies providing RC and PC Diamond drilling services consistent with current industry standard.  Over 800 drillholes have been completed totaling over 200,000 m of which 467 of these drillholes (in the currently defined resource area) were used for the resource estimates on the Esaase Property disclosed in the Technical Report.
 
 26
 
 Drilling Procedures
 
 Drillholes were surveyed on approximately 50m downhole intervals.  The initial 33 diamond drillholes were completed by Eagle Drilling using a Longyear 38 skid mounted diamond drill.  The Geodrill rig utilized in the RC drilling is multipurpose and completed the remaining diamond component of drilling also.
 
 Sampling and Analysis
 
 RC drill chips were collected as 1m intervals downhole via a cyclone into PVC bags, and then weighed prior to splitting.  The collected samples were riffle split using a three tier Jones riffle splitter.  A final sample of approximately 2kg was collected for submission to the laboratory for analysis.  All 1m samples were analysed.  RC chip trays were systematically compiled and logged with all bulk rejects being stored at the Keegan exploration camp in Esaase.
 
 For the DC, mostly 1 m intervals were taken unless geological features were identified requiring smaller intervals.  After December 2006, nominally 1m intervals were taken.  9.8% of diamond core sampling was submitted as whole core with the remaining 90.2% was submitted as half core.  These sampling intervals are much smaller than the true width of mineralized zones, which is variable throughout the deposit, but is typically in excess of 30m.  After the marking out of the required interval, the core was cut in half by electric diamond blade core saw.  The cut is made 1cm to the right (looking downhole) of the orientation line with the left side being retained and the other half broken up for assay.  In the upper oxide zone, where the core was too friable for diamond saw cutting, the procedure was to dry cut or cleave the core.
 
 Core structure orientations were routinely recorded to assist in determining the controls on mineralization, in establishing a reliable geological model for resource estimation, and to provide additional geotechnical information to determine likely blast fragmentation and pit stability characteristics.  The core was transferred from the trays and pieced together on a V-rail (angle iron) rack and the orientation line (bottom of hole), determined by the orientation tool recorded during drilling, is drawn along the entire length of the assembled core.  Geotechnical logging has recorded percentage core recovery, rock quality density percentage, rock type, weathering, rock strength and fractures per metre.  This basic geotechnical logging is considered appropriate at this stage of project development.
 
 Sample recovery for RC drilling was noted as very good and averages approximately 34kg/m drilled.  Bulk sample weights have been systematically recorded for each metre drilled.  Sample recovery in diamond holes was very good although recoveries for core from the moderate to highly weathered saprolite and highly fractured and brecciated zones returned poor recoveries.  Keegan utilised HQ3 drilling to minimize the core loss in the weathered zones.
 
 The sampling procedures adopted for drilling are consistent with current industry best practise.  Samples collected by diamond coring within the highly weathered zones are of moderate quality, with the remainder being high.  Sample recoveries and quality for the RC drilling are high with drilling switching to diamond core once wet samples were noticed.  Dedicated drillhole twinning of the DC drilling and RC drilling has not been completed by Keegan at this stage and it is difficult to determine if any negative bias has resulted in the DC drilling due to the use of water.  A number of the DC holes had poor recovery in the highly weathered zone and there exists potential to wash the fine gold associated with the fractures and veining and therefore underestimate the gold content.  RC field duplicate samples are routinely collected to allow assessment of the field sampling error (or bias) once the laboratory error, determined from analysis of pulp duplicates, has been subtracted.  Acceptable reproducibility has been identified during an assessment of RC field duplicate data generated and no distinct bias is evident.
 
 The quality control (“QC”) procedures adopted by Keegan include:  insertion of 16 internationally certified standard reference material; insertion of blank material; RC field duplicates taken; diamond core field duplicates completed by a second split at the 3mm jaw crushing stage; submission of selected umpire (control) samples to Societe Generale de Surveillance (“SGS”); and review by Keegan and the internal laboratory QC data on a batch by batch basis.  In addition, the laboratories used by Keegan (SGS Tarkwa, Transworld Tarkwa, and ALS Kumasi) employ various quality control procedures that are in accordance with industry standards.  SGS Tarkwa has been used as the primary laboratory by Keegan since February 2007.  The Technical Report analyzed certain QC data including standard and blanks (both field and laboratory), RC filed duplicates, and laboratory repeats, re-assayed pulps and umpire assaying, and generally found equivalent means and acceptable levels of precision in the majority of cases, with some minor exceptions.
 
 27
 
 The Technical Report concluded that the current Quality Assurance/Quality Control (“QA/QC”) systems in place at the Esaase Property to monitor the precision and accuracy of the sampling and assaying are adequate and should continue to be implemented.  Pertinent conclusions from the analysis of the available QA/QC data include:  use of Certified Standard Reference material has shown a significant relative low bias for SGS, Tarkwa; use of Certified Standard Reference material has shown a relative high bias for Transworld, Tarkwa and this interpretation is supported by the umpire analysis program; repeat analyses have confirmed that the precision of sampling and assaying is generally within acceptable limits for sampling of gold deposits; and umpire analysis at Genalysis in Perth has shown a lack of precision between the various laboratories.  This lack of precision is currently unexplained and requires investigation.
 
 Security of Samples
 
 The close scrutiny of sample submission procedures by Keegan technical staff, and the rapid submission of samples from drilling for analysis, provides little opportunity for sample tampering.  Equally, given the umpire assaying via an external international laboratory and the regular ‘blind’ submission of international standards to both the primary and umpire assay facilities, any misleading analytical data is readily recognised and investigated.
 
 Keegan sampling procedures require samples to be collected in staple closed bags once taken from the rig.  They are then transported to the Esaase Property camp to be picked up by the laboratory truck.  The laboratory truck then takes them to the laboratory directly.  Reference material is retained and stored at the Keegan exploration camp at the Esaase Property, as well as chips derived from RC drilling, half-core and photographs generated by diamond drilling, and duplicate pulps and residues of all submitted samples.  Assessment of the data indicates that the assay results are generally consistent with the logged alteration and mineralization, and are entirely consistent with the anticipated tenor of mineralization.
 
 The assay method applied by Transworld Tarkwa and SGS Tarkwa for the Esaase Property drilling includes:  sample preparation where 3kg or less of sample was dried, disaggregated, and jaw crushed to 3mm, sample was pulverised to a nominal 95% passing -75 micron using an LM2 pulveriser; and two pulp samples were taken for analysis and pulp storage.  In addition, sample analysis involved 50g charge, fire assay fusion, lead collection, and atomic absorption spectrometer (“AAS”) determination to 0.1parts per million (“ppm”).
 
 The assay method applied by ALS Kumasi for the Esaase Property drilling includes:  3kg or less of sample that was dried, disaggregated, and jaw crushed to 2mm with a nominal 70% passing 2mm; sample was pulverised to a nominal 85% passing -75 micron using an LM2 pulveriser; and two pulp samples are taken for analysis and pulp storage.  In addition, sample analysis involved a 50g charge, fire assay fusion, lead collection, and AAS determination to 0.1ppm
 
 Analytical procedures associated with data generated to date by SGS Tarkwa, Transworld Tarkwa, and ALS Kumasi are consistent with current industry practise and are considered acceptable for the style of mineralization identified at the Esaase Property.
 
 In 2008, Keegan contracted Lycopodium Ltd and Coffey Mining Pty Ltd., both in Perth Australia, to perform a preliminary scoping study for the Esaase Property.  The scoping study entails detailed metallurgical studies and such studies are underway under the direction of Amdel labs in Perth Australia.  Although the studies have not been completed, preliminary indications confirm the presence of coarse gold and tests to examine the potential for gravity recovery to enhance recovery have been proposed and accepted.  Preliminary results from Amdel on composite samples indicate that a higher percentage of gold may be detected in screen fire assay than in regular fire assay.  Keegan selected 103 representative samples from four intercepts of fresh core to examine the relationship between standard 50g fire assay and screen fire assay.  The assay results show that the screen fire assay results are 28% higher than that of the standard fire assay.  Investigations are ongoing and a much larger sample set is being tested to determine whether the increase in grade in the screen fire assay is statistically significant.
 
 28
 
 Mineral Resource Estimates
 
 NI 43-101 compliant indicated and inferred resources were estimated on the Esaase Property as of December 13, 2010 (the “2010 Resource Estimates”), and are summarized in Table 2 below.  Mineral resources that are not mineral reserves do not have demonstrated economic viability.
 Cautionary Note to U.S. Investors Concerning Estimates of Indicated Mineral Resources.The following paragraph and accompanying table refers to “indicated mineral resources”.  We advise U.S. investors that while this term is recognized and, in certain circumstances, required by Canadian securities regulations (under National Instrument 43-101 - Standards of Disclosure for Mineral Projects, as adopted by the Canadian Securities Administrators), it is not recognized by the U.S. Securities and Exchange Commission.  The estimation of “indicated mineral resources” involves greater uncertainty as to their economic feasibility than the estimation of proven and probable reserves.  U.S. investors are cautioned not to assume that any part or all of the mineral deposits in this category will ever be converted into reserves.



Cautionary Note to U.S. Investors Concerning Estimates of Inferred Mineral Resources.The following paragraph and accompanying table below also refers to “inferred mineral resources”.  We advise U.S. investors that while this term is recognized and, in certain circumstances, required by Canadian securities regulations (under National Instrument 43-101 - Standards of Disclosure for Mineral Projects, as adopted by the Canadian Securities Administrators), it is not recognized by the U.S. Securities and Exchange Commission. The estimation of “inferred mineral resources” involves far greater uncertainty as to their existence, economic viability and legal feasibility than the estimation of other categories of resources.  It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category.  Under Canadian securities legislation, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, or economic studies, except in rare cases.  U.S. investors are cautioned not to assume that part or all of an inferred mineral resource exists, or is economically or legally mineable.
 On December 13, 2010, the Company released an updated resource estimate for the Esaase Gold Project. The updated resource includes 3.23 million ounces of gold (an increase of 42%) in an Indicated Mineral Resource category with an average grade of 1.2 g/t Au at a 0.4 g/t Au cutoff and 1.68 million ounces of gold (an increase of 2%) in an Inferred Mineral Resource category at an average grade of 1.0 g/t Au applying a 0.4 g/t Au cut-off for a total inferred and indicated resource of 4.91 Moz of gold. A total of 770 holes drilled at collar spacing ranging from 25m by 40m to 40m by 80m and over 190,000m of drilling were used to establish the resource. This resource estimation represents over 3.5 km of strike length along the A-1 structure and includes drilling done in the B-1 and D-1 mineralized zones.
 
 29
 
 
 
 Third party database verification, grade shell geometry, variography, and multiple indicator and ordinary kriging were executed out of the Perth office of Coffey Mining.
 
 All grade estimation for the resource estimates on the Esaase Property was completed using Multiple Indicator Kriging for gold.  This estimation approach was considered appropriate based on review of a number of factors, including the quantity and spacing of available data, the interpreted controls on mineralization, and the style of mineralization.  The estimation was constrained with geological and mineralization interpretations.  The 2010 Resource Estimates was based on the available exploration drillhole database which was compiled by Coffey Mining Pty Ltd., and the database was reviewed and validated by Coffey Mining Pty Ltd.  Data included samples from extensive trenching, but only the RC and diamond drilling sample data were included for use in the modelling process.
 
 Samples were composited to 3m down-hole lengths with residual intervals less than 1.5m length being deleted from the composite file.  Prior to deletion of composites less than 1.5m, statistical analysis was undertaken to determine the impact on mean gold grades.  Deletion of these composites was deemed to have negligible impact on mean
 
 
 30
 grades and was therefore appropriate.  The resulting file contained 13,496 composites with gold grades within mineralized domains.
 
 The 2010 Resource Estimates were classified as indicated or inferred resources based on the confidence levels of the key criteria that were considered during the resource estimation, including drilling techniques, logging, drill sample recovery, sub-sampling techniques and sample preparation, quality of assay data, verification of sampling and assaying, location of sampling points, data density and distribution, database integrity, geological interpretation, rock dry bulk density, estimation and modeling techniques, and mining factors or assumptions (Multiple Indicator Kriging; 8mE x 10mN x 2.5mRL Selective Mining Unit).
 Mineral Processing and Metallurgical Testing
  Preliminary metallurgical test work was conducted on behalf of Keegan by Coffey Mining Pty Ltd. in July 2007, to determine potential amenability of oxide, transition and fresh ore zones to heap leach as well as carbon in leach (“CIL”) processing routes.  Test work was completed at the IML laboratory in Perth, Western Australia.  All three ore zones displayed amenability to conventional gold recovery via cyanidation with reasonable gold recoveries and reagent consumptions at both ‘as received’ RC chip sizing, and after grinding to typical CIL size ranges.
  Mineralogical examination of the three ore zones indicated the presence of coarse gold in the transitional and fresh samples.  This gold was generally fine at around 10 microns (“μm”) and occluded in pyrite, with the exception of the fresh sample which contained larger, free gold grains up to 300μm in size.  Sulphide was predominately pyrite and minor arsenopyrite.
  The ‘as received’ bottle roll tests conducted at approximately 1mm were used to indicate the likely amenability to heap leaching.  The oxide material produced a recovery of 85.8% with a residue of 0.18g/t which is within the range of heap leach viable ores.  The RC chip sample had a P80 sizing of 478μm which is considerably finer than would be achieved in a full scale crushing operation and requires follow up bottle roll and column test work at coarser size fractions to confirm gold recovery and percolation rate information.
  The fresh and transitional zones produced recoveries of 66.8% and 65.3% respectively, with considerably higher residues ranging from 0.60g/t – 0.74g/t.  These samples, although potentially heap leachable, were also considerably finer than would be achieved in a full scale crushing plant, and hence gold recoveries at coarser size fractions need to be investigated further.  Both the transition and fresh samples were of a relatively high gold grade, which can bias the gold recovery percentages.  At a lower head grade with the same residue value, the recovery percentage would be significantly lower.
  The cyanidation test work carried out at differing grinds was used to estimate the likely performance of a conventional CIL process route, including grind sensitivity, indicative gold recovery and reagent consumptions for each ore zone.  In all three cases, maximum recoveries were achieved at 75μm, however the oxide material showed little difference in recovery and residue grades below 300μm.  The grind dependent nature of the fresh and transitional ores corresponds with the mineralogical data, in that the fine gold occluded in sulphide grains is liberated at finer grind sizes.  Residue analysis indicated that a large portion of the non-leached gold resided in the -45μm fraction.  The recoveries ranged from 79.4% for fresh material, 87% for transitional, and 91.4% for oxide, with residues of 0.37g/t, 0.32g/t, and 0.08g/t respectively.
 
 A second, more comprehensive study, was undertaken by Amdel Limited in Perth WA during the first three quarters of 2009. The program examined a number of conventional processing options including whole ore cyanidation and gravity gold recovery followed by carbon in leach (CIL) cyanidation. Test work was conducted on core samples from both oxide and fresh material from the Esaase deposit.   Gravity concentrate processes were tested, which suggested much higher total recoveries than suggested by the previously described bottle roll tests.
 
 Results of the metallurgical test work show gold recoveries of 94% to 97% using a flowsheet incorporating a coarse primary grind, gravity recovery and CIL on the gravity tailing. The selected flowsheet is simple and has shown to be applicable to both the oxide and fresh composites tested.
 
 The main metallurgical parameters of the selected flowsheet are summarized as follows:
 • Coarse primary grind of 150 microns
   31
 
 • Centrifugal gravity concentration of gold with recovery of 40 to 70%
 • CIL cyanidation of the gravity tailing, achieving a residue grade of 0.04 to 0.09 gram per tonne gold from oxide and fresh samples,
 • Achieving an overall combined gold recovery of 94 to 97% to gravity concentrate and CIL.
 
 Composite samples of drill core from broad based sections representing surface to depth oxide and fresh mineralization from both the "north" and "south" zones at Esaase were tested using the above flowsheet and an average gold recovery of greater than 95% was achieved. Head grades of the test composites varied from 1.2 to 2.3 grams gold per tonne. A summary of the results of gravity + CIL tests on Variability Oxide Composite (VOC) and Variability Fresh Composite (VFC) samples is shown below:
 
 
 Test work results are based on multiple screen fire assay analyses of the CIL tailings and fire assay analyses of the gravity concentrate from the test work. The mineralization at Esasse is average in hardness and abrasivity for oxide and fresh material in Ghana. The grindability characteristics of the samples were found to be:
 
 
 
 The main metallurgical process design parameters that were incorporated into a Preliminary Economic Assessment by Lycopodium Minerals Pty Ltd. and Coffey Mining Pty Ltd. of Perth, WA on the Esaase deposit are:
 
 
  Preliminary Economic Assessment Study
 Cautionary Note to U.S. Investors Concerning Estimates of Indicated Mineral Resources.The disclosure below uses the term “indicated mineral resources”.  We advise U.S. investors that while this term is recognized and, in certain circumstances, required by Canadian securities regulations (under National Instrument 43-101 - Standards of Disclosure for Mineral Projects, as adopted by the Canadian Securities Administrators), it is not recognized by the U.S. Securities and Exchange Commission.  The estimation of “indicated mineral resources” involves greater uncertainty as to their economic feasibility than the estimation of proven and probable reserves.  U.S. investors are cautioned not to assume that any part or all of the mineral deposits in this category will ever be converted into reserves.



Cautionary Note to U.S. Investors Concerning Estimates of Inferred Mineral Resources.The disclosure below also uses the term “inferred mineral resources”.  We advise U.S. investors that while this term is recognized and, in certain circumstances, required by Canadian securities regulations (under National Instrument 43-101 - Standards of Disclosure for Mineral Projects, as adopted by the Canadian Securities Administrators), it is not recognized by the U.S. Securities and Exchange Commission. The estimation of “inferred mineral resources” involves far greater uncertainty as to their existence, economic viability and legal feasibility than the estimation of other categories of resources.  It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category.  Under Canadian securities legislation, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, or economic studies, except in rare cases.  U.S. investors are cautioned not to assume that part or all of an inferred mineral  resource exists, or is economically or legally mineable.
  32
 The Preliminary Economic Assessment Study (the “Study”) was undertaken in the spring of 2008 and completed by Lycopodium Minerals Pty Ltd. and Coffey Mining Pty Ltd. (see it at http://www.keeganresources.com/i/KGN_New/43101/43-101_Esaase_May_21_2010.pdf). The Study uses a base case Indicated Mineral Resource of 2.28 million ounces of gold (58.0 million tonnes grading 1.2 g/t gold at a cut-off grade of 0.4 g/t which relates to the economic cut-off in the Study) and Inferred Mineral Resource of 1.65 million ounces of gold (41.7 million tonnes grading 1.2 g/t gold at the same cut-off grade). The Study shows that the mine would recover 1.98 million ounces of gold at a waste to ore strip ratio of 3.5 to 1 over a 10-year mine life.
 
 The Study is based on the resource estimate previously disclosed in March 2009 and demonstrates strong financial returns in the current economic environment and will be the foundation for further growth as Keegan continues with infill drilling to raise the resource classification and continues exploration drilling for additional resources. Keegan has begun a 50,000-metre drill program that includes exploration drilling of new targets identified by geophysics, soils and auger sampling.
 
 Keegan is continuing infill and development drilling as well as metallurgical, environmental and engineering studies to advance the Esaase Project to the feasibility stage and ultimately production. Management of the Company believes that over the first three years, on average, Esaase will produce 243,300 ounces of gold per year at a head grade of 1.4 g/t Au. Over a projected 10-year mine life the current deposit would produce an average of 198,200 ounces of gold per year. Keegan's interest in the Esaase Project is the maximum allowable under Ghanaian law and Keegan holds a mining lease for the Esaase Project. The lease stipulates a 10% carried interest of the Esaase Project for the government of Ghana and 5.0% revenue royalty to the government and 0.5% NSR to a Liquidation Committee. The Study has been completed on a 100% Project basis and the results presented take a 3.5% royalty into account.
  ITEM 4A
UNRESOLVED STAFF COMMENTS
  There are no unresolved staff comments.
  ITEM 5
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
  The following discussion of our results of operations and financial condition for the fiscal years ended March 31, 2011, 2010 and 2009 should be read in conjunction with the consolidated financial statements and the notes thereto included elsewhere herein and Item 4: “Information on the Company”.
  Overview
  We are a natural resource company engaged in the exploration of properties in West Ghana.  None of our properties have any mineral reserves and there can be no assurance any such mineral reserves will be discovered.  However, our Esaase property has been determined to contain mineral resources.
  We plan to pursue the plan of operations as described under Item 4: “Information on the Company”.
  Item 5.A                  Results of Operations
  Fiscal Year Ended March 31, 2011 Compared to Fiscal Year Ended March 31, 2010
 
 Keegan reported a net loss of ($12,910,250) or ($0.26) per share for the year ended March 31, 2011, compared to a net loss of ($6.972,686) or ($0.18) per share during the same period in the previous year, an increase in loss of $5,937,564 or approximately 85%.
 
 The primary reasons for the increase in the loss were the increase in administration expenses. Administration expenses increased by $5,841,876 (84%) as compared to the expenses incurred in the same period of the previous year mainly due to an increase in the amount of stock-based compensation, consulting, director’s fees and wages and benefits, project investigation costs, office, rent and administrative costs, and foreign exchange loss. These increases of expenses were partially offset by a decrease in travel, promotion and investor relations, and a decrease in regulatory fees, transfer agent and shareholder information.
 
 33
 
 The following are the discussions on the significant changes in administrative expenses:
 
 Stock-based compensation increased by $5,700,910 (272%) as a result of new stock option grants during the year totaling 4,495,000 stock options, with a weighted average exercise price of $7.39, expiring five years from date of grant. During the year ended March 31, 2010, only 1,175,000 stock options were granted at a weighted average exercise price of $4.14. During both periods, additional stock-based compensation was recorded relating to the vesting of options granted in previous periods.
 
 Consulting fees, director’s fees and wages and benefits increased by $681,303 (39%), office, rent and administrative costs increased by $175,280 (30%) consistent with the reasons described for the three-month period above.
 
 During the year ended March 31, 2011, the Company incurred project investigation costs of $222,948 in relation to investigations to acquire additional concessions to expand the Company’s land holdings. As these investigations did not result in an acquisition, the costs were expensed within the period. No project investigation costs were incurred during the year ended March 31, 2010.
 
 Travel, promotion and investor relations decreased by $313,417 (24%) as a result of reduced investor relations in the year ended March 31, 2010 compared to the same period of 2010. Higher travel, promotion and investor relations costs in the 2010 period related to a one time investor relations and communication program that started in August 2009.
 
 Regulatory fees, transfer agent and shareholder information decreased by $34,989 (16%) as a result of reduced shareholder information distributions and certain filing fees. Higher that normal distribution and filing costs were incurred during the year ended March 31, 2010, which were indirectly related to the completion of a private placement during the period.
 
 Professional fees decreased by $15,529 (3%) in the year ended March 31, 2010 compared to the same period of 2010 as a result of certain accounting functions being brought in-house. The decrease is offset by part of the increase in wages.
 
 Other expenses increased by $95,688 during the year ended March 31, 2011 compared to the same period of the previous year driven mainly by the increase in foreign exchange loss by $491,234. This increase is a result of weakening of the US Dollar to the Canadian Dollar comparing closing exchange rates of US Dollar to Canadian Dollar as at March 31, 2011 and 2010. Further, as at March 31, 2011 the Company held more cash and cash equivalents in US Dollars compared to March 31, 2010.
 
 Interest and other income increased by $375,875 (327%) compared to the year ended March 31, 2010 due to an increased investment income from the invested proceeds from the companies $213 million bough deal financing.
  Fiscal Year Ended March 31, 2010 Compared to Fiscal Year Ended March 31, 2009
  During the year ended March 31, 2010, Keegan reported a loss of ($6,972,686) or ($0.18) per share compared to a loss of ($4,176,396) or ($0.15) per share during the previous year, an increase in loss of $2,796,290.
  Expenses incurred during the fiscal year ended March 31, 2010 increased by $3,323,850 as compared to expenses incurred during the fiscal year ended March 31, 2009 while other (income)/expense decreased by $527,560.
  34
 
 The primary reason for the increase in the loss was the increases in the amount of $1,512,433 in stock-based compensation, $798,933 in travel, promotion and investor relations, $488,200 in donation expense and $168,272 in office, rent and administrative costs; this, being offset by a decrease in foreign exchange loss of $490,532 and a non-reoccurring write-off of interest in resource properties of $170,596 which occurred during the fiscal 2009. The write-off of interest in resource properties occurred when Keegan terminated the agreement to acquire an interest in the Mt. Olives concession on May 27, 2008.
  The following are the discussions on the significant changes in administrative expenses:
  Stock-based compensation increased by $1,512,433 as a result of new stock option grants during the year of 170,000 options with an exercise price of $3.31, 300,000 options with an exercise price of $3.10, 485,000 options with an exercise price of $4.01 and 220,000 options with an exercise price of $6.50, all expiring five years from date of grant. During the year ended March 31, 2009, 100,000 options were granted at an exercise price of $1.12. During both fiscal years, additional stock-based compensation was recorded relating to vesting options granted in previous periods.
  Travel, promotion and investor relations increased by $798,933 as a result of an increase in investor relations activities during the year ended March 31, 2010 compared to 2009. Further, the Company experienced increased participation in various investment and mining conferences.
  During the period, the Company made a charitable donation of 75,000 common shares. The fair value of these common shares was recorded as donation expense.
  Office, rent and administration increased by $168,272 as a result of increased rent of $135,783. The Company’s corporate offices in Vancouver moved to a new location. A further increase in office and administration costs was a result of the setting up and installation of office equipment, furniture and new computers and servers in the new office. There was also an increase in office supplies related to software purchases and printing costs related to the Company’s change of address and annual general meeting mailing. No such expenses were incurred during the same period in the prior fiscal year.
  Amortization, bank charges, consulting fees, director fees and wages and benefits, professional fees and regulatory, transfer agent and shareholder information were consistent when comparing the fiscal year ended March 31, 2010 to that of March 31, 2009.
  Fiscal Year Ended March 31, 2009 Compared to Fiscal Year Ended March 31, 2008
  During the current year, Keegan terminated the agreement to acquire an interest in the Mt. Olives concession. Consequently it wrote off $170,596 in acquisition and deferred expenditures pertaining to the Mt. Olives concession.
  During the year ended March 31, 2009, Keegan reported a loss of ($4,176,396) or ($0.15) per share compared to a loss of ($4,316,042) or ($0.17) per share during the previous year, a decrease of $139,646.
  Expenses incurred during the fiscal year ended March 31, 2009 decreased by $551,149 as compared to expenses incurred during the fiscal year ended March 31, 2008.
  The primary reason for the decrease in the loss was the decreases in the amount of $1,124,259 in stock-based compensation, $13,536 in foreign exchange loss and $281,595 in travel, advertising and promotion, being offset by increases in amortization by $17,373, consulting fees, directors’ fees and wages and benefits by $467,197, office, rent and administration by $38,548, professional fees by $288,500, regulatory fees by $44,002 and write-off of interest in resource properties by $170,596 and a decrease in interest income by $253,331.
  Item 5.B                  Liquidity and Capital Resources
  The Company reported working capital of $224,458,979 at March 31, 2011 compared to working capital of $47,944,791 at March 31, 2010, representing an increase in working capital of $176,464,328. As at March 31, 2011, the Company had cash and cash equivalents of $229,144,989 compared to cash and cash equivalents of $48,712,372 as at March 31, 2010.
  35
 
 During the year ended March 31, 2011, the Company raised net cash of $207,277,430, the majority of which from the Company’s February 17, 2011 bought deal financing.
  On February 17, 2011, the Company completed a bought deal share offering pursuant to an underwriting agreement, under which the underwriters purchased an aggregate of 24,700,000 common shares of the Company at a price of $7.50 per common share for gross proceeds of $185,250,000. The underwriters exercised an over-allotment option to purchase an additional 3,705,000 common shares at $7.50, bringing the total gross proceeds from the bought deal financing to $213,037,500.  Pursuant to the underwriting agreement, the Company paid a commission to the underwriters equivalent to 4.5% of the gross proceeds raised or $9,586,688 and incurred other cash share issuance costs totaling $613,292.  In addition, the Company granted 284,050 share purchase warrants to the underwriters entitling them to purchase common shares of the Company at a price of $7.50 per share until February 17, 2013. The Company recorded share issuance costs of $652,595 related to the warrants granted to underwriters, representing the fair value or the warrants calculated using the Black-Scholes option-pricing method.
  The remainder of the Company’s financing was $3,704,179 from the exercise of share purchase options and $735,732 from the exercise of broker’s warrants.
  During the year ended March 31, 2010, the Company raised net cash of 59,869,420, of which $18,059,533 (net of commission of $960,000 and expenses of $180,467) from a brokered private placement financing, $39,065,543 (net of an underwriter fee $2,069,425 and expenses of $253,532) from a bought deal financing through a short-form prospectus.
  During the year ended March 31, 2011, Keegan expended net $3,869,688 in general and administrative expenses and $21,983,300 (net of accounts payable and stock-based compensation) in property development, exploration and evaluation cost. Keegan has budgeted $4,300,000 for general and administrative expenses and $20,100,000 for property development, exploration and acquisition costs for the fiscal 2011.
  The Company believes it currently has sufficient working capital on hand to meet its expected capital requirements for fiscal 2012 and 2013.  Additional funds may be received through the exercise of currently outstanding common stock warrants and options or through the sale of additional common shares either as a private placement or common stock offering.  The Company may also consider other forms of project financing that may include but won’t be limited to, debt.
  As at March 31, 2011, the other sources of funds potentially available to the Company are through the exercise of 237,333 broker warrants with an exercise price of $7.50 and of the outstanding stock options with terms as follows:
 Number outstanding at
Number exercisable atExercise price
March 31, 2011
Expiry date
March 31, 2011$2.44
305,000
November 10, 2011
305,000$3.60
25,000
October 17, 2012
25,000$4.20
440,000
February 5, 2013
440,000$1.12
12,500
January 15, 2014
12,500$3.31
120,000
June 2, 2014
120,000$3.10
225,000
July 2, 2014
225,000$3.10
75,000
July 17, 2014
75,000$4.01
416,250
October 6, 2014
355,625$6.50
220,000
December 14, 2014
192,500$6.19
1,505,000
May 26, 2015
912,500$7.83
115,000
October 20, 2015
43,125$9.00
225,000
November 30, 2015
84,375$8.00
2,530,000
March 17, 2016
632,5006,213,750

3,423,125
  36
 
 There can be no assurance, whatsoever, that any of these outstanding securities will be exercised.
  During the years, financing for the Company’s operations was funded primarily from various share issuances through private placements and exercise of warrants and options. The Company has and may continue to have capital requirements in excess of its currently available resources. In the event the Company’s plans change, its assumptions change or prove inaccurate, or its capital resources in addition to projected cash flow, if any, prove to be insufficient to fund its future operations, the Company may be required to seek additional financing.
  Although the Company has been successful in raising capital, there can be no assurance that the Company will have sufficient financing to meet its future capital requirements or that additional financing will be available on terms acceptable to the Company in the future.
  The Company is in the process of acquiring and exploring its interests in resource properties and has not yet determined whether these properties contain mineral deposits that are economically recoverable. The continued operations of the Company and the recoverability of expenditures incurred to earn an interest in its resource properties are dependent upon the existence of economically recoverable reserves, securing and maintaining title and beneficial interest in the properties, obtaining necessary financing to explore and develop the properties, and upon future profitable production or proceeds from disposition of the resource properties.
  US GAAP Reconciliation
  Our financial statements are prepared in accordance with Canadian GAAP.  However, Note 16 to the financial statements included herein provides a reconciliation of the statements to U.S. GAAP.
  Item 5.C                      Research and Development, Patents and Licenses, etc.
  The Company conducts no research and development activities, and has no patents and licenses, nor is it dependent upon any for its business.
  Item 5.D                      Trend Information
  The Company does not know of any trends, demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, the Company’s liquidity either materially increasing or decreasing at present or in the foreseeable future.
  Item 5.E                      Off-Balance Sheet Arrangements
  There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes of financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, which individually or in the aggregate is material to our investors.
  Item 5.F                      Tabular Disclosure of Contractual Obligations
  As at March 31, 2011, the Company has contractual comments with certain service providers in Ghana and Canada. The amounts due under these contracts and their payment terms are as follows:
  
 Payments due by periodContractual Obligations
Total
Less than 1 year
1-3 years
3-5 years
More than 5 years$
$
$
$
$Operating Lease Obligations
2,451,182
586,088
1,770,354
94,740
-Total
2,451,182
586,088
1,770,345
94,740
-
  
 37
  ITEM 6
DIRECTORS, SENIOR MANAGEMENT, AND EMPLOYEES
  Item 6.A                 Directors and Senior Management
  The following table sets forth certain information relating to our directors and executive officers:
  Table No. 6
 Directors and Senior Management
 Name
Position
Age
Date of First Election

or AppointmentMaurice Tagami
President, CEO & Director
53
April 16, 2010Shawn Wallace
Director / Executive Chair
41
March 3, 2010Marcel de Groot(1)
Director / Chair of Audit/Compensation/Nominating Committee
37
Oct 1, 2009Keith Minty
Director / Chair of Technical Committee
57
Oct 1, 2009Tony Ricci
Chief Financial Officer
48
November 21, 2005Michael Bebek(2)

Greg McCunn
Corporate Secretary

Incoming Chief Financial Officer
35

42
December 1, 2005

April 4, 2011Robert J. McLeod (1)
Director
40
February 3, 2005Gordon J. Fretwell(1)
Director
56
February 24, 2004Dan McCoy
Director / Chief Geologist
50
November 25, 2004
  (1)
Member of Audit Committee
  (2)
Michael Bebek resigned as Corporate Secretary in August 2010.
  Shawn WallaceDirector and Executive Chair of Keegan has spent the last 20 years as a consultant to many successful junior mining companies where he was instrumental in building first class mining exploration and development projects. His particular expertise in corporate development, international mining deal structure and M&A activity will be key in guiding Keegan as it moves forward.
  
 Position
From
UntilKeegan Resources Inc., Executive Chair
March 2010
Present623845BC Ltd., President
March 2001
PresentHunter Dickenson Inc.
September 1989
March 2001Glenbriar Technologies Inc., Director
April 2003
March 2004Advanced Projects, Director
March 2000
May 2001Skye Resources Inc., Director
May 2001
Jan 2002Tribune Mineral Corp., Director
May 2011
PresentCayden Resources Inc., Director
July 2009
PresentFull Metal Minerals Corp., Director

Georgetown Capital Corp., Director
November 2009

February 2011
Present

Present
  Mr. Wallace spends 100% of his time on the affairs of Keegan.
  Maurice Tagami President and CEO of Keegan has a degree from the University of British Columbia in metallurgical engineering, is a registered professional engineer in the province of British Columbia and has over 28 years experience in mine development and operations. Mr. Tagami has played a significant metallurgical and project management role in numerous open pit, underground and heap leach projects in North and South America, Australia, Papua New Guinea, Africa, Europe and Asia and has actively participated in several plant commissioning and start-up periods. Recently, Mr. Tagami held the position of senior project manager for Canico Resource Corp. on the Onca Puma project, a large greenfields nickel laterite smelter project in Para state, Brazil where he was involved in the project from exploration through scoping and feasibility studies and basic engineering.
  38
 
 Position
From
UntilKeegan Resources Inc., President & CEO
July 2009
PresentBrett Resources Inc. Director
May 2008
PresentKobex Resources Ltd., COO
February 2007
June 2009Self Employed Consultant
Jan 2006
January 2007Canico Resources Corp., Sr. Project Manager
May 2003
December 2005Self-Employed
September 2001
April 2003Eurozinc Mining Corp., Manager of Metallurgy
November 1999
August 2001Sutton Resources, Manager of Metallurgy
July 1996
October 1999
  
  Mr. Tagami spends 100% of his time on the affairs of Keegan.
  Marcel De Groota Director and Chairman of the Audit Committee as well as the Compensation and Nominating Committee for Keegan is a founder and President of Pathway Capital Ltd., a Vancouver based private venture capital corporation. Pathway Capital Ltd, formed in 2004, invests in and provides strategic support to early stage private and public companies. Companies backed by Pathway Capital have raised over $800 million in equity and completed over $900 million in M&A transaction since 2004. He is currently Chairman of Luna Gold Corp. and a director of Underworld Resources Inc. and Waterloo Resources Ltd. Mr. de Groot graduated from the University of British Columbia with a Bachelor of Commerce degree and articled with Grant Thornton LLP where he obtained the Chartered Accountant designation.
  
 Position
From
UntilIndependent Consultant
March 2004
PresentUnderworld Resources Inc., Director
December 2006
PresentLuna Gold Corp., Director
June 2000
PresentSandstorm Resources Ltd., Director
April 2008
March 2009Ashton Mining of Canada, Director
October 2006
January 2007Diamond Fields International, CFO
April 2003
February 2004Chalk Media Corp., Director
November 2003
November 2004Independent Consultant

Keegan Resources Inc., Independent Director
October 1999

July 2009
April 2003

Present
  Mr. De Groot spends 10% of his time on the affairs of Keegan.
  
  Daniel T. McCoyis the former President and CEO and is currently a Director and the Chief Geologist of Keegan.  Mr. McCoy obtained a B.S. and Ph.D in Geology from the University of Alaska and has over 22 years of work experience in the mineral exploration sector. Before being named President of Keegan, he was Senior Geologist from Placer Dome where he coordinated acquisitions and field programs for Placer’s Nevada generative exploration office and coordinator of acquisition and exploration projects in Alaska and Canada. From 1992 to 1995, he was a teaching and research associate at the University of Alaska, Fairbanks, and also served as a contract geologist for other major metals companies throughout the United States. His recent employment history is disclosed in the following table:
  39
  Position
From
UntilPlacer Dome, Senior Geologist
January 1997
November 2004Keegan Resources Inc., Director and Chief Geologist

Cayden Resouces Inc., Director

Georgetown Capital Corp., Independent Director
November 2004

September 2010

February 2011
Present

Present

Present
  Dr. McCoy spends 100% of his time on the affairs of Keegan.
  
  Tony M. Ricciis a former Director and Chief Financial Officer of Keegan and is currently the Corporate Secretary and Executive Vice President. Mr. Ricci is a chartered accountant who received his designation as a CA (Chartered Accountant) in 1989 and spent 100% of his time in public and private practice from that time through August of 2005. His recent employment history is disclosed in the following table:
 Position
From
UntilSelf-employed consultant
1994
PresentCFO and Director, Norsement Mining Inc.
August 2005
October 2007CFO, Keegan Resources Inc.

Director, Keegan Resources Inc.
November 2005

November 2005
April 2011

September 2007CFO, Remstar Resources Ltd.
April 2006
June 2010CFO and Secretary Altair Ventures
January 2006
PresentCFO, Petaquilla Minerals Ltd.
November 2006
January 2008CFO, Mosam Capital Corp.
March 2006
April 2008Director, Milk Capital Corporation
December 2006
PresentCFO, Petaquilla Copper Ltd.
January 2007
January 2008CFO and Director, Lornex Capital Inc.
May 2008
June 2010President and Director Jantar Resources Ltd.
May 2008
PresentCFO, EmerGeo Solutions Inc.

CEO and Director, Georgetown Capital Corp.
May 2008

February 2011
Present

Present
  Mr. Ricci resigned as a Director of the Company on September 10, 2007, and has been holding dual positions as both CFO and Corporate Secretary.  Due to significant growth within the Company as it continues its advancement; the need has arisen to divide these roles into two positions with Mr. Ricci continuing as Corporate Secretary and Executive Vice President as of April 2011..  He spends 50% of his time on the affairs of Keegan.
  
  Michael Bebekwas the Corporate Secretary of Keegan from December of 2005 until resigning from the position on August 30 of 2010.
  40
 
 Greg McCunn is the Chief Financial Officer of Keegan since April 4, 2011.  Mr. McCunn is a mining executive with twenty years of domestic and international experience.  His background includes technical, operational, corporate development and financial roles with Teck, Placer Dome, and several junior mining companies in Canada and Australia.  He most recently spent three years as CFO of Farallon Mining Ltd. during which time the company completed construction and commissioning of the G-9 mine in Mexico.  Mr. McCunn played an integral role in the friendly take-over of Farallon in January 2011 by Nyrstar NV.  Prior to Farallon Mr. McCunn was Vice President, Project Development for Zincore Metals.  He holds a Masters Degree in Business Administration as well as a Bachelor of Applied Science in Metallurgical Engineering.  Mr. McCunn’s experience in bringing new mines into production will be a tremendous asset to Keegan as it rapidly moves the Esaase project to production. Mr. McCunn’s recent employment history is also disclosed in the following table:
  Position
From
UntilKeegan Resources Inc., CFO
April 2011
PresentTribune Minerals Corp., Director
May 2011
PresentFarallon Mining Ltd., CFO
June 2008
January 2011Zincore Metals Inc., VP Project Development
June 2007
June 2008Hunter Dickinson Inc., Senior project Analyst and Engineer

Placer Dome Ltd., Senior Analyst, Corporate Development

Teck Resources Ltd., Senior Project Engineer
March 2006

February 2004

January 2001
June 2007

March 2006

February 2004
  Mr. McCunn devotes 100% of his time to the affairs of Keegan.
  
  Robert J. McLeod is a Director of Keegan.  Mr. McLeod is the VP of Exploration and a director of Full Metal Minerals Ltd. He has over 12 years of experience in mining and exploration, working for a variety of major and junior mining companies. Technical skills include advanced GIS and 3D geologic modeling, grade-block modeling and resource calculation, mine design and geostatistics, lithogeochemical and structural studies, as well as project generation and property evaluation. His exploration strategy is a multi-tier approach including: conceptual geologic and project generation, early-stage project advancement focusing on discovery, and advancing mid-stage projects towards feasibility. As an exploration geologist and project manager at Miramar’s Hope Bay project, he was part of the team that discovered the Naartok deposit, as well as expanding and delineating the Boston and Doris deposits. He was previously VP of Exploration for Atna Resources Ltd, where he helped assemble a portfolio of gold properties in Nevada. Mr. McLeod obtained his Bachelor of Science Degree, majoring in Economic Geology from UBC in 1993 and graduated from Queen’s University’s, Master’s in Geology, Mineral Exploration Program in 1998. He is a Fellow of the Society of Economic Geologists, member of the Association of Professional Engineers and Geoscientists of BC, Prospectors and Developers Association of Canada, Alaska Miners Association and the BC & Yukon Chamber of Mines. Mr. McLeod’s recent employment history is disclosed in the following table:
  Position
From
UntilMiramar Mining Inc., Project Manager
January 2000
January 2003Atna Resources Inc., Vice President
January 2003
January 2004Keegan Resources Inc., Director
January 2004
PresentFull Metals Minerals Corp., VP Exploration and Director
June 2003
Present
  Mr. McLeod devotes 10% of his time to the affairs of Keegan.
  41
 
 Gordon J. Fretwell is a Director of Keegan.  Mr. Fretwell holds a Bachelor of Commerce degree and graduated from the University of British Columbia in 1979 with a Bachelor of law degree. Mr. Fretwell has, since 1991, been a self-employed solicitor in Vancouver practicing primarily in the areas of corporate and securities law. He currently serves on the board or is an officer of several public companies engaged in mineral exploration including Bell Resources Corporation, Copper Ridge Exploration Inc., Continental Minerals Corporation, Rockwell Ventures Inc., Grandcru Resources Corp., Pine Valley Mining Corp., Quartz Mountain Resources Ltd., and Icon Industries Ltd.
  Mr. Fretwell devotes 10% of his time to the affairs of Keegan.
  Keith Minty is a Director and Chairman of the Technical Committee of Keegan. Keith Minty obtained a B.Sc. in Mining Engineering from Queen' University, Kingston Ontario, Canada in 1978. He has over 25 years of open pit and underground mine operational and project development experience in North America, Central America and in Africa in base and precious metals, Platinum Group Metals and Industrial Minerals. Since 1997, Keith has held many corporate management and financial positions in companies listed on the Toronto and American stock exchanges. He has raised over $ 750 million as IPO's and financings for these companies. In 2008, he joined Thani Dubai Mining as the Chief Operating Officer where he is responsible for all project gold exploration and operations activities in Yemen and Egypt and new business development activities. Prior to joining Thani Dubai Mining limited, he was Hunter Dickinson Inc. South African country manager.
  
 Position
From
UntilKeegan Resources Inc., Director
October 2009
PresentThani Dubai Mining Ltd., COO
April 2008
PresentStar Gold Mines Inc., Director
May 2007
April 2009K. Minty & Associates, President
February 2003
December 2007China Diamond Corp., Director
March 2006
September 2006Crow Fight Resources, President & CEO
April 2003
August 2003Beartooth Platinum, President & CEO
August 2004
April 2005North American Palladium, President & CEO
December 1997
February 2003
  Mr. Minty devotes 10% of his time to the affairs of Keegan.
  
  The Directors have served in their respective capacities since their election and/or appointment and will serve until the next Annual General Meeting or until a successor is duly elected, unless the office is vacated in accordance with the Articles of the Company.
  The Senior Management serves at the pleasure of the Board of Directors.
  No Director and/or Senior Management had been the subject of any order, judgment, or decree of any governmental agency or administrator or of any court or competent jurisdiction, revoking or suspending for cause any license, permit or other authority of such person or of any corporation of which he is a Director and/or Senior Management, to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining or enjoining any such person or any corporation of which he is an officer or director from engaging in or continuing any conduct/practice/employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security or any aspect of the securities business or of theft or of any felony.
  There are no family relationships between any two or more Directors or Senior Management.
  There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a Director or member of senior management.
  42
 
 Item 6.B                      Compensation
  Cash Compensation
  Total compensation accrued and/or paid (directly and/or indirectly) to all Directors/Senior Management during the year ended March 31, 2011 was CDN$ 256,507 in consulting fees, CDN$ 15,850 in professional fees, $863,987 in salaries and $112,500 in directors’ fees paid to directors and officers of the Company.
  The following table sets forth information regarding compensation paid to our executive officers for the fiscal periods indicated:
  Table No. 7
 Officer and Director Compensation
  Annual CompensationPayoutsName and

Principal Position
Year
Salary

($)
Bonus

($)
LTIP

Pay-outs ($)
All Other

Compensation

($)
Total Cash Compensation

($)Shawn Wallace

Executive Chair
2011
256,042
40,000
Nil
Nil
296,042Maurice Tagami

President & CEO
2011
270,000
50,000
Nil
Nil
320,000Daniel T. McCoy

Director/ Chief Geologist
2011
Nil
Nil
Nil
256,507
256,507Tony M. Ricci

CFO
2011
93,750
Nil
Nil
15,850
109,600Michael Bebek

Corporate Secretary
2011
60,000
5,000
Nil
Nil
65,000Richard Haslinger

VP
2011
48,570
10,000
Nil
Nil
58,570Andrea Zaradic

VP
2011
30,625
Nil
Nil
Nil
30,625Robert J. McLeod

Director
2011
25,000
Nil
Nil
Nil
25,000Gordon J. Fretwell

Director
2011
25,0000
Nil
Nil
Nil
25,000Marcel de Groot

Director
2011
32,500
Nil
Nil
Nil
32,500Keith Minty

Director
2011
30,000
Nil

l
Nil
Nil
30,000
 
 43
 
 The following table sets forth information regarding stock options held by our directors and officers as of March 31, 2011:
  Table No. 8
 Stock Option Grants
 Name
Number of

Options Held
% Of Total

Options Granted
Exercise

Price per Share
Grant Date
Expiration Date
Mkt. Value of

Securities

Underlying

Options on

Date of GrantTony Ricci
75,000
34%
$1.16
11/21/05
11/21/10
$1.1625,000
2%
$2.44
11/10/06
11/10/11
$2.4430,000
3%
$4.20
02/05/08
02/05/13
$4.20100,000

45,000
21%
4.01

$6.19
06/10/09

05/26/10
06/10/14

05/16/2015
$4.01

$6.19Shawn Wallace
150,000
17%
$4.20
02/05/08
02/05/13
$4.2050,000
29%
$3.31
02/06/09
02/06/14
$3.3150,000

125,000

220,000

250,000
10%
$4.01

$6.19

$8.00
06/10/09

01/27/10

05/26/10

03/17/11
06/10/14

01/27/15

05/26/15

03/17/16
$4.01

$6.19

$8.00Maurice Tagami
150,000
50%
$3.10
02/07/10
02/07/14
$3.1050,000

125,000

220,000

250,000
10%
$4.01

$6.19

$8.00
06/10/09

01/27/10

05/26/10

03/17/11
06/10/14

01/27/15

05/26/15

03/17/16
$4.01

$6.19

$8.00Dan McCoy
32,909
18%
$2.44
11/10/06
11/10/11
$2.4475,000
8%
$4.20
02/05/08
02/05/13
$4.2050,000

125,000

220,000

150,000
10%
$4.01

$6.19

$8.00
06/10/09

01/27/10

05/26/10

03/17/11
06/10/14

01/27/15

05/26/15

03/17/16
$4.01

$6.19

$8.00Marcel de Groot
75,000
25%
$3.10
02/07/10
02/07/14
$3.1025,000

45,000

45,000

50,000
5%
$4.01

$6.19

$8.00
06/10/09

01/27/10

05/26/10

03/17/11
06/10/14

01/27/15

05/26/15

03/17/16
$4.01

$6.19

$8.00Keith Minty
75,000
25%
$3.10
02/07/10
02/07/14
$3.1025,000

45,000

45,000

50,000
5%
$4.01

$6.19

$8.00
06/10/09

01/27/10

05/26/10

03/17/11
06/10/14

01/27/15

05/26/15

03/17/16
$4.01

$6.19

$8.00Gordon Fretwell
25,000
5%
$4.01
06/10/09
06/10/14
$4.0125,000
2%
$2.44
11/10/06
11/10/11
$2.4420,000

45,000

45,000

50,000
2%
$4.20

$6.19

$8.00
02/05/08

01/27/10

05/26/10

03/17/11
02/05/13

01/27/15

05/26/15

03/17/16
$4.20

$6.19

$8.00Rob Mcleod
25,000
5%
$4.01
06/10/09
06/10/14
$4.0150,000
4%
$2.44
11/10/06
11/10/11
$2.4420,000

45,000

45,000

50,000
2%
$4.20

$6.19

$8.00
02/05/08

01/27/10

05/26/10

03/17/11
02/05/13

01/27/15

05/26/15

03/17/16
$4.20

$6.19

$8.00Michael Bebek
50,000
4%
$2.44
11/10/06
11/10/11
$2.4450,000
5%
$4.20
02/05/08
02/05/13
$4.2025,000

50,000

45,000
5%
$4.01

$6.19
06/10/09

01/27/10

05/26/10
06/10/14

01/27/15

05/26/15
$4.01

$6.19
  44
 
 During the fiscal 2011, Michael Bebek exercised 50,000 options at a price of $2.44 per share, 22,500 options at a price of $6.19 per share, 21,875 options at a price of $4.01 per share, and 50,000 options at a price of $4.20 per share.
  During the fiscal 2011, Tony Ricci exercised 75,000 options at a price of $1.16 per share
  During the fiscal 2011, Dan McCoy exercised 41,598 options at a price of $2.44 per share, and 32,909 options at a price of $2.44 per share.
  Director Compensation.  Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of the Board of Directors.  The Board of Directors may award special remuneration to any Director undertaking any special services on behalf of Keegan other than services ordinarily required of a Director.
  Stock Options.  Keegan may grant stock options to Directors, Senior Management, consultants and employees. Stock options have been granted and 1,195,132 were exercised during Fiscal 2011. Refer to Item #6.E., “Share Ownership” and Table No. 8 for information about stock options outstanding.
  Change of Control Remuneration.  Keegan had no plans or arrangements, other than clauses within individual employment agreements with its employees, in respect of remuneration received or that may be received by Executive Officers of Keegan in Fiscal 2011 to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds US$60,000 per Senior Management.
  Other Compensation.  No Senior Management/Director received “other compensation” in excess of the lesser of US$25,000 or 10% of such officer's cash compensation, and all Senior Management/Directors as a group did not receive other compensation which exceeded US$25,000 times the number of persons in the group or 10% of the compensation.
  Bonus/Profit Sharing/Non-Cash Compensation.  Keegan paid $105,000 in bonuses in the Fiscal year ending March 31, 2011.  Except for these bonuses and the stock option program discussed in Item #6.E., Keegan had no profit sharing plans pursuant to which non-cash compensation was paid to Keegan’s Directors or Senior Management. The Company does not have a formal annual incentive bonus plan in place.  Any award of a bonus to Senior Management is entirely at the discretion of the Board of Directors. In considering the payment of a discretionary bonus to Senior Management, the Committee takes into account the individual performance and efforts of the officer during the year, the progress made by the Company in furthering its business plan and the overall economic climate.
  Pension/Retirement Benefits.  No funds were set aside or accrued by Keegan during Fiscal 2011 to provide pension, retirement or similar benefits for Directors or Senior Management.
  Item 6.C                      Board Practices
 
 The Directors hold office for a term of one year or until the next annual general meeting of the Company, at which time all directors retire, and are eligible for re-election.  Information concerning the length of each Director’s service is set forth in “Item 6.A--Directors and Senior Management”.  Except as described in “Item 6.B Compensation” above, none of our directors has any service agreements with the Company providing for benefits upon termination of employment.
 
 45
 
 Constitution and Independence of the Board
 
 The Company’s board of directors currently consists of seven directors.  Four of the directors, Gordon Fretwell, Keith Minty, Robert McLeod and Marcel de Groot, being a majority, are considered independent of management and of any significant shareholder and are considered competent to exercise independent judgment in carrying out their responsibilities as directors.  None of these directors have any direct or indirect material relationship with the Company or have any relationship pursuant to which they may accept directly or indirectly any consulting, advisory or other compensatory fees, other than as remuneration for acting in his capacity as a member of the Board of Directors or any committee thereof.
 
 Maurice Tagami, is not independent in that he is also President and Chief Executive Officer of the Company.  Shawn Wallace is not an independent as he is employed as the Executive Chair of the Company. Dan McCoy is not an independent since he stepped down as CEO and President he remains on as the Chief Geologist of the Company.
 
 Board of Director Committees
 
 There are four board committees, the Audit Committee, Compensation Committee, Disclosure Committee and the Nominating and Corporate Governance Committee.
 
 Audit Committee
 
 The Audit Committee operates under an Audit Committee Charter which is disclosed under the Company’s Management Information Circulars and may be viewed at www.SEDAR.com. The Audit Committee is comprised of Gordon Fretwell, Robert McLeod and Marcel Degroot (Chair) all of whom are independent. The Audit Committee reviews the annual and quarterly financial statements of the Company, oversees the annual audit process, the Company’s internal accounting controls, the resolution of issues identified by the Company’s auditors and recommends to the Board the firm of independent auditors to be nominated for appointment by the shareholders at the next annual general meeting.  In addition, the Audit Committee meets annually with the external auditors of the Company. The Audit Committee met five times during the year ended March 31, 2011.
  Compensation Committee
  The Compensation Committee is comprised of three directors, Marcel De Groot (chair), Gordon J. Fretwell and Robert McLeod all of whom are independent.  The Compensation Committee assists the Board of Directors in carrying out its responsibilities relating to executive and director compensation.
  Disclosure Committee
  The Disclosure Committee is comprised of three directors, Marcel De Groot, Gordon J. Fretwell, and Robert McLeod (Chair).  The primary responsibility of the Disclosure Committee is to cause the Company to fulfill its disclosure obligations on a timely basis.
  Nominating and Corporate Governance Committee
  The Nominating and Corporate Governance Committee is comprised of three directors, Marcel De Groot (Chair),  Gordon J. Fretwell and Robert McLeod all of whom are independent.  The Nominating and Governance Committee assists the Board of Directors in carrying out its responsibilities relating to stewardship and governance, including identifying and recommending to the Board individuals qualified to become Board members, consistent with criteria approved by the Board.
  Board Mandate
 
 The Board has overall responsibility for the stewardship of the Company. The Board has adopted a formal mandate which includes:
 
 46
 
 (a)           to the extent feasible, the responsibility to satisfy itself as to the integrity of the chief executive officer and other executive officers and that the chief executive officers and the other executive officers create a culture of integrity throughout the Company;
  (b)           responsibility for the adoption of a strategic planning process and approval of a strategic plan;
  (c)           responsibility for the identification of the principal risks of the Company’s business and ensuring the implementation of appropriate systems to manage these risks;
  (d)           oversight over succession planning;
  (e)           responsibility over appointing, monitoring, evaluating and, where necessary, terminating senior management;
  (f)      responsibility for the implementation of a communication policy for the Company regarding disclosure of corporate information;
  (g)           responsibility for the Company’s internal control and management information systems including accounting systems, and
  (h)           responsibility over developing the Company’s approach to corporate governance, including developing a set of corporate governance principles and guidelines that are specifically applicable to the Company.
 
 The Company’s Board of Directors is empowered by governing corporate law, the Company’s Articles and the Corporate Governance Policy to manage, or supervise the management of, the affairs and business of the Company.
 
 The Board of Directors performs its functions through quarterly and special meetings and has delegated certain of its responsibilities to those committees described below. In addition, the Board has established policies and procedures that limit the ability of management to carry out certain specific activities without the prior approval of the Board.
 
 Long-term strategies and annual operating and capital plans with respect to the Company’s operations are developed by Senior Management and reviewed and approved by the Board.
 
 The Board, through the Audit Committee, has the responsibility to identify the principal risks of the Company’s business. It works with management to implement policies to identify the risks and to establish systems and procedures to ensure that these risks are monitored.
 
 The Board reviews and discusses succession planning for Senior Management positions as part of the Company’s planning process. The Board of Directors has, together with the Chief Executive Officer, developed a written position description for the Chief Executive Officer. As well, the Board meets at least quarterly with the Chief Executive Officer to review and approve the Chief Executive Officer’s quarterly and annual objectives.
 
 The Board of Directors has delegated responsibility for communication with the public and the Company’s shareholders to its President and Chief Executive Officer and its Chief Financial Officer and Corporate Secretary. Procedures are in place to ensure proper dissemination of news releases, and that those shareholders who request information about the Company receive it in a timely manner. Inquiries by shareholders are directed to and dealt with by Senior Management.
 
 The Board has delegated responsibility for the integrity of internal controls and management information systems to the Audit Committee. The Company’s external auditors report directly to the Audit Committee. In its regular meetings with the external auditors, the Audit Committee discusses, among other things, the Company’s financial statements and the adequacy and effectiveness of the Company’s internal controls and management information systems.
 
 
 
 Orientation and Continuing Education
 47
 
 As part of the orientation program, new directors meet with senior management to discuss the business of the Company, Board policies and historical and current operating and financial information, and may tour selected offices of the Company.
 
 Ethical Business Conduct
 
 The Board of Directors has in place a number of procedures designed to ensure that directors exercise independent judgement in a matter where a director or officer has a material interest. Since there are two directors who are not independent (Maurice Tagami, President and Chief Executive Officer and Shawn Wallace, Executive Chairman for the Company), there are limited circumstances where such an interest arises. In those limited circumstances, the relevant director must declare his interest and refrain from voting, and the Corporate Governance and Nominating Committee considers the transaction in advance of its consideration by the Board. See “Item 16.B Code of Ethics”.
  Item 6.D                      Employees
  As of March 31, 2011, Keegan had 23 employees based in Vancouver, BC, excluding the Senior Management. The Company also employs 156 individuals in Ghana, including field workers, security, camp staff, and local administration.
  Item 6.E                      Share Ownership
  The following table sets out as of June 23, 2011 holdings by Directors and Senior Management who beneficially own Keegan's voting securities.  No shareholder owns more than 5% of our outstanding common stock.
  Table No. 10
 Shareholdings of Directors and Senior Management
  Title of Class
Name of Beneficial Owner
Amount and Nature of

Beneficial Ownership
Percent of ClassCommon
Shawn Wallace
720,000
*Common
Maurice Tagami
670,000
*Common
Daniel T. McCoy
495,600
*Common
Tony M. Ricci
250,000
*Common
Marcel Degroot
195,000
*Common
Robert J. McLeod
190,000
*Common
Gordon J. Fretwell
165,000
*Common
Keith Minty
145,000
*Total
2,830,600
3.8 %
 * Less than 1%.
  The percentages are based on 75,303,788 shares outstanding as of June 23, 2011 and include stock options .
  Stock Options
  The terms of incentive options grantable by Keegan are done in accordance with the rules and policies of the TSX and the British Columbia Securities Commission, including the number of common shares under option, the exercise price and expiry date of such options, and any amendments thereto.
  Originally, Keegan adopted a formal written stock option plan (the "Old Plan") on June 22, 2004. The Old Plan provided that the aggregate number of shares of Keegan, which may be issued and sold under the Old Plan, was 2,774,683. At the Annual Meeting held on September 29, 2006, Shareholders approved revisions to the Old Plan. On October 1, 2007, shareholders of the Company approved a further increase in number of shares reserved for issuance under the plan to 4,663,290.
 
 On December 22, 2008, the Company graduated from the TSX-V to the TSX and in order to comply with the policies of the TSX, the directors approved a new form of share option plan (the “2008 Option Plan”) on August 22, 2008 which was approved by the Company’s Shareholders on October 1, 2008.  All stock options which were outstanding under the Old Plan were rolled into and deemed granted under the 2008 Option Plan.  Under the 2008 Option Plan, the maximum aggregate number of shares that may be reserved for issuance at any point in time is 10% of the issued and outstanding shares of the Company. This type of share option plan is called a “rolling” plan. A copy of the 2008 Option Plan was filed as an exhibit to our Annual Report on Form 20-F our Annual Report on Form 20-F for the year ended March 31, 2009, as filed with the SEC on July 1, 2009.
 48
 
 The principal purposes of Keegan’s 2008 Option Plan is to give Eligible Persons, as additional compensation, the opportunity to participate in the success of the Company. Eligible Persons include Directors, Officers, Employees, Consultants, Consultant Companies, or Management Company Employees.
  The Company is of the view that the 2008 Option Plan provides the Company with the flexibility necessary to attract and maintain the services of senior executives and other employees and reflects in competing compensation to other companies in the industry.
  The 2008 Option Plan is subject to the following restrictions:
  (a)                 the number of Common Shares issuable to insiders as a group under the 2008 Option Plan, when combined with Common Shares issuable to insiders under all the Company’s other security based compensation plans, may not exceed 10% of the issued Common Shares within any 12 month period;
  (b)                 the number of Common Shares issuable to insiders as a group under the 2008 Option Plan, when combined with Common Shares issuable to insiders under all the Company’s other security based compensation plans, may not exceed 10% of the Company’s issued Common Shares at any time;
  (c)                 options to purchase Common Shares granted to any one Consultant within any 12 month period may not exceed 2% of the issued and outstanding Common Shares of the Company;
  (d)                 the number of Common Shares, in aggregate, issuable to all Employees conducting Investor Relations Activities, in any 12 month period, must not exceed 2% of the issued and outstanding Common Shares of the Company;
  (e)                 all options granted to Consultants performing Investor Relations Activities must vest in stages over 12 months with no more than 25% of the options vesting in any three month period;
  (f)      no exercise price of an option granted to an insider may be reduced nor an extension to the term of an option granted to an insider extended without further approval of the disinterested shareholders of the Company; and
  (g)                 the maximum aggregate number of Common Shares issuable upon exercise of Options to non-employee directors must not exceed 1% of the total common shares of the Company outstanding at any time and no more than $100,000 in total award value per non-employee director on an annual calendar basis.
  Options under the 2008 Option Plan must be granted at a minimum exercise price being no less than the market price, which is the five day volume weighted average trading price of the Common Shares, which is calculated by dividing the total value of the securities traded for the relevant period by the total volume (the “Market Price”). Where appropriate, the TSX may exclude internal crosses and certain other special term trades from the calculation.
  The following is a summary of the material terms of the 2008 Option Plan:
  (a)                 all options granted under the 2008 Option Plan are non-assignable and non-transferable and are issuable for a period of up to five years;
  (b)                 for stock options granted to employees or service providers (inclusive of management company employees), the Company must ensure that the proposed optionee is a bona fide employee or service provider (inclusive of management company employees), as the case may be, of the Company or any subsidiary;
  (c)                 if an optionee ceases to be employed by the Company (other than as a result of termination with cause), or ceased to provide services to the Company, or ceases to act as a director or officer of the Company or a subsidiary of the Company, any option held by such optionee may be exercised at the earlier of the date of expiration of the term of 90 days after the date such optionee ceases to be employed as an officer or director or, as the case may be;
  49
 
 (d)                 if an optionee dies, any vested option held by him at the date of death will become exercisable by the optionee’s lawful personal representatives, heirs or executors until the earlier of one year after the date of death of such optionee and the date of expiration of the term otherwise applicable to such option;
  (e)                 in the case of an optionee being dismissed from employment or service for cause, such optionee’s options, whether or not vested at the date of dismissal, will immediately terminate without right to exercise same;
  (f)       the minimum exercise price of an option granted under the 2008 Option Plan must not be less than the Market Price calculated the day before the grant (as defined in the 2008 Option Plan);
  (g)                 vesting of options shall be in accordance with the option commitment in the 2008 Option Plan or otherwise, at the discretion of the Board, and will generally be subject to: (i) the service provider remaining employed by or continuing to provide services to the Company or any of its affiliates as well as, at the discretion of the Board, achieving certain milestones which may be defined by the Board from time to time or receiving a satisfactory performance review by the Company or any of its affiliates during the vesting period; or (ii) the service provider remaining as a Director of the Company or any of its affiliates during the vesting period;
  (h)                 the maximum aggregate number of shares issuable upon exercise of options to non-employee directors must not exceed 1% of the total common shares of the Company outstanding at any time and no more than $100,000 in total award value per non-employee director on an annual calendar basis; and
  (i)       the Board reserves the right in its absolute discretion to terminate the 2008 Option Plan with respect to all 2008 Option Plan shares in respect of Options which have not yet been granted under the 2008 Option Plan.
  The Board has determined that, in order to reasonably protect the rights of the participants, certain amendments should be made to the current share option plan. In addition, as a matter of administration, the Board has determined that it is necessary to clarify when amendments to the 2008 Option Plan may be made by the Board without further shareholder approval. Accordingly, the Board proposes that the 2008 Option Plan provide that:
  (a) all outstanding but unvested options will vest immediately prior to completion of a change in control (as defined in the 2008 Option Plan) as being a change where any person or persons acting in concert materially control the Company, and in the absence of any evidence to the contrary;
  (b) if an option which has been previously granted is set to expire during a period in which trading in securities of the Company by any 2008 Option Plan participant is restricted by a black-out, or any such blackout extends to a date which is within five business days of the expiry of the option, the exercise date will be extended to ten business days after the trading restrictions are lifted; and
  (c) the 2008 Option Plan and outstanding options may be amended by the Board without shareholder approval in the following circumstances:
  (i)           it may make amendments which are of a typographical, grammatical or clerical nature only;
  (ii)           it may change the vesting provisions of an option or the 2008 Option Plan;
  (iii)           it may change the termination provision of an option or the 2008 Option Plan which does not entail an extension beyond 5 years from the original expiry date of an option;
  (iv)           it may amend the expiry date of an option of non-Insider optionees which does not entail an extension beyond 5 years from the original date of grant;
  (iv)           it may add a cashless exercise feature payable in cash or shares to the 2008 Option Plan;
  (v)           it may make amendments necessary as a result of changes in securities laws applicable to the Company;
  50
 
 (vi)           if the Company becomes listed or quoted on a stock exchange or stock market senior to the TSX, it may make such amendments as may be required by the policies of such senior stock exchange or stock market; and
  (vii) it may make such amendments as reduce, and do not increase, the benefits of the 2008 Option Plan to potential optionees.
  ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
  Item 7.A                 Major Shareholders
  No person owns 5% or more of the Company’s outstanding shares and there have been no changes in holdings of significant shareholders.
  Share Ownership
  On June 23, 2011, Keegan’s shareholders’ list showed 75,303,788 common shares outstanding and 32 registered shareholders, including depositories. Of these shareholders and depositories, 6 are located in Canada holding 73,767,591 common shares, or 97.96% of the total issued and outstanding; 20 are located in the United States holding 1,430,772 common shares, or 1.90% of the issued and outstanding; and 6 are located in other countries, holding 105,425 common shares, or 0.14% of the issued and outstanding common shares.
  Control of the Company
  Keegan, to its knowledge, is not controlled by any foreign government or other person(s). Keegan is not aware of any arrangements that may result in a change of control of the Company.
  Item 7.B                 Related Party Transactions
  The Company has a consulting agreement with a company controlled by a director of the Company in the amount of US$ 17,500 per month plus benefits up to February 28, 2011 and US$ 8,750 plus benefits there after. During the year ended March 31, 2011, the Company paid consulting fees, benefits and a bonus of $306,507 (2010 - $269,531; 2009 - $211,632) under this agreement.
  Included in consulting fees, wages and benefits is $15,850 (2010 - $nil; 2009 - $91,270) paid or accrued for consulting fees paid to an officer of the Company during the year ended March 31, 2011.
  During the year ended March 31, 2011, the Company included in professional fees $nil (2010 - $98,410; 2009 - $76,660) for accounting fees paid or accrued to a company controlled by an officer of the Company.
  During the year ended March 31, 2011, the Company paid or accrued $nil (2010 - $112,954, 2009 -  $155,404) for geological consulting fees to a former director of the Company. These costs have been included in resource properties.
  During the year ended March 31, 2011, the Company billed $223,264 (2010 - $nil; 2009 - $nil) to companies with directors and officers in common in respect to recovery of general and administration costs
  These transactions were conducted in the normal course of operations and were measured by the exchange amount, which is the amount agreed upon by the transacting parties.
  Included in accounts payable and accrued liabilities as at March 31, 2011 is $96,365 (2010 - $70,028) owing to a company controlled by a director of the Company. Included in receivables as at March 31, 2011 is an aggregate amount of $25,598 (2010 - $nil) due from companies with directors and officers in common.
   51
 
 Accounting Fees
  During the year ended March 31, 2011, the Company included in professional fees $nil (2010 - $98,410; 2009 - $76,660) for accounting fees paid or accrued to a company controlled by an officer of the Company.
  Amounts Owing to Senior Management/Directors
  As at March 31, 2011, there is $46,365 (March 31, 2010 - $70,028; March 31, 2009 - $61,939) owing to senior management or members of the Board of Directors.
  There have been no transactions since March 31, 2011, or proposed transactions, which have materially affected or will materially affect Keegan in which any director, executive officer, or beneficial holder of more than 5% of the outstanding common shares, or any of their respective relatives, spouses, associates or affiliates has had or will have any direct or material indirect interest.
  Item 7.C                 Interests of Experts and Counsel
  Not Applicable.
  ITEM 8.
FINANCIAL INFORMATION
  Item 8.A                 Consolidated Statements and Other Financial Information
  Keegan's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP).  However, Note 15 to the financial statements includes reconciliation to the financial statements to U.S. GAAP.  The financial statements are filed under Item 15.
  Item 8.A.7              Legal Proceedings
  Esaase Lawsuit
  On July 14, 2008, Sametro (see “Item 4.D Property Plant & Equipment – Esaase Gold Property - History of the Esaase Concession”) issued a Writ of Summons against Keegan Ghana and the Ghana Minerals Commission in the High Court of Ghana, seeking an order setting aside the Deed of Assignment of the Esaase Concession on the grounds of fraud, a declaration that the Esaase Concession is the property of Sametro, an order for perpetual injunction directed at Keegan Ghana and the Ghana Minerals Commission from interfering with Sametro’s rights to the Esaase Concession, an order directed at the Ghana Minerals Commission to expunge from their records the Deed of Assignment which granted Keegan Ghana its ownership of the Esaase Concession plus (unspecified) damages and costs.
  Sametro’s basic claim is that the individual who purported to handle the Deed of Assignment, Mr. Ekow Amua-Sekyi, was either not authorized to do so by Sametro and/or that he provided a deed to Keegan Ghana and the Ghana Minerals Commission which was not in fact signed, as it was purported to be, by the Managing Director of Sametro, Mr. Samuel Gordon Etroo.  One allegation is that Mr. Amua-Sekyi, who presented the document to Keegan Ghana, actually forged the signature of Mr. Etroo on the Deed of Assignment and his signature is a fraud.  In a separate action Sametro is suing Mr. Amua-Sekyi and making similar allegations.
  It is the legal position of Keegan Ghana that Mr. Amua-Sekyi was at all material times a director and agent of Sametro in the transactions between Sametro and Keegan Ghana, and that Keegan Ghana acted in good faith without any notice of irregularity.  Keegan Ghana notes that other directors of Sametro executed documents ratifying the underlying Option Agreement from which the Deed of Assignment was derived.  Sametro in its pleadings conceded that Sametro ratified the Option Agreement and also took consequential actions in pursuance thereof.
  Keegan Ghana will in part rely upon sections 139-142 of the Ghana Companies Code, 1963 (Act 179) which confers statutory protection on innocent third parties from any fraud by directors, officers, servants and agents of corporate bodies in Ghana.  Section 143 of the Ghana Companies Code specifically provides that:“Where in accordance with Sections 139-142 of this Code a company would be liable for the acts of any officer or agent, the company shall be liable notwithstanding that the officer or agent has acted fraudulently or forged a document purporting to be sealed by, or signed on behalf of, the company”.
  52
 
 Keegan Ghana believes that Sametro’s claims are without merit and will vigorously defend its interests in the Esaase Concession.  Based on a legal analysis of the facts and law by its Ghana counsel, the Company is confident in its legal position; however there can never be certainty in regards to the outcome of lawsuits as the trial process involves judicial assessment of witnesses, documents and other matters that can influence the outcome and which can not be fully evaluated in advance.
  On May 13, 2009, the High Court in Ghana was to have heard an interlocutory application brought by Sametro to request an injunction preventing Keegan from conducting exploration and accessing the Esaase Property. The hearing of the application was not heard on this date and as of the date hereof. A new hearing date has not been set. Keegan's counsel is of the view that the injunction request will be denied on the basis that a) Keegan at all times enjoyed a contractual right to access the property and this right should not be affected by the litigation which is in respect of other disputed matters and b) the balance of convenience greatly favours Keegan as there is no ongoing exploitation of the resource so the plaintiff is not at any economic risk by Keegan's activities.
  There is no other material litigation and no known regulatory actions, nor to the knowledge of the Company, any basis therefore.
  Item 8.A.8              Dividends
  The Company, to date, has not paid any dividends nor does it plan to pay dividends in the foreseeable future.
  Item 8.B                  Significant Changes
  There have been no significant changes since the date of the financial statements included in this Annual Report.
  ITEM 9.
THE OFFER AND LISTING
  Item 9.A                 Common Share Trading Information
  The Company’s common shares were traded on the TSX-V in Canada under the symbol “QSV” from June 25, 2001 to March 1, 2005 and thereafter under the symbol “KGN” until December 19, 2008.  Starting from January 2, 2008, the Company’s common shares have been trading on NYSE Amex Equities Stock Exchange in the United States under the symbol “KGN”. Starting from December 22, 2008, the Company’s common shares have been trading on the TSX under the symbol “KGN”.
  The following table sets out the high and low sale prices and the volume of trading of the shares on the TSX and the TSX-V for the periods indicated:
  Table No. 11
 TSX Venture Exchange and Toronto Stock Exchange
 Common Shares Trading Activity
 - Sales -
 Canadian Dollars
 Period
High
LowYear Ended:

March 31, 2011
9.29
4.92March 31, 2010
7.98
2.25March 31, 2009
5.85
0.49March 31, 2008
5.49
2.22March 31, 2007
4.95
1.30March 31, 2006
2.75
1.51   53
  Quarter Ended:March 31, 2011

December 31, 2010

September 30, 2010

June 30, 2010

March 31, 2010
9.03

9.29

8.70

7.00

7.34
7.25

7.16

4.92

5.30

5.35December 31, 2009
7.98
3.65September 30, 2009
4.40
2.25June 30, 2009
4.39
2.25Month Ended:May 31, 2011
8.80
7.38April 30, 2011
9.24
8.25March 31, 2011
9.03
7.25February 28, 2011
7.77
7.30January 31, 2011
8.86
7.27December 31, 2010
9.29
8.63
  
  The following table sets out the high and low sale prices and the volume of trading of the shares on the NYSE Amex for the periods indicated:
  Table No. 12
 NYSE Amex
 Common Shares Activity
 - Sales -
 U.S. Dollars
 Period
High
LowYear Ended:March 31, 2011

March 31, 2010
9.20

7.57
4.70

1.76March 31, 2009
5.76
0.36March 31, 2008
N/A
N/AMarch 31, 2007
N/A
N/AMarch 31, 2006
N/A
N/A   54
 Quarter Ended:March 31, 2011

December 31, 2010

September 30, 2010

June 30, 2010

March 31, 2010
9.20

9.19

8.48

6.93

7.10
7.30

6.96

4.70

5.11

5.03December 31, 2009
7.57
3.36September 30, 2009
4.13
1.91June 30, 2009
4.00
1.76Month Ended:May 31, 2011
9.24
7.60April 30, 2011
9.65
8.54March 31, 2011
9.20
7.32February 28, 2011
7.87
7.37January 31, 2011
9.00
7.30December 31, 2010
9.19
8.58
   Description of Share Capital
  Share Capital
  The authorized capital of Keegan consists of an unlimited number of common shares with no par value and an unlimited number of preferred shares with no par value, of which 6,213,750 common shares and no preferred shares are currently issued and outstanding as at March 31, 2011.
  Computershare (located at 510 Burrard Street, 2nd Floor, Vancouver, BC V6C 3B9) is the registrar and transfer agent for the common shares.
  Stock Options and Warrants
  Refer to Table No. 11 Stock Options Outstanding under Item 6.E - Share Ownership for additional information.
  55
 
 The following table lists, as of March 31, 2011 information relating to share purchase warrants outstanding:
 
 Table No. 13
 Share Purchase Warrants Outstanding
 Effective Date of Issuance
Number of Share Purchase Warrants Currently Outstanding
Year #1
Year #2
Expiration Date of Share Purchase WarrantsFebruary 17, 2013
284,050
$7.50
$7.50
February 17, 2015284,050
  Shareholder’s Rights Plan
  The Company adopted a Shareholder’s Rights Plan (the “Rights Plan”) dated September 1, 2006, which was approved by shareholders at the Annual and Special Meeting of Shareholders held on September 29, 2006. The Rights Plan was not adopted in response to any specific bid and is not aimed at blocking future bids, but is designed to ensure that any acquisition of control is through a public offer to all shareholders and that sufficient time is available to evaluate any offer.
  Summary of the Plan
  A summary of the principal terms of the Shareholder Rights Plan is set forth below and is qualified in its entirety by reference to the Plan, a copy of which has been filed with the SEC
  (a)           Effective Date. The effective date of the Shareholder Rights Plan is September 1, 2006 (the “Effective Date”).
  (b)           Term. The Shareholder Rights Plan will terminate on the sixth anniversary of the Effective Date, subject to ratification by the shareholders at the Meeting and to reconfirmation by shareholders at the third annual general meeting thereafter.
  (c)           Shareholder Approval.For the Shareholder Rights Plan to continue in effect following the Meeting, the Shareholder Rights Plan Resolution must be approved by a majority of the votes cast at the Meeting by shareholders voting in person and by proxy.
  (d)           Issue of Rights.On the Effective Date, one right (a “Right”) is issued and attached to each Common share outstanding and will attach to each Common share subsequently issued.
  (e)           Rights Exercise Privilege.The Rights will separate from the Common shares and will be exercisable eight business days (or such later business day as may be determined by the board of directors) (the “Separation Time”) after a person has acquired, or commences or publicly announces or discloses its intention to commence a take-over bid to acquire, 20% or more of the Common shares, other than by an acquisition pursuant to a take-over bid permitted by the Shareholder Rights Plan (a “Permitted Bid”). The acquisition by any person (an “Acquiring Person”) of 20% or more of the Common shares, other than by way of a Permitted Bid, is referred to as a “Flip-in Event”. Any Rights held by an Acquiring Person will become void upon the occurrence of a Flip-in Event. From and after the Separation Time, each Right (other than those held by the Acquiring Person), will permit the purchase of CDN$100 worth of Common shares (at the market price on the date of the Flip-in Event) for CDN$50 (i.e., at a 50% discount). The issue of the Rights is not initially dilutive; however, upon a Flip-in Event occurring and the Rights separating from the Common shares, reported earnings per Common share on a fully diluted or non-diluted basis may be affected. Holders of Rights not exercising their Rights upon the occurrence of a Flip-in Event may suffer substantial dilution.
  (f)           Certificates and Transferability. Prior to the Separation Time, the Rights will be evidenced by a legend imprinted on certificates for Common shares issued from and after the Effective Date and will not be transferable separately from the Common shares. From and after the Separation Time, the Rights will be evidenced by Rights certificates which will be transferable and traded separately from the Common shares.
  56
 
 ( g)           Permitted Bid Requirements.The requirements for a Permitted Bid include the following:
  (i)           the take-over bid must be made by way of a take-over bid circular;
  (ii)           the take-over bid must be made to all holders of Common shares;
  (iii)           the take-over bid must be outstanding for a minimum period of 60 days and Common shares tendered pursuant to the take-over bid may not be taken up and paid for prior to the expiry of such 60-day period and only if at such time more than 50% of the Common shares held by shareholders other than the bidder, its affiliates and persons acting jointly or in concert with the bidder (collectively, the “Independent Shareholders”) have been tendered to the take-over bid and not withdrawn;
  (iv)           the Common shares deposited pursuant to the take-over bid may be withdrawn until taken up and paid for; and
  (v)           if more than 50% of the Common shares held by Independent Shareholders are tendered to the take-over bid within such 60-day period, then the bidder must make a public announcement of that fact and the take-over bid must remain open for deposits of Common shares for an additional 10 business days from the date of such public announcement.
  The Shareholder Rights Plan allows for a competing Permitted Bid (a “Competing Permitted Bid”) to be made while a Permitted Bid is in existence. A Competing Permitted Bid must satisfy all of the requirements of a Permitted Bid except that it may expire on the same date as the Permitted Bid.
  (h)           Waiver and Redemption.The board of directors may, prior to the Flip-in Event, waive the dilutive effects of the Shareholder Rights Plan in respect of a particular Flip-in Event resulting from a take-over bid made by way of a take-over bid circular to all holders of Common shares, or to waive one or more of the requirements of a Permitted Bid, or a Competing Permitted Bid, in which event such waiver would be deemed also to be a waiver in respect of any other Flip-in Event, and any such requirement, occurring under a take-over bid made by way of a take-over bid circular to all holders of Common shares. The board of directors may also waive the Shareholder Rights Plan in respect of a particular Flip-in Event that has occurred through inadvertence, provided that the Acquiring Person that inadvertently triggered such Flip-in Event reduces its beneficial holdings to less than 20% of the outstanding voting shares of the Company within 14 days or such later date as may be specified by the board of directors. With the majority consent of shareholders or Rights holders at any time prior to the later of a Flip-in Event and the Separation time, the board of directors may at its option redeem all, but not less than all, of the outstanding Rights at a price of CDN$0.00001 each.
  (i)           Exemptions for Investment Advisors. Investment advisors (for client accounts), trust companies (acting in their capacities as trustees and administrators), statutory bodies managing investment funds (for employee benefit plans, pension plans, insurance plans or various public bodies) and administrators or trustees of registered pension funds or plans acquiring greater than 20% of the Common shares are exempted from triggering a Flip-in Event, provided that they are not making, or are not part of a group making, or proposing to make or participate in, or has not announced a current intention to make, a take-over bid.
  (j)           Exemptions for Lock-up Agreements.A person is deemed not to be the beneficial owner of Common shares if the holder of such Common shares has agreed to deposit or tender its Common shares pursuant to a “Permitted Lock-up Agreement” to a take-over bid (the “Lock-up Bid”) made by such person. In order for an agreement to constitute a Permitted Lock-up Agreement, certain conditions must be met including, among other things, (i) any “break-up” fees payable by the tendering shareholder, cannot exceed in the aggregate the greater of the cash equivalent of 2.5% of the price or value of the consideration payable under the Lock-up Bid and 50% of the amount by which the price or value of the consideration payable under another take-over bid or transaction exceeds the price or value of the consideration that would have been received under the Lock-up Bid and (ii) the terms of such agreement are publicly disclosed and a copy of which is made available to the public (including to the Company) and the Permitted Lock-up Agreement permits the tendering shareholder to withdraw its Common shares in order to deposit or tender the Common shares to another take-over bid or support another transaction where the price or value offered under such other bid is at least 7% higher than the price or value offered under the Lock-up Bid or the number of Common shares to be purchased under another take-over bid or transaction is at least 7% more than the number proposed to be purchased under the Lock-up Bid.
  57
 
 (k)           Supplements and Amendments.The Company is authorized to make amendments to the Shareholder Rights Plan to correct any clerical or typographical error or to maintain the validity of the Shareholder Rights Plan as a result of changes in law, regulation or rules. Prior to the Meeting, the Company is authorized to amend or supplement the Shareholder Rights Plan as the board of directors may in good faith deem necessary or desirable. No such amendments have been made to date. The Company will issue a press release relating to any significant amendment made to the Shareholder Rights Plan prior to the Meeting and will advise the shareholders of any such amendment at the Meeting. Other amendments or supplements to the Shareholder Rights Plan may be made with the prior approval of shareholders or Rights holders.
  A copy of the Plan was included in the Company’s Management Information Circular for the Annual and Special Meeting of Shareholders held on September 29, 2006, and which was filed as an exhibit to the Company’s Registration Statement on Form 20-F.
  Item 9.C                 Markets
  The common shares trade on the Toronto Stock Exchange in Canada under the symbol “KGN” and on the NYSE Amex Equities Exchange in the United States under the symbol “KGN”.
  ITEM 10.
ADDITIONAL INFORMATION
  Item 10.A               Share Capital
  Not applicable.
  Item 10.B               Memorandum and Articles of Association
  There were no changes to the Company’s Notice of Alteration (with respect to its Notice of Articles) and Articles, each as previously reported in, and filed with the Securities and Exchange Commission as exhibits to, the Company’s Registration Statement on Form 20-F dated March 8, 2007.
  Item 10.C               Material Contracts
  Other than contracts entered into in the ordinary course of business and those disclosed under “Item 4.D Property, Plant & Equipment – 1. The Asumura Project and 2. Esaase Gold Property”, the Company has not entered into any material contracts within the past three years.
  Item 10.D               Exchange Controls
  There is no law or governmental decree or regulation in Canada that restricts the export or import of capital, or affects the remittance of dividends, interest or other payments to a non-resident holder of common shares of the Company, other than withholding tax requirements. See “Taxation”.
  There is no limitation imposed by Canadian law or by the charter or other constituent documents of the Company on the right of a non-resident to hold or vote common shares of the Company, other than as provided in the Investment Canada Act (Canada) (the “Investment Act”).
  The following discussion summarizes the material features of the Investment Act for a non-resident who proposes to acquire a controlling number of common shares.  It is general only, it is not a substitute for independent advice from an investor’s own advisor, and it does not anticipate statutory or regulatory amendments.  The Company does not believe the Investment Act will have any affect on it or on its non-Canadian shareholders due to a number of factors including the nature of its operations.
  58
 
 The Investment Act generally prohibits implementation of a reviewable investment by an individual, government or agency thereof, corporation, partnership, trust or joint venture (each an “entity”) that is not a “Canadian” as defined in the Investment Act (a “non-Canadian”), unless after review the Director of Investments appointed by the minister responsible for the Investment Act is satisfied that the investment is likely to be of net benefit to Canada.  The size and nature of a proposed transaction may give rise to an obligation to notify the Director to seek an advance ruling.
  An investment in the common shares by a non-Canadian who is not a “WTO investor” (which includes governments of, or individuals who are nationals of, member states of the World Trade Organisation and corporations and other entities which are controlled by them), at a time when the Company was not already controlled by a WTO investor, would be reviewable under the Investment Act under three circumstances:
  (a)
first, if it was an investment to acquire control (within the meaning of the Investment Act) and the value of the Company’s assets, as determined under Investment Act regulations, was CDN$5 million or more;
  (b)
second, if an order for review was made by the federal cabinet of the Canadian government on the grounds that the investment related to Canada’s cultural heritage or national identity (as prescribed under the Investment Act), regardless of asset value;
  (c)
third, if an order for review was made by the federal cabinet of the Canadian government on the grounds that an investment by a non-Canadian could be injurious to national security, regardless of asset value.
  An investment in the common shares by a WTO investor, or by a non-Canadian at a time when the Company was already controlled by a WTO investor, would be reviewable under the Investment Act if it was an investment to acquire control and the value of the Company’s assets, as determined under Investment Act regulations, was not less than a specified amount, which for 2011 is C$312 million, or if an order for review was made by the federal cabinet of the Canadian government on the grounds that an investment by a non-Canadian could be injurious to national security, regardless of asset value.  The monetary threshold for review of a direct acquisition of a Canadian business (other than acquisition of a cultural business) by or from a WTO investor changes annually. At a date to be determined by the federal cabinet of the Canadian government, transactions will be reviewable only if the “enterprise value” of the assets of the Canadian business is equal to or greater than (a) C$600 million, in the case of investments made during the first two years after the amendments come into force; (b) C$800 million, in the case of investments made during the third and fourth years after the amendments come into force; and (c) C$1 billion, in the case of investments made between the fifth year after the amendments come into force and 31 December of the sixth year after the amendments come into force. This threshold will thereafter be adjusted on an annual basis.
  The Investment Act provides detailed rules to determine if there has been an acquisition of control of a Canadian business. For example, a non-Canadian would acquire control of the Company for the purposes of the Investment Act if the non-Canadian acquired a majority of the common shares. The acquisition of less than a majority but one-third or more of the common shares would be presumed to be an acquisition of control of the Company unless it could be established that, on the acquisition, the Company was not controlled in fact by the acquirer. An acquisition of control for the purposes of the Investment Act also could occur as a result of the acquisition by a non-Canadian of all or substantially all of the Company’s assets.
  The foregoing assumes the Company will not engage in the production of uranium or own an interest in a producing uranium property in Canada, or provide any financial service or transportation service, as the rules governing these businesses are different.
  Certain transactions relating to common shares of the Company are exempt from the Investment Act, including:
  (a)
an acquisition of common shares of the Company by a person in the ordinary course of that person’s business as a trader or dealer in securities,
  (b)
an acquisition of control of the Company in connection with the realization of security granted for a loan or other financial assistance and not for a purpose related to the provisions on the Investment Act, and
  59
 (c)
an acquisition of control of the Company by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of the Company, through the ownership of common shares, remained unchanged.
  Item 10.E                      Taxation
  CANADIAN INCOME TAX CONSEQUENCES
  The following is, as of the date of this prospectus, a summary of the principal Canadian federal income tax considerations generally applicable to the holding and disposition of common shares by an investor who, for purposes of the Income Tax Act (Canada) and the regulations thereto (collectively, the “Tax Act”) and at all relevant times: (i) holds the common shares as capital property, (ii) deals with the Company at arm’s length, (iii) is not affiliated with the Company, (iv) is not, and is not deemed to be (under the Tax Act or any relevant income tax treaty), resident in Canada, and (v) does not use or hold (and will not be deemed to use or hold) the common shares in or in respect of a business carried on in Canada. An investor who meets all of the above requirements is referred to as a “Non-Resident Holder”, and this summary only addresses such Non-Resident Holders. This summary does not deal with special situations, such as particular circumstances of traders or dealers, limited liability companies, tax-exempt entities, insurers, financial institutions (including those to which the mark-to-market provisions of the Tax Act apply), or otherwise.
  This summary is based on the current provisions of the Tax Act and our understanding of the current published administrative practice of the Canada Revenue Agency (the “CRA”). This summary takes into account all specific proposals to amend the Tax Act publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof and assumes that all such proposals will be enacted in the form proposed, although no assurance in this regard can be provided. This summary does not otherwise take into account or anticipate any changes in law or in the administrative policies or assessing practices of the CRA, whether by judicial, governmental or legislative decision or action, nor does it take into account provincial, territorial or foreign tax considerations, which may differ significantly from those described herein.
  This summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any particular investor (including a Non-Resident Holder), and no representations with respect to the income tax consequences to any particular investor are made. It does not constitute a complete analysis of the tax considerations that may be applicable to any particular investor. Accordingly, prospective purchasers of the common shares should consult their own tax advisors for advice with respect to the tax consequences to them of acquiring, holding and disposing of the common shares, including the application and effect of the income and other tax laws of any country, province, state or local tax authority.
 
 Taxation of Dividends
 
 Dividends paid or deemed to be paid to a Non-Resident Holder on the common shares will generally be subject to Canadian withholding tax at the rate of 25%, subject to reduction under the provisions of any applicable income tax treaty or convention. If a Non-Resident Holder is a resident of the United States and is fully entitled to the benefits under the Canada-United States Income Tax Convention and is the beneficial owner of the dividends, the rate of Canadian withholding tax is generally reduced to 15% (or 5% in the case of a qualifying owner that is a corporation which owns at least 10% of the Company’s voting stock). The Company will be required to withhold the applicable tax from any dividend and remit the withheld amount to the CRA.
 
 Disposition of Common Shares
 
 A Non-Resident Holder will not be subject to tax under the Tax Act in respect of any capital gain realized by such Non-Resident Holder on a sale or other disposition (or deemed disposition) of common shares unless the common shares constitute “taxable Canadian property” (as defined in the Tax Act) of the Non-Resident Holder at the time of disposition and the holder is not entitled to relief under any applicable income tax treaty or convention.
 
 Generally, the common shares will not constitute taxable Canadian property of a Non-Resident Holder at a particular time provided that the common shares are listed at that time on a designated stock exchange (which includes the TSX) unless, at any time during the 60 month period that ends at that time (i) the Non-Resident Holder, persons with whom the Non-Resident Holder did not deal at arm’s length, or the Non-Resident Holder together with all such persons, owned 25% or more of the issued shares of any class or series of shares of the capital stock of the Company and (ii) more than 50% of the fair market value of the common shares was derived directly or indirectly from one, or any combination of, real or immovable property situated in Canada, Canadian resource properties (as defined in the Tax Act), timber resource properties (as defined in the Tax Act), and options in respect of, or interests in (or, for civil law, rights in) any such properties (whether or not such property exists). Common shares may also be deemed to be taxable Canadian property of a Non-Resident Holder in certain other circumstances specified in the Tax Act.
 
 60
 
 Non-Resident Holders who may hold common shares as taxable Canadian property should consult their own tax advisors, including with respect to any relief that may be available under the provisions of any applicable income tax treaty or convention.
  ALL PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF PURCHASING THE COMPANY’S COMMON SHARES
  CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
  The following is a general summary of certain material U.S. federal income tax considerations applicable to a U.S. Holder (as defined below) arising from and relating to the acquisition, ownership, and disposition of common shares of the Company.
  This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax considerations that may apply to a U.S. Holder arising from and relating to the acquisition, ownership, and disposition of common shares.  In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income tax consequences to such U.S. Holder, including specific tax consequences to a U.S. Holder under an applicable tax treaty.  Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any U.S. Holder.  This summary does not address the U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and foreign tax consequences to U.S. Holders of the acquisition, ownership, and disposition of common shares.  Each U.S. Holder should consult its own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and foreign tax consequences relating to the acquisition, ownership and disposition of common shares.
  No legal opinion from U.S. legal counsel or ruling from the Internal Revenue Service (the “IRS”) has been requested, or will be obtained, regarding the U.S. federal income tax consequences of the acquisition, ownership, and disposition of common shares.  This summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, and contrary to, the positions taken in this summary.  In addition, because the authorities on which this summary is based are subject to various interpretations, the IRS and the U.S. courts could disagree with one or more of the positions taken in this summary.
  Scope of this Summary
  Authorities
  This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations (whether final, temporary, or proposed), published rulings of the IRS, published administrative positions of the IRS, the Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended (the “Canada-U.S. Tax Convention”), and U.S. court decisions that are applicable and, in each case, as in effect and available, as of the date of this document.  Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive or prospective basis which could affect the U.S. federal income tax considerations described in this summary.  This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive or prospective basis.
  U.S. Holders
  61
 
 For purposes of this summary, the term “U.S. Holder” means a beneficial owner of common shares that is for U.S. federal income tax purposes:
  ·
an individual who is a citizen or resident of the U.S.;
  ·
a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the U.S., any state thereof or the District of Columbia;
  ·
an estate whose income is subject to U.S. federal income taxation regardless of its source; or
  ·
a trust that (1) is subject to the primary supervision of a court within the U.S. and the control of one or more U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.
  Non-U.S. Holders
  For purposes of this summary, a “non-U.S. Holder” is a beneficial owner of common shares that is not a U.S. Holder.  This summary does not address the U.S. federal income tax consequences to non-U.S. Holders arising from and relating to the acquisition, ownership, and disposition of common shares.  Accordingly, a non-U.S. Holder should consult its own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and foreign tax consequences (including the potential application of and operation of any income tax treaties) relating to the acquisition, ownership, and disposition of common shares.
  U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed
  This summary does not address the U.S. federal income tax considerations applicable to U.S. Holders that are subject to special provisions under the Code, including, but not limited to, the following:  (a) U.S. Holders that are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) U.S. Holders that are financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies; (c) U.S. Holders that are broker-dealers, dealers, or traders in securities or currencies that elect to apply a mark-to-market accounting method; (d) U.S. Holders that have a “functional currency” other than the U.S. dollar; (e) U.S. Holders that own common shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; (f) U.S. Holders that acquired common shares in connection with the exercise of employee stock options or otherwise as compensation for services; (g) U.S. Holders that hold common shares other than as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment purposes); or (h) U.S. Holders that own or have owned  (directly, indirectly, or by attribution) 10% or more of the total combined voting power of the outstanding shares of the Company.  This summary also does not address the U.S. federal income tax considerations applicable to U.S. Holders who are:  (a) U.S. expatriates or former long-term residents of the U.S.; (b) persons that have been, are, or will be a resident or deemed to be a resident in Canada for purposes of the Income Tax Act (Canada) (the “Tax Act”); (c) persons that use or hold, will use or hold, or that are or will be deemed to use or hold common shares in connection with carrying on a business in Canada; (d) persons whose common shares constitute “taxable Canadian property” under the Tax Act; or (e) persons that have a permanent establishment in Canada for the purposes of the Canada-U.S. Tax Convention.  U.S. Holders that are subject to special provisions under the Code, including, but not limited to, U.S. Holders described immediately above, should consult their own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and foreign tax consequences relating to the acquisition, ownership and disposition of common shares.
  If an entity or arrangement that is classified as a partnership (or “pass-through” entity) for U.S. federal income tax purposes holds common shares, the U.S. federal income tax consequences to such partnership and the partners of such partnership generally will depend on the activities of the partnership and the status of such partners (or owners).  This summary does not address the tax consequences to any such partner.  Partners of entities or arrangements that are classified as partnerships for U.S. federal income tax purposes should consult their own tax advisors regarding the U.S. federal income tax consequences arising from and relating to the acquisition, ownership, and disposition of common shares.
  62
 
 Passive Foreign Investment Company Rules
  If the Company were to constitute a “passive foreign investment company” under the meaning of Section 1297 of the Code (a “PFIC”, as defined below) for any year during a U.S. Holder’s holding period, then certain different and potentially adverse rules will affect the U.S. federal income tax consequences to a U.S. Holder resulting from the acquisition, ownership and disposition of common shares.  In addition, in any year in which the Company is classified as a PFIC, such holder would be required to file an annual report with the IRS containing such information as Treasury Regulations and/or other IRS guidance may require.
  PFIC Status of the Company
  The Company generally will be a PFIC if, for a tax year, (a) 75% or more of the gross income of the Company is passive income (the “income test”) or (b) 50% or more of the value of the Company’s assets either produce passive income or are held for the production of passive income, based on the quarterly average of the fair market value of such assets (the “asset test”).  “Gross income” generally includes all sales revenues less the cost of goods sold, and “passive income” generally includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions.
  Active business gains arising from the sale of commodities generally are excluded from passive income if substantially all of a foreign corporation’s commodities are stock in trade of such foreign corporation or other property of a kind which would properly be included in inventory of such foreign corporation, or property held by such foreign corporation primarily for sale to customers in the ordinary course of business and certain other requirements are satisfied.
  For purposes of the PFIC income test and asset test described above, if the Company owns, directly or indirectly, 25% or more of the total value of the outstanding shares of another corporation, the Company will be treated as if it (a) held a proportionate share of the assets of such other corporation and (b) received directly a proportionate share of the income of such other corporation.  In addition, for purposes of the PFIC income test and asset test described above, and assuming certain other requirements are met, “passive income” does not include certain interest, dividends, rents, or royalties that are received or accrued by the Company from certain “related persons” (as defined in Section 954(d)(3) of the Code), to the extent such items are properly allocable to the income of such related person that is not passive income.
  In addition, under certain attribution rules, if the Company is a PFIC, U.S. Holders will be deemed to own their proportionate share of the stock of any subsidiary of the Company that is also a PFIC (a ‘‘Subsidiary PFIC’’), and will be subject to U.S. federal income tax on their proportionate share of (a) a distribution on the stock of a Subsidiary PFIC and (b) a disposition or deemed disposition of the stock of a Subsidiary PFIC, both as if such U.S. Holders directly held the shares of such Subsidiary PFIC.
  The Company believes that it was classified as a PFIC during the tax year ended March 31, 2011 and that it may be a PFIC in future tax years.  The determination of whether any corporation was, or will be, a PFIC for a tax year depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations.  In addition, whether any corporation will be a PFIC for any tax year depends on the assets and income of such corporation over the course of each such tax year and, as a result, cannot be predicted with certainty as of the date of this document.  Accordingly, there can be no assurance that the IRS will not challenge any determination made by the Company (or a Subsidiary PFIC) concerning its PFIC status.  Each U.S. Holder should consult its own tax advisor regarding the PFIC status of the Company and any Subsidiary PFIC.
  Default PFIC Rules Under Section 1291 of the Code
  If the Company is a PFIC, the U.S. federal income tax consequences to a U.S. Holder of the acquisition, ownership, and disposition of common shares will depend on whether such U.S. Holder makes an election to treat the Company and each Subsidiary PFIC, if any, as a “qualified electing fund” or “QEF” under Section 1295 of the Code (a “QEF Election”) or a mark-to-market election under Section 1296 of the Code (a “Mark-to-Market Election”).  A U.S. Holder that does not make either a QEF Election or a Mark-to-Market Election will be referred to in this summary as a “Non-Electing U.S. Holder.”
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 A Non-Electing U.S. Holder will be subject to the rules of Section 1291 of the Code with respect to (a) any gain recognized on the sale or other taxable disposition of common shares and (b) any excess distribution received on the common shares.  A distribution generally will be an “excess distribution” to the extent that such distribution (together with all other distributions received in the current tax year) exceeds 125% of the average distributions received during the three preceding tax years (or during a U.S. Holder’s holding period for the common shares, if shorter).
  Under Section 1291 of the Code, any gain recognized on the sale or other taxable disposition of common shares (including an indirect disposition of the stock of any Subsidiary PFIC), and any “excess distribution” received on common shares, must be ratably allocated to each day in a Non-Electing U.S. Holder’s holding period for the respective common shares.  The amount of any such gain or excess distribution allocated to the tax year of disposition or distribution of the excess distribution and to years before the entity became a PFIC, if any, would be taxed as ordinary income.  The amounts allocated to any other tax year would be subject to U.S. federal income tax at the highest tax rate applicable to ordinary income in each such year, and an interest charge would be imposed on the tax liability for each such year, calculated as if such tax liability had been due in each such year.  A Non-Electing U.S. Holder that is not a corporation must treat any such interest paid as “personal interest,” which is not deductible.
  If the Company is a PFIC for any tax year during which a Non-Electing U.S. Holder holds common shares, the Company will continue to be treated as a PFIC with respect to such Non-Electing U.S. Holder, regardless of whether the Company ceases to be a PFIC in one or more subsequent tax years.  A Non-Electing U.S. Holder may terminate this deemed PFIC status by electing to recognize gain (which will be taxed under the rules of Section 1291 of the Code discussed above), but not loss, as if such common shares were sold on the last day of the last tax year for which the Company was a PFIC.
  QEF Election
  A U.S. Holder that makes a timely and effective QEF Election for the first tax year in which its holding period of its common shares begins generally will not be subject to the rules of Section 1291 of the Code discussed above with respect to its common shares.  A U.S. Holder that makes a timely and effective QEF Election will be subject to U.S. federal income tax on such U.S. Holder’s pro rata share of (a) the net capital gain of the Company, which will be taxed as long-term capital gain to such U.S. Holder, and (b) the ordinary earnings of the Company, which will be taxed as ordinary income to such U.S. Holder.  Generally, “net capital gain” is the excess of (a) net long-term capital gain over (b) net short-term capital loss, and “ordinary earnings” are the excess of (a) “earnings and profits” over (b) net capital gain.  A U.S. Holder that makes a QEF Election will be subject to U.S. federal income tax on such amounts for each tax year in which the Company is a PFIC, regardless of whether such amounts are actually distributed to such U.S. Holder by the Company.  However, for any tax year in which the Company is a PFIC and has no net income or gain, U.S. Holders that have made a QEF Election would not have any income inclusions as a result of the QEF Election.  If a U.S. Holder that made a QEF Election has an income inclusion, such a U.S. Holder may, subject to certain limitations, elect to defer payment of current U.S. federal income tax on such amounts, subject to an interest charge.  If such U.S. Holder is not a corporation, any such interest paid will be treated as “personal interest,” which is not deductible.
  A U.S. Holder that makes a timely and effective QEF Election with respect to the Company generally (a) may receive a tax-free distribution from the Company to the extent that such distribution represents “earnings and profits” of the Company that were previously included in income by the U.S. Holder because of such QEF Election and (b) will adjust such U.S. Holder’s tax basis in the common shares to reflect the amount included in income or allowed as a tax-free distribution because of such QEF Election.  In addition, a U.S. Holder that makes a QEF Election generally will recognize capital gain or loss on the sale or other taxable disposition of common shares.
  The procedure for making a QEF Election, and the U.S. federal income tax consequences of making a QEF Election, will depend on whether such QEF Election is timely.  A QEF Election will be treated as “timely” if such QEF Election is made for the first year in the U.S. Holder’s holding period for the common shares in which the Company was a PFIC.  A U.S. Holder may make a timely QEF Election by filing the appropriate QEF Election documents at the time such U.S. Holder files a U.S. federal income tax return for such year.  If a U.S. Holder does not make a timely and effective QEF Election for the first year in the U.S. Holder’s holding period for the common shares, the U.S. Holder may still be able to make a timely and effective QEF Election in a subsequent year if such U.S. Holder also makes a “purging” election to recognize gain (which will be taxed under the rules of Section 1291 of the Code discussed above) as if such common shares were sold for their fair market value on the day the QEF Election is effective.
  64
 
 A QEF Election will apply to the tax year for which such QEF Election is timely made and to all subsequent tax years, unless such QEF Election is invalidated or terminated or the IRS consents to revocation of such QEF Election.  If a U.S. Holder makes a QEF Election and, in a subsequent tax year, the Company ceases to be a PFIC, the QEF Election will remain in effect (although it will not be applicable) during those tax years in which the Company is not a PFIC.  Accordingly, if the Company becomes a PFIC in another subsequent tax year, the QEF Election will be effective and the U.S. Holder will be subject to the QEF rules described above during any subsequent tax year in which the Company qualifies as a PFIC.
  U.S. Holders should be aware that there can be no assurances that the Company will satisfy the record keeping requirements that apply to a QEF, or that the Company will supply U.S. Holders with information that such U.S. Holders require to report under the QEF rules, in the event that the Company is a PFIC.  Thus, U.S. Holders may not be able to make a QEF Election with respect to their common shares.  Each U.S. Holder should consult its own tax advisor regarding the availability of, and procedure for making, a QEF Election.
  Mark-to-Market Election
  A U.S. Holder may make a Mark-to-Market Election only if the common shares are marketable stock.  The common shares generally will be “marketable stock” if the common shares are regularly traded on (a) a national securities exchange that is registered with the Securities and Exchange Commission, (b) the national market system established pursuant to section 11A of the Securities and Exchange Act of 1934, or (c) a foreign securities exchange that is regulated or supervised by a governmental authority of the country in which the market is located, provided that (i) such foreign exchange has trading volume, listing, financial disclosure, and meets other requirements and the laws of the country in which such foreign exchange is located, together with the rules of such foreign exchange, ensure that such requirements are actually enforced and (ii) the rules of such foreign exchange ensure active trading of listed stocks.  If such stock is traded on such a qualified exchange or other market, such stock generally will be “regularly traded” for any calendar year during which such stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter.
  A U.S. Holder that makes a Mark-to-Market Election with respect to its common shares generally will not be subject to the rules of Section 1291 of the Code discussed above with respect to such common shares.  However, if a U.S. Holder does not make a Mark-to-Market Election beginning in the first tax year of such U.S. Holder’s holding period for the common shares or such U.S. Holder has not made a timely QEF Election, the rules of Section 1291 of the Code discussed above will apply to certain dispositions of, and distributions on, the common shares.
  A U.S. Holder that makes a Mark-to-Market Election will include in ordinary income, for each tax year in which the Company is a PFIC, an amount equal to the excess, if any, of (a) the fair market value of the common shares, as of the close of such tax year over (b) such U.S. Holder’s tax basis in such common shares.  A U.S. Holder that makes a Mark-to-Market Election will be allowed a deduction in an amount equal to the excess, if any, of (a) such U.S. Holder’s adjusted tax basis in the common shares, over (b) the fair market value of such common shares (but only to the extent of the net amount of previously included income as a result of the Mark-to-Market Election for prior tax years).
  A U.S. Holder that makes a Mark-to-Market Election generally also will adjust such U.S. Holder’s tax basis in the common shares to reflect the amount included in gross income or allowed as a deduction because of such Mark-to-Market Election.  In addition, upon a sale or other taxable disposition of common shares, a U.S. Holder that makes a Mark-to-Market Election will recognize ordinary income or ordinary loss (not to exceed the excess, if any, of (a) the amount included in ordinary income because of such Mark-to-Market Election for prior tax years over (b) the amount allowed as a deduction because of such Mark-to-Market Election for prior tax years).
  A Mark-to-Market Election applies to the tax year in which such Mark-to-Market Election is made and to each subsequent tax year, unless the common shares cease to be “marketable stock” or the IRS consents to revocation of such election.  Each U.S. Holder should consult its own tax advisor regarding the availability of, and procedure for making, a Mark-to-Market Election.
  65
 
 Although a U.S. Holder may be eligible to make a Mark-to-Market Election with respect to the common shares, no such election may be made with respect to the stock of any Subsidiary PFIC that a U.S. Holder is treated as owning, because such stock is not marketable.  Hence, the Mark-to-Market Election will not be effective to eliminate the application of the default rules of Section 1291 of the Code described above with respect to deemed dispositions of Subsidiary PFIC stock or distributions from a Subsidiary PFIC.
  Other PFIC Rules
  Under Section 1291(f) of the Code, the IRS has issued proposed Treasury Regulations that, subject to certain exceptions, would cause a U.S. Holder that had not made a timely QEF Election to recognize gain (but not loss) upon certain transfers of common shares that would otherwise be tax-deferred (e.g., gifts and exchanges pursuant to corporate reorganizations).  However, the specific U.S. federal income tax consequences to a U.S. Holder may vary based on the manner in which common shares are transferred.
  Certain additional adverse rules will apply with respect to a U.S. Holder if the Company is a PFIC, regardless of whether such U.S. Holder makes a QEF Election.  For example under Section 1298(b)(6) of the Code, a U.S. Holder that uses common shares as security for a loan will, except as may be provided in Treasury Regulations, be treated as having made a taxable disposition of such common shares.
  Special rules also apply to the amount of foreign tax credit that a U.S. Holder may claim on a distribution from a PFIC.  Subject to such special rules, foreign taxes paid with respect to any distribution in respect of stock in a PFIC are generally eligible for the foreign tax credit.  The rules relating to distributions by a PFIC and their eligibility for the foreign tax credit are complicated, and a U.S. Holder should consult with their own tax advisor regarding the availability of the foreign tax credit with respect to distributions by a PFIC.
  The PFIC rules are complex, and each U.S. Holder should consult its own tax advisor regarding the PFIC rules and how the PFIC rules may affect the U.S. federal income tax consequences of the acquisition, ownership, and disposition of common shares.
  Ownership and Disposition of Common Shares
  The following discussion is subject to the rules described above under the heading “Passive Foreign Investment Company Rules.”
  Distributions on Common Shares
  Subject to the PFIC rules discussed above, a U.S. Holder that receives a distribution, including a constructive distribution, with respect to a common share will be required to include the amount of such distribution in gross income as a dividend (without reduction for any Canadian income tax withheld from such distribution) to the extent of the current or accumulated “earnings and profits” of the Company, as computed for U.S. federal income tax purposes.  A dividend generally will be taxed to a U.S. Holder at ordinary income tax rates if the Company is a PFIC. To the extent that a distribution exceeds the current and accumulated “earnings and profits” of the Company, such distribution will be treated first as a tax-free return of capital to the extent of a U.S. Holder's tax basis in the common shares and thereafter as gain from the sale or exchange of such common shares.  (See “ Sale or Other Taxable Disposition of common shares” below).  However, the Company may not maintain the calculations of earnings and profits in accordance with U.S. federal income tax principles, and each U.S. Holder should therefore assume that any distribution by the Company with respect to the common shares will constitute ordinary dividend income.  Dividends received on common shares generally will not be eligible for the “dividends received deduction”.  In addition, the Company does not anticipate that its distributions will constitute qualified dividend income eligible for the preferential tax rates applicable to long-term capital gains.  The dividend rules are complex, and each U.S. Holder should consult its own tax advisor regarding the application of such rules.
  Sale or Other Taxable Disposition of Common Shares
  Subject to the PFIC rules discussed above, upon the sale or other taxable disposition of common shares, a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference between the amount of cash plus the fair market value of any property received and such U.S. Holder's tax basis in such common shares sold or otherwise disposed of.  Subject to the PFIC rules discussed above, gain or loss recognized on such sale or other disposition generally will be long-term capital gain or loss if, at the time of the sale or other disposition, the common shares have been held for more than one year.
  66
 Preferential tax rates apply to long-term capital gain of a U.S. Holder that is an individual, estate, or trust.  There are currently no preferential tax rates for long-term capital gain of a U.S. Holder that is a corporation.  Deductions for capital losses are subject to significant limitations under the Code.
  Additional Considerations
  Receipt of Foreign Currency
  The amount of any distribution paid to a U.S. Holder in foreign currency, or on the sale, exchange or other taxable disposition of common shares, generally will be equal to the U.S. dollar value of such foreign currency based on the exchange rate applicable on the date of receipt (regardless of whether such foreign currency is converted into U.S. dollars at that time).  A U.S. Holder will have a basis in the foreign currency equal to its U.S. dollar value on the date of receipt.  Any U.S. Holder who converts or otherwise disposes of the foreign currency after the date of receipt may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes.  Each U.S. Holder should consult its own U.S. tax advisor regarding the U.S. federal income tax consequences of receiving, owning, and disposing of foreign currency.
  Foreign Tax Credit
  Subject to the PFIC rules discussed above, a U.S. Holder that pays (whether directly or through withholding) Canadian income tax with respect to dividends paid on the common shares generally will be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax paid.  Generally, a credit will reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder’s income subject to U.S. federal income tax.  This election is made on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding) by a U.S. Holder during a year.
  Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S. Holder’s U.S. federal income tax liability that such U.S. Holder’s “foreign source” taxable income bears to such U.S. Holder’s worldwide taxable income.  In applying this limitation, a U.S. Holder’s various items of income and deduction must be classified, under complex rules, as either “foreign source” or “U.S. source.”  Generally, dividends paid by a foreign corporation should be treated as foreign source for this purpose, and gains recognized on the sale of stock of a foreign corporation by a U.S. Holder should be treated as U.S. source for this purpose, except as otherwise provided in an applicable income tax treaty, and if an election is properly made under the Code.  However, the amount of a distribution with respect to the common shares that is treated as a “dividend” may be lower for U.S. federal income tax purposes than it is for Canadian federal income tax purposes, resulting in a reduced foreign tax credit allowance to a U.S. Holder.  In addition, this limitation is calculated separately with respect to specific categories of income.  The foreign tax credit rules are complex, and each U.S. Holder should consult its own U.S. tax advisor regarding the foreign tax credit rules.
  Backup Withholding and Information Reporting
  Under U.S. federal income tax law and Treasury Regulations, certain categories of U.S. Holders must file information returns with respect to their investment in, or involvement in, a foreign corporation.  For example, recently enacted legislation generally imposes new U.S. return disclosure obligations (and related penalties) on individuals who are U.S. Holders that hold certain specified foreign financial assets in excess of $50,000.  The definition of specified foreign financial assets includes not only financial accounts maintained in foreign financial institutions, but also, unless held in accounts maintained by a financial institution, any stock or security issued by a non-U.S. person, any financial instrument or contract held for investment that has an issuer or counterparty other than a U.S. person and any interest in a foreign entity.  U.S. Holders may be subject to these reporting requirements unless their common shares are held in an account at a domestic financial institution.  Penalties for failure to file certain of these information returns are substantial.  U.S. Holders should consult with their own tax advisors regarding the requirements of filing information returns.
  67
 
 Payments made within the U.S. or by a U.S. payor or U.S. middleman, of dividends on, and proceeds arising from the sale or other taxable disposition of, common shares will generally be subject to information reporting and backup withholding tax, at the rate of 28% (and increasing to 31% for payments made after December 31, 2012), if a U.S. Holder (a) fails to furnish such U.S.  Holder’s correct U.S. taxpayer identification number (generally on Form W-9), (b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject to backup withholding tax, or (d) fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that it is subject to backup withholding tax.  However, certain exempt persons generally are excluded from these information reporting and backup withholding rules.  Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner.  Each U.S. Holder should consult its own tax advisor regarding the information reporting and backup withholding rules.
  Item 10.F                      Dividends and paying Agents
  Not applicable
  Item 10.G                      Statement by Experts
  Not applicable.
  Item 10.H                      Document on Display
  The documents concerning the Company referred to in this Annual Report may be viewed at 600, 1199 West Hastings Street, Vancouver, British Columbia, Canada during normal business hours.  Copies of our financial statements and other continuous disclosure documents required under the securities legislation of the Canadian provinces in which we are a reporting issuer (namely, British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland) are available for viewing on the internet at www.SEDAR.com.
  ITEM 11



Item 11.A
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Quantitative Information about Market Risk
  Market risk represents the risk of changes in the value of a financial instrument caused by fluctuations in interest rates, foreign exchange rates, commodity prices and equity prices.
  As at March 31, 2011, the Company’s financial instruments consist of cash and cash equivalents, short-term investments, receivables, and accounts payable and accrued liabilities. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant credit, liquidity, or market risks arising from these financial instruments. The risk exposure is summarized as follows:
  (a)           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. The Company is subject to credit risk on the cash balances at the banks in each of Canada and Ghana, its short-term bank guaranteed investment certificates and accounts receivable. The short-term investments are with Schedule 1 banks or equivalent, with the majority of its cash held in Canadian based banking institutions, authorized under the Bank Act to accept deposits, which may be eligible for deposit insurance provided by the Canadian Deposit Insurance Corporation. The receivables consist of amounts receivable for GST of $244,880.
  (b)           Liquidity risk
 
 68
  The Company’s approach to managing liquidity is to ensure that it will have sufficient liquidity to settle obligations and liabilities when due. As at March 31, 2011, the Company had a cash and cash equivalents balance of $229,144,989 to settle current liabilities of $5,076,974 that mainly consist of accounts payable that are considered short term and settled within 30 days.
  (c)           Market risk
  i.      Interest rate risk
  Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
  The Company’s cash and cash equivalents attract interest at floating rates and have maturities of 90 days or less. The interest is typical of Canadian banking rates, which are at present low, however the conservative investment strategy mitigates the risk of deterioration to the investment. A change of 100 basis points in the interest rates would not be material to the financial statements.
  ii.      Foreign currency risk
  The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. The Company has offices in Canada and Ghana and holds cash in Canadian, United States and Ghanaian Cedi currencies in line with forecasted expenditures. A significant change in the currency exchange rates between the Canadian dollar relative to US dollar (“USD”), Ghanaian Cedi and the Australian dollar (“AUS”) could have an effect on the Company’s results of operations, financial position or cash flows. At March 31, 2011 and 2010, the Company had no hedging agreements in place with respect to foreign exchange rates.
  
  The Company is exposed to currency risk through the following financial assets and liabilities denominated in currencies other than Canadian dollars:
  
 March 31, 2011
March 31, 2010USD
Ghana Cedis
AUD
USD
Ghana Cedis
AUDCash and cash equivalents
62,188,642
337,577
-
11,873,686
99,172
-Accounts payable
(80,639)
(3,586,750)
(386,702)
(57,568)
(829,482)
(25,194)Net exposure
62,108,003
(3,249,173)
(386,702)
11,816,118
(730,310)
(25,194)
  A 10% appreciation or deprecation of the above mentioned currencies compared with the Canadian dollar would result in a corresponding increase or decrease in net loss of approximately $5,847,212 as at March 31, 2011 (2010 - $1,106,062).
  Item 11.B               Qualitative Information about Market Risk
  The Company manages its cash and cash equivalents, common shares, stock options and share purchase warrants as capital.  As the Company is in the exploration stage, its principal source of funds for its operations is from the issuance of common shares.  The issuance of common shares requires approval of the Board of Directors.  It is the Company’s objective to safeguard its ability to continue as a going concern, so that it can continue to explore and develop its Asumura and Esaase properties for the benefit of its stakeholders.  The Company uses stock options primarily to retain and provide future incentives to key employees and members of the management team.  The granting of stock options is primarily determined by the Board of Directors.
  69
 
 The Company has been judicious in its protection of the capital it has on hand. The Company has been investing only in Bankers’ Acceptance Notes and Guaranteed Investment Certificates and has no investments in asset-backed commercial paper which is currently experiencing liquidity issues.
  ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
  Not Applicable.
  PART II
  ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
  Not Applicable.
  ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
  Not Applicable.
  ITEM 15.
CONTROLS AND PROCEDURES
  Disclosure Controls and Procedures
 
 The Company’s disclosure controls and procedures are designed to provide reasonable assurance that material items requiring disclosure by the Company are identified and reported in a timely manner.  As of March 31, 2011, an evaluation was carried out under the supervision of, and with the participation of, the Company management, including by the Chief Executive Officer and Chief Financial Officer of the effectiveness of the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities and Exchange Act of 1934, as amended).  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures as of March 31, 2011, were effective to give reasonable assurance that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to management, including the Chief Executive Office and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
 
 It should be noted that while the Company's Chief Executive Officer and Chief Financial Officer believe that the Company’s disclosure controls and procedures provide a reasonable level of assurance and that they are effective, they do not expect that the disclosure controls and procedures can prevent all errors or mistakes.  A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  The Company’s Chief Executive Officer and Chief Financial Officer have concluded that as of the end of the period covered by this report our disclosure controls and procedures are effective at that reasonable assurance level.
  Management’s Annual Report on Internal Control over Financial Reporting
 
 The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by The Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).  Based on this evaluation, management concluded that the Company’s internal control over financial reporting were effective as of March 31, 2011.
 
 70
 
 Management is responsible for designing, establishing and maintaining a system of internal controls over financial reporting to provide reasonable assurance that the financial information prepared by the Company for external purposes is reliable and has been recorded, processed and reported in an accurate and timely manner in accordance with GAAP.  The Board of Directors is responsible for ensuring that management fulfills its responsibilities.  The Audit Committee fulfills its role of ensuring the integrity of the reported information through its review of the interim and annual financial statements.  Management reviewed the results of their assessment with the Company’s Audit Committee.
 
 There are inherent limitations in the effectiveness of internal controls over financial reporting, including the possibility that misstatements may not be prevented or detected.  Accordingly, even effective internal controls over financial reporting can provide only reasonable assurance with respect to financial statement preparation.  Furthermore, the effectiveness of internal controls can change with circumstances.  The Company has paid particular attention to segregation of duties matters surrounding its internal controls over financial reporting as the Company has only limited staff resources at the present time such that “ideal” segregation of duties is not feasible.  This risk is mitigated by management and Board review where appropriate.  At the present time, the Company does not anticipate hiring additional accounting or administrative staff as this is not considered necessary or practical and accordingly, will continue to rely on review procedures to detect potential misstatements in reporting of material to the public.
 
 The Company’s management, including the CEO and CFO, believe that any internal controls over financial reporting, including those systems determined to be effective and no matter how well conceived and operated, have inherent limitations and can provide only reasonable, not absolute, assurance that the objectives of the control system are met with respect to financial statement preparation and presentation.  Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues andinstances of fraud, if any, within the Company have been prevented or detected.  These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control.  The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected.
  Attestation Report of the Registered Public Accounting Firm.
 
 The Independent Registered Chartered Accountants, BDO Canada LLP, who audited the Company’s annual financial statements for the year ended March 31, 2011, have issued an audit report on the effectiveness of the Company’s internal control over financial reporting.  (See “Item 17 – Financial Statements”.)
 
 Changes In Internal Control Over Financial Reporting.
 
 There were no changes in our internal control over financial reporting that occurred during the year ended March 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
  ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT
  The Company has an audit committee comprised of Marcel de Groot, Rob McLeod and Gord Fretwell.  Each member of the audit committee is “independent” as that term is used in the NYSE Amex listing standards.
  The Company has determined that Marcel de Groot is the Company’s Audit Committee Financial Expert.
  ITEM 16.B
CODE OF ETHICS
 
 The Company has adopted a Code of Ethics for the Company’s Officers, Directors, Employees, and Contractors.
 
 71
 
 The Company’s Code of Conduct clearly sets out the Company’s standard requirements for honest and ethical conduct of its management and employees pertaining to conflicts of interest, timely disclosure, compliance with the law and accountability. The Company has also adopted a written Code of Business Ethics and Conduct setting out very clearly the Company’s requirements for fair dealing, and its corporate position on: conflicts of interest and corporate opportunities, confidentiality and corporate assets, reporting and the effects of violations. Shareholders may obtain a copy of each of these Codes from the Company’s website at:
 www.keeganresources.com/s/corporategovernance.asp.
  ITEM 16C.
PRINCIPAL ACCOUNTING FEES AND SERVICES
  The Company had paid its auditors the following fees for audit and audit related services during the past two fiscal years ended March 31:
  Fiscal 2011
Fiscal 2010Audit Fees (1)
$221,775
$182,000Tax Fees (2)
$2,800
3,000Totals
$224,575
$185,000
  (1)
“Audit Fees” include fees necessary to perform the annual audit and quarterly reviews of the Corporation’s consolidated financial statements.  Audit Fees include fees for review of tax provisions and for accounting consultations on matters reflected in the financial statements.  Audit Fees also include audit or other attest services required by legislation or regulation, such as comfort letters, consents, reviews of securities filings and statutory audits.
  (2)
“Tax Fees” include fees for all tax services other than those included in “Audit Fees” and “Audit-Related Fees”.  This category includes fees for tax compliance, tax planning and tax advice.  Tax planning and tax advice includes assistance with tax audits and appeals, tax advice related to mergers and acquisitions, and requests for rulings or technical advice from tax authorities.
  Our audit committee has adopted a formal policy on auditor independence requiring it to approve all professional services rendered by our independent auditor prior to the commencement of the specified services.  The audit committee will consider annually and, if appropriate, approve the provision of audit services by our independent auditor and consider and, if appropriate, pre-approve the provision of certain defined audit and non-audit services.  The audit committee also will consider on a case-by-case basis and, if appropriate, approve specific engagements that are not otherwise pre-approved.  Any proposed engagement that does not fit within the definition of a pre-approved service may be presented to the audit committee for consideration at its next regular meeting or, if earlier consideration is required, to the audit committee for action by written consent.
  ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
  Not Applicable.
  ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY KEEGAN/AFFILIATED PURCHASERS
  Not Applicable.
  ITEM 16F.
CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
  Not Applicable.
  ITEM 16G.
CORPORATE GOVERNANCE
  The Company’s corporate governance practices do not differ in any significant way from those followed by domestic companies listed on NYSE Amex.
  72
  PART III
  ITEM 17.
FINANCIAL STATEMENTS
  The audited consolidated financial statements for the years ended March 31, 2011, 2010 and 2009 of Keegan are included in this Annual Report.
  ITEM 18.
FINANCIAL STATEMENTS
  Keegan has elected to provide financial statements pursuant to Item 17.
  
 73
   (An Exploration Stage Company)
  
  
  
  
 
 CONSOLIDATED FINANCIAL STATEMENTS
 Years ended March 31, 2011, 2010 and 2009
 __________________
   74
   MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING
 
 The accompanying consolidated financial statements have been prepared by management and are in accordance with Canadian generally accepted accounting principles and reconciled to accounting principles generally accepted in the United States as set out in Note 16, and contain estimates based on management’s judgment. Other information contained in this document has also been prepared by management and is consistent with the data contained in the consolidated financial statements. A system of internal control is maintained by management to provide reasonable assurance that assets are safeguarded and financial information is accurate and reliable.
 
 The Board of Directors approves the financial statements and ensures that management discharges its financial responsibilities. The Board’s review is accomplished principally through the audit committee, which is composed of non-executive directors. The audit committee meets periodically with management and the auditors to review financial reporting and control matters.
 
 The Company’s independent auditors, BDO Canada LLP, are appointed by the shareholders to conduct an audit in accordance with generally accepted auditing standards in Canada and in accordance with the standards of the Public Company Accounting Oversight Board (United States).
 
 MANAGEMENT’S REPORT ON INTERNAL CONTROLS OVER FINANCIAL REPORTING
 
 Management is responsible for establishing and maintaining adequate internal control over financial reportingas defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.  The Company’s management has employed a framework consistent with Exchange Act Rule 13a-15(c), to evaluate the Company’s internal control over financial reporting as described below. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with generally accepted accounting principles.
 
 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
 Management has assessed the effectiveness of our internal control over financial reporting as of March 31, 2011using criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of March 31, 2011.
 
 BDO Canada LLP, our auditors, have audited the effectiveness of our internal control over financial reporting as of March 31, 2011, as stated in their report which appears herein.
   “Maurice Tagami”

Maurice Tagami P.Eng.

President and Chief Executive Officer
“Greg McCunn”

Greg McCunn

Chief Financial OfficerVancouver, Canada

June 23, 2011
  
 
 75
 
   graphic
Tel: 604 688 5421

Fax: 604 688 5132

www.bdo.ca
BDO Canada LLP

600 Cathedral Place

925 West Georgia Street

Vancouver BC  V6C 3L2  Canada
   INDEPENDENT AUDITOR’S REPORT
  To the Shareholders of Keegan Resources Inc. (“the Company”)
  We have completed integrated audits of Keegan Resources Inc.’s March 31, 2011, 2010 and 2009 consolidated financial statements and an audit of the effectiveness of the Company’s internal control over financial reporting as at March 31, 2011. Our opinions, based on our audits, are presented below.
  Report on the consolidated financial statements
  We have audited the accompanying consolidated financial statements of Keegan Resources Inc., which comprise the consolidated balance sheets as at March 31, 2011 and March 31, 2010, and the consolidated statements of operations and deficit and cash flows for each of the three years in the period ended March 31, 2011, and the related notes including a summary of significant accounting policies.
  Management’s responsibility for the consolidated financial statements
  Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian generally accepted accounting principles and for effective internal control over financial reporting to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
  Auditor’s responsibility
  Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits 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 about whether the consolidated financial statements are free from material misstatement. Canadian generally accepted auditing standards require that we comply with ethical requirements.
  An audit involves performing procedures to obtain audit evidence, on a test basis, about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting principles and policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
  We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.
  
 BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.
 
 
 76
   Change in Accounting Policy
  As discussed in Note 2 (k) to the consolidated financial statements, effective April 1, 2010, the Company changed its accounting policy for short-term investments whereby all such investments are determined to be cash equivalents regardless of their original maturity dates if they are redeemable on demand without risk of loss of value.
  Opinion
  In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Keegan Resources Inc. as at March 31, 2011 and March 31, 2010 and the results of its operations and cash flows for each of the three years in the period ended March 31, 2011 in accordance with Canadian generally accepted accounting principles.
  Report on internal control over financial reporting
  We have also audited Keegan Resources Inc.’s internal control over financial reporting as at March 31, 2011, based on criteria established in Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
  Management’s responsibility for internal control over financial reporting
  The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Controls over Financial Reporting.
  Auditor’s responsibility
  Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
  An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control, based on the assessed risk, and performing such other procedures as we consider necessary in the circumstances.
  We believe that our audit provides a reasonable basis for our audit opinion on the Company’s internal control over financial reporting.
  Definition of internal control over financial reporting
  A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
  
 77
  Inherent limitations
  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
  Opinion
  In our opinion, Keegan Resources Inc. maintained, in all material respects, effective internal control over financial reporting as at March 31, 2011 based on criteria established in Internal Control — Integrated Framework issued by COSO.
 
 /s/ BDO CANADA LLP
 
 Chartered Accountants
 Vancouver, Canada
 June 23, 2011
   78
 KEEGAN RESOURCES INC.(An Exploration Stage Company)Consolidated Balance SheetsAs at March 31, 2011 and 2010


Expressed in Canadian Dollars2011


2010AssetsCurrent assets:Cash and cash equivalents


$
229,144,989


$
48,712,372Receivables



244,880



122,669Prepaid expenses and deposits



146,084



257,561229,535,953



49,092,602Furniture, equipment and leasehold improvements (note 3)



537,111



318,242Resource properties and deferred exploration costs (note 4)



74,843,010



41,123,128$
304,916,074


$
90,533,972LiabilitiesCurrent liabilities:Accounts payable and accrued liabilities (note 7)


$
5,076,974


$
1,097,951Non-current liabilities:Asset retirement obligations (note 5)



4,762,009



49,8609,838,983



1,147,811Shareholders’ EquityShare capital (note 6)



314,407,860



104,887,236Contributed surplus (note 6(e))



17,163,323



8,082,767Deficit accumulated



(36,494,092
)


(23,583,842
)295,077,091



89,386,161$
304,916,074


$
90,533,972Commitments (note 9)Contingencies (note 10)Subsequent event (note 14)Approved by the Board of Directors:“Shawn Wallace”
“Marcel de Groot”Director
Director
 SEE ACCOMPANYING NOTES
  79
 KEEGAN RESOURCES INC.(An Exploration Stage Company)Consolidated Statements of Operations and DeficitYears ended March 31, 2011, 2010 and 2009




Expressed in Canadian Dollars2011


2010


2009Administration expenses:Amortization

$
101,974


$
64,634


$
40,346Bank charges and interest


36,232



19,054



25,287Consulting fees, directors’ fees andwages and benefits (note 7)


2,415,249



1,733,946



1,379,953Donation expense


82,000



488,200



-Office, rent and administration


754,874



579,594



411,322Professional fees (note 7)


437,970



453,499



448,308Regulatory, transfer agent and shareholderinformation


185,783



220,772



241,999Stock-based compensation (note 6(c))


7,799,995



2,099,085



586,652Travel, promotion and investor relations


970,548



1,283,965



485,03212,784,625



6,942,749



3,618,899Other expenses (income):Interest and other income


(490,851
)


(114,994
)


(222,703
)Foreign exchange loss


609,194



117,960



608,492Gain on sale of marketable securities


(215,666
)


-



-Mineral property evaluation costs


222,948



-



-Write-off of equipment


-



26,971



1,112Write-off of interest in resources properties (note 4(c))


-



-



170,596125,625



29,937



557,497Loss and comprehensive loss for the year


12,910,250



6,972,686



4,176,396Deficit accumulated, beginning of year


23,583,842



16,611,156



12,434,760Deficit accumulated, end of year

$
36,494,092


$
23,583,842


$
16,611,156Weighted average number ofshares outstanding


49,177,957



38,018,679



28,233,377Loss per share - basic and diluted

$
0.26


$
0.18


$
0.15
 SEE ACCOMPANYING NOTES
 80
 
 KEEGAN RESOURCES INC.(An Exploration Stage Company)Consolidated Statements of Cash FlowsYears ended March 31, 2011, 2010 and 2009




Expressed in Canadian Dollars2011


2010


2009restated (note 2k)


restated (note 2k)Cash provided by (used in):Operating activities:Net loss for the period

$
(12,910,250
)

$
(6,972,686
)

$
(4,176,396
)Items not involving cash:Amortization


101,974



64,634



40,346Gain on sale of marketable securities


(215,666
)


-



-Stock-based compensation


7,799,995



2,099,085



586,652Stock-based donation


-



486,000



-Unrealized foreign exchange loss


252,610



223,087



173,484Write-off of equipment


-



27,639



1,112Write-off of interest in resource properties


-



-



170,596Changes in non-cash working capital:Accounts payable and accrued liabilities


1,116,591



(6,793
)


80,095Prepaid expenses and deposits


107,269



(168,798
)


(33,905
)Receivables


(122,211
)


(73,628
)


87,109(3,869,688
)


(4,321,460
)


(3,070,907
)Investing activities:Acquisition of interest in resource properties


(639,220
)


-



(237,161
)Purchase of marketable securities


(145,921
)


-



-Proceeds from sale of marketable securities


361,587



-



-Purchase of buildings, furniture, equipment andleasehold improvements


(320,843
)


(214,751
)


(119,631
)Deferred exploration costs


(21,238,903
)


(9,319,015
)


(10,901,528
)(21,983,300
)


(9,533,766
)


(11,258,320
)Financing activities:Common shares issued for cash, net of shareissuance costs


207,277,430



59,869,420



2,225,493Impact of foreign exchange on cash and cashequivalents


(991,825
)


(302,940
)


(136,201
)Increase (Decrease) in cash and cash equivalents


180,432,617



45,711,254



(12,239,935
)Cash and cash equivalents, beginning of year


48,712,372



3,001,118



15,241,053Cash and cash equivalents, end of year

$
229,144,989


$
48,712,372


$
3,001,118Supplemental disclosure of cash flow information:Cash paid for:Interest

$
-


$
-


$
-Income taxes

$
-


$
-


$
-Non-cash investing and financing activities:Mineral property costs includedin accounts payable, change

$
3,191,794


$
499,899


$
148,872Stock-based compensation included in
 mineral properties

$
3,523,755


$
839,198


$
136,411Reclassification of contributed surplus onexercise of options and brokers’ warrants(note 6(e))

$
2,895,789


$
1,959,664


$
381,249Warrants issued for services:Share issue costs

$
652,595


$
523,924


$
-
 
 SEE ACCOMPANYING NOTES
 81
 
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 
 Consolidated Schedule of Resource Property CostsYears ended March 31, 2011 and 2010




Expressed in Canadian DollarsGhanaEsaase


Asumura


TotalBalance, March 31, 2009

$
24,388,371


$
5,969,574


$
30,357,945Acquisition costs:Cash and accrued


-



-



-Deferred exploration costs:Asset retirement obligation


49,860



-



49,860Camp operations


330,840



46,509



377,349Development support costs


147,928



-



147,928Equipment and infrastructure


423,860



25,557



449,417Engineering studies


176,050



-



176,050Exploration drilling


4,043,602



43,877



4,087,479Exploration support costs


3,596,512



306,394



3,902,906Health, safety and environmental

studies


147,972



-



147,972Stock-based compensation


839,198



-



839,198Technical and in-fill drilling


587,024



-



587,02410,342,846



422,337



10,765,183Balance, March 31, 2010


34,731,217



6,391,911



41,123,128Acquisition costs:Cashand accrued (note 4(a))


1,170,439



-



1,170,439Asset retirement obligation (note 5)


5,126,210



-



5,126,210Deferred exploration costs:Camp operations


626,158



181,775



807,933Development support costs


1,896,792



-



1,896,792Equipment and infrastructure


1,242,037



29,429



1,271,466Engineering studies


2,034,473



-



2,034,473Exploration drilling


4,993,818



1,022,979



6,016,797Exploration support costs


4,754,896



296,187



5,051,083Health, safety and environmental

studies


1,199,552



-



1,199,552Stock-based compensation


3,523,755



-



3,523,755Technical and in-fill drilling


5,621,382



-



5,621,38231,019,073



1,530,370



32,549,443Balance, March 31, 2011

$
66,920,729


$
7,922,281


$
74,843,010
 
 SEE ACCOMPANYING NOTES
  82
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 1
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
  
 1.           Nature of operations and going concern
 
 Keegan Resources Inc. (“Keegan” or the “Company”) was incorporated on September 23, 1999 under the laws of British Columbia.  The Company is in the exploration stage and is focused on advancing its principal property, the Esaase Gold Project to commercial production. In addition to its principal project, the Company holds a portfolio of other Ghanaian gold concessions in various stages of exploration. The Company’s shares trade on the Toronto Stock Exchange (“TSX”) and American Stock Exchange (“AMEX”) under the symbol “KGN”.
 
 Management has estimated that the Company will have adequate funds from existing working capital to meet  corporate, development, administrative and property obligations for the coming year, including the completion of the pre-feasibility and feasibility studies of the Esaase property. As at March 31, 2011, the Company had $229,144,989 in cash and cash equivalents, working capital of $224,458,979 and no long-term debt.
 
 The Company will require additional financing from time to time, and while the Company has been successful in raising equity financing in the past, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be available on acceptable terms.
 
 The recoverability of amounts shown for resource properties and deferred exploration costs and the Company’s ability to continue as a going concern is dependent upon the discovery of economically recoverable reserves, continuation of the Company's interest in the underlying resource claims, the ability of the Company to obtain necessary financing to complete their development and upon future profitable production or proceeds from the disposition thereof.The amounts shown as resource properties and deferred exploration costs represent net costs to date, less amounts amortized and/or written-off, and do not necessarily represent present or future values.
 
 2.           Significant accounting policies, change in accounting policy, and recent accounting pronouncements
 
 The consolidated financial statements of the Company have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”). The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes.  Actual results could differ from those estimates.  The consolidated financial statements have, in management’s opinion, been properly prepared using careful judgment within the framework of the significant accounting policies summarized below.
 
 (a)
Basis of consolidation
 
 The consolidated financial statements include the accounts of the Company and the following subsidiaries:
 
 Subsidiary name
Jurisdiction

OwnershipKeegan Resources Ghana Limited
Ghana


90
%(note 4(a))Keegan International (Barbados) Inc.
Barbados


100
%Keegan Ghana (Barbados) Inc.
Barbados


100
%Quicksilver Ventures (Nevada) Inc
Nevada, USA


100
%
 During the three months ended March 31, 2011, the Company incorporated Keegan International (Barbados) Inc. and Keegan Ghana (Barbados) Inc. as its wholly-owned subsidiaries.
 
 All significant intercompany amounts and transactions have been eliminated on consolidation.
  83
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 2
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
 2.
Significant accounting policies, change in accounting policy, and recent accounting pronouncements (continued)
 
 (b)           Financial instruments
 
 i.
Financial assets and financial liabilities
 
 The Company’s financial instruments are comprised of cash and cash equivalents, receivables and accounts payable and accrued liabilities. Financial instruments are measured and classified as follows:
  ·
Held-for-trading financial instruments are measured at fair value. All gains and losses resulting from changes in their fair value are included in net earnings (loss) in the period in which they arise. Cash and cash equivalents are classified as held-for-trading and are measured at fair value.
  ·
Held-to-maturity investments, loans and receivables, and other financial liabilities are initially measured at fair value and subsequently measured at amortized cost. Amortization of premiums or discounts and transaction costs are amortized into net earnings (loss), using the effective interest method less any impairment. Receivables are classified as loans and receivables and accounts payable and accrued liabilities are classified as other financial liabilities.
  ·
Available-for-sale financial assets are measured at fair value, with unrealized gains and losses recorded in other comprehensive income until the asset is realized, at which time they will be recorded in net earnings (loss). Other than temporary impairments on available-for-sale financial assets are recorded in net earnings (loss).
  ·
Derivatives embedded in other financial instruments or non-financial contracts (the “host instrument”) are treated as separate derivatives with fair value changes recognized in the statement of operations when their economic characteristics and risks are not clearly and closely related to those of the host instrument, and the combined instrument or contract is not held for trading. There were no embedded derivatives identified in a review of the Company’s contracts. Free-standing derivatives that meet the definition of an asset or liability are measured at their fair value and reported in the Company’s financial statements.
 
 ii      Transaction Costs
  The Company has chosen to recognize all transaction costs in operations on all financial instruments in the period they are incurred.
 
 (c)           Cash and cash equivalents
 
 Cash and cash equivalents consist of cash and short-term investments with original maturity dates of less than ninety days and/or with original maturity days over ninety days but redeemable on demand without penalty (note 2(k)). The Company places its cash with institutions of high-credit worthiness.
 
 (d)           Furniture, equipment and leasehold improvements
 
 Furniture, equipment and leasehold improvements are carried at cost less accumulated amortization. Amortization is determined at rates which will reduce original cost to estimated residual value over the useful life of each asset. The annual rates used to compute amortization are as follows:
 
 Asset
Basis
RateFurniture and equipment
declining balance
20
%Computers
declining balance
30
%Leasehold improvements
straight-line
term of lease
 Amortization is recorded at half the annual rate in the year of acquisition.
  84
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 3
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
  2.
Significant accounting policies, change in accounting policy, and recent accounting pronouncements (continued)
 
 (e)           Resource properties and deferred exploration costs
  The Company accounts for resource property costs in accordance with the Canadian Institute of Chartered Accountants Handbook Section 3061, “Property, plant and equipment” (“CICA 3061”), and Emerging Issues Committee abstract 174, “Mining Exploration Costs” (“EIC-174”). CICA 3061 provides for the capitalization of the acquisition and exploration costs of a resource property where such costs are considered to have the characteristics of property, plant and equipment. EIC-174 provides that a mining enterprise is not precluded from considering exploration costs to have the characteristics of property, plant and equipment when it has not established resource reserves objectively and therefore does not have a basis for preparing a projection of the estimated future net cash flow from the property.
 
 The fair value of resource properties acquired in exchange for the issuance of the Company’s shares is determined by the trading price of the Company’s shares on the date the shares were issued.
 
 Resource property costs include initial acquisition costs and related option payments, which are recorded when paid. Exploration and development costs are capitalized until properties are brought into production, when costs are amortized on a unit-of-production basis over economically recoverable reserves, abandoned or the interest is sold. Option payments are credited against resource property costs when received. No gain or loss on disposition of a partial interest is recorded until all carrying costs of the interest have been offset by proceeds of sale or option payments received.
 
 EIC-174 states that a mining enterprise that has not established mineral reserves objectively and, therefore, may not have a basis for preparing a projection of the estimated future net cash flow from the property, is not precluded from considering exploration costs to have the characteristics of property, plant and equipment. Exploration costs related to mining properties may be initially capitalized under Section 3061 if an enterprise considers that such costs have the characteristics of property, plant and equipment and that capitalization is appropriate to its circumstances.
 
 CICA 3061 requires that property, plant and equipment be written down when the long-term expectation is that the net carrying amount will not be recovered; further, EIC-174 references certain conditions that should be considered in determining subsequent write-downs, such as a significant drop in mineral prices, a significant deterioration in the availability of financing or a significant delay in the development activity; management reviews such conditions to determine whether a write-down of capitalized costs is required. When the carrying value of a property exceeds its net recoverable amount, provision is made for the impairment in value.
 
 (f)           Asset retirement obligations
  The fair value of a liability for an asset retirement obligation, such as site reclamation costs, is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The Company is required to record the estimated present value of future cash flows associated with site reclamation as a liability when the liability is incurred and increase the carrying value of the related assets for that amount. The obligations recognized are statutory, contractual or legal obligations. The liability is accreted over time for changes in the fair value of the liability through charges to accretion, which is included in the statement of operations.  The costs capitalized upon initial recognition of an obligation are amortized in a manner consistent with the depletion of the related asset.
 
 (g)           Comprehensive loss
  Comprehensive income consists of net loss and other comprehensive income (“OCI”). OCI represents changes in shareholders’ equity during a period arising from transactions and other events with non-owner sources.  For the period covered by these financial statements comprehensive loss and net loss are the same.
   85
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 4
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
  2.
Significant accounting policies, change in accounting policy, and recent accounting pronouncements (continued)
 
 (h)           Foreign currency translation
  The Company’s functional currency is the Canadian dollar. Foreign denominated monetary assets and liabilities are translated to their Canadian dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Non-monetary items are translated at exchange rates prevailing when the assets were acquired or the obligations incurred. Foreign currency denominated revenue and expense items are translated at exchange rates prevailing at the transaction date. Exchange gains or losses arising on foreign currency translation were charged to the statement of operations during the period.
 
 (i)           Earnings per share
 
 Basic earnings per share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the year. Diluted earnings per share is calculated by dividing net income available to common shareholders by the weighted average number of diluted common shares outstanding during the year. Diluted common shares reflect the potential dilutive effect of exercising the stock options and warrants based on the treasury stock method.
 
 For the years ended March 31, 2011, 2010 and 2009, common equivalent shares (consisting of shares issuable on exercise of stock options and warrants), totaling 6,497,800, 3,221,840, and 5,194,410 respectively, were not included in the computation of diluted loss per share because the effect was anti-dilutive.
 
 (j)           Stock-based compensation
 
 The Company has a stock option plan as described in note 6(c). The Company records all stock-based compensation using the fair value method.
 
 Compensation expense attributable to share based awards to employees is measured at the fair value at the date of grant using the Black-Scholes model. The fair value takes into account a number of variables, including the exercise price of the award, the expected dividend rate, the expected life of the options and the risk free interest rate. The expense is recorded on a straight-line basis over the graded vesting period of the award. The forfeiture rate is assumed to be nil and the expense is adjusted prospectively as forfeitures occur. Compensation expense attributable to awards that call for settlement in cash or other assets is measured at intrinsic value and recognized over the vesting period.
 
 Under the fair value based method, stock-based payments to non-employees are measured at the fair value of the goods and/or services received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable. The fair value of stock-based payments to non-employees is periodically re-measured until counterparty performance is complete, and any change therein is recognized over the performance period of the award. The cost of stock-based payments to non-employees that are fully vested and non-forfeitable at the grant date is measured and recognized at that date.
  (k)           Change in accounting policy
 
 During the year ended March 31, 2011, the Company changed its accounting policy on short-term investments. Previously, the Company considered all cash equivalents with maturity dates over 90 days as short-term investments, including those that were redeemable on demand without penalty or loss of interest. Investments with maturity dates over 90 days that are redeemable on demand without penalty or loss of interest are now treated as cash and cash equivalents.
  86
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 5
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
 2.
Significant accounting policies, change in accounting policy, and recent accounting pronouncements (continued)
 
 (k)           Change in accounting policy (continued)
 
 Management judges that the new policy provides reliable and more relevant information because it better presents the nature of these investments in the fact that they can be liquidated before maturity. This change in accounting policy has been accounted for retroactively, and the comparative consolidated balance sheets and consolidated statements of cash flows as at and for the year ended March 31, 2010 have been restated. The effect of the change on the consolidated balance sheets as at March 31, 2010 is a decrease of the short-term investments by $22,000,000 and an increase in the cash and cash equivalents by the same amount. The effect of the change on the consolidated cash flows statements for the year ended March 31, 2010 is a decrease of the cash used in investing activities by $21,000,000 (2009 - $1,000,000), an increase in cash and cash equivalents by the same amount, and an increase in the cash and cash equivalents, end of year by $22,000,000. The change in the accounting policy did not have an impact on the opening retained earnings.
 
 (l)           Recent Accounting Pronouncements Issued But Not Yet Implemented
 
 i.  Consolidations and non-controlling interests
  CICA Handbook Section 1601, Consolidated Financial Statements, and Section 1602, Non-Controlling Interests, replace Section 1600, Consolidated Financial Statements. Section 1601 establishes standards for the preparation of consolidated financial statements. Section 1602 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 IFRS standard, International Accounting Standards (“IAS”) 27 (Revised), Consolidated and Separate Financial Statements. The sections apply to interim and annual consolidated financial statements relating to fiscal years beginning on or after January 1, 2011. Earlier adoption is permitted. The Company will adopt this standard on April 1, 2011. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.
  ii.      Business combinations
  CICA Handbook Section 1582, Business Combinations, replaces Section 1581 and establishes standards for the accounting for a business combination.  It provides the Canadian equivalent to IFRS 3 - Business Combinations.  This applies to a transaction in which the acquirer obtains control of one or more businesses.  Most assets acquired and liabilities assumed, including contingent liabilities that are considered to be improbable, will be measured at fair value.  Any interest in the acquiree owned prior to obtaining control will be remeasured at fair value at the acquisition date, eliminating the need for guidance on step acquisitions.  Additionally, a bargain purchase will result in recognition of a gain and acquisition costs must be expensed.  Earlier application is permitted. The Company will adopt this standard on April 1, 2011. The Company is currently evaluating the impact of the adoption of this new standard on its consolidated financial statements.
 
 iii.
Financial instruments – recognition and measurement
 
 CICA Handbook Section 3855 was amended in June 2010 to clarify the application of the effective interest rate method after a debt instrument has been impaired and when an embedded prepayment option is separated from its host debt instrument at initial recognition. The amendments are applicable for the Company’s interim and annual financial statements for its fiscal year beginning April 1, 2011 with earlier adoption permitted. The Company will adopt this standard on April 1, 2011 and does not expect a material impact on its consolidated financial statements.
 
 87
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 6
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
 
 2.
Significant accounting policies, change in accounting policy, and recent accounting pronouncements (continued)
 
 (l)           Recent Accounting Pronouncements Issued But Not Yet Implemented (continued)
 
 iv.
International Financial Reporting Standards (“IFRS”)
 
 In 2006, the Canadian Accounting Standards Board (“AcSB”) published a new strategic plan that will significantly affect financial reporting requirements for Canadian companies. The AcSB strategic plan outlines the convergence of Canadian GAAP with IFRS over a five-year transitional period. In February 2008, the CICA Accounting Standards Board confirmed that the changeover to IFRS from Canadian GAAP will be required for publicly accountable enterprises, effective for the interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011.   The transition date of April 1, 2011 will require the restatement for comparative purposes of amounts reported by the Company for the year ending March 31, 2011.  The Company has assessed the impact of adopting IFRS on financial statement presentation and accounting policies selection and currently is in a process of preparation of the Company’s IFRS opening balance sheet and note disclosures. The Company’s IT, accounting and financial reporting systems are not expected to be significantly impacted. Further, the Company has in place internal and disclosure control procedures to ensure continued effectiveness during the transition period.
 
 3.           Furniture, equipment and leasehold improvements
 
 
 Accumulated


Net bookMarch 31, 2011

Cost


amortization


valueFurniture and equipment


245,680



77,478



168,202Computers


300,509



91,025



209,484Leasehold improvements


201,691



42,266



159,425$
747,880


$
210,769


$
537,111
 
 
 Accumulated


Net bookMarch 31, 2010

Cost


amortization


valueFurniture and equipment


180,241



43,628



136,613Computers


132,921



39,426



93,495Leasehold improvements


113,875



25,741



88,134$
427,037


$
108,795


$
318,242
 
 4.
Resource properties and deferred exploration costs
 
 Title to resource properties involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequent ambiguous conveyancing history characteristic of many resource properties.  The Company has investigated title to all of its resource properties and, to the best of its knowledge, title to all of its properties are in good standing.  However, this should not be construed as a guarantee to title.  The concessions may be subject to prior claims, agreements or transfer and rights of ownership may be affected by undetected defects.
  88
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 7
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
 4.           Resource properties and deferred exploration costs (continued)
 
 (a)
Esaase Gold Property
 
 On May 3, 2006,the Company entered into an option agreement with Sametro Co. Ltd. (“Sametro”) to purchase a 100% interest in the Esaase Gold property in the southwest part of the Republic of Ghana (“Ghana”), West Africa. The property is asubject to the underlying 10% interest and 5% royalty (see note 10(a))to the Ghanaian government and a 0.5% royalty payable to the Bonte Liquidation Committee. Under the terms of the agreement, the Company was to make a series of cash payments totaling US$890,000, issue 780,000 common shares and incur minimum exploration expenditures of US$2,250,000 over a three year period.
 
 During the year ended March 31, 2008, after having already made cash payments of US$500,000, issued 40,000 common shares and completed the full exploration expenditure requirement, the Company renegotiated the option agreement so that all further cash and share payments were no longer owed. In lieu of these payments, the Company paid US$850,000 to a creditor of Sametro and issued 40,000 additional common shares to Sametro.
 
 Subsequent to these payments, the Company was granted the full Esaase Mining Lease by the Minerals Commission and Minister of Mines, Lands and Forestry with no further obligation to any party aside from the NSR and government commitments.
 
 During the year ended March 31, 2008, the Company purchased 100% private ownership of the Jeni Concession mining lease and exploration rights. The Jeni Concession lies directly to the southwest and contiguous to the Esaase Gold property. In consideration for the acquisition of the mining lease, Keegan paid US$50,000 to the Bonte Liquidation Committee and US$50,000 to the Minerals Commission of Ghana for the title transfer. The Ghanaian government retains a standard 10% carried interest and 3% royalty based on the existing mining lease and the Bonte Liquidation Committee retains a 0.5% royalty.
 Subsequent to the granting of the Esaase and Jeni mining leases, the Ghanaian government amended the royalty scheme in Ghana to a 5% royal for all mining projects and uncertainty now exists as to the final royalty rate applicable to the property (see note 10(a)).
  Acquisition
  During the year ended March 31, 2011, the Company made a payment of $ 591,660 (US$ 600,000) plus certain acquisition costs to acquire a 100% interest in the Dawohodo prospecting concession, an adjacent mineral concession to the Esaase Gold property. A further payment of US$500,000 is payable pursuant to the agreement. This payment was made subsequent to March 31, 2011.
 
 Free carried interest to the Ghanaian government
 
 Pursuant to the provisions of the Ghanaian statute, as at March 31, 2011,the Ghanaian government acquired, for zero proceeds, a 10% free carried interest in the rights and obligations of the mineral operations of the Esaase Gold Property through an interest in Keegan Resources Ghana Limited (“Keegan Ghana”).Keegan Ghanareserved 10% of its common shares for issuance to the Ghanaian government, and one government representative was appointed to the Board of Directors of Keegan Ghana. The Ghanaian government is entitled to 10% of declared dividends from the net profit of Keegan Ghana at the end of a financial year.
  89
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 8
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
  4.
Resource properties and deferred exploration costs (continued)
 
 (b)
Asumura Gold Project
 
 The Company entered into an option agreement with GTE Ventures Limited (“GTE”) dated February 18, 2005 and subsequently amended, through which it acquired an undivided 100% private interest in the Asumura Reconnaissance Concession (“Asumura property”) located in Ghana.
 
 The Asumura property is subject to a 3.5% royalty; 50% of which may be purchased for US$2,000,000 from GTE and the remaining 50% may be purchased for an additional US$4,000,000. If the property is converted to a Mining License, in accordance with Ghanaian law, it will become subject to a 5% royalty and 10% ownership by the Ghanaian government (see note 10(a)).
 
 (c)
Write-off of interest in resources properties
 
 During the years ended March 31, 2011 and 2010 no deferred acquisition and exploration costs related to resource properties were written-off. During the year ended March 31, 2009, the Company decided not to pursue its option agreement to earn a 100% ownership of a reconnaissance concession in Ghana (Mt. Olives concession) and as a result, $170,596 in acquisition and deferred exploration expenditures were written-off.
 
 5.
Asset retirement obligations
 
 The asset retirement obligations provision relates to current and historical disturbance caused to the mineral concessions with in the area of interest of the Esaase Gold Property. Management has determined that these areas will be included as part of the project’s life-of-mine rehabilitation program. The estimated present value of future cash flows associated with this constructive obligation has been recorded as a non-current provision.
 
 Esaase development project

Year ended


Year endedMarch 31, 2011


March 31, 2010Opening balance

$
49,860


$
-Additions


4,712,149



49,860Closing Balance

$
4,762,009


$
49,8602011



2010Undiscounted and uninflated estimated future cash obligation

$
8,186,463


$
9,860Expected term until settlement


13 years



1 yearInflation rate


2.49
%


-Discount rate


6.60
%


-
  6.
Share capital and contributed surplus
 
 (a)           Authorized share capital
 
 unlimited common shares without par value; and
 unlimited preferred shares without par value
  90
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 9
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
 
 6.           Share capital and contributed surplus (continued)
 
 (b)
Issued and outstanding common shares  Number of shares
AmountBalance, March 31, 2008
27,467,648
$
40,489,334Issued for cash:Pursuant to the exercise of warrants- at $2.40
623,000

1,495,200- at $3.25
150,000

487,500Pursuant to the exercise of options- at $0.92
263,905

242,793Transferred from contributed surplus for the exerciseof options and warrants
-

1,959,664Balance, March 31, 2009
28,504,553
$
43,096,076Issued for cash:Pursuant to private placements- at $2.40
8,000,000

19,200,000- at $5.90
7,015,000

41,388,500Share issuance costs
-

(4,049,152 )Pursuant to the exercise of warrants- at $3.10
162,667

504,268Pursuant to the exercise of options- at $0.92
609,410

560,657- at $1.12
50,000

56,000- at $1.16
25,000

29,000- at $2.44
475,493

1,160,203- at $2.48
20,000

49,600- at $3.38
19,000

64,220- at $4.20
91,000

382,200Transferred from contributed surplus for the exerciseof options and warrants
-

1,959,664Issued in donation
75,000

486,000Balance, March 31, 2010
45,047,123
$
104,887,236Issued for cash:Pursuant to a bought deal financing at $7.50
28,405,000

213,037,500Share issuance costs, cash
-

(10,199,980)Share issuance costs, fair value of warrantsgranted to underwriters
-

(652,595 )Pursuant to the exercise of warrants- at $3.10
237,333

735,732Pursuant to the exercise of options- at $1.12
37,500

42,000- at $1.16
200,000

232,000- at $2.44
349,507

852,797- at $2.48
40,000

99,200- at $3.31
50,000

165,500- at $3.60
75,000

270,000- at $4.01
65,625

263,156- at $4.20
280,000

1,176,000- at $6.19
97,500

603,525Transferred from contributed surplus for the exerciseof options and warrants
-

2,895,789Balance, March 31, 2011
74,884,588
$
314,407,860
  91
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 10
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
 6.           Share capital and contributed surplus (continued)
 
 (b)           Issued and outstanding common shares (continued)
 
 Year ended March 31, 2011
 
 On February 17, 2011, the Company completed a bought deal share offering pursuant to an underwriting agreement, under which the underwriters purchased an aggregate of 24,700,000 common shares of the Company at a price of $7.50 per common share for gross proceeds of $185,250,000. The underwriters exercised an over-allotment option to purchase an additional 3,705,000 common shares at $7.50, bringing the total gross proceeds from the bought deal financing to $213,037,500.  Pursuant to the underwriting agreement, the Company paid a commission to the underwriters equivalent to 4.5% of the gross proceeds raised or $9,586,688  and incurred other cash share issuance costs totaling $613,292.In addition, the Company granted 284,050 share purchase warrants to the underwriters entitling them to purchase common shares of the Company at a price of $7.50 per share until February 17, 2013. The Company recorded share issuance costs of $652,595 related to the warrants granted to underwriters, representing the fair value or the warrants calculated using the Black-Scholes option-pricing method (note 6(d)).
 
 During the year ended March 31, 2011, an aggregate of 1,195,132common shares were issued for gross proceeds of $3,704,178 on exercise of options. In addition, a reclassification of $2,584,883 from contributed surplus to share capital was recorded on the exercise of these options.
 
 During the year ended March 31, 2011, an aggregate of 237,333 common shares were issued for gross proceeds of $735,732 on exercise of broker’s warrants. In addition, a reclassification of $310,906from contributed surplus to share capital was recorded on the exercise of the broker’s warrants.
 
 Year ended March 31, 2010
 
 During the year ended March 31, 2010, the Company completed a bought deal share offering pursuant to an underwriting agreement dated November 23, 2009, under which the underwriters purchased an aggregate of 7,015,000 common shares of the Company at a price of $5.90 per common share for total gross proceeds of $41,388,500.  Pursuant to the underwriting agreement, the Company paid a commission to the underwriters equivalent to 5% of the gross proceeds raised or $2,069,425 and incurred other issuance costs totaling $315,336.
 
 During the year ended March 31, 2010, the Company also completed a brokered private placement pursuant to an underwriting agreement dated May 8, 2009,under which the underwriters purchased an aggregate of 8,000,000 common shares of the Company at a price of $2.40 per common share for total gross proceeds of $19,200,000.  Pursuant to the underwriting agreement, the Company paid a commission to the underwriters equivalent to 5% of the gross proceeds raised or $960,000 and incurred other issuance costs totaling $180,467. In addition, the Company issued 400,000 warrants to the underwriters which is equal to 5% of the total common shares sold. Each warrant will entitle the underwriters to purchase a common share of the Company at a price of $3.10 per share for a period of 18 months. The fair value of the warrants, $523,924, has been included in share issuance costs.
 
 During the year ended March 31, 2010, the Company issued 75,000 common shares in donation. The shares were recorded at fair value of $6.48 per share in the statement of operations.
 
 During the year ended March 31, 2010, an aggregate of 1,289,903 common shares were issued for gross proceeds of $2,301,880on exercise of options. In addition, a reclassification of $1,746,586 from contributed surplus to share capital was recorded on the exercise of these options.
 
 92
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 11
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
 
 6.           Share capital and contributed surplus (continued)
 
 (b)           Issued and outstanding common shares (continued)
 
 During the year ended March 31, 2010, an aggregate of 162,667 common shares were issued for gross proceeds of $504,268 on exercise of broker’s warrants. In addition, a reclassification of $213,078 from contributed surplus to share capital was recorded on the exercise of these options.
 
 Year ended March 31, 2009
 
 During the year ended March 31, 2009, 263,905 common shares were issued for gross proceeds of $242,793 on exercise of options. In addition, a reclassification of $152,674 from contributed surplus to share capital was recorded on the exercise of these options.
 
 During the year ended March 31, 2009, an aggregate of 773,000 common shares were issued for gross proceeds of $1,982,700 on exercise of warrants and broker’s warrants. In addition, a reclassification of $228,575 from contributed surplus to share capital was recorded on the exercise of broker’s warrants.
 
 
 (c)           Stock options
 
 The Company maintains a rolling stock option plan providing for the issuance of stock options up to 10% of the Company’s issued and outstanding common shares. The Company may grant from time to time options to its directors, officers, employees and other service providers. The options vest 25% on the date of the grant and 12 1⁄2 % every three months thereafter for a total vesting period of 18 months.
 
 The following table summarizes the stock options outstanding and exercisable at March 31, 2011:
 
 Number outstanding at

Number exercisable atExercise price
March 31, 2011
Expiry date
March 31, 2011$2.44
305,000
November 10, 2011
305,000$3.60
25,000
October 17, 2012
25,000$4.20
440,000
February 5, 2013
440,000$1.12
12,500
January 15, 2014
12,500$3.31
120,000
June 2, 2014
120,000$3.10
225,000
July 2, 2014
225,000$3.10
75,000
July 17, 2014
75,000$4.01
416,250
October 6, 2014
355,625$6.50
220,000
December 14, 2014
192,500$6.19
1,505,000
May 26, 2015
912,500$7.83
115,000
October 20, 2015
43,125$9.00
225,000
November 30, 2015
84,375$8.00
2,530,000
March 17, 2016
632,5006,213,750

3,423,125Weighted average contractual liferemaining at March 31, 2011 (years)
4.04

3.48
 The number of stock options exercisable as at March 31, 2010  and 2009 was 2,322,632 and 2,907,910 respectively.
 
 A summary of the stock options grants, exercises and forfeitures for the year ended March 31, 2011, 2010 and 2009 is presented below:
  93
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 12
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
 
 
 6.           Share capital and contributed surplus (continued)
 
 (c)
Stock options (continued)
 Number


Weighted averageof shares


Exercise priceBalance, March 31, 2008


3,533,315


$
2.49Granted


100,000



1.12Exercised


(263,905
)


0.92Forfeited


(150,000
)


3.30Balance, March 31, 2009


3,219,410


$
2.54Granted


1,175,000



4.14Exercised


(1,289,903
)


1.78Forfeited


(115,000
)


3.05Balance, March 31, 2010


2,989,507


$
3.48Granted


4,495,000



7.39Exercised


(1,195,132
)


3.10Forfeited


(75,625
)


4.20Balance, March 31, 2011


6,213,750


$
6.37
 
  The weighted average exercise price of the stock options exercisable as at March 31, 2011 was $5.41.
 
 During the year ended March 31, 2011, under the fair-value-based method, $7,799,995 (2010 – $2,099,085, 2009 - $586,652)) in stock-based compensation expense was recorded in the statements of operations and deficit and $3,523,755 (2010 – $839,198, 2009 - $136,411) was capitalized to resource properties for stock options granted to directors, employees and consultants of the Company.
 
 The fair value of stock options used to calculate stock-based compensation expense has been estimated using the Black-Scholes option valuation model with the following weighted average assumptions:
 2011


2010


2009Risk free interest rate


2.21
%


2.35
%


1.48
%Expected dividend yield


0
%


0
%


0
%Stock price volatility


88
%


93
%


86
%Expected life of options

3.63 years

3.71 years

3.67 years
 
 The weighted average fair value of options granted during year ended March 31, 2011 was $4.67 (2010 - $3.28, 2009 - $0.70) per option.
  (d)
Warrants
  The following warrants were outstanding at March 31, 2011. Each warrant entitles the holder to purchase one common share of the company as follows:
  
 Number outstanding at

Number exercisable atExercise price
March 31, 2011
Expiry date
March 31, 2011$
7.50
284,050
February 17, 2013
284,050284,050

284,050
 94
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 13
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
 6.           Share capital and contributed surplus (continued)
 
 (d)           Warrants (continued)
 
 The continuity of share purchase warrants for the year ended March 31, 2011 is as follows:
  Exercise

price

Expiry date

March 31,

2010


Issued


Exercised


Expired


March 31,

2011$
7.50

February17, 2013


-



284,050



-



-



284,050$
3.10

November 26, 2010


237,333



-



(237,333
)


-



-237,333



284,050



(237,333
)


-



284,050
 
 The fair value of $652,595 of the 284,050 brokers’ warrants issued during the year ended March 31, 2011 was included in share issuance costs (note 6 (b)).
 
  The continuity of share purchase warrants for the year ended March 31, 2010is as follows:
  Exercise

price

Expiry date

March 31,

2009


Issued


Exercised


Expired


March 31,

2010$
4.25

May 27, 2009


330,000



-



-



(330,000
)


-$
5.25

May 27, 2009


1,650,000



-



-



(1,650,000
)


-$
3.10

November 26, 2010


-



400,000



(162,667
)


-



237,3331,980,000



400,000



(162,667
)


(1,980,000
)


237,333
 The fair value of $523,924 of the 400,000 brokers’ warrants issued during the year ended March 31, 2010 was included in share issuance costs (note 6 (b)).
 
 The continuity of share purchase warrants for the year ended March 31, 2009 is as follows:
  Exercise

price

Expiry date

March 31,

2008


Issued


Exercised


Expired


March 31,

2009$
2.40

May 16, 2007


630,500



-



(623,000
)


(7,500
)


-$
3.25

February 16, 2009


3,208,750



-



(150,000
)


(3,058,750
)


-$
4.25

May 27, 2009


330,000



-



-



-



330,000$
5.25

May 27, 2009


1,650,000



-



-



-



1,650,0005,819,250



-



(773,000
)


(3,066,250
)


1,980,000
 
 The fair value of broker warrants used to calculate share issuance costs has been estimated using the Black-Scholes option valuation model with the following weighted average assumptions:
  2011


2010


2009Risk free interest rate


1.79
%


0.97
%


-Expected dividend yield


0
%


0
%


-Stock price volatility


55
%


117.54
%


-Expected life of warrants

2.0 years


1.5 years



-
 The weighted average fair value of broker warrants granted during the year ended March 31, 2011 was approximately $2.30(2010 - $1.31) per broker warrant.
 
 95
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 14
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
 6.           Share capital and contributed surplus (continued)
 
 (e)           Contributed surplus
 
 2011


2010


2009Balance, beginning of year

$
8,082,767


$
6,580,224


$
6,238,410Stock-based compensation


11,323,750



2,938,283



7,232,063Brokers’ warrants issued


652,595



523,924



-Transferred to share capital for the exerciseof options and brokers’ warrants


(2,895,789
)


(1,959,664
)


(381,249
)Balance, end of year

$
17,163,323


$
8,082,767


$
6,580,224
 (f)           Shareholder rights plan
 
 The Directors of the Company approved the adoption of a shareholder rights plan (the “Rights Plan”).  The objective of the Board of Directors in adopting this Plan is to achieve full and fair value for the Company’s shareholders in the event of an unsolicited take-over bid for the Company.
 
 The rights become exercisable only when a person or party acquires or announces its intention to acquire 20% or more of the outstanding shares of the Company without complying with certain provisions of the Rights Plan. Each right would entitle each holder of common shares (other than the acquiring person or party) to purchase additional common shares of the Company at a 50% discount to the market price at the time.
 
 7.             Related party transactions
 
 The Company has a consulting agreement with a company controlled by a director of the Company in the amount of US$ 17,500 per month plus benefits up to February 28, 2011 and US$ 8,750 plus benefits there after. During the year ended March 31, 2011, the Company paid consulting fees, benefits and a bonus of $306,507 (2010 - $269,531; 2009 - $211,632) under this agreement.
 
 Included in consulting fees, wages and benefits is $nil (2010 - $nil; 2009 - $91,270) paid or accrued for consulting fees paid to an officer of the Company during the year ended March 31, 2011.
 
 During the year ended March 31, 2011, the Company included in professional fees $15,850 (2010 - $98,410; 2009 - $76,660) for accounting fees paid or accrued to a company controlled by an officer of the Company.
 
 During the year ended March 31, 2011, the Company paid or accrued $nil (2010 - $112,954, 2009 -  $155,404) for geological consulting fees to a former director of the Company. These costs have been included in resource properties.
 
 During the year ended March31, 2011, the Company billed $223,264 (2010 - $nil; 2009 - $nil) to companies with directors and officers in common in respect to recovery of general and administration costs
 
 These transactions were conducted in the normal course of operations and were measured by the exchange amount, which is the amount agreed upon by the transacting parties.
 
 Included in accounts payable and accrued liabilities as at March 31, 2011 is $96,365 (2010 - $70,028) owing to a company controlled by a director of the Company. Included in receivables as at March 31, 2011 is an aggregate amount of $25,598(2010 - $nil) due from companies with directors and officers in common.
  96
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 15
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
 
 8.           Income taxes
 
 The Company has accumulated foreign resource deductions totaling $38,397,548 (2010 - $22,627,113) and non-capital losses of approximately $19,865,000 (2010 - $12,484,000) in Canada and $2,703,000 (2009 - $1,937,000) in Ghana for income tax purposes, which may be carried forward to reduce taxable income of future years.  The non-capital losses expire as follows:
 
 
 Ghana


Canada


Total2012


173,908



-



173,9082013


272,784



-



272,7842014


622,727



54,776



677,5032015


673,498



369,545



1,043,0432016


960,126



-



960,1262026


-



1,098,124



1,098,1242027


-



1,406,794



1,406,7942028


-



2,170,432



2,170,4322029


-



2,517,510



2,517,5102030


-



4,379,038



4,379,0382031


-



7,868,482



7,868,4822,703,043



19,864,701



22,567,744
 
 A reconciliation of the income tax provision computed at statutory rates to the reported income tax provision is:
 
 2011


2010


2009Average statutory tax rate


28
%


29.63
%


30.38
%Loss before income taxes

$
(12,910,000
)

$
(6,973,000
)

$
(4,176,000
)Expected income tax recovery


(3,615,000
)


(2,066,000
)


(1,269,000
)Increase (decrease) in income tax recovery resulting from:Mineral exploration costs not deductible for tax


2,619,000



1,838,000



245,000Stock based compensation


2,184,000



622,000



178,000Other permanent differences


(38,000
)


18,000



133,000Change in statutory rates


44,000



311,000



172,000Share issuance costs


(2,550,000
)


(881,000
)


-Other


(443,000
)


(214,000
)


-Increase in the valuation allowance


1,799,000



372,000



541,000Income tax recovery

$
-


$
-


$
-
 
  97
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 16
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
 8.           Income taxes (continued)
 
 
 The significant components of the Company’s future income tax assets (liabilities) are as follows:
 
 2011


2010


2009Non-capital and capital losses

$
5,642,000


$
3,814,000


$
2,570,000Foreign development and exploration expenditures


(5,074,000
)


(2,768,000
)


(1,283,000
)Share issuance costs


2,608,000



834,000



240,000Unrealized foreign exchange loss


497,000



-



-Furniture, equipment and leasehold improvements


49,000



43,000



24,0003,722,000



1,923,000



1,551,000Less: valuation allowance


(3,722,000
)


(1,923,000
)


(1,551,000
)$
-


$
-


$
-
 
 The Company has recorded a valuation allowance against its future income tax assets as it was determined that under current conditions it is not more like-than-not that these future tax benefits in Canada and Ghana will be realized.
 
 9.           Commitments
 
 As at March 31, 2011, the Company has contractual commitments with certain service providers in Ghana and Canada. The amounts due under these contracts and their payment terms are as follows:
   2012

$
586,0882013


633,4782014


568,4382015


568,4382016


94,740$
2,451,182
  10.           Contingencies
 
 (a)           Ghanaian mining royalties
 
 On March 19, 2010, the government of Ghana amended section 25 of the Minerals and Mining Act of 2006 (Act 703) which stipulates the royalty rates on mineral extraction payable by mining companies in Ghana. The section now states that a holder of a mining lease, restricted mining lease, or small scale mining license shall pay royalty in respect of minerals obtained from its mining operations to Ghana at the rate of 5% of the total revenue earned from minerals obtained by the holder. Currently,  uncertainty exists on how this amendment will affect the Esaase gold property’s existing mining lease and whether this rate will change as the Company goes through negotiations with the government with respect to a stability agreement on the project.
  98
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 17
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
 10.           Contingencies (continued)
 
 
 (b)           Esaase option agreement suit
 
 Keegan Ghana was named jointly with the Ghana Minerals Commission as a co-defendant in a legal suit by the company that had originally optioned the Esaase Gold property to the Company. The Plaintiff is alleging certain irregularities in connection with the closing of the option resulting in Keegan Ghana’s acquisition of the Esaase gold property and the issuing of the requisite regulatory approvals under Ghanaian Law. Keegan Ghana has refuted the allegations on grounds that it had at all material times acted legally and in good faith and has therefore filed a defense and counter-claim against the Plaintiff. The Company is of the view after discussion with Ghanaian Counsel that the allegations are totally without legal merit and will be vigorously defended. The Ghana Minerals Commission has also denied the allegations and filed a defense to the suit. The Company’s potential liability for damages, if any, is currently not determinable.
 
 
 11.           Segmented information
 
 
 Geographic Information
 The Company operates in one reportable operating segment, being the exploration and development of resource properties.
 
 March 31, 2011

Canada


Ghana


TotalFurniture, equipment and leaseholdimprovements

$
417,261


$
119,850


$
537,111Resource properties and deferred explorationcosts


-



74,843,010



74,843,010$
417,261


$
74,962,860


$
75,380,121
 
 
 
 March 31, 2010

Canada


Ghana


TotalFurniture, equipment and leaseholdimprovements

$
218,388


$
99,854


$
318,242Resource properties and deferred explorationcosts


-



41,123,128



41,123,128$
218,388


$
41,222,982


$
41,441,370
  99
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 18
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
  
 12.           Financial instruments
 
 As at March 31, 2011, the Company’s financial instruments consist of cash and cash equivalents, receivables and accounts payable and accrued liabilities.
 
 As introduced by the amendments to Section 3862, the following table summarizes the designation and fair value hierarchy under which the Company’s financial instruments are valued:
 
 Level 1 – fair values based on unadjusted quoted prices in active markets for identical assets or liabilities;
 Level 2 – fair values based on inputs that are observable for the asset or liability, either directly or indirectly; and
 Level 3 – fair values based on inputs for the asset or liability that are not based on observable market data.
 
 The fair value of these financial instruments approximates their carrying value, unless otherwise noted.
 
 March 31, 2011Category
Carrying

Value

Amount


Fair value

hierarchy

Level 1Financial AssetsCash and cash equivalents
Held-for-trading
Fair value

$
229,144,989


$
229,144,989Receivables excluding

sales taxes refundable
Loans and

receivables
Amortized

cost


95,816



N/A$
229,240,805


$
229,144,989Financial LiabilitiesAccounts payable and

accrued liabilities
Other financial

liabilities
Amortized

cost

$
5,076,974



N/A$
5,076,974



N/A
 
 March 31, 2010Category
Carrying

Value

Amount


Fair value

hierarchy

Level 1Financial AssetsCash and cash equivalents
Held-for-trading
Fair value

$
48,712,372


$
48,712,372Receivables
Loans and

receivables
Amortized

cost


39,662



N/A$
48,752,034


$
48,712,372Financial LiabilitiesAccounts payable and

accrued liabilities
Other financial

liabilities
Amortized

cost

$
1,097,951



N/A$
1,097,951



N/A
 
 Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant credit, liquidity, or market risks arising from these financial instruments. The risk exposure is summarized as follows:
 
 (a)           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. The Company is subject to credit risk on the cash and cash equivalent balances at the banks in each of Canada and Ghana (approximately $920,000). The majority of the Company’s cash held in Canadian based banking institutions, authorized under the Bank Act (Canada) to accept deposits, which may be eligible for deposit insurance provided by the Canadian Deposit Insurance Corporation. As at March 31, 2011, the receivables consist primarily of interest receivable of $70,218 (2010 - $39,662) and other receivables of $25,598 (2010 - $nil), neither of which are considered past due.
  100
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 19
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
 
 12.           Financial instruments (continued)
 
 (b)           Liquidity risk
 
 The Company’s approach to managing liquidity is to ensure that it will have sufficient liquidity to settle obligations and liabilities when due. As at March 31, 2011, the Company had a cash and cash equivalents balance of $229,144,989(2010 – $48,712,372) to settle current liabilities of $5,076,974 (2010 - $1,097,951) that mainly consist of accounts payable that are considered short term and expected to be settled within 30 days.
 
 (c)           Market risk
 
 i.           Interest rate risk
 
 Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
 
 The Company’s cash and cash equivalents attract interest at floating rates and have maturities of 90 days or less  or maturity over ninety days but redeemable on demand without penalty. The interest is typical of Canadian banking rates, which are at present low, however the conservative investment strategy mitigates the risk of deterioration to the investment. A sensitivity analysis suggests that a change of 100 basis points in the interest rates would result in a corresponding increase or decrease in net loss of approximately $2,291,754 as at March 31, 2011. A change of 100 basis points in the interest would have not been material to the financial statements as at March 31, 2010.
 
 ii.           Foreign currency risk
 
 The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. The Company has offices in Canada and Ghana and holds cash in Canadian, United States and Ghanaian Cedi currencies in line with forecasted expenditures. A significant change in the currency exchange rates between the Canadian dollar relative to US dollar (“USD”), Ghanaian Cedi and the Australian dollar (“AUS”) could have an effect on the Company’s results of operations, financial position or cash flows. At March 31, 2011 and 2010, the Company had no hedging agreements in place with respect to foreign exchange rates.
 
 The Company is exposed to currency risk through the following financial assets and liabilities denominated in currencies other than Canadian dollars:
 
 March 31, 2011


March 31, 2010USD


Ghana

Cedis


AUD


USD


Ghana

Cedis


AUDCash and cash

equivalents


62,188,642



337,577



-



11,873,686



99,172



-Accounts payable


(80,639
)


(3,586,750
)


(386,702
)


(57,568
)


(829,482
)


(25,194
)Net exposure


62,108,003



(3,249,173
)


(386,702
)


11,816,118



(730,310
)


(25,194
)
 
 A 10% appreciation or deprecation of the above mentioned currencies compared with the Canadian dollar would result in a corresponding increase or decrease in net loss of approximately $5,847,212 as at March 31, 2011 (2010 - $1,106,062).
  101
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 20
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
 
 
 12.           Financial instruments (continued)
 
 (c)           Market risk (continued)
  iii.           Other price risk
 
 Other price risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market prices, other than those arising from currency risk or interest rate risk. As at March 31, 2011 and 2010, the Company was not exposed to other price risk.
 
 (d)           Fair value
 
 The carrying values of cash and cash equivalents, short-term investments, receivables and accounts payable and accrued liabilities approximate their respective fair values due to the short-term nature of these instruments.
 
 (e)
Items of income, expense, gains or losses
 
 2011


2010


2009Interest income from held-for-trading financial assets

$
478,467


$
114,994


$
222,702Interest expense from other financial liabilities


-



-



-Realized gain on available-for-sale financial assets

$
215,666


$
-


$
-
 
 13.           Capital management
 
 The Company considers items included in shareholders’ equity and cash and cash equivalents to be capital.
 
 2011


2010Cash and cash equivalents

$
229,144,989


$
48,712,372Shareholders’ equity

$
295,077,091


$
89,386,161
 
 The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company in order to support the acquisition, exploration and development of mineral properties and to maintain the Company in good standing with the various regulatory authorities. The Company has no debt and is not subject to externally imposed capital requirements.
 
 The properties in which the Company currently has an interest in are in the exploration stage, as such, the Company does not recognize revenue from its exploration properties. The Company’s historical sources of capital have consisted of the sale of equity securities and interest income. In order for the Company to carry out planned exploration and development and pay for administrative costs, the Company will spend its working capital and raise additional amounts externally as needed.
 
 The Company has policies and procedures in place for employee and officer expenditure authorization limits and capital expenditure authorization. Capital expenditures of $1,500,000 or more require approval by the Board of Directors. Management reviews its capital management approach on an ongoing basis and believes this approach, given the size of the Company, is reasonable.
 
 There were no changes in the Company’s management of capital during the year ended March 31, 2011.
  102
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 21
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
  14.           Subsequent event
 
 Stock options exercises
 
 Subsequent to March 31, 2011, the Company received an aggregate of $1,629,173 upon the exercise of 419,200 stock options at a weighted average exercise price of $3.89 per share.
 
 
 15.           Comparative figures
 
 Certain of the 2010 comparative figures have been reclassified to conform to the current year’s presentation.
  
 16.            United States generally accepted accounting principles
 
 These consolidated financial statements have been prepared in accordance with Canadian GAAP.  A description of US GAAP and practices prescribed by the US Securities and Exchange Commission (collectively US GAAP) that result in material measurement differences from Canadian GAAP are as follows:
 
 (a)           Resource properties and deferred exploration costs
 
 Under Canadian GAAP, the Company’s accounting policy is to defer all expenditures related to mineral property exploration and development. Both Canadian and US GAAP require that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  US GAAP requires mineral property exploration and land use costs to be charged to operations as incurred until economically proven and probable mineral reserves have been established and a final feasibility study has been completed. Accordingly, for all periods presented, the Company has expensed all mineral property exploration and land use costs for US GAAP purposes.  The costs remaining for US GAAP purposes, if any, relate to mineral property acquisition costs under which the Company acquired an ownership interest in a given mineral property.
 
 For Canadian GAAP, cash flows relating to mineral property exploration and land use costs are reported as investing activities.  For US GAAP, these costs would be characterized as operating activities.
 
 (b)           Accounting for uncertainty in income taxes
 
 In July 2006, the FASB issued an interpretation of ASC 740 — Income Taxes (“ASC 740”) which addresses the accounting for uncertainty in income taxes. This interpretation clarifies the accounting for income taxes by prescribing a minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition.
 
 The Company is subject to income taxes in Canada and the Republic of Ghana. The tax years of major tax jurisdictions that remain subject to examination as of March 31, 2011 are as follows:
 
 Canada

2004 to 2011Ghana

2006 to 2011
  103
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 22
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
 
 16.            United States generally accepted accounting principles (continued)
 
 (c)          Stock-based compensation
 
 The Company applies ASC 718-20, a revision to SFAS 123 “Accounting for Stock-Based compensation”. ASC 718-20 requires the Company to recognize in the statement of operations the grant date fair value of share-based compensation awards granted to employees over the requisite service period.
 
 Pursuant to the provisions of ASC 718-20 the Company applied the modified-prospective transition method. Under this method, the fair value provisions of ASC 718-20 are applied to new employee share-based payment awards granted or awards modified, repurchased, or cancelled after January 1, 2006. Measurement and attribution of compensation cost for unvested awards at January 1, 2006, granted prior to the adoption of ASC 718-20 are recognized based upon the provisions of SFAS 123. The cumulative effect of a change in accounting principle to reflect forfeitures for prior periods was determined to be immaterial and not recorded.
 
 The following is a summary for stock options as at March 31:
   2011


2010


2009Outstanding stock options


6,213,750



2,984,507



3,214,410Exercisable stock options


3,423,125



2,317,632



2,907,910Aggregate intrinsic value of options outstanding

$
13,515,367


$
8,510,028


$
3,048,594Weighted average contractual term

4.04 years


3.03 years


2.64 years
 
 The aggregate intrinsic value represents the difference between the Company’s closing stock price on March 31, 2011 and the exercise price of the award, multiplied by the number of in-the-money options.
 
 (d)          Non-controlling interest
 
 The Company applies ASC 810 – Non-controlling interests in Consolidated Financial Statements (“ASC 810). ASC 810 requires losses be attributed to the non-controlling interest even if they exceed its carrying amount and non-controlling interests be classified as a component of equity. Under Canadian GAAP losses are attributed to non-controlling interest up to its carrying amount and non-controlling interest is recognized between liabilities and shareholders equity of the balance sheet.
 
 (e)           Adoption of New Accounting Policies
 
 i.
Accounting of Transfers of Financial Assets an amendment of FASB No. 140
 
  In June 2009, FASB issued ASC 860, Accounting of Transfers of Financial Assets an amendment of FASB No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. ASC 860 improves the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. The Board undertook this project to address (1) practices that have developed since the issuance of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, that are not consistent with the original intent and key requirements of that Statement and (2) concerns of financial statement users that many of the financial assets (and related obligations) that have been derecognized should continue to be reported in the financial statements of transferors.
  104
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 23
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
  16.            United States generally accepted accounting principles (continued)
 
 (e)
Adoption of New Accounting Policies (continued)
 
 i.
Accounting of Transfers of Financial Assets an amendment of FASB No. 140 (continued)
  This Statement must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited.  The adoption of the standard did not have a material impact on the Company’s financial statements.
 
 ii.  Variable interest entities an Amendment to FASB Interpretation No.46(R)
 
 In June 2009, FASB issued Statement No. 167, Amendment to FASB Interpretation No.46(R). This Statement improves financial reporting by enterprises involved with variable interest entities. The Board undertook this project to address (1) the effects on certain provisions of FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, as a result of the elimination of the qualifying special-purpose entity concept in FASB Statement No. 166, Accounting for Transfers of Financial Assets, and (2) constituent concerns about the application of certain key provisions of Interpretation 46(R), including those in which the accounting and disclosures under the Interpretation do not always provide timely and useful information about an enterprise’s involvement in a variable interest entity.  This Statement shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited.  The adoption of the standard did not have a material impact on the Company’s financial statements.
 
 (f)
As permitted by the Securities Exchange Commission, the Company will not provide reconciliations between local generally accepted accounting principles and US GAAP, following the adoption of IFRS for periods starting on April 1, 2011.
 
 (g)
Reconciliation
 
 The effect of the above measurement differences between Canadian GAAP and US GAAP (including practices prescribed by the SEC) on the consolidated balance sheets and statements of operations, comprehensive loss and deficit and cash flows is summarized as follows:
 
 Reconciliation of losses reported to US GAAP:
 
 2011


2010


2009Net loss and comprehensive loss as reported in accordance with Canadian GAAP

$
(12,910,250
)

$
(6,972,686
)

$
(4,176,396
)Adjustments:Mineral property exploration costs (note 16(a))


(32,549,443
)


(10,765,183
)


(11,057,807
)Net loss and comprehensive loss under US GAAP

$
(45,459,693
)

$
(17,737,869
)

$
(15,234,203
)Less: Loss attributable to non-controlling interest US GAAP (note 16(d))


471,776



-



-Loss attributable toshareholders US GAAP


(44,987,917
)


-



-Basic and diluted loss per share under US GAAP

$
(0.91
)

$
(0.47
)

$
(0.54
)
 
  105
 KEEGAN RESOURCES INC.
 (An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements, page 24
 Years ended March 31, 2011, 2010 and 2009                                                                                           Expressed in Canadian Dollars
 
 16.            United States generally accepted accounting principles (continued)
  
 (g)        Reconciliation (continued)
 
 Reconciliation of total assets, liabilities and shareholders’ equity to US GAAP:
 
 2011


2010Total assets under Canadian GAAP

$
304,916,074


$
90,533,972Adjustments:Mineral property exploration costs (note 16(a))


(70,697,780
)


(38,148,337
)Total assets under US GAAP

$
234,218,294


$
52,385,635Total liabilities under Canadian and US GAAP

$
9,838,983


$
1,147,811Total shareholders’ equity under Canadian GAAP

$
295,077,091


$
89,386,161Adjustments:Mineral property exploration costs (note 16(a))


(70,697,780
)


(38,148,337
)Accumulated deficit attributable tonon-controlling interest (note 4(a),16(d))


5,389,036



-Shareholders’ equity attributable toshareholders under US GAAP


229,768,347



51,237,824Shareholders’ equity attributable tonon-controlling interest under US GAAP (note 16(d))


(5,389,036
)


-Total shareholders’ equity under US GAAP


224,379,311



51,237,824Total liabilities and shareholders’ equity under US GAAP

$
234,218,294


$
52,385,635
 
 
 Reconciliation of consolidated statements of cash flows under US GAAP:
 
 2011


2010


2009Restated (note 2k)


Restated (note 2k)Cash used in operating activities under Canadian GAAP

$
(3,869,688
)

$
(4,321,460
)

$
(3,070,907
)Adjustments:Mineral property exploration costs (note 16(a))


(21,238,903
)


(9,319,015
)


(10,901,528
)Cash used in operating activities under US GAAP

$
(25,108,591
)

$
(13,640,475
)

$
(13,972,435
)
 
 
 2011


2010


2009Cash used in investing activities under Canadian GAAP

$
(21,983,300
)

$
(9,533,766
)

$
(12,258,320
)Adjustments:Mineral property exploration costs (note 16(a))


21,238,903



9,319,015



10,901,528Cash used in investing activities under US GAAP

$
(744,397
)

$
(214,751
)

$
(1,356,792
)
 106
 
  ITEM 19.
EXHIBITS
 
 Exhibit
Description of Exhibit1.1
Certificate of Incorporation (1)1.2
Certificate of Name Change (1)1.3
Articles (1)1.5
Notice of Alteration (1)4.1
Asumura Project – Agreement dated February 18, 2005 between the Company and GTE Ventures Limited (1)4.2
Esaase Project – Agreement dated May 9, 2006 between the Company and Sammetro Co. Ltd. (1)4.3
Option agreement dated March 27, 2008 with Mt. Olives Goldfields, Ltd. (2)4.4
Jeni Concession mining lease and exploration rights. (2)4.5
Dan McCoy Consulting Agreement – Agreement between the Company and Dan McCoy dated January 1, 2005 (1)4.6
2008 Share Option Plan (3)8.1
List of Subsidiaries – See Item 4.C.12.1
302 Certification of Chief Executive Officer12.2
302 Certification of Chief Financial Officer13.1
906 Certification of Chief Executive Officer13.2
906 Certification of Chief Financial Officer15.1
Letter by BDO Canada LLP  - Preferable accounting principle
 (1)
Incorporated by reference from our Registration Statement on Form 20-F filed with the SEC on October 17, 2006.
 (2)           Incorporated by reference from our Annual Report on Form 20-F filed with the SEC on September 30, 2008.
 (3)           Incorporated by reference from our Annual Report on Form 20-F filed with the SEC on July 1, 2009.
  
 107
 SIGNATURES
  The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and has duly caused and authorized the undersigned to sign this Annual Report on its behalf.
  Dated: June 29, 2011
By:

“Maurice Tagami”Maurice Tagami,

President and CEO
 
 
   108