UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON,
D.C. 20549



FORM 20-F



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



OR



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



For the fiscal year ended January
31, 2015



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: ____________



Commission File Number 000-28980



Royal Standard Minerals Inc.
(Exact name of Registrant as specified in its charter)



Not applicable
(Translation of Registrant’s name into English)



Canada
(Jurisdiction of incorporation or organization)



36 Toronto Street, Suite 1000, Toronto,
Ontario M5C 2C5
(Address of principal executive offices)



Daniel Crandall36 Toronto Street, Suite 1000, Toronto, Ontario M5C 2C5



|(416) 848-9407                                                                          | (416) 361 0923 | dcrandall@marrellisupport.ca
|--------------------------------------------------------------------------------------- | -------------- | ----------------------------
|(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)



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













|None                  | Not applicable                             
|--------------------- | -------------------------------------------
|(Title of each class) | (Name of each exchange on which registered)



Securities registered or to be registered
pursuant to Section 12(g) of the Act.



Common Shares, without par value
(Title of Class)



Securities for which there is a reporting
obligation pursuant to Section 15(d) of the Act.



None
(Title of Class)



Indicate the number of outstanding shares of each of the issuer’s
classes of capital or common stock as of the close of the period covered by the annual report.



As of January 31, 2015: 920,835,502 Common
Shares, without par value



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes ̈Nox



If
this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant
to Section 13 or 15(d) of Securities Exchange Act of 1934.Yes ̈Nox



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.YesxNo ̈



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).YesxNo ̈



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 ̈Non-accelerated
filerx



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



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

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 ̈Item 18



If
this is an annual report, indicate by check mark whether the company is a shell company (as defined in Rule 12b-2 of the Exchange
Act).Yes ̈Nox











TABLE OF CONTENTS



|PART I                                                              | 2 
|------------------------------------------------------------------- | --
|                                                                    |   
|Item 1. Identity of Directors, Senior Management and Advisers       | 2 
|Item 2. Offer Statistics and Expected Timetable                     | 2 
|Item 3. Key Information                                             | 2 
|A. Selected financial data                                          | 2 
|B. Capitalization and indebtedness.                                 | 3 
|C. Reasons for the offer and use of proceeds                        | 3 
|D. Risk factors                                                     | 3 
|Item 4. Information on the Company                                  | 4 
|A. History and development of the Company                           | 4 
|B. Business overview                                                | 5 
|C.
Organizational structure.                                        | 6 
|D. Property, plants and equipment                                   | 6 
|Item 4A. Unresolved Staff Comments                                  | 7 
|Item 5. Operating and Financial Review and Prospects                | 7 
|A. Operating results                                                | 7 
|B. Liquidity and capital resources                                  | 8 
|C. Research and development, patents and licenses, etc              | 8 
|D. Trend information                                                | 8 
|E.
Off-balance sheet arrangements                                   | 9 
|F.
Tabular disclosures of contractual obligations                   | 9 
|G.
Safe harbor.                                                     | 9 
|Item
6. Directors, Senior Management and Employees                  | 9 
|A.
Directors and senior management.                                 | 9 
|B.
Compensation                                                     | 10
|C.
Board practices                                                  | 14
|D.
Employees.                                                       | 18
|E.
Share ownership                                                  | 18
|Item
7. Major Shareholders and Related Party Transactions           | 18
|A.
Major shareholders.                                              | 18
|B.
Related party transactions                                       | 18
|C.
Interests of experts and counsel                                 | 19
|Item
8. Financial Information                                       | 19
|A.
Consolidated Statements and Other Financial Information          | 19
|B.
Significant Changes                                              | 19
|Item
9. The Offer and Listing                                       | 20
|A.
Offer and listing details                                        | 20
|B.
Plan of distribution.                                            | 21
|C.
Markets                                                          | 21
|D.
Selling shareholders.                                            | 21
|E.
Dilution                                                         | 21
|F.
Expenses of the issue.                                           | 21
|Item
10. Additional Information                                     | 21
|A.
Share capital                                                    | 21
|B.
Memorandum and articles of association.                          | 21
|C. Material contracts.                                              | 25
|D. Exchange controls.                                               | 25
|E. Taxation                                                         | 25
|F. Dividends and paying agents.                                     | 30
|G. Statement by experts.                                            | 30
|H. Documents on display.                                            | 30
|I. Subsidiary Information.                                          | 31
|Item 11. Quantitative and Qualitative Disclosures About Market Risk | 31



i







|Item 12. Description of Securities Other than Equity Securities                       | 32 
|------------------------------------------------------------------------------------- | ---
|PART II                                                                               | 32 
|Item 13. Defaults, Dividend Arrearages and Delinquencies                              | 32 
|Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds | 32 
|Item 15. Controls and Procedures                                                      | 35 
|A. Disclosure Controls and Procedures                                                 | 35 
|B. Management's Annual Report on Internal Control over Financial Reporting            | 35 
|C. Attestation Report of the Registered Public Accounting Firm                        | 36 
|D. Changes in Internal Control over Financial Reporting                               | 36 
|Item 16. [Reserved]                                                                   | 36 
|Item 16A. Audit Committee Financial Expert                                            | 36 
|Item 16B. Code of Ethics                                                              | 36 
|Item 16C. Principal Accountant Fees and Services                                      | 36 
|Item 16D. Exemptions from the Listing Standards for Audit Committees                  | 37 
|Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers      | 37 
|Item 16F. Change in Registrant's Certifying Accountant                                | 37 
|Item 16G. Corporate Governance                                                        | 38 
|Item 16H. Mine Safety Disclosure                                                      | 38 
|PART III                                                                              | 38 
|Item 17. Financial Statements                                                         | 38 
|Item 18. Exhibits                                                                     | 177
|SIGNATURES                                                                            | 178



ii







EXPLANATORY NOTE



Royal Standard Minerals Inc. (together with its subsidiaries,
the “Company,” “Royal Standard” or “RSM”) is a Canadian issuer eligible to file its annual
report pursuant to Section 13(a) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), on Form
20-F. The Corporation is a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act and Rule 405 under
the U.S. Securities Act of 1933, as amended (the “Securities Act”). Equity securities of the Company are accordingly
under the Exchange Act exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act pursuant to Rule 3a12-3.



The Company prepares its consolidated financial statements in
accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards
Board (“IASB”). The Company’s consolidated financial statements, which are filed with this annual report on Form
20-F, may be subject to Canadian auditing and auditor independence standards. They may not be comparable to financial statements
of United States companies.



Unless otherwise indicated, all dollar amounts in this report
are presented in U.S. dollars. The exchange rate of Canadian dollars into United States dollars, on January 31, 2015, based upon
the Bank of Canada noon exchange rate, was U.S.$1.00 = Cdn$1.2711.



FORWARD-LOOKING STATEMENTS



This annual report on Form 20-F and the exhibits attached hereto
contain “forward-looking statements” within the meaning of applicable laws concerning the Company’s plans at
its properties, plans related to its business and other matters. These statements relate to analyses and other information that
are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.



Any statements that express or involve discussions with respect
to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but
not always, using words or phrases such as “expects,” “anticipates,” “plans,” “estimates”
or “intends,” or the negative or other variations of these words or other comparable words or phrases or stating that
certain actions, events or results “may,” “could,” “would,” “might” or “will”
be taken, occur or be achieved) are not statements of historical fact and may be “forward-looking statements.” Forward-looking
statements also include the potential for future growth, indications of potential for economic extraction, the extraction of material
that the Company is able to process, the potential to increase throughput and resource estimates, exploration and development plans,
and the execution of certain agreements including the terms of those agreements. Forward-looking statements are subject to a variety
of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements,
including, without limitation:



| | · | volatility in the financial markets;
| | - | ------------------------------------



| | · | risks associated with dilution;·
risks related to environmental regulation and liability for past activities;
| | - | -------------------------------------------------------------------------------------------------------------



| | · | risks related to the possibility that
the Company is a passive foreign investment company; and
| | - | ----------------------------------------------------------------------------------------------



| | · | uncertainty associated with U.S. investors
enforcing in the United States civil liabilities of the Company and its directors and officers who are resident in Canada.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



Some of the important risks and uncertainties that could affect
the Company’s forward-looking statements are described further in “Item 3.D. Risk Factors.” Should one or more
of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially
from those described in forward-looking statements. Forward-looking statements are made based on management’s beliefs, estimates
and opinions on the date the statements are made and the Company undertakes no obligation to update forward-looking statements
if these beliefs, estimates and opinions or other circumstances should change, except as required by law. Investors are cautioned
against placing undue reliance on forward-looking statements.



1







PART I



Item 1. Identity of Directors, Senior Management and Advisers



Not applicable.



Item 2. Offer Statistics and Expected Timetable



Not applicable.



Item 3. Key Information



A. Selected financial data.



The tables below present selected statement of operations and
balance sheet data for Royal Standard Minerals Inc. as at and for the fiscal years ended January 31, 2015, 2014, 2013, 2012 and
2011. The selected financial data presented herein for the fiscal years ended January 31, 2015, 2014, 2013, 2012 and 2011 is prepared
in accordance with International Financial Reporting Standards. The financial data includes the accounts of the Company and, ,
where applicable, its previously wholly-owned subsidiaries, Kentucky Standard Energy Company, Inc. (“Kentucky”), and
Manhattan Mining Co. (“Manhattan”), both United States companies which were dissolved during the fiscal year ended
January 31, 2014 . See “Item 4. Information on the Company”.



Royal Standard Minerals Inc.(An Exploration Stage Enterprise)Consolidated Financial Statement DataFor the Years Ended January 31(Expressed in US Currency)



|                                |  | 2015 |             |   | 2014 |   |             | 2013 | 
|------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | ---- | 
|                                |  |      |             |   |      |   |             |      | 
|Revenue                         |  | $    | 0           |   |      | $ | 0           |      | 
|Finance Income                  |  | $    | 0           |   |      | $ | 9,138       |      | 
|Expenses                        |  | $    | (57,174     | ) |      | $ | (474,925    | )    | 
|Net income (loss) for the year  |  | $    | (57,174     | ) |      | $ | 69,225      |      | 
|Deficit, beginning of year      |  | $    | (39,193,127 | ) |      | $ | (39,262,352 | )    | 
|Income (loss) per common share: |  |      |             |   |      |   |             |      | 
|Basic income (loss) per share   |  | $    | 0.00        |   |      | $ | 0.00        |      | 
|Diluted income (loss) per share |  | $    | 0.00        |   |      | $ | 0.00        |      | 
|Weighted Average Shares         |  |      |             |   |      |   |             |      | 
|Outstanding-Basic               |  |      | 920,835,502 |   |      |   | 116,053,396 |      | 
|Outstanding-Diluted             |  |      | 920,835,502 |   |      |   | 116,053,396 |      | 





|Balance Sheet       |  | January 31, 2015 |         |   | January 31, 2014 |   |         | January 31, 2013 | 
|------------------- |  | ---------------- | ------- | - | ---------------- | - | ------- | ---------------- | 
|Current Assets      |  | $                | 6,029   |   |                  | $ | 22,360  |                  | 
|Equipment, net      |  | $                | 0       |   |                  | $ | 0       |                  | 
|Total Assets        |  | $                | 6,029   |   |                  | $ | 22,360  |                  | 
|Current Liabilities |  | $                | 69,076  |   |                  | $ | 35,917  |                  | 
|Net Assets          |  | $                | (63,047 | ) |                  | $ | (13,557 | )                | 





2







|                                |  | 2012 |             |   | 2011 |  
|------------------------------- |  | ---- | ----------- | - | ---- | -
|                                |  |      |             |   |      |  
|Revenue                         |  | $    | 0           |   |      |  
|Finance Income                  |  | $    | 4,291       |   |      |  
|Expenses                        |  | $    | (5,763,475  | ) |      | $
|Net income (loss) for the year  |  | $    | (6,451,698  | ) |      | $
|Deficit, beginning of year      |  | $    | (38,101,796 | ) |      | $
|Income (loss) per common share: |  |      |             |   |      |  
|Basic income (loss) per share   |  | $    | (0.08       | ) |      | $
|Diluted income (loss) per share |  | $    | (0.08       | ) |      | $
|Weighted Average Shares         |  |      |             |   |      |  
|Outstanding-Basic               |  |      | 83,853,825  |   |      |  
|Outstanding-Diluted             |  |      | 83,853,825  |   |      |  



|Balance Sheet       |  | January 31, 2012 |            |   | January 31, 2011 |  
|------------------- |  | ---------------- | ---------- | - | ---------------- | -
|Current Assets      |  | $                | 935,828    |   |                  | $
|Equipment, net      |  | $                | 2,084,336  |   |                  | $
|Total Assets        |  | $                | 3,653,198  |   |                  | $
|Current Liabilities |  | $                | 6,120,109  |   |                  | $
|Net Assets          |  | $                | (5,810,547 | ) |                  | $



B. Capitalization and indebtedness.



Not applicable.



C. Reasons for the offer and use of proceeds.



Not applicable.



D. Risk factors.



The operations of the Company involve a number of substantial
risks and the securities of the Company are highly speculative in nature. See the risk factors found in the Management’s
Discussion and Analysis for the fiscal year ended January 31, 2015, included in Item 17 of this Form 20-F.



Additional Risk Factor



The Company may be a passive foreign investment company,
which has certain adverse consequences for U.S. Holders (as defined herein).



A non-U.S. corporation generally will be considered a “passive
foreign investment company” (a “PFIC”) as such term is defined in the U.S. Internal Revenue Code of 1986, as
amended (the “Code”), for any taxable year if either (1) at least 75% of its gross income is passive income or (2)
at least 50% of the value of its assets is attributable to assets that produce or are held for the production of passive income.
If the Company were treated as a PFIC for any taxable year in which a U.S. Holder held the Company’s common shares, certain
adverse consequences could apply, including a material increase in the amount of tax that the U.S. Holder would owe, an imposition
of tax earlier than would otherwise be imposed, interest charges and additional tax form filing requirements.



The determination of whether a corporation is a PFIC involves
the application of complex tax rules. The Company has not made a conclusive determination as to whether it has been in prior tax
years or is currently a PFIC. The Company could have qualified as a PFIC for past tax years and may qualify as a PFIC currently
or in future tax years. However, no assurance can be given as to such status for prior tax years, for the current tax year or future
tax years. U.S. Holders of the Company’s common shares are urged to consult their own tax advisors regarding the application
of U.S. income tax rules. Each U.S. Holder of the Company is urged to consult a tax advisor with respect to how the PFIC rules
affect their situation.



3







Item 4. Information on the Company



A. History and development of the Company.



Royal Standard Minerals Inc. was incorporated pursuant to the
laws of Canada by articles of incorporation dated December 10, 1986 under its former name, Ressources Minieres Platinor Inc. ("Resources").
On April 30, 1996, Royal Standard shareholders approved the acquisition of all the issued and outstanding shares of Southeastern
Resources, Inc. ("Southeastern") in a reverse take-over transaction. Pursuant to this transaction, articles of amendment
were filed effective May 14, 1996, pursuant to which the name of the Company was changed to its current form of name and its shares
issued and outstanding at that time were consolidated on a 7.5:1 basis. On June 28, 1996, the common shares commenced trading on
the Montreal Exchange. On January 4, 2002 the Company was continued from the laws of Canada (Canada Business Corporations Act,
“CBCA”) to the laws of the Province of New Brunswick (Business Corporations Act(New Brunswick)). On February
17, 2004 under the laws of the Province of New Brunswick the articles were amended to provide for an unlimited number of common
shares and an unlimited number of special shares. On July 23, 2007, the Company was continued from the laws of the Province of
New Brunswick to the laws of Canada, under the CBCA, and the articles of continuance provided for an unlimited number of common
shares and an unlimited number of preferred shares. The Company’s common shares are quoted on the United States Over-the-Counter
Bulletin Board (“OTC Bulletin Board”), under the symbol “RYSMF”.



The registered office of the Company is located at 36 Toronto
Street, Suite 1000, Toronto, Ontario M5C 2C5. The Company’s telephone number at its registered office is (416) 848-9407.



For a description of certain of the Company’s principal
capital expenditures and divestitures, see “Item 4.D. Property, plants and equipment.”



On December 19, 2012, the Company announced the completion of
its transaction (the “Transaction”) with Scorpio Gold Corporation (TSX V:SGN) (“Scorpio”) to sell its Goldwedge
and Piñon property interests and the assets related thereto to Scorpio. Subsequent to the announcement of the non-binding
letter of intent with Scorpio on August 29, 2012, the Company slowed down daily activity at Goldwedge, its flagship operation,
while the Transaction was ultimately concluded. During the interim, the Company focused on a maintenance and upkeep program.



The Transaction was completed pursuant to the previously announced
asset purchase and sale agreement entered into with Scorpio on October 10, 2012. Pursuant to the Transaction, the interests of
the Company and its wholly-owned subsidiary, Manhattan Mining Co. (“Manhattan”), in the Goldwedge and Piñon
properties and the assets related thereto were sold to Scorpio and its wholly-owned subsidiary Goldwedge LLC for $1.25 million
in cash, 3 million common shares of Scorpio and the assumption by Scorpio of approximately $12 million in principal and all interest,
fees and other amounts due on such principal (such amounts having an approximate current aggregate value of $16,681 million) which
were owed by the Company to Waterton Global Value, L.P., (“Waterton”) the Company’s principal creditor.



The completion of the Transaction followed a special meeting
of the Company’s shareholders held on November 28, 2012, at which votes representing 50.08% of the total issued and outstanding
shares of the Company as at the record date were cast either by proxy or in person, with 99.46% of such shares voting in favour
of the special resolution approving the Transaction.



Subsequent to the closing of the Transaction and the sale of
its material mineral properties, the Company has used the net proceeds from the Transaction to fund ongoing operations and to repay
existing creditors including through the sale of the Company’s remaining properties and assets.



On January 31, 2013, the Company sold its royalty on the Piñon
Railroad Property to XDM Royalty Corp. (“XDM”), for $902,126.



On January 31, 2013, the Company sold the 3 million common shares
it received from Scorpio on the sale of its Goldwedge and Piñon property interests and the related assets thereto to Waterton
for $1,651,320.



4







On August 9, 2013, the Company and its wholly-owned subsidiary,
Manhattan, completed the sale of its Fondaway Canyon and Dixie-Comstock Gold Properties (the “Assets”) to American
Innovative Minerals LLC (“AIMLLC”). The Assets were sold on an “as is where is” basis for cash consideration
of $144,000. In addition, as a condition to the closing of the transaction, Hale Capital Management, LP and Hale Capital Partners,
LP (collectively, “Hale Capital”), delivered to the Company a full and final release and settlement relating to the
legal action commenced by Hale Capital on September 27, 2011 (see below under “Contingencies” (b)). A stipulation of
dismissal with prejudice was filed with the Supreme Court of the State of New York dismissing all claims against the Company and
Manhattan in connection with that litigation.



Subsequently, the Company submitted articles of dissolution
for Manhattan to the Nevada Secretary of State and Manhattan was dissolved on November 7, 2013.



On August 27, 2013, the Company’s wholly-owned subsidiary,
Kentucky, entered into a settlement and release agreement with Pick & Shovel Mining (“Pick & Shovel”) and Roger
and Jacqueline Stacy pursuant to which, in consideration for a cash settlement payment of $8,000 and transfer of certain equipment
by Kentucky to Pick & Shovel, the parties resolved to waive and release any claims relating to a prior claim between the parties
(see below under “Contingencies” (a)). In addition, Kentucky relinquished its interest in a bond posted on Permit No.
919-0066 and Pick & Shovel agreed to be solely responsible for such Permit and all related claims and issues asserted by the
Kentucky Energy and Environment Cabinet.



Subsequently, the Company submitted articles of dissolution
for Kentucky to the Kentucky Secretary of State and Kentucky was dissolved on September 5, 2013.



On January 17, 2014, the Company announced that it completed
a corporate reorganization consisting of a debt conversion, private placement and change of management.



Under the debt conversion, the Company issued an aggregate of
755,654,241 common shares at an effective price of CDN $0.0002216 per share to settle aggregate indebtedness of CDN $167,452.98.
Under the non-brokered private placement, the Company issued and sold an aggregate of 81,227,436 common shares at a price of CDN
$0.0002216 per share raising gross proceeds of CDN $18,000. The net proceeds from the placement will be used by the Company for
general corporate purposes and working capital.



To facilitate the completion of the debt conversion and private
placement transactions, the shareholder rights plan of the Company was amended and application of the plan to the debt conversion
and private placement were waived by the board of directors.



George Duguay, C. Marrelli Services Limited and Lonnie Kirsh,
Toronto-based investors (collectively, the “Investors”), each acquired ownership of 278,960,559 common shares of the
Company, representing approximately 30.3% of the number of outstanding common shares of the Company following the debt conversion
and private placement.



In conjunction with the debt conversion and private placement,
all directors of the Company resigned and were replaced by Lonnie Kirsh, Carmelo Marrelli and George Duguay. All officers of the
Company also resigned and Mr. Kirsh was appointed as President and Chief Executive Officer and Mr. Dan Crandall was appointed as
Chief Financial Officer.



B. Business overview.



Royal Standard was previously a mineral exploration company.
The Company sold its previously held Goldwedge and Piñonproperty interests and the
assets related thereto to Scorpio and its wholly-owned subsidiary Goldwedge LLC, on December 17, 2012 and its previously held Fondaway
Canyon and Dixie-Comstock Projects to American Innovative Minerals LLC on August 9, 2013.



The Company is now focused on identifying suitable assets or
businesses to acquire or merge with, with a view to maximizing value for shareholders.



5







C. Organizational structure.



The Company dissolved its two wholly-owned subsidiaries, Manhattan
Mining Co., a corporation incorporated under the laws of the State of Nevada, and Kentucky Standard Energy Company, Inc., a corporation
incorporated under the laws of the State of Kentucky during the fiscal year ended January 31, 2014.



D. Property, plants and equipment.



The registered office of Royal Standard Minerals Inc. is located
at 36 Toronto Street, Suite 1000, Toronto, Ontario M5C 2C5.



Project Expenditures



The Company’s Fondaway Canyon and Dixie-Comstock Projects
were sold on August 9, 2013. Cumulative expenditures to January 31, 2015 and 2014 were $597,020. These costs were incurred in connection
with various activities performed by the Company on a discretionary basis. A table of detailed expenditures follows:





|                                            |  |             |         |  |             |   |         |             |  |   | Cumulative from      | 
|------------------------------------------- |  | ----------- | ------- |  | ----------- | - | ------- | ----------- |  | - | -------------------- | 
|                                            |  | January 31, |         |  | January 31, |   |         | January 31, |  |   | date
of inception of | 
|For the years ending                        |  | 2014        |         |  | 2013        |   |         | 2012        |  |   | exploration phase    | 
|Fondaway Canyon and Dixie-Comstock Projects |  |             |         |  |             |   |         |             |  |   |                      | 
|Opening balance                             |  | $           | 533,447 |  |             | $ | 465,630 |             |  | $ | 397,813              | 
|Property acquisition costs                  |  | $           | 35,000  |  |             | $ | 35,000  |             |  | $ | 35,000               | 
|                                            |  |             |         |  |             |   |         |             |  |   |                      | 
|Claim stacking and maintenance fees         |  | $           | 0       |  |             | $ | 32,817  |             |  | $ | 32,817               | 
|Consulting, wages and salaries              |  | $           | 19,711  |  |             | $ | 0       |             |  | $ | 0                    | 
|Travel                                      |  | $           | 5,714   |  |             | $ | 0       |             |  | $ | 0                    | 
|Drilling                                    |  | $           | 0       |  |             | $ | 0       |             |  | $ | 0                    | 
|Office and general                          |  | $           | 3,148   |  |             | $ | 0       |             |  | $ | 0                    | 
|Analysis and assays                         |  | $           | 0       |  |             | $ | 0       |             |  | $ | 0                    | 
|Activity during the period                  |  | $           | 63,573  |  |             | $ | 67,817  |             |  | $ | 67,817               | 
|Closing balance                             |  | $           | 597,020 |  |             | $ | 533,447 |             |  | $ | 465,630              | 





Project Expenditures



Kentucky, which previously held certain interests in coal projects
located in eastern Kentucky, was dissolved during the fiscal year ended January 31, 2014. Cumulative expenditures to January 31,
2015 and 2014 on the Kentucky projects were $1,765,455. These costs were incurred in connection with various activities performed
by the Company on a discretionary basis.



6







A table of detailed expenditures follows:



|                                       |  |             |           |  |             |   |           |             |  |   | Cumulative from   | 
|-------------------------------------- |  | ----------- | --------- |  | ----------- | - | --------- | ----------- |  | - | ----------------- | 
|                                       |  |             |           |  |             |   |           |             |  |   | date of inception | 
|                                       |  | January 31, |           |  | January 31, |   |           | January 31, |  |   | of exploration    | 
|For the years ending                   |  | 2014        |           |  | 2013        |   |           | 2012        |  |   | phase             | 
|Kentucky Project                       |  |             |           |  |             |   |           |             |  |   |                   | 
|Opening balance                        |  | $           | 1,741,795 |  |             | $ | 1,580,478 |             |  | $ | 1,483,556         | 
|Property acquisition costs             |  | $           | 0         |  |             | $ | 0         |             |  | $ | 0                 | 
|Travel                                 |  | $           | 0         |  |             | $ | 0         |             |  | $ | 12,764            | 
|Reclamation costs                      |  | $           | 0         |  |             | $ | 0         |             |  | $ | 0                 | 
|Professional fees                      |  | $           | 0         |  |             | $ | 0         |             |  | $ | 2,400             | 
|Consulting, wages and salaries         |  | $           | 0         |  |             | $ | 0         |             |  | $ | 46,300            | 
|Office and general                     |  | $           | 20,102    |  |             | $ | 7,521     |             |  | $ | 12,794            | 
|Penalty                                |  | $           | 0         |  |             | $ | 145,000   |             |  | $ | 0                 | 
|Supplies, equipment and transportation |  | $           | 0         |  |             | $ | 0         |             |  | $ | 10,552            | 
|Rent                                   |  | $           | 0         |  |             | $ | 0         |             |  | $ | 0                 | 
|Amortization                           |  | $           | 0         |  |             | $ | 0         |             |  | $ | 0                 | 
|Depreciation                           |  | $           | 3,558     |  |             | $ | 8,796     |             |  | $ | 12,112            | 
|Activity during the period             |  | $           | 23,660    |  |             | $ | 161,317   |             |  | $ | 96,922            | 
|Closing balance                        |  | $           | 1,765,455 |  |             | $ | 1,741,795 |             |  | $ | 1,580,478         | 



Item 4A. Unresolved Staff Comments



Not applicable.



Item 5. Operating and Financial Review and Prospects



A. Operating results.



Royal Standard was an exploration and pre-development stage
enterprise. The Company's remaining properties were disposed of during the fiscal year ended January 31, 2014.



The Company is now focused on identifying suitable assets or
businesses to acquire or merge with, with a view to maximizing value for shareholders.



Year Ended January 31, 2015 Compared to the Year Ended
January 31, 2014



The Company’s net loss for the year ended January 31,
2015 was $57,174 ($0.00 loss per share) and for the year ended January 31, 2014 was an income of $69,225 ($0.00 income per share),
an increase in net loss of $126,399. The increase in net loss relates mainly to a reduction of gain on dissolution of subsidiary
from $402,782 in the year ended January 31, 2014 to $nil in 2015 and reduction in gain on sale of property interests and related
assets from $123,228 in the year ended January 31, 2014 to $nil in 2015. The reduced gain is offset by a lower general and administrative
expense of $57,174 for the year ended January 31, 2015 compared to $387,692 for the year ended January 31, 2014. The decrease in
general and administrative expenses of $330,518 was primarily a result of lower office and general expenses, wages and salaries,
insurance, travel and share-based payments as a result of the Company no longer having any active mineral exploration business
operations. As a result of the sale of all property interests in the prior year the Company’s exploration and evaluation
expenditures for the year ended January31, 2015 was $nil, compared to $87,233 for the year ended January 31, 2014.



7







Year Ended January 31, 2014 Compared to the Year Ended
January 31, 2013



The Company’s net income for the year ended January 31,
2014 was $69,225 ($0.00 income per share) and for the year ended January 31, 2013 was $5,291,142 ($0.06 income per share), a reduction
of $5,221,917. The reduction in net income relates mainly to the gain on sale of property interests and related assets in 2013
of $14,171,405 versus $123,228 in 2014 on the sale of the Fondaway Canyon and Dixie-Comstock Gold Properties described above and
the gain on sale of royalty of $866,505 in 2013 versus $nil in 2014. This was partially offset by a gain on dissolution of subsidiaries
of $402,782, a reduction of $3,049,972 in total exploration and evaluation expenditures as a result of the sale of all property
interests and a decrease in administrative expenses of $1,856,544, primarily as a result of lower corporate development costs,
lower professional fees, including a reversal of legal fees previously accrued related to the dismissal of the Hale Capital litigation
and lower share-based payments, as a result of no new granting of stock options and the reversal of previously recorded share-based
payments on unvested options forfeited during the current year ended January 31, 2014.



B. Liquidity and capital resources.



The Company currently has no positive operating cash flow and
has to date, financed its activities and its ongoing expenditures primarily through equity transactions such as equity offerings,
the exercise of warrants and other financing arrangements. The Company believes that additional financing will be required to fund
its operating expenses as it searches for suitable assets and businesses to merge with or acquire.



During the year ended January 31, 2015, the cash resources of
the Company were reduced by $12,772. The decrease in cash resources is a result of cash used in operating, offset partially by
cash provided by financing activities from notes payable issued. There is no assurance that equity or debt capital will be available
to the Company in the amounts or at the times desired, or on terms that are acceptable to the Company, if at all. (See “Item
3.D. - Risk Factors”).



Year Ended January 31, 2015 Compared to the Year Ended
January 31, 2014



As at January 31, 2015, the Company had cash and cash equivalents
of $4,035 compared to $16,807 as at January 31, 2014, to settle current liabilities of $69,076 compared to $35,917 as at January
31, 2014.



Cash used in operating activities was $28,054 for the year ended
January 31, 2015. During the year ended January 31, 2015, the Company experienced a net increase of $21,436 in non-cash working
capital items, which was due to a decrease in sundry receivables and prepaid of $3,559 and increase in accounts payable and accrued
liabilities of $17,877. Cash provided by financing activities was $15,282 for the year ended January 31, 2015 due to notes payable
advanced from a shareholder.



Year Ended January 31, 2014 Compared to the Year Ended
January 31, 2013



As at January 31, 2014, the Company had cash and cash equivalents
of $16,807 (2013 - $201,565). The Company had a working capital deficiency of $13,557 at January 31, 2014 (January 31, 2013 - $252,103).
Cash provided by operating activities was $275,614 for the year ended January 31, 2014.



During the year ended January 31, 2014, the Company experienced
a net increase of $723,247 in non-cash working capital items, which was due to a decrease in sundry receivables and prepaids of
$2,706,451, offset by a decrease in accounts payable and accrued liabilities of $1,983,204. Cash used in financing activities consisted
of $600,000 of other advances paid which was partially offset by the proceeds from sale of property interests, net of transaction
costs of $123,228 and a private placement of $16,400.



Working capital has increased for the period presented as a
result of the one-time gains on the sale of Fondaway Canyon and Dixie-Comstock properties and the dissolution of subsidiaries.



C. Research and development, patents and licenses, etc.



Not applicable



D. Trend information.



Not applicable



8







E. Off-balance sheet arrangements.



None.



F. Tabular disclosures of contractual obligations.



None.



G. Safe harbor.



Not applicable.



Item 6. Directors, Senior Management and Employees





A. Directors and senior management.



|Name and Residence                                      |  | Position withthe Company              |  | Date First Elected a Director/Held Office
|------------------------------------------------------- |  | ------------------------------------- |  | -----------------------------------------
|Carmelo Marrelli(1)
        Woodbridge, Ontario, Canada |  | Director                              |  | January 2014                             
|Lonnie Kirsh(1)
        Toronto, Ontario, Canada        |  | Chief Executive Officer 
and Director |  | January 2014                             
|Daniel Crandall
        Mississauga, Ontario, Canada    |  | Chief Financial Officer               |  | January 2014                             
|George A. Duguay(1)(2)Thornhill, Ontario, Canada        |  | Secretary and Director                |  | March 2009                               



Notes:

| | (1) | Member of the Audit Committee.
| | --- | ------------------------------

| | (2) | Appointed as Director January 17, 2014.
| | --- | ---------------------------------------



The following is a brief biography of each of the Company’s
directors and executive officers:



Carmelo Marrelli



Mr. Marrelli is the principal of Marrelli Support Services Inc.,
a firm that has delivered accounting and regulatory compliance services to listed companies on various exchanges for over twenty
years. In addition, Carmelo is a controlling shareholder of DSA Corporate Services Inc., a firm providing corporate secretarial
and regulatory filing services. Carmelo is a Chartered Professional Accountant (CPA, CA, CGA), and a member of the Institute of
Chartered Secretaries and Administrators, a professional body that certifies corporate secretaries. He has a Bachelor of Commerce
degree from the University of Toronto.



Lonnie Kirsh



Mr.
Kirsh is a principal of Acuity Corporate Securities Lawyers (practicing in association) where he practices law in the area of corporate
finance and securities law. Prior to entering private law practice, Mr. Kirsh gained securities regulatory experience at The Toronto
Stock Exchange, where he headed the group responsible for all new listing, suspension and delisting activity on the Exchange, and
at the Ontario Securities Commission, where he worked as a staff solicitor in the Corporate Finance Branch. Mr. Kirsh also serves
as a director or officer of a number of public and private corporations. He
holds an LL.B. degree from the University of Western Ontario and is a member of the Law Society of Upper Canada.



9







Daniel Crandall



Mr. Crandall is a Manager at Marrelli Support Services Inc.,
providing CFO, accounting, regulatory compliance, and management advisory services to numerous issuers on the TSX, TSX-Venture
and other Canadian and US exchanges. Previously, he was a Manager at Collins Barrow Toronto LLP, a public accounting firm where
he worked for over five years. Mr. Crandall holds a CPA, CA, as well as an Honours Bachelor of Accounting degree from Brock University.



George A. Duguay



Since January 1989, Mr. Duguay has been the President of G.
Duguay Services Inc., which was a partner of Duguay and Ringler Corporate Services, a provider of corporate and financial administrative
services to public companies, until February 2006. G. Duguay Services Inc. continues to act as a consultant in this area. Mr. Duguay
is Corporate Secretary of three public companies in the resource sector, and a Director and Chairman of the Audit Committee of
Intrinsyc Software International, Inc., a company listed on the Toronto Stock Exchange that provides proprietary software, hardware,
and services for the growing market of mobile handheld products. Mr. Duguay also serves or has served as a board member for several
other public and private companies. Mr. Duguay was a co-founder of Equity Financial Trust Co., a provider of transfer agent and
corporate trust services to companies. Mr. Duguay holds a CPA, CGA and a Fellow of the Institute of Chartered Secretaries.



B. Compensation.



Compensation Discussion and Analysis



Background



The Company was previously an exploration stage company engaged
in the acquisition, exploration and development of precious metal and coal properties in the United States. Following the disposition
of all mining interests, the Company is now focused on identifying suitable assets or businesses to acquire or merge with, with
a view to maximizing value for shareholders.



Overview



The Board of Directors (the “Board”) is responsible
for setting the overall compensation strategy of the Company and for evaluating and approving the compensation of directors and
executive officers. The Board annually reviews the base salary, incentive compensation and long-term compensation for the Company’s
executive officers, if any, to determine if the compensation package for executive officers continues to be appropriate or if any
modifications are required. Factors considered by the Board in establishing suitable compensation packages for its executive officers
include, the activities of the Company, its stage of development, the small number of executive officers, financial resources available
to the Company, competitive factors and the time committed by the executive officer to the affairs of the Company. The Board has
determined that the current compensation is appropriate for the risk and responsibilities assumed by the officers.



Objectives of Compensation Program



It is the objective of the Company’s compensation program
to attract and retain highly qualified executives and to link incentive compensation to performance and shareholder value. It is
the goal of the Board to endeavor to ensure that the compensation of executive officers is sufficiently competitive to achieve
the objectives of the executive compensation program. The Board gives consideration to the Company’s contractual obligations,
performance, quantitative financial objectives, including relative shareholder return, as well as to the qualitative aspects of
the individual’s performance and achievements.



Role of Executive Officers in Compensation Decisions



The Board will receive and review any recommendations of the
President and Chief Executive Officer relating to the general compensation structure and policies and programs for the Company
and the salary and benefit levels for executive officers.



10







Elements of the Compensation Program



The Company’s compensation program comprises (i) base
salary and (ii) long-term incentives, including the 2011 Amended and Restated Stock Option Plan (the “Stock Option Plan”).
Each component of the executive compensation program is addressed below.



The Board recognizes that certain elements of compensation could
promote unintended inappropriate risk-taking behaviors, but the Company seeks to ensure that the Company’s executive compensation
package is comprised of a mix of cash and equity compensation, balancing short term incentives (e.g., cash bonuses) and long-term
incentives (e.g., options). Base salaries and personal benefits are sufficiently competitive and not subject to performance risk.
To receive the benefit of long-term incentives (options), the executive officers must be employed by the Company (subject to limited
exceptions), thereby better aligning executive performance with the interests of the Company and its shareholders. The Board believes
that executive compensation risk management is reinforced by ongoing Board oversight of, among other things, the Company’s
financial results, regulatory disclosure, strategic plans, fraud and error reporting, the Audit Committee’s regular meetings
with the external auditors (the “auditors”) (including without the presence of management the Company’s internal
control, management information systems and financial control systems. As a result, the Board does not believe that its compensation
practices and policies are reasonably likely to have a material adverse effect on the Company.



Base Salaries and Benefits



Salaries for executive officers are reviewed annually based
on corporate and personal performance and on individual levels of responsibility. Salaries of the executive officers are not determined
based on a specific formula, nor is a formal benchmarking process used. The Board considers, and, if deemed appropriate, approves
salaries recommended by the President and Chief Executive Officer for the other executive officers of the Company. As stated above,
base salaries are established to be competitive in order to attract and retain highly qualified executives.



The Company does not provide any pension or retirement benefits
to its executive officers.



Long-Term Incentives and Stock Option Pan



The Board administers the Stock Option Plan that is designed
to provide a long-term incentive that is linked to shareholder value. The Board determines the number of options to be granted
to each executive officer based on the level of responsibility and experience required for the position. The Board regularly reviews
and where appropriate adjusts the number of options granted to individuals and determines the vesting provisions of such options.
The Board sets the number of options, as appropriate, designed to attract and retain qualified and talented personnel. The Board
also takes account of the Company’s contractual obligations and the award history for all participants in the Stock Option
Plan.



Option-based Awards



A description of the process that the Company uses to grant
option-based awards to executive officers, including the role of the Board and executive officers, is included under the heading
“Compensation Discussion and Analysis – Elements of Compensation Program – Long-Term Incentives and Stock Option
Plan” above.



The Company did not grant any option-based awards to executive
officers or directors during the year ended January 31, 2015.



Hedging



The Company has not initiated any policies related to the purchase
of financial instruments (including prepaid variable forward contracts, equity swaps, collars, or units of exchange funds) by directors
or Named Executive Officers (as defined below), that are designed to hedge or offset a decrease in market value of equity securities
granted as compensation or held, directly or indirectly, by any director or Named Executive Officer.



11







Compensation of Executive Officers



Summary Compensation Table for Executive Officers



The following table sets forth all compensation paid, payable,
awarded, granted, given or otherwise provided, directly or indirectly, for each of the Company’s three most recently completed
financial years to the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”). Other than
the CEO and CFO, the Company has no other executive officers, who were serving as executive officers at the end of the most recently
completed financial year and whose total salary and bonus exceeds $150,000 (collectively the “Named Executive Officers”).
Total compensation encompasses, as applicable, regular salary, dollar amount of option awards, non-equity incentive plan compensation
which would include discretionary and non-discretionary bonuses, pension value with compensatory amounts for both defined and non-defined
contribution retirement plans, and all other compensation which could include perquisites, tax gross-ups, premiums for certain
insurance policies, payments resulting from termination, resignation, retirement or a change in control and all other amounts not
reported in another column.







|                                    |  |                                     |  |                 |         |  |                               |     |                                |     | Non-equity
    incentive  plan compensation  ($) |     |                                      |     |                         |     |                                  |  |       
|----------------------------------- |  | ----------------------------------- |  | --------------- | ------- |  | ----------------------------- | --- | ------------------------------ | --- | ------------------------------------------------ | --- | ------------------------------------ | --- | ----------------------- | --- | -------------------------------- |  | ------
|Name
    and  Principal  Position   |  | Fiscal
     Year  Ended  January 31 |  | Salary
     ($) |         |  | Share-
    based  awards  ($) |     | Option-
    based  awards  ($) |     | Annual
     incentive  plans  ($)                |     | Long-term
     incentive  plans  ($) |     | Pension
     Value  ($) |     | All
    other  compensation  ($) |  |       
|Lonnie Kirsh                        |  | 2015                                |  |                 | Nil     |  |                               | Nil |                                | Nil |                                                  | Nil |                                      | Nil |                         | N/A |                                  |  | 19,899
|President & Chief Executive Officer |  | 2014                                |  |                 | Nil     |  |                               | Nil |                                | Nil |                                                  | Nil |                                      | Nil |                         | N/A |                                  |  | Nil   
|Daniel Crandall                     |  | 2015                                |  |                 | Nil     |  |                               | Nil |                                | Nil |                                                  | Nil |                                      | Nil |                         | N/A |                                  |  | 13,027
|Chief Financial Officer             |  | 2014                                |  |                 | Nil     |  |                               | Nil |                                | Nil |                                                  | Nil |                                      | Nil |                         | N/A |                                  |  | 750   
|Philip Gross,                       |  |                                     |  |                 |         |  |                               |     |                                |     |                                                  |     |                                      |     |                         |     |                                  |  |       
|Interim President                   |  | 2014                                |  |                 | 330,000 |  |                               | Nil |                                | Nil |                                                  | Nil |                                      | Nil |                         | N/A |                                  |  | Nil   
|& Chief Executive
Officer(1)        |  | 2013                                |  |                 | 180,000 |  |                               | Nil |                                | Nil |                                                  | Nil |                                      | Nil |                         | N/A |                                  |  | 75,000
|Ike Makrimichalos                   |  |                                     |  |                 |         |  |                               |     |                                |     |                                                  |     |                                      |     |                         |     |                                  |  |       
|Chief Financial                     |  | 2014                                |  |                 | 91,985  |  |                               | Nil |                                | Nil |                                                  | Nil |                                      | Nil |                         | N/A |                                  |  | Nil   
|Officer(2)                          |  | 2013                                |  |                 | 122,088 |  |                               | Nil |                                | Nil |                                                  | Nil |                                      | Nil |                         | N/A |                                  |  | Nil   





Notes:

| | (1) | Mr. Gross ceased to be President and Chief Executive Officer on January 16, 2014.
| | --- | ---------------------------------------------------------------------------------



| | (2) | Mr. Makrimichalos ceased to be Chief Financial Officer on January 16, 2014.
| | --- | ---------------------------------------------------------------------------



| | (3) | Pursuant to a consulting agreement, Marrelli Support Services Inc., a corporation of which Mr. Crandall is a senior employee,
was paid $13,027 during the year ended January 31, 2015 ($750 during the year ended January 31, 2014).
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | The Company received legal services of $19,899 during the year ended January 31, 2015 from Kirsh Securities Law Professional
Corporation, a law firm owned by Mr. Kirsh.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



12







Incentive Plan Awards for Named Executive Officers



Outstanding Share-Based Awards and Option-Based
Awards



The following table sets forth information concerning all option-based
and share-based awards for each Named Executive Officer outstanding at the end of the financial year ended January 31, 2015.





|                |  | Option-based Awards                                          |     |  | Share-based Awards                | 
|--------------- |  | ------------------------------------------------------------ | --- |  | --------------------------------- | 
|Name            |  | Number of  securities  underlying  unexercised  options  (#) |     |  | Option  exercise  price  (U.S. $) | 
|Lonnie Kirsh    |  |                                                              | Nil |  |                                   | 
|Daniel Crandall |  |                                                              | Nil |  |                                   | 





See “Compensation Discussion and Analysis – Elements
of the Compensation Program” and “Compensation Discussion and Analysis-Option-based Awards.”



Incentive Plan Awards – Value Vested
or Earned During the Year



There was no value of option-based awards granted to Named Executive
Officers which vested during the year ended January 31, 2015. The Company has not granted any share based awards nor does it have
a non-equity compensation plan.



Pension Plan Benefits



The Company does not have any pension plans that provide for
payments of benefits at, following or in connection with retirement, or provide for retirement or deferred compensation plans for
its Named Executive Officers or directors.



Compensation of Directors



Summary Compensation Table for Directors



The following table sets forth all amounts of compensation provided
to the non-executive directors of the Company for the financial year ended January 31, 2015.





|Name  (a)        |  | Fees  earned  ($)  (b) |     |  | Share-  based  awards  ($)  (c) |  |     | Option-  based  awards  ($)  (d) |  |  | Non-equity  incentive  plan
compensation
 ($)  (e) |  |  | Pension  value  ($)  (f) |     |  | All other  compensa-
tion  ($)  (g) |  |     | Total  ($)  (h) | 
|---------------- |  | ---------------------- | --- |  | ------------------------------- |  | --- | -------------------------------- |  |  | -------------------------------------------------- |  |  | ------------------------ | --- |  | ----------------------------------- |  | --- | --------------- | 
|Carmelo Marrelli |  |                        | Nil |  |                                 |  | Nil |                                  |  |  | Nil                                                |  |  |                          | Nil |  |                                     |  | Nil |                 | 
|George Duguay    |  |                        | Nil |  |                                 |  | Nil |                                  |  |  | Nil                                                |  |  |                          | Nil |  |                                     |  | Nil |                 | 





Board Fees



The Company does not anticipate paying any cash fees to directors
until a merger or acquisition transaction is completed.



The directors are also entitled to receive stock options under
the Stock Option Plan.



13







Incentive Plan Awards for Directors



Outstanding Share-Based Awards and Option-Based
Awards



The following table sets forth information concerning all option-based
and share-based awards for each non-executive director outstanding at January 31, 2015.





|                 |  |            |     |  | Option-based Awards                                   |  |     | Share-based Awards              | 
|---------------- |  | ---------- | --- |  | ----------------------------------------------------- |  | --- | ------------------------------- | 
|Name             |  | Option     |     |  | Number ofsecuritiesunderlyingunexercisedoptions(#)(1) |  |     | Option  exercise price  (U.S.$) | 
|(a)              |  | grant date |     |  | (b)                                                   |  |     | (c)                             | 
|Carmelo Marrelli |  |            | Nil |  |                                                       |  | Nil |                                 | 
|George Duguay    |  |            | Nil |  |                                                       |  | Nil |                                 | 





See “Compensation Discussion and Analysis – Elements
of the Compensation Program” and “Compensation Discussion and Analysis – Option-based Awards”, above.



Incentive Plan Awards – Value Vested
or Earned During the Year



There were no option-based awards granted to directors during
the year. And, there was no value of option-based awards granted to directors for any year prior to the current year. In addition,
the company had not granted any share based awards nor does it have a non-equity compensation plan.



C. Board practices.



Information regarding the length of service of the members of
the Board is shown in “Item 6.A. Directors and senior management.” Each director elected will hold office until the
next annual meeting or until his successor is appointed, unless his office is earlier vacated in accordance with the CBCA and the
bylaws of the Company.



There are no contracts providing for benefits upon termination
to any director.



Responsibilities of the Board



The Board is responsible for the stewardship of the business
and affairs of the Company and has adopted a set of principles and practices setting out its stewardship responsibilities. Under
its mandate, the Board seeks to discharge such responsibility by reviewing, discussing and approving the Company's strategic planning
and organizational structure, and supervising management to ensure that the foregoing enhance and preserve the underlying value
of the Company for the benefit of all shareholders. As part of the strategic planning process, the Board contributes to the development
of a strategic direction for the Company by reviewing, on an annual basis, the Company's principal opportunities, the processes
that are in place to identify such opportunities and the full range of business risks facing the Company, including strategic,
financial, operational, leadership, partnership and reputation risks. On an ongoing basis, the Board also reviews with management
how the strategic environment is changing, what key business risks and opportunities are appearing and how they are managed, including
the implementation of appropriate systems to manage these risks and opportunities. The performance of management, including the
Company's Chief Executive Officer, is also supervised to ensure that the affairs of the Company are conducted in an ethical manner.
The Board, directly and through its committees, ensures that the Company puts in place, and reviews at least on an annual basis,
comprehensive communication policies to address how the Company (i) interacts with analysts, investors, other key stakeholders
and the public, and (ii) complies with its continuous and timely disclosure obligations and avoids selective disclosure. Finally,
the Board monitors the integrity of corporate internal control procedures and management information systems to manage such risks
and ensure that the value of the underlying asset base is not eroded.



14







The Board from time to time delegates to senior executives the
authority to enter into certain types of transactions, including financial transactions, subject to specified limits. According
to the Company's policy, investments and other similar expenditures above the specified limits, including major capital projects
as well as material transactions outside the ordinary course of business, whether on or off balance sheet, are reviewed by, and
subject to, the prior approval of the Board.



Following, are the principles of the Company's corporate governance
arrangements:



| | · | Subject to the relatively small size of
the Company and to business needs, the size of the Board must be kept to a sufficiently low number to facilitate open and effective
dialogue and full participation and contribution of each director.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The Board must function as a cohesive
team, with shared responsibilities and accountabilities that are clearly defined, understood and respected.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The Board must have the ability to exercise
all its supervisory responsibilities independent of any influence by management.
| | - | ----------------------------------------------------------------------------------------------------------------------------



| | · | The Board must have access to all the
information needed to carry out its full responsibilities. Information must be available in a timely manner and in a format conducive
to effective decision making.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The Board must develop, implement, and
measure effective corporate governance practices, processes and procedures.
| | - | ------------------------------------------------------------------------------------------------------------------



Committees of the Board



There is only one committees of the Board, being the Audit Committee..
In addition to regularly scheduled meetings of the Board, its members are in contact with one another and with the members of senior
management.



Audit Committee



The Audit Committee shall be composed of three or more directors
as determined by the Board, the composition of which shall satisfy applicable independence requirements of applicable securities
regulatory authorities. Members shall be appointed annually from among the members of the Board. The Chair of the Audit Committee
shall be appointed by the Board. All members of the Audit Committee shall be financially literate. An Audit Committee member who
is not financially literate may be appointed to the Audit Committee provided that the member becomes financially literate within
a reasonable period of time. The following persons have been appointed to the Audit Committee: Carmelo Marrelli (Chair), Lonnie
Kirsh and George Duguay.



The Audit Committee's primary duties and responsibilities are
to:



(a) Identify and monitor the management of the principal risks
that could impact the financial reporting of the Company;



(b) Oversee and monitor the integrity of the Company's financial
reporting process and system of internal controls regarding financial reporting and accounting compliance;



(c) Oversee and monitor the independence and performance of
the Company's external auditors; and



(d) Provide an avenue of communication among the external auditors,
management and the Board.



The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to the external auditors as well as anyone in the organization.
The Audit Committee has the ability to retain, at the Company's expense, special legal, accounting, or other consultants or experts
it deems necessary in the performance of its duties.



15









The Audit Committee shall, in addition to any other duties and
responsibilities specifically assigned or delegated to it from time to time by the Board:



(a) Be directly responsible for overseeing
the work of the external auditors engaged for the purpose of preparing or issuing an auditor’s report or performing other
audit, review or attest services for the Company, including the resolution of disagreements between management and the auditors
regarding financial reporting;



(b) Meet with the auditors and the senior management of the
Company to review, and recommend to the Board for approval, the year-end audited financial statements, related Management’s
Discussion and Analysis (“MD&A”) and earnings releases and financial reporting contained in public disclosure documents,
including annual reports and annual information forms of the Company prior to any public disclosure thereof;



(c) Review with senior management and, if necessary, the auditors,
and recommend to the Board for approval, the interim financial statements, related MD&A and earnings releases of the Company
prior to any public disclosure thereof;



(d) Review, and recommend to the Board for approval, all financial
statements or results of the Company which have not previously been approved by the Board and which are to be included in a prospectus,
press release, material change report, offering document or other public disclosure document of the Company;



(e) Consider and be satisfied that adequate policies and procedures
are in place for the review of the Company’s disclosure of financial information extracted or derived from the Company’s
financial statements, and periodically assess the adequacy of such procedures;



(f) Review the audit plans and the independence of the auditors;



(g) Review and approve the Company’s hiring policies regarding
partners, employees and former partners and employees of the present and former auditors of the Company;



(h) Meet with the auditors independently of management, including
to consider any matter which the Audit Committee or auditors believe should be brought to the attention of the Board or the shareholders
of the Company;



(i) In consultation with senior management, review annually
and recommend for approval by the Board:



(i) the appointment of auditors at the annual general
meeting of shareholders of the Company;



(ii) the remuneration of the auditors; and



(iii) the pre-approval of all non-audit services
to be provided to the Company by the auditors. In fulfilling such requirement, if the Audit Committee deems it appropriate, the
Audit Committee may form and delegate to subcommittees consisting of one or more members, the authority to grant pre-approvals
of audit and permitted non-audit services, provided that decisions of such subcommittee to grant pre-approvals shall be presented
to the full Audit Committee at its next scheduled meeting. The pre-approval of services pursuant to delegated authority may be
given at any time up to one year before commencement of the specified service;



(j) Review with the auditors:



(i) the scope of the audit;



(ii) the significant changes
in the Company's accounting principles, practices or policies; and



(iii) new developments in accounting principles,
reporting matters or industry practices which may materially affect the financial statements of the Company;



16







(k) Review with the auditors and senior management the results
of the annual audit, and make appropriate recommendations to the Board, having regard to, among other things:



(i) the financial statements;



(ii) management's discussion and analysis and related
financial disclosure contained in continuous disclosure documents;



(iii) significant changes, if any, to the initial
audit plan;



(iv) accounting and reporting decisions relating
to significant current year events and transactions;



(v) the audit findings report and management letter,
if any, outlining the auditors' findings and recommendations, together with management's response, with respect to internal controls
and accounting procedures;



(vi) any difficulties encountered in the course of
the audit work, any restrictions on the scope of activities or access to requested information, and any significant disagreements
with management; and



(vii) any other matters relating to the conduct of
the audit, including the review and opportunity to provide comments in respect of any press releases announcing year-end financial
results prior to issue and such other matters which should be communicated to the Audit Committee under generally accepted auditing
standards;



(l) Review with the auditors the adequacy of management's internal
control procedures and management information systems and inquiring of management and the auditors about significant risks, including
fraud risk, and exposures to the Company that may have a material adverse impact on the Company's financial statements, and inquiring
of the auditors as to the efforts of management to mitigate such risks and exposures;



(m) Review disclosures made to the Audit Committee by the Chief
Executive Officer and Chief Financial Officer of the Company during their certification process related to the Company’s
annual and quarterly regulatory filings, including with respect to any significant deficiencies in the design or operation of the
Company’s internal control over financial reporting or material weaknesses therein, and any fraud involving management or
other employees who have a significant role in the Company’s internal control over financial reporting;



(n) Monitor policies and procedures for reviewing directors'
and officers' expenses and perquisites, and inquire about the results of such reviews;



(o) Review and approve written risk management policies and
guidelines including the effectiveness of the overall process for identifying the principal risks affecting financial reporting;



(p) Review, and advise the Board of, issues relating to legal,
ethical and regulatory responsibilities to monitor management's efforts to seek to ensure compliance, including any legal matters
that could have a significant impact on the Company’s financial statements, the Company’s compliance with applicable
laws and regulations and inquiries received from regulators of governmental agencies. Discuss with management and the auditors
any correspondence with respect to such inquiries and published reports that raise material issues regarding the Company’s
financial statements and accounting policies; and



(q) Establish procedures for:



(i) the receipt, retention and treatment of complaints
received by the issuer regarding accounting, internal accounting controls, or auditing matters; and



(ii) the confidential, anonymous submission by employees
of the issuer of concerns regarding questionable accounting or auditing matters.



17







Conflicts of Interest



Some of the directors and officers of Royal Standard also serve
as directors and officers of other companies . Consequently, there exists a possibility for any such officer or director to be
placed in a position of conflict. Each such director or officer is subject to fiduciary duties and obligations to act honestly
and in good faith with a view to the best interests of the Company. Similar duties and obligations will apply to such other companies.
Thus, any future transaction between the Company and such other companies will be for bona fidebusiness purposes and approved
by a majority of disinterested directors of the Company.



D. Employees.



In addition to the officers identified above, at January 31,
2015 and 2014, the Company had no employees.



E. Share ownership.



|                 |  |                                                      |  | Number of Common    |             |  | Percentage of Common   | 
|---------------- |  | ---------------------------------------------------- |  | ------------------- | ----------- |  | ---------------------- | 
|                 |  |                                                      |  | Shares Beneficially |             |  | Shares Beneficially    | 
|                 |  |                                                      |  | Owned as of         |             |  | Owned as of January 31 | 
|Name             |  | Office Held                                          |  | January 31, 2015    |             |  | 2015                   | 
|George Duguay    |  | Director                                             |  |                     | 278,960,559 |  |                        | 
|Carmelo Marrelli |  | Director                                             |  |                     | 278,960,559 |  |                        | 
|Lonnie Kirsh     |  | President and  Chief Executive  Officer and Director |  |                     | 278,960,559 |  |                        | 
|Daniel Crandall  |  | Chief Financial Officer                              |  |                     | Nil         |  |                        | 



See “Item 6. Compensation - Compensation of Executive
Officers – Incentive Plan Awards for Named Executive Officers” and “Item 6. Compensation - Compensation of Directors
– Incentive Plan Awards for Directors” for details of options granted to the above officers and directors.



Item 7. Major Shareholders and Related Party Transactions



A. Major shareholders.



To the knowledge of the directors and officers of the Company
based on reports filed on Schedule 13G/A pursuant to Rule 13d-1(c) of the Exchange Act (Amendment No. 5) and on the System for
Electronic Document Analysis and Retrieval (“SEDAR”) pursuant to National Instrument 62-103 of the Canadian Securities
Administrators, Lonnie Kirsh exercises direction or control over 30.29% of the outstanding voting securities of the Company, George
Duguay exercises direction or control over 30.29% of the outstanding voting securities of the Company and C. Marrelli Services
Ltd. exercises direction or control over 30.29% of the outstanding voting securities of the Company.



B. Related party transactions.



Other than as described below, no director, senior officer,
principal holder of securities, or any associate, affiliate, or family member thereof, of the Company has any material interest,
direct or indirect, in any transaction since the commencement of the Company's last fiscal year or in any proposed transaction
which, in either case, has or will materially affect the Company.



Paul G. Smith, a former director and Chairman of the Board,
was the President and Chief Executive Officer of Equity Financial Holdings Inc. ("Equity"), a company that provided financial
services to the Company until April 5, 2013. Fees for services provided by Equity totaled $nil for the year ended January 31, 2015
(year ended January 31, 2014 - $4,822).



Daniel Crandall, the Chief Financial Officer, is a senior employee
of Marrelli Support Services Inc. ("Marrelli Support"), a firm providing accounting services. Marrelli Support's President,
Carmelo Marrelli, beneficially controls 278,960,559 common shares of the Company through his holding company, C. Marrelli Services
Limited. Fees for services provided by Marrelli Support totaled $13,027, for the year ended January 31, 2015 (year ended January
31, 2014 - $750). As at January 31, 2015, Marrelli Support was owed $1,967 and this amount was included in accounts payable and
accrued liabilities (January 31, 2014 - $nil).



18







During the year ended January 31, 2015, the Company incurred
fees totaling $740, (year ended January 31, 2014 - $nil) for filing services received from DSA Filing Services ("DSA").
Carmelo Marrelli is an officer and shareholder of DSA. As at January 31, 2015, DSA was owed $370 and this amount was included in
accounts payable and accrued liabilities (January 31, 2014 - $nil).



During the year ended January 31, 2015, the Company incurred
fees totaling $19,899, (year ended January 31, 2014 - $nil) for legal services received from Kirsh Securities Law Professional
Corporation, a law firm owned by the President and Chief Executive Officer of the Company. An amount of $17,446 is included in
accounts payable and accrued liabilities at January 31, 2015 (January 31, 2014 - $nil).



During the year ended January 31, 2015, the Company incurred
fees totaling $4,038 (year ended January 31, 2014 - $nil) for consulting services received from G. Duguay Services Inc., a firm
where George Duguay, a director and shareholder of the Company, is the President. An amount of $3,540 is included in accounts payable
and accrued liabilities at January 31, 2015 (January 31, 2014 - $nil).



C. Interests of experts and counsel.



Not applicable.



Item 8. Financial Information



A. Consolidated Statements and Other Financial Information.



Financial Statements
See note “18. Contingencies” in the notes to the above-referenced financial statements.Dividends
The Company does not anticipate paying dividends in the foreseeable future.



B. Significant Changes.



IAS 32 Financial Instruments: Presentation (“IAS
32”)



IAS 32 – Financial Instruments: Presentation (“IAS
32”) was amended by the IASB in December 2011 to clarify certain aspects of the requirements on offsetting. The amendments
focus on the criterion that an entity currently has a legally enforceable right to set off the recognized amounts and the criterion
that an entity intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. At February
1, 2014, the Company adopted this pronouncement and there was no material impact on the Company's consolidated financial statements.



IFRS – Certain new standards, interpretations and amendments
to existing standards have been issued by the IASB or the International Financial Reporting Interpretations Committee (“IFRIC”)
that are mandatory for accounting periods beginning after January 31, 2015, or later periods. The following have not yet been adopted
and are being evaluated to determine their impact on the Company.



IFRS 9 Financial Instruments ("IFRS 9")



IFRS 9 was issued by the IASB in October 2010 and will replace
IAS 39 - Financial Instruments: Recognition and Measurement (“IAS 39”). IFRS 9 uses a single approach to determine
whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. The approach in
IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash
flow characteristics of the financial assets. Most of the requirements in IAS 39 for classification and measurement of financial
liabilities were carried forward unchanged to IFRS 9. The new standard also requires a single impairment method to be used, replacing
the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods beginning on or after January 1, 2018. Earlier
adoption is permitted.



19







Item 9. The Offer and Listing



A. Offer and listing details.



The issued and outstanding share capital of Royal Standard consists
solely of its Common Shares. The Common Shares of Royal Standard are without nominal or par value. Subject to the prior rights
of holders of Preferred Shares (as hereinafter defined), if any, each Common Share ranks equally with all other Common Shares with
respect to dissolution, liquidation or winding-up of Royal Standard and payment of dividends. The holders of Common Shares are
entitled to one vote for each share held of record on all matters to be voted on by such holders and are entitled to receive pro
rata such dividends as may be declared by the Board of Royal Standard out of funds legally available therefor and to receive pro
rata the remaining property of Royal Standard upon dissolution. The holders of Common Shares have no preemptive or conversion rights.
The rights attaching to the Common Shares can only be modified by the affirmative vote of at least two-thirds of the votes cast
at a meeting of shareholders called for that purpose.



The common shares of the Company are quoted on the OTC Bulletin
Board under the symbol “RYSMF.” The Company’s common shares were previously listed and traded on the TSX Venture
Exchange (the “TSXV”) and were voluntarily delisted from the TSXV effective May 11, 2009.



The following tables set forth the reported high and low sales
prices on the TSXV and the OTC Bulletin Board, respectively, for the periods specified below.



OTC Bulletin Board (US$)



|Period                             |  | High |       |  | Low | 
|---------------------------------- |  | ---- | ----- |  | --- | 
|                                   |  |      |       |  |     | 
|Fiscal year ended January 31, 2011 |  |      | 0.12  |  |     | 
|Fiscal year ended January 31, 2012 |  |      | 0.29  |  |     | 
|Fiscal year ended January 31, 2013 |  |      | 0.29  |  |     | 
|Fiscal year ended January 31, 2014 |  |      | 0.015 |  |     | 
|Fiscal year ended January 31, 2015 |  |      | 0.012 |  |     | 



|Period                         |  | High |       |  | Low | 
|------------------------------ |  | ---- | ----- |  | --- | 
|Quarter ended April 30, 2013   |  |      | 0.015 |  |     | 
|Quarter ended July 31, 2013    |  |      | 0.004 |  |     | 
|Quarter ended October 31, 2013 |  |      | 0.009 |  |     | 
|Quarter ended January 31, 2014 |  |      | 0.005 |  |     | 
|Quarter ended April 30, 2014   |  |      | 0.010 |  |     | 
|Quarter ended July 31, 2014    |  |      | 0.012 |  |     | 
|Quarter ended October 31, 2014 |  |      | 0.007 |  |     | 
|Quarter ended January 31, 2015 |  |      | 0.004 |  |     | 



20







|Period         |  | High |       |  | Low | 
|-------------- |  | ---- | ----- |  | --- | 
|August  2014   |  |      | 0.007 |  |     | 
|September 2014 |  |      | 0.002 |  |     | 
|October 2014   |  |      | 0.003 |  |     | 
|November 2014  |  |      | 0.004 |  |     | 
|December  2014 |  |      | 0.002 |  |     | 
|January 2015   |  |      | 0.003 |  |     | 



B. Plan of distribution.



Not applicable.



C. Markets.



The common shares currently trade on the OTC Bulletin Board
under the symbol "RYSMF".



D. Selling shareholders.



Not applicable.



E. Dilution.



Not applicable



F. Expenses of the issue.



Not applicable.



Item 10. Additional Information



A. Share capital.



Not applicable.



B. Memorandum and articles of association.



The articles of incorporation, amendments thereto and articles
of continuance, as well as the location of the registered office of the Company, are described under “Item 4.A. History and
Development of the Company” above. The Company is continued under the CBCA under Corporation No. 681198-1. The articles of
continuance of the Company do not place any restrictions on the Company’s objects and purposes.



On December 12, 2011 the Board approved the repeal of general
By-Law No. 1 and adopted By-Law No. 2, being a new by-law relating generally to the conduct of the business and affairs of the
Company. On January 11, 2012, the shareholders of the Company ratified the repeal of By-Law No. 1 and confirmed By-Law No. 2 as
the new general by-law.



Meetings of Shareholders



Subject to the CBCA, meetings of shareholders are held at such
time and at such place, within or outside Canada, as the Board, the chair of the Board, the chief executive officer or the president
may from time to time determine. Annual shareholders’ meetings must be held yearly, not later than fifteen months after the
preceding general meeting but no later than six months after the end of its preceding financial year, to consider the financial
statements and auditor’s report thereon, elect directors, appoint auditors and consider such other business that may properly
brought before the meeting.



21







Pursuant to the CBCA the holders of not less than five percent
of the issued and outstanding shares that carry the rights to vote (i.e. common shares) may request that the Board call a meeting
of shareholders for the purposes stated in the request by sending the request to each director and to the Company’s registered
office. Upon the requisition of shareholders, the Board must proceed to convene the meeting or meetings to be held in the manner
set forth in the Company’s by-laws and the CBCA, as applicable. The request shall state the business to be transacted at
the meeting.



Subject to the CBCA and applicable securities law, notice of
the time and place of each meeting of shareholders, along with a management information circular and form of proxy, shall be sent
not less than 21 days nor more than 60 days before the meeting to each shareholder entitled to vote at the meeting, to each director
and to the auditors. These materials are filed with the Canadian securities regulatory authorities and the SEC. If a meeting of
shareholders is adjourned for less than 30 days it is not necessary to give notice of the adjourned meeting other than by announcement
at the earliest meeting that is adjourned.



A quorum is present at a meeting of shareholders if two persons
are present in person, each being a shareholder entitled to vote thereat or a duly appointed proxy holder for an absent shareholder
so entitled, and together holding or representing by proxy not less than five percent of the outstanding shares of the Company
entitled to vote at the meeting. The only persons entitled to be present at a meeting of shareholders are those entitled to vote
thereat and others who, although not entitled to vote, are entitled or required under any provisions of the CBCA, other applicable
law or the articles to be present at the meeting. Any other person may be admitted only on the invitation of the chair of the meeting
or with the consent of the meeting.



The CBCA also prescribes the method under which proposals may
be made by shareholders entitled to vote. The shareholder must submit to the Company, within a prescribed period, a notice of any
matter that the person proposes to raise at the meeting. The Company is required to set out the proposal in the management proxy
circular and the proposing shareholder may request to include a supporting statement. If the Company does not include the proposal
in the management proxy circular, it must send a notice of refusal to the proposing shareholder including the reasons why the proposal
will not be included. Either the shareholder and/or the Company may apply to the courts claiming grievance.



Directors



The Board shall manage, or supervise the management of, the
business and affairs of the Company. Each of the directors and officers shall act honestly and in good faith with a view to the
best interests of the Company and exercise care, diligence and skill that a reasonably prudent person would exercise in comparable
circumstances. Directors stand for election at the annual general meeting of shareholders, and there are no staggered terms. At
least 25 percent of the Board must be resident Canadians. However, if there are less than four directors, at least one director
must be a resident Canadian. A director is not required to hold any shares of the Company to qualify as a director. Neither the
articles nor the by-laws provide for retirement or non-retirement of directors under an age limit.



Subject to the Company’s by-laws and articles, the Board
may fix the remuneration of the members of the Board. To the extent permitted by law, no director or officer for the time being
of the Company shall be liable for: (i) the acts, receipts, neglects or defaults of any other director or officer or employee;
(ii) joining in any receipt or other act for conformity; (iii) any loss, damage or expense happening to the Company through the
insufficiency or deficiency of title to any property acquired by the Company or for or on behalf of the Company; (iv) the insufficiency
or deficiency of any security in or upon which any of the moneys of or belonging to the Company shall be placed out or invested;
(v) any loss or damage arising from the bankruptcy, insolvency or tortious act of any person with whom or which any moneys, securities
or other assets belonging to the Company shall be lodged or deposited; (vi) any loss, conversion, misapplication or misappropriation
of or any damage resulting from any dealings with any moneys, securities or other assets belonging to the Company or for any other
loss, damage or misfortune which may happen in the execution of the duties of his respective office or trust or in relation thereto;
unless the same shall happen by or through his failure to act honestly and in good faith with a view to the best interests of the
Company and in connection therewith to exercise the care, diligence and skill that a reasonably prudent person would exercise in
comparable circumstances. If any director or officer of the Company shall be employed by or shall perform services for the Company
otherwise than as a director or officer or shall be a member of a firm or a shareholder, director or officer of a body corporate
which is employed by or performs services for the Company, the fact of his being a director or officer of the Company shall not
disentitle such director or officer or such firm or body corporate, as the case may be, from receiving proper remuneration for
such services.



22









The Company shall indemnify its directors and officers, a former
director or officer of the Company or another individual who acts or acted at the Company’s request as a director or officer,
or an individual acting in a similar capacity, of another entity against all costs, charges and expenses, including an amount paid
to settle an action or satisfy a judgment, reasonably incurred by such individual in respect of any civil, criminal or administrative,
investigative or other proceeding in which the individual is involved because of that association with the Company or other entity.
The Company may not indemnify an individual in connection with the foregoing unless the individual: (a) acted honestly and in good
faith with a view to the Company’s best interests or that of another entity for which the individual acted as a director
or officer or in a similar capacity at the Company’s request, as the case may be; and (b) in the case of a criminal or administrative
action or proceeding that is enforced by a monetary penalty, had reasonable grounds for believing that his conduct was lawful.
The Company has entered into such indemnity agreements with its directors and officers.



A director or officer who is a party to a material transaction
or material contract or proposed material transaction or material contract with the Company, is a director or an officer of, or
acts in a capacity similar to a director or officer of, or has a material interest in any person who is, a party to a material
transaction or material contract or proposed material transaction or material contract with the Company shall disclose the nature
and extent of his interest at the time and in the manner provided in the CBCA. Except as provided in the CBCA (including in the
case of director remuneration), no such director of the Company shall vote on any resolution to approve any transaction. If a material
transaction or material contract is made between the Company and one or more of its directors or officers, or between the Company
and another person of which a director or officer of the Company is a director or officer or in which he/she has a material interest,
the transaction is neither void nor voidable by reason only of that relationship, or by reason only that a director with an interest
in the transaction or contract is present at or is counted to determine the presence of a quorum at a meeting of the Board or committee
of Board that authorized the transaction, if the director or officer disclosed his interest in accordance with the provisions of
the CBCA, the transaction or contract was approved by Board or shareholders, as the case may be, and it was reasonable and fair
to the Company at the time it was approved.



The CBCA provides that, unless the articles or by-laws otherwise
provide, the directors may:



| | (a) | borrow money upon the credit of the Company;
| | --- | --------------------------------------------



| | (b) | issue, reissue, sell or pledge or hypothecate debt obligations
of the Company;
| | --- | ------------------------------------------------------------------------------



| | (c) | give a guarantee on behalf of the Company to secure performance
of an obligation of any person; and
| | --- | ---------------------------------------------------------------------------------------------------



| | (d) | mortgage, hypothecate, charge, pledge or otherwise create
a security interest in all or any property of the Company, owned or subsequently acquired, to secure any obligation of the Company.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The directors may, by resolution, make, amend or repeal any
by-laws that regulate the business or affairs of the Company. The CBCA requires the directors to submit any such by-law, amendment
or repeal to the Company’s shareholders at the next meeting of shareholders, and the shareholders may, by ordinary resolution,
confirm, reject or amend the by-law, amendment or repeal.



Limitations on Ownership of Securities



Except as described under Item 10.D. “Exchange Controls”
below, there are no limitations on the right to own securities imposed by foreign law to the Company’s knowledge or by the
articles of the Company.



Share Capital



The authorized capital of the Company consists of an unlimited
number of Common Shares without par value, and an unlimited number of preferred shares issuable in series (“Preferred Shares”).
Please see Item 9.A. “Offer and listing details”, for the rights, privileges, restrictions and conditions attaching
to the Common Shares. The rights attaching to the Common Shares and the Preferred Shares can only be modified by the affirmative
vote of at least two-thirds of the votes cast at a meeting of shareholders called for that purpose.



23







The following summarizes the key rights, privileges, restrictions
and conditions attached to Preferred Shares.



Series



The Preferred Shares are issuable in series with such preferred,
deferred or other special rights, privileges, restrictions, conditions and designations attached thereto as shall be fixed from
time to time by any resolutions which may be passed by the directors, including:



| | (a) | the rate, amount or method of calculation of any dividends,
provided always that dividends on each series of Preferred Shares shall be non-cumulative;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | any right of redemption and/or purchase and the redemption
or purchase prices and terms and conditions of any such right;
| | --- | -------------------------------------------------------------------------------------------------------------------------



| | (c) | any right of retraction vested in the holders of Preferred
Shares of such series and the prices and terms and conditions of any such rights;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | any rights upon dissolution, liquidation or winding-up
of the Company;
| | --- | ----------------------------------------------------------------------



| | (e) | any voting rights; and
| | --- | ----------------------



| | (f) | any other provisions attaching to any such series of Preferred
Shares.
| | --- | ----------------------------------------------------------------------



Priority



The Preferred Shares of each series shall, with respect to the
payment of dividends and the distribution of assets or return of capital in the event of liquidation, dissolution or winding-up
of the Company, whether voluntary or involuntary, rank on a parity with the Preferred Shares of every other series and be entitled
to a preference and priority over the Common Shares and over any other shares of the Company ranking junior to the Preferred Shares.



Notices and Voting



Subject to the rights, privileges, restrictions and conditions
that may be attached to a particular series of Preferred Shares, the holders of Preferred Shares shall not, as such, be entitled
to receive notice of or to attend meetings of the shareholders of the Company nor shall they have any voting rights for the election
of directors or for any other purpose except as provided in the CBCA.



Purchase for Cancellation



Subject to the rights, privileges, restrictions and conditions
that may be attached to a particular series of Preferred Shares, the Company may at any time or from time to time purchase for
cancellation the whole or any part of the Preferred Shares outstanding at such time. In the case of the purchase for cancellation
by private contract, the Company shall not, except as required by law, be required to purchase Preferred Shares from all holders
or series of Preferred Shares or to offer to purchase the shares of any other class or any series of shares before proceeding to
purchase from any one holder of Preferred Shares nor shall it be required to make purchases from holders of Preferred Shares on
a pro ratabasis.



Redemption



Subject to the rights, privileges, restrictions and conditions
that may be attached to a particular series of Preferred Shares, the Company may, at its option, redeem all or from time to time
any part of the outstanding Preferred Shares on payment to the holders thereof, for each share to be redeemed, the redemption price
per share, together with all dividends declared thereon and unpaid.



24







Retraction



Subject to the rights, privileges, restrictions and conditions
that may be attached to a particular series of Preferred Shares and partial redemption obligations set forth below, a holder of
Preferred Shares shall be entitled to require the Company to redeem at any time and from time to time after the date of issue of
any Preferred Shares, upon giving notice, all or any number of the Preferred Shares registered in the name of such holder on the
books of the Company at the redemption price per share, together with all dividends declared thereon and unpaid.



Partial Redemption



Subject to the rights, privileges, restrictions and conditions
that may be attached to a particular series of Preferred Shares, if the redemption by the Company on any option redemption date
of all of the Preferred Shares to be redeemed on such date would be contrary to any provisions of the CBCA or any other applicable
law, the Company shall be obligated to redeem only the maximum number of Preferred Shares which the Company determines it is then
permitted to redeem, such redemptions to be made pro rata (disregarding fractions of shares) according to the number of Preferred
Shares required by each such holder to be redeemed by the Company. The Company shall, before redeeming any other Preferred Shares,
redeem on the first day of each month thereafter the maximum number of such Preferred Shares so required by holders to be redeemed
as would not then be contrary to any provisions of the CBCA or any other applicable law, until all of such shares have been redeemed.



Liquidation, Dissolution and Winding Up



Subject to the rights, privileges, restrictions and conditions
that may be attached to a particular series of Preferred Shares, in the event of liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, the holders of Preferred Shares shall be entitled to receive, before any distribution
of any part of the assets of the Company among the holders of any other shares, for each Preferred Share, an amount equal to the
redemption price of such share and any dividends declared thereon and unpaid.



C. Material contracts.



None.



D. Exchange controls.



There is no law, governmental decree or regulation in Canada
that restricts the export or import of capital, including foreign exchange controls, or that affects the remittance of dividends,
interest or other payments to non-resident holders of Common Shares, other than withholding tax requirements and potential capital
gain on the disposition of the Common Shares under certain circumstances. See “Item 10.E. Taxation”.



E. Taxation



Canadian Federal Income Tax Considerations



The following is a summary of certain Canadian federal income
tax provisions under the Income Tax Act (Canada) and the regulations promulgated thereunder (the “Tax Act”) applicable
to United States corporations, citizens and resident alien individuals purchasing Common Shares. The discussion is only a general
summary and does not purport to deal with all aspects of Canadian federal taxation that may be relevant to shareholders, including
those subject to special treatment under the Tax Act. Shareholders are advised to consult their own tax advisors regarding the
Canadian federal income tax consequences of holding and disposing of the Company's Common Shares, as well as any consequences arising
under U.S. federal, state or local tax laws or tax laws of other jurisdictions outside the United States. The summary is based
on the assumption that, for Canadian tax purposes, the purchasers or shareholders (i) deal at arm'slength with the Company, (ii)
are not resident or deemed to be resident in Canada, (iii) hold the Common Shares as capital property and (iv) do not use or hold
Common Shares in, or in the course of, carrying on business in Canada (a "Non-Resident Holder").





25







This summary does not apply to a shareholder that is a “financial
institution” (as defined in the Tax Act for the purpose of the “mark-to-market” rules), to a shareholder an interest
in which is a “tax shelter investment” (as defined in the Tax Act) or to a shareholder that has elected to report its
“Canadian tax results” (as defined in the Tax Act) in a currency other than Canadian currency.



Dividends paid or credited or deemed to be paid or credited
to a Non-Resident Holder on the Common Shares will generally be subject to Canadian withholding tax at a rate of 25%, subject to
reduction under the provisions of an applicable income tax treaty or convention between Canada and the country in which the Non-Resident
Holder is resident. For this purpose, dividends will include amounts paid by the Company in excess of the paid-up capital of the
Common Shares on redemption or a purchase for cancellation of such shares by the Company (other than purchases on the open market).



Where a Non-Resident Holder is a resident of the United States
for purposes of the Canada-United States Tax Convention (1980) and is fully entitled to the benefits under such treaty, the applicable
rate of Canadian withholding tax is generally reduced to 15% of the gross amount of the dividends (or 5% in the case of a resident
of the United States that is a company beneficially owning at least 10% of the Company’s voting shares).



A Non-Resident Holder will generally not be subject to tax in
Canada on capital gains realized from disposition of Common Shares, unless such shares are "taxable Canadian property"
within the meaning of the Tax Act and the Non-Resident Holder is not entitled to relief under an applicable tax treaty.



The Common Shares will generally not constitute taxable Canadian
property of the Non-Resident Holder unless at any time during the 60-month period that ends at that time more than 50% of the fair
market value of the Common Shares of the Company 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). Certain provisions of the Tax Act may deem property to be ‘‘taxable Canadian property’’
of a Non-Resident Holder in specific circumstances. Non-Resident Holders should consult their own tax advisors for advice having
regard to their particular circumstances.



United States Federal Income Tax Considerations



TO ENSURE COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230,
PROSPECTIVE INVESTORS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES IN THIS ANNUAL REPORT IS NOT INTENDED
OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED UPON, BY INVESTORS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED
UNDER THE CODE; (B) SUCH DISCUSSION IS BEING USED IN CONNECTION WITH THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS
ADDRESSED HEREIN; AND (C) PROSPECTIVE INVESTORS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT
TAX ADVISOR.



The following summary describes certain material U.S. federal
income tax considerations generally applicable to “U.S. Holders” (as defined below) with respect to the ownership and
disposition of the Company’s common shares offered hereunder. This summary is based on the Code, Treasury Regulations (whether
final, temporary or proposed), administrative rulings of the Internal Revenue Service (“IRS”), judicial decisions and
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 “U.S.-Canada tax treaty”), as in effect and available as of the date of this annual report,
all of which are subject to change, possibly with retroactive effect. It addresses only U.S. Holders that hold the Company’s
common shares as capital assets within the meaning of Section 1221 of the Code (generally, assets held for investment purposes).
The following summary does not purport to be a complete analysis of all of the potential U.S. federal income tax considerations
that may be relevant to particular U.S. Holders in light of their particular circumstances, nor does it deal with persons that
are subject to special tax rules, such as brokers, dealers in securities or currencies, financial institutions, mutual funds, insurance
companies, tax-exempt entities, qualified retirement plans, regulated investment companies, common trust funds, U.S. Holders subject
to the alternative minimum tax, U.S. Holders holding the Company’s common shares as part of a straddle, hedge or conversion
transaction or as part of a synthetic security or other integrated transaction, traders in securities that elect to use a mark-to-market
method of accounting for their securities holdings, U.S. Holders that have a “functional currency” other than the U.S.
dollar, U.S. expatriates, and persons that acquired the Company’s common shares in connection with the performance of services.
In addition, this summary does not address persons that hold an interest in a partnership or other pass-through entity that holds
the Company’s common shares, or tax considerations arising under the laws of any state, local or non-U.S. jurisdiction or
other U.S. federal tax considerations (e.g., estate or gift tax) other than those pertaining to the income tax.





26







As used herein, the term “U.S. Holder” means a beneficial
owner of the Company’s common shares that is (i) a citizen or individual resident of the U.S. for U.S. federal income tax
purposes, (ii) a corporation (or an entity classified as a corporation for U.S. federal income tax purposes) created or organized
in or under the laws of the U.S. or any political subdivision thereof, (iii) an estate, the income of which is subject to U.S.
federal income taxation regardless of its source, or (iv) a trust if (A) a U.S. court is able to exercise primary supervision over
its administration and one or more U.S. persons, within the meaning of Section 7701(a)(30) of the Code, have authority to control
all of its substantial decisions or (B) it has properly elected under applicable Treasury Regulations to be treated as a U.S. person.



The tax treatment of a partner in a partnership (or other entity
classified as a partnership for U.S. federal income tax purposes) may depend on both the partner’s and the partnership’s
status and the activities of such partnership. Partnerships that are beneficial owners of the Company’s common shares, and
partners in such partnerships, should consult their own tax advisors regarding the U.S. federal, state, local and non-U.S. tax
considerations applicable to them with respect to the ownership and disposition of the Company’s common shares.



THIS SUMMARY IS OF A GENERAL NATURE ONLY. IT IS NOT INTENDED
TO CONSTITUTE, AND SHOULD NOT BE CONSTRUED TO CONSTITUTE, LEGAL OR TAX ADVICE TO ANY PARTICULAR U.S. HOLDER. U.S. HOLDERS SHOULD
CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR PARTICULAR CIRCUMSTANCES.



Ownership and Disposition of the Company’s Common Shares



Distributions. Subject to the discussion below under
“United States Federal Income Tax Considerations –Passive Foreign Investment Company Rules” and “United
States Federal Income Tax Considerations –Certain Controlled Foreign Corporations Rules,” distributions made with respect
to the Company’s common shares (including any Canadian taxes withheld from such distributions) generally will be included
in the gross income of a U.S. Holder as dividend income to the extent of the Company’s current and accumulated earnings and
profits, as determined under U.S. federal income tax principles. Distributions in excess of the Company’s current and accumulated
earnings and profits, if made with respect to the Company’s common shares, will be treated as a return of capital to the
extent of the U.S. Holder’s adjusted tax basis in such common shares, and thereafter as capital gain.



For taxable years beginning before January 1, 2013, a dividend
paid by the Company generally will be taxed at the preferential tax rates applicable to long-term capital gains if (a) the Company
is a “qualified foreign corporation” (as defined below), (b) the U.S. Holder receiving such dividends is an individual,
estate, or trust, and (c) such dividend is paid on the Company’s shares that have been held by such U.S. Holder for at least
61 days during the 121-day period beginning 60 days before the ex-dividend date.



The Company generally will be a “qualified foreign
corporation” under Section 1(h)(11) of the Code (a “QFC”) if the Company is eligible for the benefits of the
U.S.-Canada tax treaty or, if not, the Company’s shares are readily tradable on an established securities market in the U.S.
However, even if the Company satisfies one or more of such requirements, the Company will not be treated as a QFC if the Company
is a PFIC for the taxable year during which it pays a dividend or for the preceding taxable year.



As discussed below, the Company has not made a determination
of whether it is or has been a PFIC. It is possible that the Company currently is, may have been or will be a PFIC.



If any dividends are paid in Canadian dollars, the amount includible
in gross income will be the U.S. dollar value of such dividend, calculated by reference to the exchange rate in effect on the date
of actual or constructive receipt of the payment, regardless of whether the payment is actually converted into U.S. dollars. If
any Canadian dollars actually or constructively received by a U.S. Holder are later converted into U.S. dollars, such U.S. Holder
may recognize gain or loss on the conversion, which will be treated as ordinary gain or loss. Such gain or loss generally will
be treated as gain or loss from sources within the U.S. for U.S. foreign tax credit purposes.





27







A U.S. Holder may be entitled to deduct or claim a credit for
Canadian withholding taxes, subject to applicable limitations in the Code. 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.” However, the amount of a distribution with
respect to the common shares that is treated as “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. Dividends paid to a U.S. Holder generally
will constitute “foreign source” income and generally will be categorized as “passive category” income.
U.S. Holders should consult their own tax advisors regarding the availability of the foreign tax credit in their particular circumstances.



Dispositions.Subject to the discussion below under “United
States Federal Income Tax Considerations –Passive Foreign Investment Company Rules” and “United States Federal
Income Tax Considerations –Certain Controlled Foreign Corporation Rules,” upon the sale, exchange or other taxable
disposition of the Company’s common shares, a U.S. Holder generally will recognize capital gain or loss equal to the difference
between (i) the amount of cash and the fair market value of any other property received upon the sale, exchange or other taxable
disposition and (ii) the U.S. Holder’s adjusted tax basis in such common shares. Capital gain or loss recognized upon a sale,
exchange or other taxable disposition of the Company’s common shares will generally be long-term capital gain or loss if
the U.S. Holder’s holding period with respect to such common shares disposed of is more than one year at the time of the
sale, exchange or other taxable disposition. The deductibility of capital loss is subject to limitations.



Passive Foreign Investment Company Rules



The foregoing discussion assumes that the Company is not a PFIC.
Certain adverse U.S. federal income tax rules generally apply to a U.S. person that owns or disposes of stock in a non-U.S. corporation
that is treated as a PFIC. In general, a non-U.S. corporation will be treated as a PFIC for any taxable year during which, after
applying relevant look-through rules with respect to the income and assets of subsidiaries, either (i) 75% or more of the non-U.S.
corporation’s gross income is passive income, or (ii) 50% or more of the average value of the non-U.S. corporation’s
assets produce or are held for the production of passive income. Special rules apply where a non-U.S. corporation owns, directly
or indirectly, at least 25% (by value) of the shares of another corporation (a “lower-tier corporation”).



For purposes of determining whether the Company is a PFIC, it
will be treated as if it held its proportionate share of the assets of any lower-tier corporation and received directly its proportionate
share of the income of any lower-tier corporation.



For purposes of the PFIC rules, and subject to certain exceptions,
passive income generally includes dividends, interest, certain rents and royalties, and the excess of gains over losses from certain
commodities transactions, including transactions involving oil and gas. However, gains and losses from commodities transactions
generally are excluded from the definition of passive income if (i) such gains or losses are derived by a non-U.S. corporation
in the active conduct of a commodity business, and (ii) “substantially all” of such corporation’s business is
as an active producer, processor, merchant or handler of commodities of like kind (the “active commodities business exclusion”).



The Company has not made a determination as to its PFIC status
for the current or any past taxable years. PFIC classification is factual in nature, generally cannot be determined until the close
of the taxable year in question, and is determined annually. Thus, there can be no assurance that the Company is not a PFIC for
the current taxable year, has not been for any past taxable years or will not be a PFIC for any future taxable years.





28







The following U.S. federal income tax consequences generally
will apply to a U.S. Holder of the Company’s common shares if the Company is treated as a PFIC:



Distributions.Distributions made by the Company with
respect to its common shares, to the extent such distributions are treated as “excess distributions” pursuant to Section
1291 of the Code, must be allocated rateably to each day of the U.S. Holder’s holding period for such common shares. The
amounts allocated to the taxable year during which the distribution is made, and to any taxable years in such U.S. Holder’s
holding period which are prior to the first taxable year in which the Company is treated as a PFIC, are included in such U.S. Holder’s
gross income as ordinary income for the taxable year of the distribution. The amount allocated to each other taxable year is taxed
as ordinary income in the taxable year of the distribution at the highest tax rate in effect for the U.S. Holder in that other
taxable year and is subject to an interest charge at the rate applicable to underpayments of tax. Any distribution made by the
Company that does not constitute an excess distribution would be treated in the manner described under “Item 10.E Additional
Information-Taxation-United States Federal Income Tax Considerations — Ownership and Disposition of the Company’s Common
Shares — Distributions,” above.



Dispositions. The entire amount of any gain realized upon the
U.S. Holder’s disposition of the Company’s common shares generally will be treated as an excess distribution made in
the taxable year during which such disposition occurs, with the consequences described above.



Elections. In general, the adverse U.S. federal income tax consequences
of holding stock of a PFIC described above may be mitigated if a U.S. shareholder of the PFIC is able to and timely makes a valid
qualified electing fund (“QEF”) election with respect to the PFIC or a valid mark-to-market election with respect to
the stock of the PFIC. U.S. Holders should be aware that there can be no assurance that the Company will supply U.S. Holders with
the information and statements that such U.S. Holders require to make a QEF election under Section 1295 of the Code.



Under recently enacted U.S. tax legislation and subject to future
guidance, if the Company is a PFIC, U.S. Holders will be required to file an annual information return with the IRS (on IRS Form
8621, which will be required to be filed with income tax or information returns) relating to their ownership of the common shares
(the “general filing requirement”). In addition under the current version of the Instructions to IRS Form 8621, if
the Company is a PFIC, U.S. Holders generally will be required to file IRS Form 8621 if they receive excess distributions from
or dispose of the common shares or in order to make certain tax elections with respect to the common shares (“the reportable
transaction filing requirement”). Pursuant to recent IRS guidance, the IRS has temporarily suspended the general filing requirement
under the recent legislation until the IRS releases a revised IRS Form 8621 which reflects the recently enacted U.S. tax legislation.
However, the reportable transaction filing requirement is not affected by the temporary suspension set forth in the recent IRS
guidance and continues to apply to PFIC shareholders under the current version of the Instructions to IRS Form 8621.



U.S. Holders should consult their own tax advisors as to
the tax consequences of owning and disposing of stock in a PFIC, including the availability of any elections that may mitigate
the adverse U.S. federal income tax consequences of holding stock of a PFIC.



Certain Controlled Foreign Corporation Rules



If more than 50% of the total voting power or the total value
of the Company’s outstanding shares is owned, directly or indirectly, by citizens or residents of the U.S., U.S. partnerships
or corporations, or U.S. estates or trusts (as defined by Section 7701(a)(30) of the Code), each of which own, directly or indirectly,
10% or more of the total voting power of the Company’s outstanding shares (each a “10% Shareholder”), the Company
could be treated as a “Controlled Foreign Corporation” (“CFC”) under Section 957 of the Code.



The Company’s classification as a CFC would bring into
effect many complex results, including that under Section 1248 of the Code, gain from the disposition of the Company’s common
stock by a U.S. Holder that is or was a 10% Shareholder at any time during the five-year period ending with the disposition will
be treated as a dividend to the extent of the Company’s earnings and profits attributable to the common shares sold or exchanged.



If the Company is classified as both a PFIC and a CFC, the Company
generally will not be treated as a PFIC with respect to 10% Shareholders.



The Company has made no determination as to whether it currently
meets or has met the definition of a CFC, and there can be no assurance that it will not be considered a CFC for the current or
any future taxable year.





29







The CFC rules are very complicated, and U.S. Holders should
consult their own financial advisor, legal counsel or accountant regarding the CFC rules and how these rules may impact their U.S.
federal income tax situation.



Surtax on Unearned Income



For tax years beginning after December 31, 2012, certain U.S.
persons, including individuals, estates and trusts, will be subject to an additional 3.8% Medicare tax on “net investment
income.” Investment income generally includes passive income such as interest, dividends, annuities, royalties, rents, and
capital gains. Net investment income would be reduced by properly allocable deductions to such income.



Information Reporting and Backup Withholding Tax



Dividend payments made with respect to shares of the Company’s
stock and proceeds from the sale, exchange or other disposition of common shares may be subject to information reporting requirements,
and to possible U.S. backup withholding (currently at a rate of 28%). In general, backup withholding will apply with respect to
reportable payments made to a U.S. Holder unless (i) the U.S. Holder is a corporation or other exempt recipient and, if required,
demonstrates such exemption, or (ii) the U.S. Holder furnishes the payor with a taxpayer identification number on IRS Form W-9
in the manner required, certifies under penalty of perjury that such U.S. Holder is not currently subject to backup withholding
and otherwise complies with the backup withholding requirements.



Backup withholding is not an additional tax. Rather, the amount
of any backup withholding imposed on a payment to a holder will be allowed as a refund or a credit against such holder’s
U.S. federal income tax liability, provided that the required information is furnished to the IRS.



Additional Reporting Requirements



Recently-enacted U.S. tax legislation generally requires a U.S.
individual to report to the IRS certain interests owned by such individual in stock issued by a non-U.S. person (such as the Company’s
common shares), if the aggregate value of all such interests exceeds $50,000. This reporting requirement is subject to certain
exceptions (including an exception for stock held in custodial accounts maintained by a U.S. financial institution), and applies
for tax years beginning after March 18, 2010. Pursuant to recent IRS guidance, this reporting requirement has been suspended until
the IRS releases IRS Form 8938. Additional guidance is expected regarding the specific information that will be required to be
reported on IRS Form 8938. Prior to filing their annual income tax returns, U.S. Holders should consult their tax advisers regarding
whether additional guidance has been issued with respect to this reporting requirement, and if so, how to comply with such guidance.



THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS
OF ALL TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT TO THE OWNERSHIP AND DISPOSITION OF THE COMPANY’S COMMON
SHARES. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR PARTICULAR
CIRCUMSTANCES.



F. Dividends and paying agents.



Not applicable.



G. Statement by experts.



Not applicable.



H. Documents on display.



Documents concerning the Company that are referred to in this
annual report on Form 20-F may be inspected at 36 Toronto Street, Suite 1000, Toronto, Ontario M5C 2C5 during regular business
hours of the Company.





30







You may also review a copy of the Company’s filings with
the SEC, including exhibits and schedules filed with this annual report on Form 20-F, at the SEC's public reference room 100 F
Street, N.E., Room 1580, Washington, D.C. 20549. You may also obtain copies of such materials upon payment of a duplicating fee,
by writing to the SEC. You may call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. The SEC maintains
a website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants
that file electronically with the SEC.



You may read and copy any reports, statements or other information
that the Company files with the SEC at the addresses indicated above and you may also access some of them electronically at the
website set forth above. These SEC filings are also available to the public from commercial document retrieval services.



The Company also files reports, statements and other information
with the Canadian Securities Administrators (the “CSA”), and these can be accessed electronically at the CSA's SEDAR
website (http://www.sedar.com).



I. Subsidiary Information.



Not applicable.



Item 11. Quantitative and Qualitative Disclosures About Market
Risk



The Company's activities expose it to a variety of financial
risks including credit risk, liquidity risk and market risk. Risk management is carried out by the Company's management team with
guidance from the Audit Committee under policies approved by the Board. The Board also provides regular guidance for overall risk
management.



Credit risk.Credit risk is the risk of
loss associated with a counterparty’s inability to fulfill its payment obligations. The Company's credit risk is primarily
attributable to cash and cash equivalents. The Company has no significant concentration of credit risk arising from operations.
Cash and cash equivalents are held with reputable financial institutions, from which management believes the risk of loss to be
minimal.



Liquidity risk.The Company's approach
to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at January 31,
2015, the Company had a cash balance of $4,035 (January 31, 2014 - $16,807) to settle current liabilities of $69,076 (January 31,
2014 - $35,917). All of the Company's financial liabilities have contractual maturities of less than 60 days and are subject to
normal trade terms.



It is expected the Company will be funded by shareholder loans
or private placements from related parties until the Company finds an asset or business to incorporate into the Company.



Market risk.Market risk is the risk of
loss that may arise from changes in market factors such as interest rate and foreign exchange rates.



(a) Interest rate risk



The Company has cash balances and no interest-bearing
debt. The Company's current policy is to invest excess cash in guaranteed investment certificates, bankers acceptance and money
market deposits, with reputable financial institutions. The interest rate risk is remote.



(b) Foreign currency risk



The Company's functional and reporting currency was
previously the United States dollar and major purchases were transacted in United States dollars. Subsequent to the dissolution
of Manhattan, the functional currency of the Company changed to Canadian dollars and major purchases are transacted in Canadian
dollars.



31







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



On January 11, 2012, the shareholders of the Company approved
the adoption of a shareholder rights plan agreement dated December 23, 2010 (the “Rights Plan”). The following description
of the Rights Plan is qualified in its entirety by reference to the Rights Plan, which is filed as Exhibit 2.1 to this annual report
on Form 20-F. On January 8, 2014, the Rights Plan was amended to permit the Board to waive application of the Rights Plan in appropriate
circumstances in its sole discretion.



Purpose of the Rights Plan



The primary purpose of the Rights Plan is to seek to ensure
that, in the context of a bid for control of the Company through an acquisition of shares, all shareholders have an equal opportunity
to participate in the bid and are given adequate time to access the bid. The Rights Plan in no way prohibits a change of control
of the Company in a transaction that is procedurally fair to shareholders. The Rights Plan does not attempt to discourage bids.
It allows a potential bidder to make a "permitted bid" directly to the shareholders of the Company without the prior
approval of the Board. Such permitted bid must be made to all shareholders and must remain open for a minimum period of 60 days
after the date of the bid and for a further period of 10 business days after the bidder publicly announces that the shares deposited
constitute more than 50% of the outstanding Common Shares held by independent shareholders.



Summary of the Rights Plan



The following summary of the Rights Plan does not purport to
be complete and is qualified in its entirety by reference to the Rights Plan.



Issuance of Rights



Pursuant to the Rights Plan, one Right has been issued and has
attached to each Common Share of the Company outstanding as of 4:00 p.m. (Toronto time) on December 23, 2010, the date of implementation
of the Company's Rights Plan, and one Right will continue to be issued in respect of each Common Share issued thereafter prior
to the earlier of the Separation Time (as defined below) and the expiration time.



Each Right entitles the holder thereof to purchase from the
Company one Common Share at the exercise price equal to five times the market price per Common Shares determined as at the Separation
Time, subject to adjustment and certain anti-dilution provisions (the “Exercise Price”). The Rights are not exercisable
until the Separation Time. If a Flip-in Event (defined below) occurs, each Right will entitle the registered holder to receive,
upon payment of the Exercise Price, that number of Common Shares of the Company, having an aggregate market price on the date of
the occurrence of such Flip-in Event equal to twice the Exercise Price for an amount in cash equal to the Exercise Price.



Trading of Rights



Until the occurrence of certain specific events, the Rights
will trade with the Common Shares of the Company and not be represented by any certificates for such Common Shares. The Rights
will separate and trade separately from the Common Shares to which they are attached and will become exercisable from and after
the Separation Time.





32







Separation Time



The “Separation Time” will occur on the close of
business on the tenth trading day after the earliest of: (a) the date of public announcement by the Company or an Acquiring Person
(defined below) of facts indicating that a person has become an Acquiring Person, (b) the date that any person commences or announces
an intention to commence a take-over bid, and (c) the date on which a Permitted Bid (as defined below) or a Competing Permitted
Bid (as described below) ceases to qualify as such, or such later date as the Board may determine.



Acquiring Person



In general, an “Acquiring Person” is a person who
is the beneficial owner of 20% or more of the outstanding voting shares of the Company. Excluded from the definition of “Acquiring
Person” are the Company and its subsidiaries, and any person who becomes the beneficial owner of 20% or more of the outstanding
voting shares of the Company as a result of one or more or any combination of a Voting Share Reduction, Permitted Bid Acquisitions,
Exempt Acquisition, a Pro Rata Acquisition, or a Convertible Security Acquisition. The definitions of “Voting Share Reduction”,
“Permitted Bid Acquisitions”, “Exempt Acquisition”, a “Pro Rata Acquisition”, or a “Convertible
Security Acquisition” are set out in the Rights Plan. However, in general:



(a) a “Voting Share Reduction” means an acquisition
or redemption by the Company or a subsidiary of voting shares which by reducing the number of voting shares outstanding increases
the percentage of outstanding voting shares beneficially owned by any person to 20% or more of the voting shares outstanding;



(b) a “Permitted Bid Acquisition” means a voting
share acquisition made pursuant to a Permitted Bid or a Competing Permitted Bid;



(c) an “Exempt Acquisition” means an acquisition
of voting shares: (i) in respect of which the directors have waived the application of the Flip-in Event provisions of the Rights
Plan; (ii) pursuant to a distribution by the Company of voting shares or convertible securities (x) pursuant to a prospectus or
similar document (provided that the purchaser does not thereby beneficially own a greater percentage of voting shares or convertible
securities so offered than the percentage of voting shares or convertible securities beneficially owned by the purchaser immediately
prior to such acquisition) or (y) by private placement provided that in such case, all necessary stock exchange approvals have
been obtained and complied with and the purchaser does not become the beneficial owner of more than 25% of the voting shares issued
and outstanding immediately prior to the private placement (and in making this determination, the securities to be issued to such
purchaser on the private placement will be deemed to be held by such purchaser but shall not be included in the aggregate number
of outstanding voting shares immediately prior to the private placement); and (iii) pursuant to an amalgamation, merger or other
statutory procedure requiring shareholder approval;



(d) a “Pro Rata Acquisition” means: (i) an acquisition
as a result of a stock dividend or a stock split or other event pursuant to which a person receives or acquires voting shares on
the same proportionate basis as all other holders of the same class of voting shares; (ii) the acquisition pursuant to a dividend
reinvestment plan of the Company or other plan made available by the Company to the holders of voting shares generally; or (iii)
the receipt and/or exercise of rights (other than the Rights) issued by the Company to all holders of a class of voting shares
to subscribe for or purchase voting shares, provided that such rights are acquired directly from the Company and not from any other
person; and



(e) a “Convertible Security Acquisition” means the
acquisition of voting shares on the exercise, conversion or exchange of convertible securities acquired by a person pursuant to
a Permitted Bid Acquisition, Exempt Acquisition or Pro Rata Acquisition.



Also excluded from the definition of “Acquiring Person”
are underwriters or members of a banking or selling group acting in such capacity in connection with a distribution of securities,
and a Person (a “Grandfathered Person”) who is the beneficial owner of 20% or more of the outstanding voting shares
of the Company as at the record time; provided, however, that this exception ceases to be applicable to a Grandfathered Person
in the event that such Grandfathered Person shall, after the record time, become the Beneficial Owner of any additional voting
shares outstanding at the record time, other than pursuant to one or any combination of a Voting Share Reduction, a Permitted Bid
Acquisition, an Exempt Acquisition or a Pro Rata Acquisition.





33







In addition, for purposes of determining whether a Flip-in Event
has occurred, generally, a person (including a trust company) who is engaged in the business of managing investment funds for others
and, as part of such person's duties for fully managed accounts, holds or exercises voting or dispositive power over voting shares
in the ordinary course of business, would not, by reason thereof, be considered to be the beneficial owner of such voting shares.
Exemptions are also provided for Crown agents and statutory or other registered pension plans or funds. In each case, the exemption
ceases to apply in the event that the exempt person is making a take-over bid (other than pursuant to a distribution by the Company,
pursuant to a Permitted Bid or Competing Permitted Bid or by means of ordinary course market transactions).



Flip-in Event



If a transaction occurs prior to the expiration time pursuant
to which any person becomes an Acquiring Person (a “Flip-in Event”), then each Right will constitute within ten trading
days of such occurrence that each Right (except for Rights beneficially owned by the Acquiring Person, its affiliates or associates
and/or persons acting jointly or in concert with the foregoing) shall thereafter constitute the right to purchase from the Company
upon payment of the exercise price that number of Common Shares of the Company having an aggregate market price on the date of
the occurrence of such Flip-in Event equal to twice the exercise price for an amount in cash equal to the exercise price (subject
to anti-dilution adjustments).



Permitted Bid



A “Permitted Bid” is a take-over bid where the bid
is made by way of a take-over bid circular and is a bid that complies with, among other things, the following: (a) the take-over
bid must be made to all holders of voting shares other than the bidder; and (b) (i) the take-over bid must not permit the bidder
to take up any Common Shares that have been tendered pursuant to the take-over bid prior to the expiry of a period not less than
60 days after the date of the take-over bid, and (ii) then only if at such time more than 50% of the voting shares held by the
independent shareholders (which generally includes shareholders other than the bidder, its affiliates or associates and/or persons
acting jointly or in concert with the foregoing), have been deposited or tendered pursuant to the take-over bid and not withdrawn.



Competing Permitted Bid



A “Competing Permitted Bid” is a take-over bid that
satisfies all the criteria of a permitted bid except that since it is made after a permitted bid or another competing permitted
bid (the “prior bid”) the time period for any take up and payment of voting shares tendered under a competing bid is
not 60 days, but is instead no earlier than the later of 35 days after the date of the Competing Permitted Bid and the 60thday after the date of the Prior Bid outstanding, and then only if at the close of business on the date voting shares are
first taken up or paid for, more than 50% of the outstanding voting shares held by independent shareholders have been deposited
or tendered pursuant to such Competing Prior Bid and not withdrawn. The requirements of a Permitted Bid and a Competing Permitted
Bid enable shareholders to decide whether the take-over bid or any Competing Permitted Bid is adequate on its own merits, without
being influenced by the likelihood that a take-over bid will succeed.



Lock-Up Agreement



The Rights Plan contains an exemption for “Lock-Up Agreements”,
where the agreement, among other things: (a) permits the locked-up person to withdraw voting shares from the lock-up bid to tender
to another bid that provides greater value, or if another bid is an offer for a greater number of voting shares (where the maximum
hurdle rate is 5%), and (b) provides for no break-up fees or similar fees payable to the locked-up person that are greater than:
(i) the cash equivalent of 3.5% of the price or value payable to the locked-up person under the lock-up bid; and (ii) one-half
of the difference in value payable to the locked-up person between the lock-up bid and the other bid.



Redemption



Until the occurrence of a Flip-In Event as to which the Board
has not issued a waiver, the Board, with the prior consent of the shareholders, may elect to redeem all but not less than all of
the then outstanding Rights at a redemption price of Cdn$0.00001 per Right (subject to anti-dilution adjustments).



34







Waiver



Until the occurrence of a Flip-in Event, the Board may waive
the application of the Rights Plan to a take-over bid that is not a Permitted Bid and that is made to all holders of voting shares,
but if it does so then it will be deemed to have waived the application of the Rights Plan to all similar bids made prior to the
expiry of any bid for which such a waiver was granted.



In addition, subject to the prior consent of holders of voting
shares, until the occurrence of a Flip-in Event, the Board may waive the application of the Rights Plan if such Flip-in Event would
occur by reason of an acquisition of voting shares other than pursuant to a take-over bid.



Term of the Rights Plan



The Rights Plan will expire on the close of business on December
23, 2020 unless extended by the Board.



Amending Power



The Company, without the prior consent of holders of voting
shares at any time prior to the Separation Time, may supplement or amend any provisions of the Rights Plan, except that Section
5 thereof, dealing with the rights agent, requires the written consent of the rights agent to such supplement or amendment. Any
amendment will be subject to receipt of any requisite approval or consent from any applicable regulatory authority, including necessary
approvals of the stock exchange on which the Common Shares may be listed.



Rights holder not a Shareholder



Until a Right is exercised, the holder thereof, as such, will
have no rights as a shareholder of the Company.



Item 15. Controls and Procedures



A. Disclosure Controls and Procedures.



As of January 31, 2015 and based on their evaluations, the Company's
principal executive officer and principal financial officer have concluded that the Company's disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective to ensure that the information required to be disclosed
by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in SEC rules and forms.



B. 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 under Exchange Act Rules 13a-15(f) and 15d-15(f).
The Company’s internal control over financial reporting is 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.



All internal control systems, no matter how well designed, have
inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can
only provide reasonable assurance with respect to financial reporting reliability and financial statement preparation and presentation.
In addition, projections of any evaluation of effectiveness to future periods are subject to risk that controls become inadequate
because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.



Management assessed the effectiveness of the Company's internal
control over financial reporting as of January 31, 2015. In making the assessment, management used the criteria issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on its assessment,
management concluded that, as of January 31, 2015, the Company's internal control over financial reporting was effective 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.





35







C. Attestation Report of the Registered Public Accounting
Firm.



This annual report on Form 20-F does not include an attestation
report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report
was not subject to attestation by the Company's registered public accounting firm pursuant to the rules of the SEC that permit
the Company to provide only management's report in this annual report.



D. Changes in Internal Control over Financial Reporting.



There were no changes in the Company’s internal controls
over financial reporting that occurred during the fiscal year ended January 31, 2015 that have materially affected, or are reasonably
likely to materially affect the Company’s internal control over financial reporting.



Item 16. [Reserved]



Item 16A. Audit Committee Financial Expert



The Board has determined that Mr. Carmelo Marrelli, a director
and Audit Committee member of the Company is an “audit committee financial expert” as defined in Form 20-F. Mr. Marrelli
is “independent,” as such term is defined under the Nasdaq Stock Market Rules.



Item 16B. Code of Ethics



The Company is committed to maintaining high standards of integrity
and accountability in conducting its business. It is the Company's goal to seek to ensure that its best interests are paramount
in all of its dealings with consultants, competitors, existing and potential business partners and other representatives wherever
possible, and are conducted in a manner that avoids actual or potential material conflicts of interest. The Board takes steps to
ensure directors exercise independent judgment in considering transactions and agreements in respect of which a director or officer
of the Company has a material interest, which include ensuring that directors and officers are familiar with the rules concerning
reporting conflicts of interest and obtaining direction from the Company’s President and Chief Executive Officer and/or the
Company’s legal counsel, as appropriate, regarding any potential conflicts of interest. The Company has not yet adopted a
formal written code of ethics because the Company believes that the fiduciary duties required to be met by the Company’s
officers and directors, as set forth above, are sufficient to ensure that the Company operates in an ethical manner at this stage
of the Company’s Development.



Item 16C. Principal Accountant Fees and Services



MNP LLP (MSCM LLP prior to its merger with MNP LLP) has served
as the Company’s auditing firm since March 26, 2009. Aggregate fees billed to the Company for professional services rendered
by MNP LLP and its affiliates during the fiscal years ended January 31, 2015 and January 31, 2014 are detailed below:







|                   |  | Year Ended January 31, |      
|------------------ |  | ---------------------- | -----
|                   |  | (Cdn$)                 |      
|                   |  | 2015                   |      
|Audit Fees         |  | $                      | 6,500
|Audit-Related Fees |  | $                      |      
|Tax Fees           |  | $                      |      
|All Other Fees     |  | $                      |      



36







The nature of each category of fees is as follows:



Audit Fees:



Audit fees were paid for professional services rendered by the
auditors for the audit of the Company’s annual financial statements, reviews of the Company’s condensed consolidated
interim financial statements and attestation services provided in connection with statutory and regulatory filings or engagements.



Audit-Related Fees:



Audit-related fees are defined as the aggregate fees billed
for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s
financial statements and are not reported under the Audit Fees item above. This category comprises fees billed for advisory services
associated with the Company’s financial reporting.



Tax Fees:



Tax fees are defined as the aggregate fees billed for professional
services rendered by the Company’s external auditor for tax compliance, tax advice and tax planning.



All Other Fees:



All other fees include expenses reimbursed for services rendered
to the Company and its subsidiaries, other than the services described above.



Pre-approval Policies and Procedures



All services to be performed by the Company’s auditor
must be approved in advance by the Audit Committee. The Audit Committee, in consultation with senior management, reviews annually
and recommends for approval by the Board:



| | · | the appointment of independent auditors
at the annual general meeting of shareholders of the Company;
| | - | -----------------------------------------------------------------------------------------------------



| | · | the remuneration of the auditors; and
| | - | -------------------------------------



| | · | pre-approval of all audit and non-audit
services to be provided to the Company by the external auditor, other than any de minimisservices other than audit, review
or attest services allowed by applicable law or regulation.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Since the commencement of the Company's most recently completed
financial year, every recommendation of the Audit Committee to nominate or compensate an external auditor was adopted by the Board.



Of the total aggregate fees paid by the Company to its accountants
during the fiscal year ended January 31, 2015, none of the aggregate fees, were approved by the Audit Committee pursuant to the
de minimisexception provided by Section (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.



Item 16D. Exemptions from the Listing Standards for Audit
Committees



Not applicable.



Item 16E. Purchases of Equity Securities by the Issuer and
Affiliated Purchasers



Not applicable.



Item 16F. Change in Registrant's Certifying Accountant



Not applicable.



37







Item 16G. Corporate Governance



Not applicable.



Item 16H. Mine Safety Disclosure



Not applicable.



PART III



Item 17. Financial Statements.



Following is a list of financial statements filed as part of
this annual report on Form 20-F.



| | · | Auditor's Report for Royal Standard Minerals Inc. for the years ended January 31, 2015 and 2014. Consolidated Statements of Financial Position of Royal Standard Minerals Inc. as at January 31, 2015 and January 31, 2014. 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | Consolidated Statements of Operations of Royal Standard Minerals Inc. for the years ended January 31, 2015 and 2014.                                                                                                        
| | · | Consolidated Statements of Comprehensive Loss of Royal Standard Minerals Inc. for the years ended January 31, 2015 and 2014.                                                                                                
| | · | Consolidated Statements of Changes in Shareholders’ Equity of Royal Standard Minerals Inc. for the years ended January 31, 2015 and 2014.                                                                                   
| | · | Consolidated Statements of Cash Flows of Royal Standard Minerals Inc. for the years ended January 31, 2015 and 2014.                                                                                                        
| | · | Notes to the Consolidated Financial Statements of Royal Standard Minerals Inc.                                                                                                                                              
| | · | Management's Discussion and Analysis for the year ended January 31, 2015.                                                                                                                                                   
| | · | Auditor's Report for Royal Standard Minerals Inc. for the years ended January 31, 2014 and 2013. Consolidated Statements of Financial Position of Royal Standard Minerals Inc. as at January 31, 2014 and, January 31, 2013.
| | · | Consolidated Statements of Operations of Royal Standard Minerals Inc. for the years ended January 31, 2014 and 2013.                                                                                                        
| | · | Consolidated Statements of Comprehensive Loss of Royal Standard Minerals Inc. for the years ended January 31, 2014 and 2013.                                                                                                
| | · | Consolidated Statements of Shareholders' Equity of Royal Standard Minerals Inc. for the years ended January 31, 2014 and 2013.                                                                                              
| | · | Consolidated Statements of Cash Flows of Royal Standard Minerals Inc. for the years ended January 31, 2014 and 2013.                                                                                                        
| | · | Notes to the Consolidated Financial Statements of Royal Standard Minerals Inc.                                                                                                                                              
| | · | Auditor's Report for Royal Standard Minerals Inc. for the years ended January 31, 2013 and 2012. Consolidated Statements of Financial Position of Royal Standard Minerals Inc. as at January 31, 2013 and, January 31, 2012.
| | · | Consolidated Statements of Operations of Royal Standard Minerals Inc. for the years ended January 31, 2013 and 2012.                                                                                                        
| | · | Consolidated Statements of Comprehensive Loss of Royal Standard Minerals Inc. for the years ended January 31, 2013 and 2012.                                                                                                
| | · | Consolidated Statements of Shareholders' Equity of Royal Standard Minerals Inc. for the years ended January 31, 2013 and 2012.                                                                                              
| | · | Consolidated Statements of Cash Flows of Royal Standard Minerals Inc. for the years ended January 31, 2013 and 2012.                                                                                                        
| | · | Notes to the Consolidated Financial Statements of Royal Standard Minerals Inc.                                                                                                                                              



The consolidated financial statements of Royal Standard Minerals
Inc. were prepared in accordance with International Financial Reporting Standards and are expressed in United States dollars.



38
















Royal Standard Minerals Inc.



(Expressed in United States Dollars)



Consolidated Financial Statements



Years Ended January 31, 2015 and 2014








39







Independent Auditor's Report



To the Shareholders of Royal Standard Minerals
Inc.



We have audited the accompanying consolidated
financial statements of Royal Standard Minerals Inc., which comprise the consolidated statements of financial position as at January
31, 2015 and 2014, and the consolidated statements of operations, comprehensive (loss) income, changes in shareholders' deficiency
and cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information.



Management's Responsibility for the
Financial Statements



Management is responsible for the preparation
and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards
and for such internal control as management determines is necessary to enable the preparation of 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 with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement.



The Company is not required to have, nor
were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly,
we express no such opinion.



An audit involves performing procedures
to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation
of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.



We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our audit opinion.



40







Opinion



In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of Royal Standard Minerals Inc. as at January 31, 2015
and 2014, and its financial performance and its cash flows for the years then ended in accordance with International Financial
Reporting Standards.



Emphasis of Matter



Without modifying our opinion, we draw
attention to Note 1 to the consolidated financial statements which highlights the existence of a material uncertainty relating
to conditions that cast significant doubt on Royal Standard Minerals Inc.'s ability to continue as a going concern.







Mississauga, Ontario



May 22, 2015



41







|Royal Standard Minerals Inc.                 
|---------------------------------------------
|Consolidated Statements of Financial Position
|(Expressed in United States Dollars)         



|                                                   |  | As at       |             |   | As at       |  
|-------------------------------------------------- |  | ----------- | ----------- | - | ----------- | -
|                                                   |  | January 31, |             |   | January 31, |  
|                                                   |  | 2015        |             |   | 2014        |  
|ASSETS                                             |  |             |             |   |             |  
|                                                   |  |             |             |   |             |  
|Current                                            |  |             |             |   |             |  
|Cash and cash equivalents                          |  | $           | 4,035       |   |             | $
|Sundry receivables and prepaids (Note 7)           |  |             | 1,994       |   |             |  
|                                                   |  |             |             |   |             |  
|Total assets                                       |  | $           | 6,029       |   |             | $
|                                                   |  |             |             |   |             |  
|LIABILITIES AND SHAREHOLDERS' DEFICIENCY           |  |             |             |   |             |  
|                                                   |  |             |             |   |             |  
|Liabilities                                        |  |             |             |   |             |  
|Current                                            |  |             |             |   |             |  
|Accounts payable and accrued liabilities (Note 10) |  | $           | 53,794      |   |             | $
|Notes payable (Notes 11 and 17)                    |  |             | 15,282      |   |             |  
|                                                   |  |             |             |   |             |  
|Total liabilities                                  |  |             | 69,076      |   |             |  
|                                                   |  |             |             |   |             |  
|Shareholders' Deficiency                           |  |             |             |   |             |  
|Share capital (Note 13(b))                         |  |             | 28,273,230  |   |             |  
|Reserves                                           |  |             | 10,900,438  |   |             |  
|Accumulated deficit                                |  |             | (39,250,301 | ) |             |  
|Accumulated other comprehensive income             |  |             | 13,586      |   |             |  
|                                                   |  |             |             |   |             |  
|Total shareholder's deficiency                     |  |             | (63,047     | ) |             |  
|                                                   |  |             |             |   |             |  
|Total liabilities and shareholders' deficiency     |  | $           | 6,029       |   |             | $



The Company and Operations and Going Concern(Note 1)

Contingencies(Note 18)

Subsequent event(Note 21)



Approved by the Board:



|"Carmelo Marrelli" |  | "George Duguay" | 
|------------------ |  | --------------- | 
|Director           |  | Director        | 



The accompanying notes are an integral part
of these consolidated financial statements.



42







Royal Standard Minerals Inc.

Consolidated Statements of Operations

|(Expressed in United States Dollars)
|------------------------------------



|                                                                  |  | Years Ended |        
|----------------------------------------------------------------- |  | ----------- | -------
|                                                                  |  | January 31, |        
|                                                                  |  | 2015        |        
|                                                                  |  |             |        
|Expenses                                                          |  |             |        
|Exploration and evaluation expenditures (Note 8)                  |  | $           | -      
|General and administrative (Note 19)                              |  |             | 57,174 
|                                                                  |  |             |        
|                                                                  |  |             | 57,174 
|                                                                  |  |             |        
|Operating loss                                                    |  |             | (57,174
|                                                                  |  |             |        
|Finance income                                                    |  |             | -      
|Impairment of marketable securities (Note 6)                      |  |             | -      
|Gain on sale of property interests and related assets (Note 8(a)) |  |             | -      
|Gain on dissolution of subsidiary (Note 3)                        |  |             | -      
|Write-off of accounts payable and accrued liabilities             |  |             | -      
|Gain on settlement and release (Note 8(b))                        |  |             | -      
|Foreign currency translation adjustment                           |  |             | -      
|                                                                  |  |             |        
|Net (loss) income for the year                                    |  | $           | (57,174
|                                                                  |  |             |        
|Basic (loss) income per share (Note 15)                           |  | $           | (0.00  
|Diluted (loss) income per share (Note 15)                         |  | $           | (0.00  



The accompanying notes are an integral part
of these consolidated financial statements.



43







Royal Standard Minerals Inc.

Consolidated Statements of Comprehensive (Loss) Income

|(Expressed in United States Dollars)
|------------------------------------



|                                                          |  | Years Ended |        
|--------------------------------------------------------- |  | ----------- | -------
|                                                          |  | January 31, |        
|                                                          |  | 2015        |        
|                                                          |  |             |        
|Net (loss) income for the year                            |  | $           | (57,174
|                                                          |  |             |        
|Other comprehensive income                                |  |             |        
|Item that will not be reclassified subsequently to income |  |             |        
|Foreign currency translation                              |  |             | 7,684  
|                                                          |  |             |        
|Comprehensive (loss) income for the year                  |  | $           | (49,490



The accompanying notes are an integral part
of these consolidated financial statements.



44







Royal Standard Minerals Inc.

Consolidated Statements of Changes in Shareholders' Deficiency

|(Expressed in United States Dollars)
|------------------------------------



|                                                                         |  |         |            |  |          |   |            |             |  |   | Accumulated   |   |  |       |       
|------------------------------------------------------------------------ |  | ------- | ---------- |  | -------- | - | ---------- | ----------- |  | - | ------------- | - |  | ----- | ------
|                                                                         |  |         |            |  |          |   |            |             |  |   | Other         |   |  |       |       
|                                                                         |  | Share   |            |  |          |   |            | Accumulated |  |   | Comprehensive |   |  |       |       
|                                                                         |  | Capital |            |  | Reserves |   |            | Deficit     |  |   | Income        |   |  | Total |       
|                                                                         |  |         |            |  |          |   |            |             |  |   |               |   |  |       |       
|Balance, January 31, 2013                                                |  | $       | 28,104,264 |  |          | $ | 11,010,304 |             |  | $ | (39,262,352   | ) |  | $     | -     
|Private placement - common shares                                        |  |         | 16,400     |  |          |   | -          |             |  |   | -             |   |  |       | -     
|Shares issued for settlement of accounts payable and accrued liabilities |  |         | 152,566    |  |          |   | -          |             |  |   | -             |   |  |       | -     
|Foreign currency translation                                             |  |         | -          |  |          |   | -          |             |  |   | -             |   |  |       | 5,902 
|Share-based payments                                                     |  |         | -          |  |          |   | (109,866   | )           |  |   | -             |   |  |       | -     
|Net income for the year                                                  |  |         | -          |  |          |   | -          |             |  |   | 69,225        |   |  |       | -     
|                                                                         |  |         |            |  |          |   |            |             |  |   |               |   |  |       |       
|Balance, January 31, 2014                                                |  |         | 28,273,230 |  |          |   | 10,900,438 |             |  |   | (39,193,127   | ) |  |       | 5,902 
|Foreign currency translation                                             |  |         | -          |  |          |   | -          |             |  |   | -             |   |  |       | 7,684 
|Net (loss) for the year                                                  |  |         | -          |  |          |   | -          |             |  |   | (57,174       | ) |  |       | -     
|                                                                         |  |         |            |  |          |   |            |             |  |   |               |   |  |       |       
|Balance, January 31, 2015                                                |  | $       | 28,273,230 |  |          | $ | 10,900,438 |             |  | $ | (39,250,301   | ) |  | $     | 13,586



The accompanying notes are an integral part
of these consolidated financial statements.



45







Royal Standard Minerals Inc.

Consolidated Statements of Cash Flows

|(Expressed in United States Dollars)
|------------------------------------



|                                                                                      |  | Years Ended |        
|------------------------------------------------------------------------------------- |  | ----------- | -------
|                                                                                      |  | January 31, |        
|                                                                                      |  | 2015        |        
|                                                                                      |  |             |        
|Operating activities                                                                  |  |             |        
|Net (loss) income for the year                                                        |  | $           | (57,174
|Operating items not involving cash:                                                   |  |             |        
|Depreciation                                                                          |  |             | -      
|Accretion in asset retirement obligations                                             |  |             | -      
|Share-based payments                                                                  |  |             | -      
|Shares issued for settlement of accounts payable and accrued liabilities              |  |             | -      
|Impairment of marketable securities                                                   |  |             | -      
|Gain on sale of property interests                                                    |  |             | -      
|Gain on dissolution of subsidiary                                                     |  |             | -      
|Lawsuit settlement                                                                    |  |             | -      
|Gain on settlement and release                                                        |  |             | -      
|Write-off of accounts payable and accrued liabilities                                 |  |             | -      
|Foreign exchange                                                                      |  |             | 7,684  
|Changes in non-cash working capital:                                                  |  |             |        
|Sundry receivables and prepaids                                                       |  |             | 3,559  
|Accounts payable and accrued liabilities                                              |  |             | 17,877 
|                                                                                      |  |             |        
|Cash (used in) provided by operating activities                                       |  |             | (28,054
|                                                                                      |  |             |        
|Financing activities                                                                  |  |             |        
|Private placement - common shares                                                     |  |             | -      
|Notes payable                                                                         |  |             | 15,282 
|Other repayments                                                                      |  |             | -      
|Proceeds from sale of property interests and related assets, net of transaction costs |  |             | -      
|                                                                                      |  |             |        
|Cash provided by (used in) financing activities                                       |  |             | 15,282 
|                                                                                      |  |             |        
|Change in cash and cash equivalents                                                   |  |             | (12,772
|Cash and cash equivalents, beginning of year                                          |  |             | 16,807 
|                                                                                      |  |             |        
|Cash and cash equivalents, end of year                                                |  | $           | 4,035  



The accompanying notes are an integral part
of these consolidated financial statements.



46







Royal Standard Minerals Inc.

Notes to Consolidated Financial Statements

(Expressed in United States Dollars)

January 31, 2015 and 2014








| | 1. | The Company and Operations and Going Concern
| | -- | --------------------------------------------



Royal Standard Minerals Inc. (the "Company")
is a publicly held company focused on identifying suitable assets or businesses to acquire or merge with, with a view to maximizing
value for shareholders. The Company was previously engaged in the acquisition, exploration and development of gold and precious
metal properties in the United States of America but has disposed of these interests. The Company is continued under the Canada
Business Corporations Act and its common shares are quoted in the United States of America on the Over-the-Counter ("OTC")
Bulletin Board. Inception has been deemed to be June 26, 1996, the date on which the Company acquired all of the outstanding common
shares of Southeastern Resources Inc. ("SRI"), which acquisition was accounted for as a reverse takeover of the Company
by SRI. The Company's head office is located at 36 Toronto Street, Suite 1000, Toronto, Ontario, M5C 2C5, Canada.



The consolidated financial statements were
approved by the Board of Directors on May 22, 2015.



These consolidated financial statements
have been prepared on the basis of accounting principles applicable to a going concern, which assume that the Company will continue
in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course
of operations as they come due. In assessing whether the going concern assumption is appropriate, management takes into account
all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting
period. Management is aware, in making its assessment, of material uncertainties related to events or conditions that cast significant
doubt upon the entity's ability to continue as a going concern. The Company had a loss of $57,174 during the year ended January
31, 2015 (year ended January 31, 2014 - income of $69,225) and has an accumulated deficit of $39,250,301 (January 31, 2014 - $39,193,127).
In addition, the Company has a working capital deficiency of $63,047 at January 31, 2015 (January 31, 2014 - $13,557).



There is significant doubt regarding the
going concern assumption and, accordingly, the ultimate appropriateness of the use of accounting principles applicable to a going
concern. These consolidated financial statements do not reflect the adjustments, to the carrying values or classifications of assets
and liabilities or to the reported expenses that would be necessary if the Company were unable to realize its assets and settle
its liabilities as a going concern in the normal course of operations for the foreseeable future. These adjustments could be material.



| | 2. | Significant Accounting Policies
| | -- | -------------------------------



Statement of compliance



The consolidated financial statements have
been prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting
Standards Board (“IASB”) and interpretations issued by the IFRS Interpretations Committee of the IASB. The policies
set out below have been consistently applied to all periods presented.



Principles of consolidation



These consolidated financial statements
include the accounts of the Company and its previously wholly-owned subsidiaries up to the date of their dissolution, Kentucky
Standard Energy Company, Inc. ("Kentucky") and Manhattan Mining Co. ("Manhattan"), both United States companies
(see note 3). All intercompany transactions and balances have been eliminated upon consolidation.



47







Royal Standard Minerals Inc.

Notes to Consolidated Financial Statements

(Expressed in United States Dollars)

January 31, 2015 and 2014








| | 2. | Significant Accounting Policies (Continued)
| | -- | -------------------------------------------



Equipment



Equipment is recorded at cost less accumulated
depreciation. Depreciation is provided using the declining balance method using the following rates:



|Exploration equipment | - 25% to 30%
|--------------------- | ------------



At the end of each reporting period, the
Company reviews the carrying amounts of its equipment to determine whether there is any indication that the equipment has suffered
an impairment loss. Where such an indication exists, the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss. The recoverable amount is the higher of the equipment's fair value less cost to sell or its value
in use.



Exploration and evaluation expenditures



The Company expenses exploration and evaluation
expenditures as incurred. Exploration and evaluation expenditures include acquisition costs of mineral properties, property option
payments and evaluation activity.



Once a project has been established as
commercially viable and technically feasible, related development expenditure is capitalized. This includes costs incurred in preparing
the site for mining operations. Capitalization ceases when the mine is capable of commercial production, with the exception of
development costs that give rise to a future benefit.



Restoration, rehabilitation and environmental obligations



A legal or constructive obligation to incur
restoration, rehabilitation and environmental costs may arise when environmental disturbance is caused by the exploration, development
or ongoing production of a mineral property interest. Such costs arising from the decommissioning of plant and other site preparation
work, discounted to their net present value, are provided for and recorded in the exploration and evaluation expenditures, as soon
as the obligation to incur such costs arises. Discount rates using a pretax rate that reflects the time value of money are used
to calculate the net present value. These costs are charged against profit or loss over the economic life of the related asset,
through amortization using either a unit-of production or the straight-line method as appropriate. The related liability is adjusted
for each period for the unwinding of the discount rate and for changes to the current market-based discount rate, amount or timing
of the underlying cash flows needed to settle the obligation.



Share-based payments



The fair value of the stock options granted
to directors, officers and employees is determined using the Black-Scholes option pricing model and management's assumptions as
disclosed in note 14 and recorded as share-based payments expense over the vesting period of the stock options, with the offsetting
credit recorded as an increase in reserves. The fair value of stock options issued to other than employees are measured at the
fair value of the goods or services received unless this cannot be reliably estimated, and are recognized over the period of service.
If the stock options are exercised, the proceeds are credited to share capital and the fair value at the date of grant is reclassified
from reserves to share capital.



48







Royal Standard Minerals Inc.

Notes to Consolidated Financial Statements

(Expressed in United States Dollars)

January 31, 2015 and 2014








| | 2. | Significant Accounting Policies (Continued)
| | -- | -------------------------------------------



Income taxes



Tax expense comprises current and deferred
tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination,
or items recognized directly in equity or in other comprehensive income.



Current tax is the expected tax payable
or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date,
and any adjustment to tax payable in respect of previous years.



Deferred tax is recognized in respect of
temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used
for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets
or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss,
and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that
they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences
arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary
differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred
tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and
they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they
intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.



A deferred tax asset is recognized for
unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits
will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to
the extent that it is no longer probable that the related tax benefit will be realized.



Income per common share



Basic income per share is computed by dividing
the income or loss for the year by the weighted average number of common shares outstanding during the year, including contingently
issuable shares which are included when the conditions necessary for issuance have been met. Diluted income per share is calculated
in a similar manner, except that the weighted average number of common shares outstanding is increased to include potentially issuable
common shares from the assumed exercise of common share purchase options and warrants, if dilutive. The number of additional shares
included in the calculation is based on the treasury stock method for options and warrants.



49







Royal Standard Minerals Inc.

Notes to Consolidated Financial Statements

(Expressed in United States Dollars)

January 31, 2015 and 2014








| | 2. | Significant Accounting Policies (Continued)
| | -- | -------------------------------------------



Foreign currency translation



Effective November 7, 2013, the functional
currency of the Company changed to Canadian dollars as a significant portion of the Company's expenses are denominated in Canadian
dollars, the dissolution of Manhattan ended all of the Company's United States operations (see note 3) and future sources of financing
are anticipated to be denominated in Canadian dollars. Prior to that time, the functional currency was the United States dollar.
The change to the Company's functional currency has been accounted for in accordance with IAS 21 - The Effects of Changes in Foreign
Exchange Rates. All amounts in these financial statements are presented in US dollars ("presentation currency") since
the United States dollar provides a more useful point of reference for investors.



Subsequent to the change in functional
currency described above, the Company translates the assets and liabilities of the Company from the functional currency to the
presentation currency at the period end rate. Revenue and expenses are translated at the average rate of exchange prevailing during
the period. The resulting unrealized gain or loss on translation is recognized as other comprehensive income or loss. Equity is
translated at historical rates.



Financial instruments



The Company recognizes financial assets
and financial liabilities when the Company becomes a party to a contract. Financial assets and financial liabilities, with the
exception of financial assets classified at fair value through profit or loss, are measured at fair value plus transaction costs
on initial recognition. Financial assets at fair value through profit or loss are measured at fair value on initial recognition
and transaction costs are expensed when incurred. Securities are accounted for at the trade date.



Measurement in subsequent periods depends
on the classification of the financial instrument.



i) Financial assets at fair value through
profit or loss ("FVTPL")



Financial assets are classified as FVTPL
when acquired principally for the purpose of trading, if so designated by management (fair value option), or if they are derivative
assets that are not part of an effective and designated hedging relationship. Financial assets classified as FVTPL are measured
at fair value, with changes recognized in the consolidated statements of operations.



The Company’s financial assets classified
as FVTPL include cash and cash equivalents. The Company does not currently hold any derivative instruments or apply hedge accounting.



ii) Available-for-sale financial assets



Financial assets are classified as available-for-sale
when so designated by management. Financial assets classified as available-for-sale are measured at fair value, with changes recognized
in the other comprehensive income.



The Company did not have any financial
asset classified as available-for-sale at January 31, 2015.



50







Royal Standard Minerals Inc.

Notes to Consolidated Financial Statements

(Expressed in United States Dollars)

January 31, 2015 and 2014








| | 2. | Significant Accounting Policies (Continued)
| | -- | -------------------------------------------



Financial instruments (continued)



iii) Loans and receivables



Loans and receivables are non-derivative
financial assets that have fixed or determinable payments and are not quoted in an active market. Subsequent to initial recognition,
loans and receivables are carried at amortized cost using the effective interest method.



Sundry receivables are classified as loans
and receivables.



iv) Financial liabilities at FVTPL



This category comprises derivatives, or
liabilities acquired or incurred principally for the purpose of being sold or repurchased in the near term. They are carried in
the consolidated statements of financial position at fair value with changes in fair value recognized in the consolidated statements
of operations.



The Company may enter into certain financial
derivative contracts in order to manage the exposure to market risks from fluctuations in commodity prices. The Company’s
policy is not to utilize derivative financial instruments for speculative purposes.



Embedded derivatives are separated from
the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded
derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition
of a derivative, and the combined instrument is not measured at FVTPL. Changes in the fair value of separable embedded derivatives
are recognized immediately in profit or loss.



v) Other financial liabilities



Other financial liabilities are financial
liabilities that are not classified as FVTPL. Subsequent to initial recognition, other financial liabilities that are not subject
to hedge accounting, are measured at amortized cost using the effective interest method.



Accounts payable and accrued liabilities
and note payable are classified as other financial liabilities. The Company does not currently apply hedge accounting.



The effective interest method is a method
of calculating the amortized cost of an instrument and of allocating interest income over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form
an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of
the debt instrument to the net carrying amount on initial recognition.



51







Royal Standard Minerals Inc.

Notes to Consolidated Financial Statements

(Expressed in United States Dollars)

January 31, 2015 and 2014








| | 2. | Significant Accounting Policies (Continued)
| | -- | -------------------------------------------



Financial instruments (continued)



vi) Financial instruments recorded at
fair value



Financial instruments recorded at fair
value on the consolidated statements of financial position are classified using a fair value hierarchy that reflects the significance
of the inputs used in making the measurements. The fair value hierarchy has the following levels: Level 1 - valuation based on
quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - valuation techniques based on inputs
other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and Level 3 - valuation techniques using inputs for the asset or liability that are not
based on observable market data (unobservable inputs). As of January 31, 2015 and 2014, the financial asset measured at fair value
is the Company's cash and cash equivalents.



Cash and cash equivalents is considered
Level 1.



Significant accounting judgments
and estimates



The preparation of these consolidated financial
statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes
could differ from these estimates. These consolidated financial statements include estimates that, by their nature, are uncertain.
The impacts of such estimates are pervasive throughout the consolidated financial statements, and may require accounting adjustments
based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and
future periods if the revision affects both current and future periods. These estimates are based on historical experience, current
and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under
the circumstances.



Critical accounting estimates



Significant assumptions about the future
that management has made that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event
that actual results differ from assumptions made, relate to, but are not limited to, the following:



| | · | the inputs used in accounting for share
based payment transactions in the consolidated statements of operations.
| | - | ----------------------------------------------------------------------------------------------------------------



52







Royal Standard Minerals Inc.

Notes to Consolidated Financial Statements

(Expressed in United States Dollars)

January 31, 2015 and 2014








| | 2. | Significant Accounting Policies (Continued)
| | -- | -------------------------------------------



Critical accounting estimates (continued)



Critical accounting judgments



| | · | the categorization of financial assets
and liabilities is an accounting policy that requires management to make judgments or assessments;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------



| | · | the measurement of income taxes payable
and deferred income tax assets and liabilities requires management to make judgments in the interpretation and application of the
relevant tax laws. Deferred tax assets require management to assess the likelihood that the Company will generate taxable income
in future periods in order to utilize recognized deferred tax assets;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | going concern presentation of the consolidated
financial statements which assumes that the Company will continue in operation for the foreseeable future and will be able to realize
its assets and discharge its liabilities in the normal course of operations as they come due; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | management's determination that the functional
currency of the Company is the Canadian Dollar.
| | - | ----------------------------------------------------------------------------------------------



Adoption of new accounting standards



IAS 32 – Financial Instruments: Presentation
(“IAS 32”) was amended by the IASB in December 2011 to clarify certain aspects of the requirements on offsetting. The
amendments focus on the criterion that an entity currently has a legally enforceable right to set off the recognized amounts and
the criterion that an entity intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
At February 1, 2014, the Company adopted this pronouncement and there was no material impact on the Company's consolidated financial
statements.



New standards not yet adopted and interpretations issued
but not yet effective



IFRS 9 – Financial instruments (“IFRS
9”) was issued by the IASB in October 2010 and will replace IAS 39 - Financial Instruments: Recognition and Measurement (“IAS
39”). IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing
the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context
of its business model and the contractual cash flow characteristics of the financial assets. Most of the requirements in IAS 39
for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9. The new standard also requires
a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods
beginning on or after January 1, 2018. Earlier adoption is permitted. The Company is in the process of assessing the impact of
this pronouncement.



53







Royal Standard Minerals Inc.

Notes to Consolidated Financial Statements

(Expressed in United States Dollars)

January 31, 2015 and 2014








| | 3. | Dissolution of Subsidiaries
| | -- | ---------------------------



(a) On September 5, 2013, the Kentucky
Secretary of State accepted the articles of dissolution for Kentucky Kentucky and Kentucky has been dissolved. As a result, a gain
on dissolution of subsidiary of $30,100 was recorded as a result of accounts payable and accrued liabilities dissolved.



(b) On November 7, 2013, the Nevada Secretary
of State accepted the articles of dissolution for Manhattan and Manhattan has been dissolved. As a result, a gain on dissolution
of subsidiary of $372,682 was recorded.



|Net liabilities dissolved                |  |   |          |  
|---------------------------------------- |  | - | -------- | -
|Reclamation bonds                        |  | $ | 9,550    |  
|Accounts payable and accrued liabilities |  |   | (379,254 | )
|Asset retirement obligation              |  |   | (2,978   | )
|                                         |  |   |          |  
|Total net liabilities dissolved          |  |   | (372,682 | )
|                                         |  |   |          |  
|Total gain on sale                       |  | $ | 372,682  |  



| | 4. | Capital Management
| | -- | ------------------



The Company manages its capital with the
following objectives:



| | · | to ensure sufficient financial flexibility
to achieve the ongoing business objectives; and
| | - | ------------------------------------------------------------------------------------------

| | · | to maximize shareholder return through
enhancing the share value.
| | - | -----------------------------------------------------------------



The Company monitors its capital structure
and makes adjustments according to market conditions in an effort to meet its objectives given the current outlook of the business
and industry in general. The Company may manage its capital structure by issuing new shares, repurchasing outstanding shares, adjusting
capital spending, or disposing of assets. The capital structure is reviewed by Management and the Board of Directors on an ongoing
basis.



The Company's equity comprises of share
capital, reserves, accumulated other comprehensive income and accumulated deficit, which at January 31, 2015 was a deficiency of
$63,047 (January 31, 2014 - $13,557). Note that included in the consolidated statements of financial position presented is a deficit
of $39,250,301 as at January 31, 2015 (January 31, 2014 - $39,193,127).



The Company manages capital through its
financial and operational forecasting processes. The Company reviews its working capital and forecasts its future cash flows based
on operating expenditures, and other investing and financing activities. Selected information is provided to the Board of Directors
of the Company. The Company’s capital management objectives, policies and processes have remained unchanged during the year
ended January 31, 2015. The Company is not subject to external capital requirements.



54







Royal Standard Minerals Inc.

Notes to Consolidated Financial Statements

(Expressed in United States Dollars)

January 31, 2015 and 2014








| | 5. | Financial Risk Factors
| | -- | ----------------------



(a) Financial risk factors



The Company’s activities expose it
to a variety of financial risks: credit risk, liquidity risk and market risk (including interest rate and foreign currency risk).



Risk management is carried out by the Company's
management team with guidance from the Audit Committee under policies approved by the Board of Directors. The Board of Directors
also provides regular guidance for overall risk management.



(i) Credit risk



Credit risk is the risk of loss associated
with a counterparty’s inability to fulfill its payment obligations. The Company's credit risk is primarily attributable to
cash and cash equivalents. The Company has no significant concentration of credit risk arising from operations. Cash and cash equivalents
are held with reputable financial institutions, from which management believes the risk of loss to be minimal.



(ii) Liquidity risk



The Company's approach to managing liquidity
risk is to ensure that it will have sufficient liquidity to meet liabilities when due (see note 1). As at January 31, 2015, the
Company had a cash balance of $4,035 (January 31, 2014 - $16,807) to settle current liabilities of $69,076 (January 31, 2014 -
$35,917). All of the Company's financial liabilities have contractual maturities of less than 60 days and are subject to normal
trade terms.



(iii) Market risk



Market risk is the risk of loss that may
arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices.



Interest rate risk

The Company has cash balances and no variable
interest-bearing debt. The Company's current policy is to invest excess cash in guaranteed investment certificates, bankers acceptance
and money market deposits, with reputable financial institutions. The interest rate risk is remote.



Foreign currency risk

The Company's functional and reporting
currency was previously the United States dollar and major purchases were transacted in United States dollars. Subsequent to the
dissolution of Manhattan (see note 3), the functional currency of the Company changed to Canadian dollars and major purchases are
transacted in Canadian dollars.



55







Royal Standard Minerals Inc.

Notes to Consolidated Financial Statements

(Expressed in United States Dollars)

January 31, 2015 and 2014



| | 6. | Marketable Securities
| | -- | ---------------------



Marketable securities consist of 2,000,000
common shares of Sharpe Resources Corporation ("Sharpe"). Sharpe is a publicly held Canadian company engaged in the exploration
and development of coal properties in the United States. In the year ended January 31, 2014, as a result of the continued and significant
decline in the market value and the delisting of the shares, the Company has taken a provision of loss of $30,000 and written down
the investment to $nil.



| | 7. | Sundry Receivables and Prepaids
| | -- | -------------------------------



|                      |  | As at       |       |  | As at       |  
|--------------------- |  | ----------- | ----- |  | ----------- | -
|                      |  | January 31, |       |  | January 31, |  
|                      |  | 2015        |       |  | 2014        |  
|                      |  |             |       |  |             |  
|Sales tax receivables |  | $           | 1,994 |  |             | $
|Prepaid expenses      |  |             | -     |  |             |  
|                      |  |             |       |  |             |  
|                      |  | $           | 1,994 |  |             | $



| | 8. | Exploration and Evaluation Expenditures on Mineral Properties
| | -- | -------------------------------------------------------------



| | (a) | Fondaway Canyon and Dixie-Comstock Projects
| | --- | -------------------------------------------



On August 9, 2013, the Company completed
its transaction with American Innovative Minerals LLC (“AIMLLC”) to sell its interests in the Fondaway Canyon and Dixie-Comstock
properties (the “Transaction”) for cash consideration of $144,000. As a result, the Company recorded a gain on sale
of property interests of $123,228, net of transaction costs.



In addition, as a condition to the closing
of the Transaction, Hale Capital Management, LP and Hale Capital Partners, LP (together, “Hale Capital”) delivered
to the Company a full and final release and settlement agreement relating to the legal action commenced by Hale Capital on September
27, 2011. A stipulation of dismissal with prejudice was filed with the Supreme Court of the State of New York dismissing all claims
against the Company and Manhattan in connection with that litigation.



|Cash                    |  | $ | 144,000 |  
|----------------------- |  | - | ------- | -
|Less: Transaction costs |  |   | (20,772 | )
|                        |  |   |         |  
|Total gain on sale      |  | $ | 123,228 |  



56







Royal Standard Minerals Inc.

Notes to Consolidated Financial Statements

(Expressed in United States Dollars)

January 31, 2015 and 2014



| | 8. | Exploration and Evaluation Expenditures on Mineral Properties
(Continued)
| | -- | -------------------------------------------------------------------------



| | (b) | Kentucky Project
| | --- | ----------------



Kentucky entered into a settlement and
release agreement on August 27, 2013 with Pick & Shovel Mining ("Pick & Shovel") and Roger and Jacqueline Stacy
pursuant to which in consideration of a cash settlement payment and transfer of certain equipment by Kentucky to Pick & Shovel,
the parties resolved to waive and release any claims relating to a prior claim between the parties. In addition, Kentucky relinquished
any interest in a bond posted on Permit No. 919-0066 and Pick & Shovel agreed to be solely responsible for such Permit and
all related claims and issues asserted by the Kentucky Energy and Environment Cabinet.



|Consideration paid                       |  |   |          |  
|---------------------------------------- |  | - | -------- | -
|Cash                                     |  | $ | 8,000    |  
|                                         |  |   |          |  
|Net liabilities settled                  |  |   |          |  
|Reclamation bond                         |  |   | 178,700  |  
|Equipment                                |  |   | 20,158   |  
|Accounts payable and accrued liabilities |  |   | (145,000 | )
|Asset retirement obligation              |  |   | (109,949 | )
|                                         |  |   |          |  
|Total net liabilities settled            |  |   | (56,091  | )
|                                         |  |   |          |  
|Total gain on settlement                 |  | $ | 48,091   |  



During the years ended January 31, 2015
and 2014, the Company's exploration and evaluation expenditures were as follows:



|                                            |  | Years Ended |  
|------------------------------------------- |  | ----------- | -
|                                            |  | January 31, |  
|                                            |  | 2015        |  
|                                            |  |             |  
|                                            |  |             |  
|Fondaway Canyon and Dixie-Comstock Projects |  |             |  
|                                            |  |             |  
|Property acquisition costs                  |  | $           | -
|Consulting, wages and salaries              |  |             | -
|Travel                                      |  |             | -
|Office and general                          |  |             | -
|                                            |  | $           | -
|                                            |  |             |  
|Kentucky Project                            |  |             |  
|                                            |  |             |  
|Office and general                          |  | $           | -
|Depreciation                                |  |             | -
|                                            |  | $           | -
|                                            |  |             |  
|Total exploration activities                |  | $           | -



57







Royal Standard Minerals Inc.

Notes to Consolidated Financial Statements

(Expressed in United States Dollars)

January 31, 2015 and 2014



| | 9. | Equipment
| | -- | ---------



|                                   |  | Exploration |         |   |       |  
|---------------------------------- |  | ----------- | ------- | - | ----- | -
|COST                               |  | equipment   |         |   | Total |  
|Balance, January 31, 2013          |  | $           | 89,000  |   |       | $
|Sale of equipment (Note 8(b))      |  |             | (89,000 | ) |       |  
|Balance, January 31, 2014 and 2015 |  | $           | -       |   |       | $



|                                   |  |   | Exploration |   |  |   |         |  
|---------------------------------- |  | - | ----------- | - |  | - | ------- | -
|ACCUMULATED DEPRECIATION           |  |   | equipment   |   |  |   | Total   |  
|Balance, January 31, 2013          |  | $ | 65,284      |   |  | $ | 65,284  |  
|Depreciation for the year          |  |   | 3,558       |   |  |   | 3,558   |  
|Sale of equipment (Note 8(b))      |  |   | (68,842     | ) |  |   | (68,842 | )
|Balance, January 31, 2014 and 2015 |  | $ | -           |   |  | $ | -       |  



|                          |  |   | Exploration |  |  |   |       | 
|------------------------- |  | - | ----------- |  |  | - | ----- | 
|CARRYING AMOUNT           |  |   | equipment   |  |  |   | Total | 
|Balance, January 31, 2014 |  | $ | -           |  |  | $ | -     | 
|Balance, January 31, 2015 |  | $ | -           |  |  | $ | -     | 



Depreciation of exploration equipment is
expensed to exploration and evaluation expenditures on the consolidated statements of operations.



| | 10. | Accounts Payable and Accrued Liabilities
| | --- | ----------------------------------------



|                    |  | As at       |        |  | As at       |  
|------------------- |  | ----------- | ------ |  | ----------- | -
|                    |  | January 31, |        |  | January 31, |  
|                    |  | 2015        |        |  | 2014        |  
|                    |  |             |        |  |             |  
|Trade payables      |  | $           | 27,609 |  |             | $
|Accrued liabilities |  |             | 26,185 |  |             |  
|                    |  |             |        |  |             |  
|                    |  | $           | 53,794 |  |             | $



| | 11. | Notes Payable
| | --- | -------------



On September 30, 2014, December 12, 2014
and January 31, 2015, the Company entered into promissory note arrangements for the purposes of covering accounting fees, whereby
the Company borrowed CDN $13,452, CDN $3,912 and CDN $1,870, respectively, from C. Marrelli Services Limited (together the "Notes").
C. Marrelli Services Limited controls 278,960,559 common shares of the Company and is 100% owned by Carmelo Marrelli. The Notes
are unsecured, bear interest at a rate of 2% per annum and are due on demand.



58







Royal Standard Minerals Inc.

Notes to Consolidated Financial Statements

(Expressed in United States Dollars)

January 31, 2015 and 2014



| | 12. | Asset Retirement Obligations
| | --- | ----------------------------



The Company is required to recognize a
liability for a legal and constructive obligation to perform asset retirement activities, including decommissioning, reclamation
and environmental monitoring activities once any of its projects are permanently closed. Although these activities are conditional
upon future events, the Company is required to make a reasonable estimate of the fair value of the liability. As at January 31,
2014, the Company had disposed of all of its mineral properties and transferred all obligations to the purchasers.



Determination of the undiscounted AROs
and the timing of these obligations was based on internal estimates using information currently available, existing regulations,
and estimates of closure costs.



|                                                 |  | Year Ended  |         
|------------------------------------------------ |  | ----------- | --------
|                                                 |  | January 31, |         
|                                                 |  | 2014        |         
|                                                 |  |             |         
|Balance, beginning of                            |  | $           | 107,647 
|Reversal on dissolution of Manhattan (Note 3(b)) |  |             | (2,978  
|Accretion cost                                   |  |             | 5,280   
|Sale of AROs (Note 8(b))                         |  |             | (109,949
|                                                 |  |             |         
|Balance, end of year                             |  | $           | -       



| | 13. | Share Capital
| | --- | -------------



(a) Authorized



The authorized capital of the Company consists
of an unlimited number of common shares and an unlimited number of preferred shares, each without par value.



(b) Issued



|                                                                                  |  | Shares |             |  | Amount |  
|--------------------------------------------------------------------------------- |  | ------ | ----------- |  | ------ | -
|                                                                                  |  |        |             |  |        |  
|Balance, January 31, 2013                                                         |  |        | 83,953,825  |  |        | $
|Private placement - common shares (i)                                             |  |        | 81,227,436  |  |        |  
|Shares issued for settlement of
    accounts payable and accrued liabilities (ii) |  |        | 755,654,241 |  |        |  
|Balance, January 31, 2014 and 2015                                                |  |        | 920,835,502 |  |        | $



(i) On January 17, 2014, the Company closed
a non-brokered private placement of 81,227,436 common shares at CDN $0.0002216 per share for gross proceeds of CDN $18,000 ($16,400).



(ii) On January 17, 2014, the Company issued
755,654,241 shares at CDN $0.0002216 per share as settlement of accounts payable due to a trade creditor.



(iii) The issuance of shares on January
17, 2014 (Note 13(b)(i), (ii)) resulted in a change in the Company's major shareholders. See Note 17.



59







Royal Standard Minerals Inc.

Notes to Consolidated Financial Statements

(Expressed in United States Dollars)

January 31, 2015 and 2014



14.	Stock Options



Under the Company's stock option plan (the
"Option Plan"), the directors of the Company can grant options to acquire common shares of the Company to directors,
employees and others who provide ongoing services to the Company. Exercise prices cannot be less than the closing price of the
Company's shares on the trading day preceding the grant date and the maximum term of any option cannot exceed ten years.



The number of common shares under option
at any time under the Option Plan or otherwise cannot exceed 5% of the then outstanding common shares of the Company for any optionee.
In addition, options granted to insiders of the Company cannot exceed more than 10% of the then outstanding common shares of the
Company. Options granted may be subject to vesting restrictions in the discretion of the board.



Option pricing models require the input
of highly subjective assumptions including the expected price volatility. Changes in the subjective input assumptions can materially
affect the fair value estimate, and therefore the existing models do not necessarily provide a reliable measure of the fair value
of the Company's share purchase options.



The following table reflects the continuity
of stock options for the years ended January 31, 2015 and 2014:





|                          |  | Number of     |            |   | Weighted Average |  
|------------------------- |  | ------------- | ---------- | - | ---------------- | -
|                          |  | Stock Options |            |   | Exercise Price   |  
|                          |  |               |            |   |                  |  
|Balance, January 31, 2013 |  |               | 3,800,000  |   |                  | $
|Forfeited                 |  |               | (1,450,000 | ) |                  | $
|Balance, January 31, 2014 |  |               | 2,350,000  |   |                  | $
|Forfeited                 |  |               | (2,200,000 | ) |                  | $
|Expired                   |  |               | (150,000   | ) |                  | $
|Balance, January 31, 2015 |  |               | -          |   |                  | $









60







Royal Standard Minerals Inc.

Notes to Consolidated Financial Statements

(Expressed in United States Dollars)

January 31, 2015 and 2014



| | 15. | Basic and Diluted Loss Per Share
| | --- | --------------------------------



The following table sets forth the computation
of basic and diluted loss per share:





|                                                                                         |  | Years Ended |            
|---------------------------------------------------------------------------------------- |  | ----------- | -----------
|                                                                                         |  | January 31, |            
|                                                                                         |  | 2015        |            
|                                                                                         |  |             |            
|Numerator:                                                                               |  |             |            
|(Loss) income for the year                                                               |  | $           | (57,174    
|                                                                                         |  |             |            
|Denominator:                                                                             |  |             |            
|Weighted average number of common shares outstanding for basic (loss) income per share   |  |             | 920,835,502
|Weighted average number of common shares outstanding for diluted (loss) income per share |  |             | 920,835,502
|                                                                                         |  |             |            
|Basic (loss) income per share                                                            |  | $           | (0.00      
|Diluted (loss) income per share                                                          |  | $           | (0.00      





The stock options were not included in
the computation of diluted (loss) income per share on January 31, 2014 as their inclusion would be anti-dilutive.



| | 16. | Income Taxes
| | --- | ------------



The following table reconciles the expected
income tax expense (recovery) at the Canadian statutory income tax rate at 26.50% (2014 - 26.50%) to the amounts recognized in
the consolidated statements of operations:





|                                                      |  | Years Ended |         
|----------------------------------------------------- |  | ----------- | --------
|                                                      |  | January 31, |         
|                                                      |  | 2015        |         
|                                                      |  |             |         
|Net (loss) income before income taxes                 |  | $           | (57,174 
|                                                      |  |             |         
|Expected tax (recovery) expense at statutory rate     |  | $           | (15,151 
|Permanent differences                                 |  |             | -       
|Functional currency translation                       |  |             | 447,091 
|Difference between Canadian and foreign tax rates     |  |             | -       
|Tax effect of dissolution of US subsidiaries          |  |             | -       
|Utilization of tax benefits not previously recognized |  |             | -       
|Tax benefits not recognized                           |  |             | (431,940
|                                                      |  |             |         
|Tax provision                                         |  | $           | -       





61









Royal Standard Minerals Inc.

Notes to Consolidated Financial Statements

(Expressed in United States Dollars)

January 31, 2015 and 2014



| | 16. | Income Taxes (Continued)
| | --- | ------------------------



Deferred Tax Assets and Liabilities



Unrecognized deferred tax assets



Deferred tax assets are recognized for
the carry-forward or unused tax losses and unused tax credits to the extent that it is probable that taxable profits will be available
against which the unused tax losses/credits can be utilized. The following represents the deductible temporary differences by jurisdiction
which have not been recognized in the consolidated financial statements.



|                                                                                      |  | 2015 |           |  | 2014 |  
|------------------------------------------------------------------------------------- |  | ---- | --------- |  | ---- | -
|                                                                                      |  |      |           |  |      |  
|Unclaimed non-capital losses                                                          |  | $    | 6,707,041 |  |      | $
|Excess of unclaimed resources pools over carrying value of exploration
    properties |  |      | 1,213,136 |  |      |  
|                                                                                      |  | $    | 7,920,177 |  |      | $



The excess of unclaimed resources pools
over carrying value of exploration properties can be carried forward indefinitely. The unclaimed non-capital losses carried forward
by expiry date:



|        |  |      |  | Canada |          
|------- |  | ---- |  | ------ | ---------
|Expires |  | 2026 |  | $      | 675,809  
|        |  | 2027 |  |        | 660,222  
|        |  | 2028 |  |        | 813,881  
|        |  | 2029 |  |        | 508,819  
|        |  | 2030 |  |        | 902,261  
|        |  | 2031 |  |        | 386,926  
|        |  | 2032 |  |        | 1,430,643
|        |  | 2033 |  |        | 933,825  
|        |  | 2034 |  |        | 349,675  
|        |  |      |  | $      | 6,707,041



62







Royal Standard Minerals Inc.

Notes to Consolidated Financial Statements

(Expressed in United States Dollars)

January 31, 2015 and 2014



| | 17. | Related Party Transactions and Balances
| | --- | ---------------------------------------



Remuneration of Directors and key management
personnel of the Company was as follows:



|                                                             |  | Years Ended |  
|------------------------------------------------------------ |  | ----------- | -
|                                                             |  | January 31, |  
|                                                             |  | 2015        |  
|                                                             |  |             |  
|Salaries and benefits paid to directors
    and officers (2) |  | $           | -
|Share-based payments (1)                                     |  | $           | -



(1) Negative amount is the result
of the reversal of previously recorded share-based payments on forfeited unvested options.



(2) Salaries and benefits include
director fees. The Board of Directors do not have employment or service contracts with the Company. Also included above are the
fees for the previous Interim President and Chief Executive Officer and previous Chief Financial Officer whose fees for services
for the year ended January 31, 2014 were $330,000 and $91,985, respectively.



Paul G. Smith, a former director and Chairman
of the Board, was the President and Chief Executive Officer of Equity Financial Holdings Inc. ("Equity"), a company that
provided financial services to the Company until April 5, 2013. Fees for services provided by Equity totaled $nil for the year
ended January 31, 2015 (year ended January 31, 2014 - $4,822).



Daniel Crandall, the Chief Financial Officer,
is a senior employee of Marrelli Support Services Inc. ("Marrelli Support"), a firm providing accounting services. Marrelli
Support's President, Carmelo Marrelli, beneficially controls 278,960,559 common shares of the Company through his holding company,
C. Marrelli Services Limited. Fees for services provided by Marrelli Support totaled $13,027, for the year ended January 31, 2015
(year ended January 31, 2014 - $750). As at January 31, 2015, Marrelli Support was owed $1,967 and this amount was included in
accounts payable and accrued liabilities (January 31, 2014 - $nil).



During the year ended January 31, 2015,
the Company incurred fees totaling $740, (year ended January 31, 2014 - $nil) for filing services received from DSA Filing Services
("DSA"). Carmelo Marrelli is an officer and shareholder of DSA. As at January 31, 2015, DSA was owed $370 and this amount
was included in accounts payable and accrued liabilities (January 31, 2014 - $nil).



At January 31, 2015, notes payable of $15,282
(CDN $19,234) (January 31, 2014 - $nil) are owed to C. Marrelli Services Limited for advances to cover accounting fees. The notes
payable are unsecured, bear interest at 2% per annum and are due on demand (note 11). The interest expense pertaining to the notes
payable for the year ended January 31, 2015 is $173 (year ended January 31, 2014 - $nil).



During the year ended January 31, 2015,
the Company incurred fees totaling $19,899, (year ended January 31, 2014 - $nil) for legal services received from Kirsh Securities
Law Professional Corporation, a law firm owned by the President and Chief Executive Officer of the Company. An amount of $17,446
is included in accounts payable and accrued liabilities at January 31, 2015 (January 31, 2014 - $nil).



63







Royal Standard Minerals Inc.

Notes to Consolidated Financial Statements

(Expressed in United States Dollars)

January 31, 2015 and 2014



| | 17. | Related Party Transactions and Balances (Continued)
| | --- | ---------------------------------------------------



During the year ended January 31, 2015,
the Company incurred fees totaling $4,038 (year ended January 31, 2014 - $nil) for consulting services received from G. Duguay
Services Inc., a firm where George Duguay, a director and shareholder of the Company, is the President. An amount of $3,540 is
included in accounts payable and accrued liabilities at January 31, 2015 (January 31, 2014 - $nil).



To the knowledge of the directors and senior
officers of the Company, as at January 31, 2015, no person or corporation beneficially owns or exercises control over common shares
of the Company carrying more than 10% of the voting rights attached to all common shares of the Company other than as set out below:



|                                                   |  |               |             |  | Percentage of | 
|-------------------------------------------------- |  | ------------- | ----------- |  | ------------- | 
|                                                   |  | Number of     |             |  | outstanding   | 
|Major Shareholder                                  |  | common shares |             |  | common shares | 
|                                                   |  |               |             |  |               | 
|Lonnie Kirsh, Chief Executive Officer and Director |  |               | 278,960,559 |  |               | 
|George Duguay, Director                            |  |               | 278,960,559 |  |               | 
|C. Marrelli Services Limited                       |  |               | 278,960,559 |  |               | 



None of the Company's major shareholders
have different voting rights than other holders of the Company's common shares.



| | 18. | Contingencies
| | --- | -------------



The Company’s previous wholly-owned
subsidiary, Manhattan, received several documents filed in various district courts, one in Shelby County Chancery Court, Memphis,
Tennessee and one in Elko County District Court, Elko, Nevada, from certain suppliers seeking payment of unpaid services provided
to Manhattan and where applicable, interest and court costs. In addition, one of the suppliers is seeking compensation for unjust
enrichment. Management of Manhattan attempted to settle both claims on several occasions, but was unsuccessful.



Manhattan has been dissolved and the Company
is not liable to settle these claims.



| | 19. | General and Administrative
| | --- | --------------------------



|                               |  | Years Ended |       
|------------------------------ |  | ----------- | ------
|                               |  | January 31, |       
|                               |  | 2015        |       
|                               |  |             |       
|Corporate development          |  | $           | 2,724 
|Insurance                      |  |             | -     
|Office and general             |  |             | 2,418 
|Professional fees (Note 17)    |  |             | 47,956
|Wages and salaries (Note 17)   |  |             | -     
|Share-based payments (Note 17) |  |             | -     
|Travel                         |  |             | 38    
|Consulting fees (Note 17)      |  |             | 4,038 
|                               |  | $           | 57,174



64







Royal Standard Minerals Inc.

Notes to Consolidated Financial Statements

(Expressed in United States Dollars)

January 31, 2015 and 2014



| | 20. | Segmented Information
| | --- | ---------------------



The Company's operations comprise a single
reporting segment which is currently inactive. As the operations comprise a single reporting segment, amounts disclosed in the
consolidated financial statements also represent segment amounts.



| | 21. | Subsequent Event
| | --- | ----------------



Subsequent to January 31, 2015, the Company
obtained separate promissory notes of CDN$4,000 from each of George Duguay, C. Marrelli Services Inc. and Lonnie Kirsh, for total
promissory notes of CDN$12,000. These notes are unsecured, bear interest at an annual rate at 2% and are due on demand.



65











ROYAL STANDARD MINERALS INC.



MANAGEMENT’S
DISCUSSION

AND ANALYSIS



YEAR ENDED
JANUARY 31, 2015



66







Royal Standard Minerals Inc.

Management’s Discussion
and Analysis

Year Ended January 31, 2015

Discussion Dated May 22, 2015



This Management Discussion and Analysis
(“MD&A”) is dated May 22, 2015 and unless otherwise noted, should be read in conjunction with the Company’s
audited consolidated financial statements for the years ended January 31, 2015 and 2014 and the notes thereto. Results are reported
in United States dollars, unless otherwise noted. The Company’s consolidated financial statements have been prepared in accordance
with International Financial Reporting Standards (“IFRS”). This MD&A was written to comply with the requirements
of National Instrument 51-102-Continuous Disclosure Obligations. In the opinion of management, all adjustments (which consist only
of normal recurring adjustments) considered necessary for a fair presentation have been included. The results presented for the
year ended January 31, 2015 are not necessarily indicative of the results that may be expected for any future period.



For the purposes of preparing this MD&A,
management, in conjunction with the Board of Directors, considers the materiality of information. Information is considered material
if (1) such information is a change or a fact that has or would reasonably be expected to have, a significant effect on the market
price or value of the Company’s common shares; or (2) there is a substantial likelihood that a reasonable investor would
consider it important in making an investment decision; or (3) if it would significantly alter the total mix of information available
to investors. Management, in conjunction with the Board of Directors, evaluates materiality with reference to all relevant circumstances,
including potential market sensitivity.



Additional information relating to the
Company can be found on SEDAR at www.sedar.com.



The Company’s common shares are quoted
in the United States of America on the Over the Counter Bulletin Board “OTC:BB”, under the symbol RYSMF. The Company’s
is currently considered delinquent in its SEC filings until such time as it files a Form 20-F Annual Report for the fiscal year
ended January 31, 2014.



67







Royal Standard Minerals Inc.

Management’s Discussion
and Analysis

Year Ended January 31, 2015

Discussion Dated May 22, 2015



DISCLOSURE REGARDING FORWARD-LOOKING
STATEMENTS



This MD&A contains certain forward-looking
information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as “forward-looking
statements”). These statements relate to future events or the Company’s future performance. All statements other than
statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified
by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”,
“estimates”, “continues”, “forecasts”, “projects”, “predicts”, “intends”,
“anticipates” or “believes”, or variations of, or the negatives of, such words and phrases, or state that
certain actions, events or results “may”, “could”, “would”, “should”, “might”
or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause actual results to differ materially from those anticipated in such forward-looking statements.
The forward-looking statements in this MD&A speak only as of the date of this MD&A or as of the date specified in such
statement. The following table outlines certain significant forward-looking statements contained in this MD&A and provides
the material assumptions used to develop such forward-looking statements and material risk factors that could cause actual results
to differ materially from the forward-looking statements.



|Forward-looking statements                                        |  | Assumptions                                                                                                                                                                                                                                                                 |  | Risk factors                                                                                                                                                                                                                                                                                                                                 
|----------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Company will be able to continue its business activities.     |  | The Company has anticipated all material costs and the operating activities of the Company, and such costs and activities will be consistent with the Company’s current expectations; the Company will be able to obtain shareholder loans or equity funding when required. |  | Unforeseen costs to the Company will arise; any particular operating cost increase or decrease from the date of the estimation; and capital markets not being favourable for funding and/or related parties discontinue funding the Company resulting in the Company not being able to obtain financing when required or on acceptable terms.
|The Company will be able to carry out anticipated business plans. |  | The operating activities of the Company for the twelve months ending January 31, 2016, will be consistent with the Company’s current expectations.                                                                                                                          |  | Sufficient funds not being available; increases in costs; the Company may be unable to retain key personnel.                                                                                                                                                                                                                                 



Inherent in forward-looking statements
are risks, uncertainties and other factors beyond the Company’s ability to predict or control. Please also make reference
to those risk factors referenced in the “Risk Factors”
section below. Readers are cautioned that the above chart does not contain an exhaustive list of the factors or assumptions that
may affect the forward-looking statements, and that the assumptions underlying such statements may prove to be incorrect. Actual
results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking
statements contained in this MD&A.



68







Royal Standard Minerals Inc.

Management’s Discussion
and Analysis

Year Ended January 31, 2015

Discussion Dated May 22, 2015



Forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements
to be materially different from any of its future results, performance or achievements expressed or implied by forward-looking
statements. All forward-looking statements herein are qualified by this cautionary statement. Accordingly, readers should not place
undue reliance on forward-looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking
statements whether as a result of new information or future events or otherwise, except as may be required by law. If the Company
does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect
to those or other forward-looking statements, unless required by law.



DESCRIPTION OF BUSINESS AND GOING CONCERN



The Company’s business activities
are currently restricted to funding ongoing operations as a reporting issuer and to repaying existing creditors and is currently
seeking new business opportunities. Success in identifying a suitable new asset or business for the Company is uncertain. Unless
the Company can identify a suitable asset or business opportunity and/or obtain additional financing in the near term, there is
significant doubt on the ability of the Company to continue as a going concern. Without a suitable asset or business opportunity
and/or additional financing, the Company will be required to consider the basis on which it will continue as an entity. The Company
has no operating revenues and therefore it must utilize current cash and cash equivalents to satisfy outstanding liabilities.



The Company’s financial statements
have been prepared on the basis of accounting principles applicable to a going concern, which assume that the Company will continue
in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course
of operations as they come due. In assessing whether the going concern assumption is appropriate, management takes into account
all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting
period. Management is aware, in making its assessment, of material uncertainties related to events or conditions that cast significant
doubt upon the entity's ability to continue as a going concern. The Company had a loss of $57,174 during the year ended January
31, 2015 (year ended January 31, 2014 - income of $69,225) and has an accumulated deficit of $39,250,301 (January 31, 2014 - accumulated
deficit of $39,193,127). In addition, the Company has a working capital deficiency of $63,047 at January 31, 2015 (January 31,
2014 - working capital deficiency of $13,557).



69







Royal Standard Minerals Inc.

Management’s Discussion
and Analysis

Year Ended January 31, 2015

Discussion Dated May 22, 2015



The Company’s ability to continue
to meet its obligations is uncertain and, as a result, there is significant doubt regarding the going concern assumption and, accordingly,
the ultimate appropriateness of the use of accounting principles applicable to a going concern. The Company has no remaining mineral
property interests and its business activities are currently restricted to funding ongoing operations as a reporting issuer and
to repaying existing creditors and is currently focused on identifying suitable assets or businesses to acquire or merge with.
Success in identifying a suitable new asset or business for the Company is uncertain. Furthermore, the Company has limited working
capital to pursue such opportunities. Unless the Company can identify a suitable asset or business opportunity and/or obtain additional
financing in the near term, there is significant doubt on the ability of the Company to repay its outstanding liabilities. If the
Company is unable to extinguish all of its outstanding liabilities, the going concern assumption will not be valid. The financial
statements do not reflect the adjustments to the carrying values or classifications of assets and liabilities or to the reported
expenses that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern
in the normal course of operations for the foreseeable future. These adjustments could be material.



70







Royal Standard Minerals Inc.

Management’s Discussion
and Analysis

Year Ended January 31, 2015

Discussion Dated May 22, 2015



OVERALL PERFORMANCE



The Company’s net loss for the year
ended January 31, 2015 was $57,174 ($0.00 loss per share) and for the year ended January 31, 2014 was an income of $69,225 ($0.00
income per share), an increase in net loss of $126,399. The increase in net loss relates mainly to a reduction of gain on dissolution
of subsidiary from $402,782 in the year ended January 31, 2014 to $nil in 2015 and reduction in gain on sale of property interests
and related assets from $123,228 in the year ended January 31, 2014 to $nil in 2015. The reduced gain is offset by a lower general
and administrative expense of $57,174 for the year ended January 31, 2015 compared to $387,692 for the year ended January 31, 2014.
The decrease in general and administrative expenses of $330,518 was primarily a result of lower office and general expenses, wages
and salaries, insurance, travel and share-based payments as a result of the Company no longer having any active mineral exploration
business operations. As a result of the sale of all property interests in the prior year the Company’s exploration and evaluation
expenditures for the year ended January 31, 2015 was $nil, compared to $87,233 for the year ended January 31, 2014.



SELECTED ANNUAL FINANCIAL INFORMATION



The following is selected financial data
derived from the audited consolidated financial statements of the Company as at January 31, 2015, 2014 and 2013 and for the years
then ended.



|                                                |  | Year ended January 31, 2015 |         |   | Year ended January 31, 2014 |   |        | Year ended January 31, 2013 | 
|----------------------------------------------- |  | --------------------------- | ------- | - | --------------------------- | - | ------ | --------------------------- | 
|Net (loss) income                               |  | $                           | (57,174 | ) |                             | $ | 69,225 |                             | 
|Net (loss) income per share - basic and diluted |  | $                           | (0.00   | ) |                             | $ | 0.00   |                             | 



|                                |  | As at January 31, 2015 |       |  | As at January 31, 2014 |   |        | As at January 31, 2013 | 
|------------------------------- |  | ---------------------- | ----- |  | ---------------------- | - | ------ | ---------------------- | 
|Total assets                    |  | $                      | 6,029 |  |                        | $ | 22,360 |                        | 
|Long-term financial liabilities |  | $                      | nil   |  |                        | $ | nil    |                        | 





71







Royal
Standard Minerals Inc.

Management’s Discussion
and Analysis

Year Ended January 31, 2015

Discussion Dated May 22, 2015



FINANCIAL PERFORMANCE



Year ended January 31, 2015, compared
with year ended January 31, 2014



The Company’s net loss for the year
ended January 31, 2015 was $57,174 ($0.00 loss per share) compared to a net income $69,225 ($0.00 income per share) for the year
ended January 31, 2014, on no revenue. The increase in loss of $126,399 was principally the result of:



| | · | Exploration and evaluation
expenditures decreased by $87,233 to $nil for the year ended January 31, 2015, compared to the same period in 2014. The decrease
was the result of the sale of all property interests in the prior year.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Office and general expense
decreased by $33,112 to $2,418 for the year ended January 31, 2015, compared to the same period in 2014. The decrease was the result
of the Company no longer having any active mineral exploration business operations.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Wages and salaries decreased
by $443,194 to $nil for the year ended January 31, 2015, compared to the same period in 2014. The decrease was the result of the
Company no longer having any mineral exploration operations.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Professional fees increased
to $47,956 for the year ended January 31, 2015, compared to a recovery of $45,439 for the same period in 2014. The recovery for
2014 was the result of the reversal of certain accrued legal expenses arising from full and final settlement of certain legal action.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Share-based payments
was $nil for the year ended January 31, 2015, compared to a recovery of $109,866 for the same period in 2014. The negative amount
is the result of the reversal of previously recorded share-based payments on forfeited unvested options. No share-based payments
were made in 2015.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Impairment of marketable
securities decreased by $30,000 to $nil for the year ended January 31, 2015, compared to the same period in 2014. The decrease
was the result of the Company impairing all marketable securities to $nil in the prior year.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Gain on sale of property
interests and related assets decreased by $123,228 to $nil for the year ended January 31, 2015, compared to the same period in
2014. The decrease was the result of the sale of all mineral property interests in the prior year.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Gain on dissolution of
subsidiaries decreased by $402,782 and gain on settlement and release decreased by $48,091, to $nil for the year ended January
31, 2015, compared to the same period in 2014. The decrease is a result of these being one-time events.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Foreign currency translation
adjustment decreased by $31,286 to $nil for the year ended January 31, 2015, compared to the same period in 2014. The decrease
is the result of the change in functional currency in the prior year resulting in the foreign currency translation adjustment being
recorded in comprehensive loss.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



72







Royal Standard Minerals Inc.

Management’s Discussion
and Analysis

Year Ended January 31, 2015

Discussion Dated May 22, 2015



Three months ended January 31, 2015,
compared with three months ended January 31, 2014



The Company’s net loss for the three
months ended January 31, 2015 was $13,985 ($0.00 loss per share) compared to net income of $270,714 ($0.00 income per share) for
the three months ended January 31, 2014, on no revenue. The increase in net loss of $284,699 was principally the result of:



| | · | Professional fees increased
to $10,480 for the three months ended January 31, 2015, compared to a recovery of $10,638 for the same period in 2014. The recovery
for 2014 was the result of the reversal of certain accrued legal expenses arising from full and final settlement of certain legal
action.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Wages and salaries decreased
by $240,679 to $nil for the three months ended January 31, 2015, compared to the same period in 2014. The decrease was the result
of the Company no longer having any active mineral exploration business operations.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Share-based payments
was $nil for the three months ended January 31, 2015 compared to a recovery of $126,266 for the same period ended 2014. The negative
amount is the result of the reversal of previously recorded share-based payments on forfeited unvested options. No share-based
payments were made during the three months ended January 31, 2015.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Gain on dissolution of
subsidiaries decreased by $372,682 to $nil for the three months ended January 31, 2015, compared to the same period in 2014. The
decrease is a result of this being a one-time event.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



SUMMARY OF QUARTERLY RESULTS



The following is a summary of selected
financial information of the Company for the quarterly periods indicated.



|Three Months Ended |  | Net Revenues ($) |  | Net Income (Loss) ($) |         
|------------------ |  | ---------------- |  | --------------------- | --------
|January 31, 2015   |  | nil              |  |                       | (13,985 
|October 31, 2014   |  | nil              |  |                       | (2,550  
|July 31, 2014      |  | nil              |  |                       | (11,700 
|April 30, 2014     |  | nil              |  |                       | (28,939 
|January 31, 2014   |  | nil              |  |                       | 270,714 
|October 31, 2013   |  | nil              |  |                       | 40,418  
|July 31, 2013      |  | nil              |  |                       | (49,485 
|April 30, 2013     |  | nil              |  |                       | (192,422



73







Royal Standard Minerals Inc.

Management’s Discussion
and Analysis

Year Ended January 31, 2015

Discussion Dated May 22, 2015



LIQUIDITY AND CAPITAL RESOURCES



The Company currently has no positive
operating cash flow and has, to date, financed its activities and its ongoing expenditures primarily through equity transactions
such as equity offerings, the exercise of warrants and other financing arrangements. The Company believes that additional financing
will be required to fund its operating expenses as it searches for suitable assets and businesses to merge with or acquire.



As at January 31, 2015, the Company had
cash and cash equivalents of $4,035. Cash used in operating activities was $28,054 for the year ended January 31, 2015. During
the year ended January 31, 2015, the Company experienced a net increase of $21,436 in non-cash working capital items, which was
due to a decrease in sundry receivables and prepaid of $3,559 and increase in accounts payable and accrued liabilities of $17,877.
Cash provided by financing activities was $15,282 for the year ended January 31, 2015 due to notes payable advanced from a shareholder.



The Company's approach to managing liquidity
risk has been to ensure that it will have sufficient liquidity to meet liabilities when due. As at January 31, 2015, the Company
had cash and cash equivalents of $4,035 compared to $16,807 as at January 31, 2014, to settle current liabilities of $69,076 compared
to $35,917 as at January 31, 2014. The Company currently does not have sufficient cash and cash equivalents to settle current
liabilities although creditors who are related to the Company have agreed to defer payment. All of the Company's financial liabilities
have contractual maturities of less than 60 days and are subject to normal trade terms. The Company regularly evaluates its cash
position in an effort to maintain its liquidity.



There is no assurance that future equity
or debt capital will be available to the Company in the amounts or at the times desired, or on terms that are acceptable to the
Company, if at all. See “Risk Factors” below.



As at January 31, 2015 and the date of
this MD&A, the Company had 920,835,502 common shares issued and outstanding and no stock options outstanding. The Company’s
liquidity risk with financial instruments is minimal as any excess cash, when present, is deposited with a Schedule I Canadian
bank.



74







Royal Standard Minerals Inc.

Management’s Discussion
and Analysis

Year Ended January 31, 2015

Discussion Dated May 22, 2015



RELATED PARTY TRANSACTIONS



Remuneration of Directors and key management
personnel of the Company was as follows:





|                                                         |  | Year Ended 
January 31, |    
|-------------------------------------------------------- |  | ----------------------- | ---
|                                                         |  | 2015 ($)                |    
|Salaries and benefits paid to directors and officers (2) |  |                         | nil
|Share-based payments (1)                                 |  |                         | nil



| | (1) | Negative amount is the result of the reversal of previously recorded share-based payments on forfeited
unvested options.
| | --- | ------------------------------------------------------------------------------------------------------------------------





| | (2) | Salaries and benefits include director fees. The Board of Directors do not have employment or service
contracts with the Company. Also included above are the fees for the previous Interim President and Chief Executive Officer and
previous Chief Financial Officer whose fees for services for the year ended January 31, 2014 were $330,000 and $91,985, respectively.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Paul G. Smith, a former director and Chairman
of the Board, was the President and Chief Executive Officer of Equity Financial Holdings Inc. ("Equity"), a company that
provided financial services to the Company until April 5, 2013. Fees for services provided by Equity totaled $nil for the year
ended January 31, 2015 (year ended January 31, 2014 - $4,822).



Daniel Crandall, the Chief Financial Officer,
is a senior employee of Marrelli Support Services Inc. ("Marrelli Support"), a firm providing accounting services. Marrelli
Support's President, Carmelo Marrelli, beneficially controls 278,960,559 common shares of the Company through his holding company,
C. Marrelli Services Limited Fees for services provided by Marrelli Support totaled $13,027, for the year ended January 31, 2015
(year ended January 31, 2014 - $750). As at January 31, 2015, Marrelli Support was owed $1,967 and this amount was included in
accounts payable and accrued liabilities (January 31, 2014 - $nil).



During the year ended January 31, 2015,
the Company incurred fees totaling $740, (year ended January 31, 2014 - $nil) for filing services received from DSA Filing Services
("DSA"). Carmelo Marrelli is an officer and shareholder of DSA. As at January 31, 2015, DSA was owed $370 and this amount
was included in accounts payable and accrued liabilities (January 31, 2014 - $nil).



75







Royal Standard Minerals Inc.

Management’s Discussion
and Analysis

Year Ended January 31, 2015

Discussion Dated May 22, 2015



At January 31, 2015, notes payable of $15,282
(CDN $19,234) (January 31, 2014 - $nil) are owed to C. Marrelli Services Limited for advances to cover accounting fees. The notes
payable are unsecured, bear interest at 2% per annum and are due on demand. The interest expense pertaining to the notes payable
for the year ended January 31, 2015 is $173 (year ended January 31, 2014 - $nil).



During the year ended January 31, 2015,
the Company incurred fees totaling $19,899, (year ended January 31, 2014 - $nil) for legal services received from Kirsh Securities
Law Professional Corporation, a law firm owned by the President and Chief Executive Officer of the Company. An amount of $17,446
is included in accounts payable and accrued liabilities at January 31, 2015 (January 31, 2014 - $nil).



During the year ended January 31, 2015,
the Company incurred fees totaling $4,038 (year ended January 31, 2014 - $nil) for consulting services received from G. Duguay
Services Inc., a firm where George Duguay, a director and shareholder of the Company, is the President. An amount of $3,540 is
included in accounts payable and accrued liabilities at January 31, 2015 (January 31, 2014 - $nil).



To the knowledge of the directors and senior
officers of the Company, as at January 31, 2015, no person or corporation beneficially owns or exercises control over common shares
of the Company carrying more than 10% of the voting rights attached to all common shares of the Company other than as set out below:



|Major Shareholder                                  |  | Number of common shares |             |  | Percentage of outstanding common shares | 
|-------------------------------------------------- |  | ----------------------- | ----------- |  | --------------------------------------- | 
|Lonnie Kirsh, Chief Executive Officer and Director |  |                         | 278,960,559 |  |                                         | 
|George Duguay, Director                            |  |                         | 278,960,559 |  |                                         | 
|C. Marrelli Services Limited                       |  |                         | 278,960,559 |  |                                         | 



None of the Company's major shareholders
have different voting rights than other holders of the Company's common shares.



SHARE CAPITAL



The Company is authorized to issue an unlimited
number of common shares and preferred shares. As of the date of this MD&A, the Company had 920,835,502 common shares outstanding.



76







Royal Standard Minerals Inc.

Management’s Discussion
and Analysis

Year Ended January 31, 2015

Discussion Dated May 22, 2015



CONTINGENCIES



The Company’s previous wholly-owned
subsidiary, Manhattan Mining Co. ("Manhattan"), received several documents filed in various district courts, one in Shelby
County Chancery Court, Memphis, Tennessee and one in Elko County District Court, Elko, Nevada, from certain suppliers seeking payment
of unpaid services provided to Manhattan and where applicable, interest and court costs. In addition, one of the suppliers is seeking
compensation for unjust enrichment. Management attempted to settle both claims on several occasions, but was unsuccessful.



Manhattan has been dissolved and the Company
is not liable to settle these claims.



OFF BALANCE SHEET ARRANGEMENTS



As of the date hereof, management believes
the Company does not have any off balance sheet arrangements that have, or are reasonably likely to have, a current or future effect
on the results of operations or financial condition of the Company, including, and without limitation, such considerations as liquidity
and capital resources.



SIGNIFICANT ACCOUNTING ESTIMATES AND
JUDGMENTS



The preparation of the Company’s
consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting
period. Actual outcomes could differ from those estimates. The Financial Statements for the years ended January 31, 2015 and 2014
include estimates that, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the Financial Statements
for the years ended January 31, 2015 and 2014 and may require accounting adjustments based on future occurrences. Revisions to
accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both
current and future periods. These estimates are based on historical experience, current and future economic conditions and other
factors, including expectations of future events that are believed to be reasonable under the circumstances.



Significant assumptions about the future
that management has made that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event
that actual results differ from assumptions made, relate to, but are not limited to, the following:



77







Royal Standard Minerals Inc.

Management’s Discussion
and Analysis

Year Ended January 31, 2015

Discussion Dated May 22, 2015



Critical accounting estimates



| | · | the inputs used in accounting
for share based payment transactions in the consolidated statements of operations.
| | - | ----------------------------------------------------------------------------------------------------------------



Critical accounting judgments



| | · | the categorization of
financial assets and liabilities is an accounting policy that requires management to make judgments or assessments;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------

| | · | the measurement of income
taxes payable and deferred income tax assets and liabilities requires management to make judgments in the interpretation and application
of the relevant tax laws. Deferred tax assets require management to assess the likelihood that the Company will generate taxable
income in future periods in order to utilize recognized deferred tax assets;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | going concern presentation
of the consolidated financial statements which assumes that the Company will continue in operation for the foreseeable future and
will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | management's determination
that the functional currency of the Company is the Canadian Dollar.
| | - | ----------------------------------------------------------------------------------------------



NEW ACCOUNTING PRONOUNCEMENTS



IFRS 9 – Financial instruments (“IFRS
9”) was issued by the IASB in October 2010 and will replace IAS 39 - Financial Instruments: Recognition and Measurement (“IAS
39”). IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing
the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context
of its business model and the contractual cash flow characteristics of the financial assets. Most of the requirements in IAS 39
for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9. The new standard also requires
a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods
beginning on or after January 1, 2018. Earlier adoption is permitted. The Company is in the process of assessing the impact of
this pronouncement.



CHANGE IN ACCOUNTING POLICIES



IAS 32 – Financial Instruments: Presentation
(“IAS 32”) was amended by the IASB in December 2011 to clarify certain aspects of the requirements on offsetting. The
amendments focus on the criterion that an entity currently has a legally enforceable right to set off the recognized amounts and
the criterion that an entity intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. At
February 1, 2014, the Company adopted this pronouncement and there was no material impact on the Company's consolidated financial
statements.



78







Royal Standard Minerals Inc.

Management’s Discussion
and Analysis

Year Ended January 31, 2015

Discussion Dated May 22, 2015



MANAGEMENT OF CAPITAL



The Company manages its capital with the
following objectives:



| | · | to ensure sufficient financial flexibility
to achieve the ongoing business objectives; and
| | - | ------------------------------------------------------------------------------------------

| | · | to maximize shareholder return through
enhancing the share value.
| | - | -----------------------------------------------------------------



The Company monitors its capital structure
and makes adjustments according to market conditions in an effort to meet its objectives given the current outlook of the business
and industry in general. The Company may manage its capital structure by issuing new shares, repurchasing outstanding shares, adjusting
capital spending, or disposing of assets. The capital structure is reviewed by Management and the Board of Directors on an ongoing
basis.



The Company's equity comprises of share
capital, reserves, accumulated other comprehensive income and accumulated deficit, which at January 31, 2015 was a deficiency of
$63,047 (January 31, 2014 - deficiency of $13,557). Note that included in the consolidated statements of financial position presented
is a deficit of $39,250,301 as January 31, 2015 (January 31, 2014 - $39,193,127).



The Company manages capital through its
financial and operational forecasting processes. The Company reviews its working capital and forecasts its future cash flows based
on operating expenditures, and other investing and financing activities. Selected information is provided to the Board of Directors
of the Company. The Company’s capital management objectives, policies and processes have remained unchanged during the year
ended January 31, 2015. The Company is not subject to external capital requirements.



FINANCIAL RISK FACTORS



The Company's financial instruments, consisting
of cash and cash equivalents, sundry receivables and accounts payable and accrued liabilities, approximate fair values due to the
relatively short-term maturities of the instruments. It is management’s opinion that the Company is not exposed to significant
interest, currency or credit risks arising from these financial instruments.



Risk management is carried out by the Company's
management team with guidance from the Audit Committee under policies approved by the Board of Directors. The Board of Directors
also provides regular guidance for overall risk management.



79







Royal Standard Minerals Inc.

Management’s Discussion
and Analysis

Year Ended January 31, 2015

Discussion Dated May 22, 2015



Credit risk



Credit risk is the risk of loss associated
with a counterparty’s inability to fulfill its payment obligations. The Company's credit risk is primarily attributable to
cash and cash equivalents. The Company has no significant concentration of credit risk arising from operations. Cash and cash equivalents
are held with reputable financial institutions, from which management believes the risk of loss to be minimal.



Liquidity risk



The Company's approach to managing liquidity
risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at January 31, 2015, the Company had
a cash balance of $4,035 (January 31, 2014 - $16,807) to settle current liabilities of $69,076 (January 31, 2014 - $35,917). All
of the Company's financial liabilities have contractual maturities of less than 60 days and are subject to normal trade terms.



It is expected the Company will be funded
by shareholder loans or private placements from related parties until the Company finds an asset or business to incorporate into
the Company.



Market risk



Market risk is the risk of loss that may
arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices.



Interest rate risk



The Company has cash balances
and no interest-bearing debt. The Company's current policy is to invest excess cash in guaranteed investment certificates, bankers
acceptance and money market deposits, with reputable financial institutions. The interest rate risk is remote.



Foreign currency risk



The Company's functional and
reporting currency was previously the United States dollar and major purchases were transacted in United States dollars. Subsequent
to the dissolution of Manhattan, the functional currency of the Company changed to Canadian dollars and major purchases are transacted
in Canadian dollars.



80







Royal Standard Minerals Inc.

Management’s Discussion
and Analysis

Year Ended January 31, 2015

Discussion Dated May 22, 2015



RISK FACTORS



At the present time, the Company does not
hold any interest in an active operating business or asset. The Company's viability and potential success lie in its
ability to develop, exploit and generate revenue from a future asset or business acquisition. Revenues, profitability and cash
flow from any future asset or business acquisition involving the Company are difficult to predict and will be influenced by factors
unknown to management at the present time. The Company has limited financial resources and there is no assurance that it will be
able to obtain adequate financing in the future or that the terms of any such financing will be favourable. Failure to obtain such
additional financing could result in delay or indefinite postponement of future business activities of the Company with the possible
dilution or loss of such business activities.



The Company’s ability to continue
as a going concern is uncertain and is dependent upon its ability to identify assets or business opportunities to acquire or merge
with. Success in identifying a new assets or business is uncertain. Furthermore, the Company has limited working capital to pursue
such opportunities. Unless the Company can identify a suitable assets or business opportunity and/or obtain additional financing
in the near term, there is significant doubt on the ability of the Company to continue as a going concern. Any material delays,
or failure of, identifying a suitable business opportunity and/or obtaining additional financing in the near term is likely to
have a material adverse impact on the business, operations and prospects of the Company and the ability of the Company to raise
adequate financing and re-commence business operations, which in turn is likely to have a material adverse impact on the Company's
business, assets and financial condition.



Additionally, Certain of the directors
and officers of the Company may also serve as directors and officers of other companies and consequently, the possibility of conflict
exists. Any decisions made by such directors involving the Company will be made in accordance with the duties and obligations of
directors to deal fairly and in good faith with the Company and such other companies. In addition, such directors declare, and
refrain from voting on, any matters in which such directors may have a conflict of interest.



Consequently, such directors and officers
will be dividing their time between their duties to the Company and their duties to their other reporting issuers.



RISK MANAGEMENT



Risk management is carried out by the Company's
management team with guidance from the Audit Committee under policies approved by the Board of Directors. The Board of Directors
provides regular guidance for overall risk management.



81







Royal Standard Minerals Inc.

Management’s Discussion
and Analysis

Year Ended January 31, 2015

Discussion Dated May 22, 2015



DISCLOSURE OF INTERNAL CONTROLS



Management has established processes to
provide it with sufficient knowledge to support representations that it has exercised reasonable diligence to ensure that (i) the
consolidated financial statements do not contain any untrue statement of material fact or omit to state a material fact required
to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, as of
the date of and for the periods presented by the consolidated financial statements, and (ii) the consolidated financial statements
fairly present in all material respects the financial condition, results of operations and cash flow of the Company, as of the
date of and for the periods presented.



In contrast to the certificate required
for non-venture issuers under National Instrument 52-109, Certification of Disclosure in Issuers’ Annual and Interim Filings
(“NI 52-109”), the Venture Issuer Basic Certificate filed by the Company does not include representations relating
to the establishment and maintenance of disclosure controls and procedures (“DC&P”) and internal control over financial
reporting (“ICFR”), as defined in NI 52-109. In particular, the certifying officers filing such certificate are not
making any representations relating to the establishment and maintenance of:



| | (i) | controls and other procedures designed to provide reasonable assurance that information required
to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation
is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | a process to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with the issuer’s generally accepted accounting
principles (IFRS).
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Company’s certifying officers
are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations
they are making in such certificate.



Investors should be aware that inherent
limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P
and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim
and annual filings and other reports provided under securities legislation.



82







Royal Standard Minerals Inc.

Management’s Discussion
and Analysis

Year Ended January 31, 2015

Discussion Dated May 22, 2015



ADDITIONAL DISCLOSURE FOR VENTURE ISSUERS WITHOUT SIGNIFICANT
REVENUE



The following tables set forth a breakdown
of the components of general and administrative expenditures and exploration and evaluation expenditures on mineral properties
for the Company, for the year ended January 31, 2015 and 2014.



General and Administrative:



|                      |  | Year Ended January 31, |       
|--------------------- |  | ---------------------- | ------
|                      |  | 2015 ($)               |       
|Corporate development |  |                        | 2,724 
|Insurance             |  |                        | -     
|Office and general    |  |                        | 2,418 
|Professional fees     |  |                        | 47,956
|Wages and salaries    |  |                        | -     
|Share-based payments  |  |                        | -     
|Travel                |  |                        | 38    
|Consulting fees       |  |                        | 4,038 
|Total                 |  |                        | 57,174



83







Royal Standard Minerals Inc.

Management’s Discussion
and Analysis

Year Ended January 31, 2015

Discussion Dated May 22, 2015



Exploration and Evaluation Expenditures on Mineral Properties:



|                                                  |  | Year Ended January 31, |  
|------------------------------------------------- |  | ---------------------- | -
|                                                  |  | 2015 ($)               |  
|Fondaway Canyon and Dixie-Comstock Projects       |  |                        |  
|Property acquisition costs                        |  |                        | -
|Consulting, wages and salaries                    |  |                        | -
|Travel                                            |  |                        | -
|Office and general                                |  |                        | -
|Total Fondaway Canyon and Dixie-Comstock Projects |  |                        | -
|Kentucky Project                                  |  |                        |  
|Office and general                                |  |                        | -
|Depreciation                                      |  |                        | -
|Total Kentucky Project                            |  |                        | -
|Total exploration activities                      |  |                        | -





84











INDEPENDENT AUDITOR'S REPORT



To the Shareholders of Royal Standard
Minerals Inc.



We have audited the accompanying
consolidated financial statements of Royal Standard Minerals Inc., which comprise the consolidated statements of financial position
as at January 31, 2014, and the consolidated statements of operations, comprehensive income, changes in shareholders' deficiency
and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.



Management's Responsibility for
the Financial Statements



Management is responsible for the
preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards
and for such internal control as management determines is necessary to enable the preparation of 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 financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted
auditing standards and with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement.



The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration
of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion.



An audit involves performing procedures
to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation
of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.



85







We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our audit opinion.



Opinion



In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of Royal Standard Minerals Inc. as at January
31, 2014, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting
Standards.



Emphasis of Matter



Without modifying our opinion,
we draw attention to Note 1 to the consolidated financial statements which highlights the existence of a material uncertainty relating
to conditions that cast significant doubt on Royal Standard Minerals Inc.'s ability to continue as a going concern.



Other matters



The consolidated financial statements
as at January 31, 2013 and for the year then ended were audited by MSCM LLP of Toronto, Canada, prior to its merger with MNP LLP.
MSCM LLP expressed an unmodified opinion on those statements on May 24, 2013.



| | 
| | 



Chartered Professional Accountants



Licensed Public Accountants



Toronto, Ontario



May 5, 2014



86














Royal Standard Minerals Inc.



(Expressed in United States Dollars)



Consolidated Financial Statements



January 31, 2014










87







Royal Standard Minerals Inc.

Consolidated Statements of Financial Position

(Expressed in United States Dollars)








|                                                   |  | As at       |             |   | As at       |  
|-------------------------------------------------- |  | ----------- | ----------- | - | ----------- | -
|                                                   |  | January 31, |             |   | January 31, |  
|                                                   |  | 2014        |             |   | 2013        |  
|                                                   |  |             |             |   |             |  
|Assets                                             |  |             |             |   |             |  
|Current                                            |  |             |             |   |             |  
|Cash and cash equivalents                          |  | $           | 16,807      |   |             | $
|Marketable securities (Note 7)                     |  |             | -           |   |             |  
|Sundry receivables and prepaids (Note 8)           |  |             | 5,553       |   |             |  
|                                                   |  |             | 22,360      |   |             |  
|Reclamation bonds (Note 9)                         |  |             | -           |   |             |  
|Equipment, net (Note 11)                           |  |             | -           |   |             |  
|                                                   |  | $           | 22,360      |   |             | $
|                                                   |  |             |             |   |             |  
|Liabilities                                        |  |             |             |   |             |  
|Current                                            |  |             |             |   |             |  
|Accounts payable and accrued liabilities (Note 12) |  | $           | 35,917      |   |             | $
|Other advances (Note 14)                           |  |             | -           |   |             |  
|                                                   |  |             | 35,917      |   |             |  
|Asset retirement obligations (Note 13)             |  |             | -           |   |             |  
|                                                   |  |             | 35,917      |   |             |  
|                                                   |  |             |             |   |             |  
|Shareholders' Deficiency                           |  |             |             |   |             |  
|Share capital (Note 15(b))                         |  |             | 28,273,230  |   |             |  
|Reserves                                           |  |             | 10,900,438  |   |             |  
|Accumulated deficit                                |  |             | (39,193,127 | ) |             |  
|Accumulated other comprehensive income             |  |             | 5,902       |   |             |  
|                                                   |  |             | (13,557     | ) |             |  
|                                                   |  | $           | 22,360      |   |             | $



The Company and Operations and Going Concern(Note 1)

Contingencies(Note 20)

Subsequent event(Note 23)



Approved by the Board:



|Carmelo Marrelli |  | George Duguay
|---------------- |  | -------------
|Director         |  | Director     



The accompanying notes are an integral part
of these consolidated financial statements.



88







Royal Standard Minerals Inc.

Consolidated Statements of Operations

(Expressed in United States Dollars)








|                                                                          |  | Year Ended  |         
|------------------------------------------------------------------------- |  | ----------- | --------
|                                                                          |  | January 31, |         
|                                                                          |  | 2014        |         
|                                                                          |  |             |         
|Expenses                                                                  |  |             |         
|Exploration and evaluation expenditures (Note 10)                         |  | $           | 87,233  
|General and administrative (Note 21)                                      |  |             | 387,692 
|                                                                          |  |             |         
|                                                                          |  |             | 474,925 
|                                                                          |  |             |         
|Operating loss                                                            |  |             | (474,925
|                                                                          |  |             |         
|Finance income                                                            |  |             | 9,138   
|Finance costs                                                             |  |             | -       
|Lawsuit settlement                                                        |  |             | -       
|Impairment of marketable securities (Note 7)                              |  |             | (30,000 
|Gain on disposal of marketable securities (Note 3(b))                     |  |             | -       
|Gain on sale of property interests and related assets (Note 3(a) and (b)) |  |             | 123,228 
|Gain on sale of royalty (Note 3(c))                                       |  |             | -       
|Gain on dissolution of subsidiaries (Note 4)                              |  |             | 402,782 
|Write-off of accounts payable and accrued liabilities                     |  |             | 22,197  
|Gain on settlement and release (Note 10(d))                               |  |             | 48,091  
|Foreign currency translation adjustment                                   |  |             | (31,286 
|                                                                          |  |             |         
|Net income for the year                                                   |  | $           | 69,225  
|                                                                          |  |             |         
|Basic income per share (Note 17)                                          |  | $           | 0.00    
|Diluted income per share (Note 17)                                        |  | $           | 0.00    



The accompanying notes are an integral part
of these consolidated financial statements.



89







Royal Standard Minerals Inc.

Consolidated Statements of Comprehensive Income

(Expressed in United States Dollars)








|                                                                |  | Year Ended  |       
|--------------------------------------------------------------- |  | ----------- | ------
|                                                                |  | January 31, |       
|                                                                |  | 2014        |       
|                                                                |  |             |       
|Net income for the year                                         |  | $           | 69,225
|                                                                |  |             |       
|Other comprehensive income (loss)                               |  |             |       
|Items that will be reclassified subsequently to income          |  |             |       
|Net unrealized loss on available-for-sale marketable securities |  |             | -     
|Items that will not be reclassified subsequently to income      |  |             |       
|Foreign currency translation                                    |  |             | 5,902 
|                                                                |  |             |       
|Comprehensive income for the year                               |  | $           | 75,127



The accompanying notes are an integral part
of these consolidated financial statements.



90







Royal Standard Minerals Inc.

Consolidated Statements of Changes in Shareholders' Deficiency

(Expressed in United States Dollars)








|                                                                            |  |         |            |  |          |   |            |             |  |   | Accumulated   |   |  |       |        
|--------------------------------------------------------------------------- |  | ------- | ---------- |  | -------- | - | ---------- | ----------- |  | - | ------------- | - |  | ----- | -------
|                                                                            |  |         |            |  |          |   |            |             |  |   | Other         |   |  |       |        
|                                                                            |  | Share   |            |  |          |   |            | Accumulated |  |   | Comprehensive |   |  |       |        
|                                                                            |  | Capital |            |  | Reserves |   |            | Deficit     |  |   | Income        |   |  | Total |        
|                                                                            |  |         |            |  |          |   |            |             |  |   |               |   |  |       |        
|Balance, January 31, 2012                                                   |  | $       | 28,098,264 |  |          | $ | 10,580,808 |             |  | $ | (44,553,494   | ) |  | $     | 63,875 
|Shares issued for lawsuit settlement                                        |  |         | 6,000      |  |          |   | -          |             |  |   | -             |   |  |       | -      
|Share-based payments                                                        |  |         | -          |  |          |   | 429,496    |             |  |   | -             |   |  |       | -      
|Net income for the year                                                     |  |         | -          |  |          |   | -          |             |  |   | 5,291,142     |   |  |       | -      
|Net increase in unrealized loss on available-for-sale marketable securities |  |         | -          |  |          |   | -          |             |  |   | -             |   |  |       | (63,875
|                                                                            |  |         |            |  |          |   |            |             |  |   |               |   |  |       |        
|Balance, January 31, 2013                                                   |  | $       | 28,104,264 |  |          | $ | 11,010,304 |             |  | $ | (39,262,352   | ) |  | $     | -      
|Private placement - common shares                                           |  |         | 16,400     |  |          |   | -          |             |  |   | -             |   |  |       | -      
|Shares issued for settlement of accounts payable and accrued liabilities    |  |         | 152,566    |  |          |   | -          |             |  |   | -             |   |  |       | -      
|Foreign currency translation                                                |  |         | -          |  |          |   | -          |             |  |   | -             |   |  |       | 5,902  
|Share-based payments                                                        |  |         | -          |  |          |   | (109,866   | )           |  |   | -             |   |  |       | -      
|Net income for the year                                                     |  |         | -          |  |          |   | -          |             |  |   | 69,225        |   |  |       | -      
|                                                                            |  |         |            |  |          |   |            |             |  |   |               |   |  |       |        
|Balance, January 31, 2014                                                   |  | $       | 28,273,230 |  |          | $ | 10,900,438 |             |  | $ | (39,193,127   | ) |  | $     | 5,902  



The accompanying notes are an integral part
of these consolidated financial statements.



91







Royal Standard Minerals Inc.

Consolidated Statements of Cash Flows

(Expressed in United States Dollars)








|                                                                                      |  | Year Ended  |           
|------------------------------------------------------------------------------------- |  | ----------- | ----------
|                                                                                      |  | January 31, |           
|                                                                                      |  | 2014        |           
|                                                                                      |  |             |           
|Operating activities                                                                  |  |             |           
|Net income for the year                                                               |  | $           | 69,225    
|Operating items not involving cash:                                                   |  |             |           
|Depreciation                                                                          |  |             | 3,558     
|Accretion in asset retirement obligations                                             |  |             | 5,280     
|Accretion expense                                                                     |  |             | -         
|Share-based payments                                                                  |  |             | (109,866  
|Shares issued for lawsuit settlement                                                  |  |             | -         
|Shares issued for settlement of accounts payable and accrued liabilities              |  |             | 152,566   
|Embedded derivative on long-term debt                                                 |  |             | -         
|Impairment of marketable securities                                                   |  |             | 30,000    
|Gain on sale of property interests                                                    |  |             | (123,228  
|Gain on sale of royalty                                                               |  |             | -         
|Gain on disposal of marketable securities                                             |  |             | -         
|Gain on dissolution of subsidiaries                                                   |  |             | (402,782  
|Lawsuit settlement                                                                    |  |             | (8,000    
|Gain on settlement and release                                                        |  |             | (48,091   
|Write-off of accounts payable and accrued liabilities                                 |  |             | (22,197   
|Foreign exchange                                                                      |  |             | 5,902     
|Changes in non-cash working capital:                                                  |  |             |           
|Sundry receivables and prepaids                                                       |  |             | 2,706,451 
|Accounts payable and accrued liabilities                                              |  |             | (1,983,204
|Due to related parties                                                                |  |             | -         
|                                                                                      |  |             |           
|Cash provided by (used in) in operating activities                                    |  |             | 275,614   
|                                                                                      |  |             |           
|Financing activities                                                                  |  |             |           
|Private placement - common shares                                                     |  |             | 16,400    
|Other advances (repayments)                                                           |  |             | (600,000  
|Increase in long-term debt                                                            |  |             | -         
|Finance costs paid on long-term debt                                                  |  |             | -         
|Proceeds from sale of property interests and related assets, net of transaction costs |  |             | 123,228   
|                                                                                      |  |             |           
|Cash (used in) provided by financing activities                                       |  |             | (460,372  
|                                                                                      |  |             |           
|Investing activities                                                                  |  |             |           
|Increase in reclamation bonds                                                         |  |             | -         
|Purchase of equipment                                                                 |  |             | -         
|                                                                                      |  |             |           
|Cash used in investing activities                                                     |  |             | -         
|                                                                                      |  |             |           
|Change in cash and cash equivalents                                                   |  |             | (184,758  
|Cash and cash equivalents, beginning of year                                          |  |             | 201,565   
|                                                                                      |  |             |           
|Cash and cash equivalents, end of year                                                |  | $           | 16,807    



The accompanying notes are an integral part
of these consolidated financial statements.



92







| | 2. | Significant Accounting Policies (Continued)
| | -- | -------------------------------------------



[b] Accounting policies



Principles of consolidation



These consolidated financial
statements include the accounts of the Company and its previously wholly-owned subsidiaries up to the date of their dissolution,
Kentucky Standard Energy Company, Inc. ("Kentucky") and Manhattan Mining Co. ("Manhattan"), both United States
companies (see note 4). All intercompany transactions and balances have been eliminated upon consolidation.



Equipment



Equipment is recorded at cost
less accumulated depreciation. Depreciation is provided using the declining balance method using the following rates:



|Exploration equipment    | - 25% to 30%                
|------------------------ | ----------------------------
|Office equipment         | - 20%                       
|Construction in progress | - nil, as not yet in service



At the end of each reporting
period, the Company reviews the carrying amounts of its equipment to determine whether there is any indication that the equipment
has suffered an impairment loss. Where such an indication exists, the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss. The recoverable amount is the higher of the equipment's fair value less cost to sell
or its value in use.



Exploration and evaluation expenditures



The Company expenses exploration
and evaluation expenditures as incurred. Exploration and evaluation expenditures include acquisition costs of mineral properties,
property option payments and evaluation activity.



Once a project has been established
as commercially viable and technically feasible, related development expenditure is capitalized. This includes costs incurred in
preparing the site for mining operations. Capitalization ceases when the mine is capable of commercial production, with the exception
of development costs that give rise to a future benefit.



Restoration, rehabilitation and environmental
obligations



A legal or constructive obligation
to incur restoration, rehabilitation and environmental costs may arise when environmental disturbance is caused by the exploration,
development or ongoing production of a mineral property interest. Such costs arising from the decommissioning of plant and other
site preparation work, discounted to their net present value, are provided for and recorded in the exploration and evaluation expenditures,
as soon as the obligation to incur such costs arises. Discount rates using a pretax rate that reflects the time value of money
are used to calculate the net present value. These costs are charged against profit or loss over the economic life of the related
asset, through amortization using either a unit-of-production or the straight-line method as appropriate. The related liability
is adjusted for each period for the unwinding of the discount rate and for changes to the current market-based discount rate, amount
or timing of the underlying cash flows needed to settle the obligation.



93







| | 2. | Significant Accounting Policies (Continued)
| | -- | -------------------------------------------



[b] Accounting polices (continued)



Share-based payments



The fair value of the stock
options granted to directors, officers and employees is determined using the Black-Scholes option pricing model and management's
assumptions as disclosed in Note 16 and recorded as share-based payments expense over the vesting period of the stock options,
with the offsetting credit recorded as an increase in reserves. The fair value of stock options issued to other than employees
are measured at the fair value of the goods or services received unless this cannot be reliably estimated, and are recognized over
the period of service.



If the stock options are exercised,
the proceeds are credited to share capital and the fair value at the date of grant is reclassified from reserves to share capital.



Income taxes



Tax expense comprises current
and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business
combination, or items recognized directly in equity or in other comprehensive income.



Current tax is the expected
tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting
date, and any adjustment to tax payable in respect of previous years.



Deferred tax is recognized in
respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition
of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit
or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable
that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences
arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary
differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred
tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and
they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they
intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.



A deferred tax asset is recognized
for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable
profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced
to the extent that it is no longer probable that the related tax benefit will be realized.



94







| | 2. | Significant Accounting Policies (Continued)
| | -- | -------------------------------------------



[b] Accounting polices (continued)



Income per common share



Basic income per share is computed
by dividing the income for the year by the weighted average number of common shares outstanding during the year, including contingently
issuable shares which are included when the conditions necessary for issuance have been met. Diluted income per share is calculated
in a similar manner, except that the weighted average number of common shares outstanding is increased to include potentially issuable
common shares from the assumed exercise of common share purchase options and warrants, if dilutive. The number of additional shares
included in the calculation is based on the treasury stock method for options and warrants.



Foreign currency translation



Effective November 7, 2013,
the functional currency of the Company changed to Canadian dollars as a significant portion of the Company's expenses are denominated
in Canadian dollars, the dissolution of Manhattan ended all of the Company's United States operations (see note 4) and future sources
of financing are anticipated to be denominated in Canadian dollars. Prior to that time, the functional currency was the United
States dollar. The change to the Company's functional currency has been accounted for in accordance with IAS 21 - The Effects of
Changes in Foreign Exchange Rates. All amounts in these financial statements are presented in US dollars ("presentation currency")
since the United States dollar provides a more useful point of reference for investors.



Subsequent to the change in
functional currency described above, the Company translates the assets and liabilities of the Company from the functional currency
to the presentation currency at the period end rate. Revenue and expenses are translated at the average rate of exchange prevailing
during the period. The resulting unrealized gain or loss on translation is recognized as other comprehensive income or loss. Equity
is translated at historical rates.



Financial instruments



The Company recognizes financial
assets and financial liabilities when the Company becomes a party to a contract. Financial assets and financial liabilities, with
the exception of financial assets classified at fair value through profit or loss, are measured at fair value plus transaction
costs on initial recognition. Financial assets at fair value through profit or loss are measured at fair value on initial recognition
and transaction costs are expensed when incurred. Securities are accounted for at the trade date.



Measurement in subsequent periods
depends on the classification of the financial instrument.



95







| | 2. | Significant Accounting Policies (Continued)
| | -- | -------------------------------------------



[b] Accounting polices (continued)



Financial instruments (continued)



i) Financial assets at fair
value through profit or loss (FVTPL)



Financial assets are classified
as FVTPL when acquired principally for the purpose of trading, if so designated by management (fair value option), or if they are
derivative assets that are not part of an effective and designated hedging relationship. Financial assets classified as FVTPL are
measured at fair value, with changes recognized in the consolidated statements of operations.



The Company’s financial
assets classified as FVTPL include cash and cash equivalents. The Company does not currently hold any derivative instruments or
apply hedge accounting.



ii) Available-for-sale financial
assets



Financial assets are classified
as available-for-sale when so designated by management. Financial assets classified as available-for-sale are measured at fair
value, with changes recognized in the other comprehensive income.



The Company’s financial
assets classified as available-for-sale include marketable securities.



iii) Loans and receivables



Loans and receivables are non-derivative
financial assets that have fixed or determinable payments and are not quoted in an active market. Subsequent to initial recognition,
loans and receivables are carried at amortized cost using the effective interest method.



Sundry receivables are classified
as loans and receivables.



iv) Financial liabilities at
FVTPL



This category comprises derivatives,
or liabilities acquired or incurred principally for the purpose of being sold or repurchased in the near term. They are carried
in the consolidated statements of financial position at fair value with changes in fair value recognized in the consolidated statements
of operations.



The Company may enter into certain
financial derivative contracts in order to manage the exposure to market risks from fluctuations in commodity prices. The Company’s
policy is not to utilize derivative financial instruments for speculative purposes.



Embedded derivatives are separated
from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded
derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition
of a derivative, and the combined instrument is not measured at fair value through the profit or loss. Changes in the fair value
of separable embedded derivatives are recognized immediately in profit or loss.



96







| | 2. | Significant Accounting Policies (Continued)
| | -- | -------------------------------------------



[b] Accounting polices (continued)



Financial instruments (continued)



v) Other financial liabilities



Other financial liabilities
are financial liabilities that are not classified as FVTPL. Subsequent to initial recognition, other financial liabilities that
are not subject to hedge accounting, are measured at amortized cost using the effective interest method.



Accounts payable and accrued
liabilities and other advances are classified as other financial liabilities. The Company does not currently apply hedge accounting.



The effective interest method
is a method of calculating the amortized cost of an instrument and of allocating interest income over the relevant period. The
effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or
received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through
the expected life of the debt instrument to the net carrying amount on initial recognition.



vi) Financial instruments recorded
at fair value



Financial instruments recorded
at fair value on the consolidated statements of financial position are classified using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: Level 1 - valuation
based on quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - valuation techniques based
on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and Level 3 - valuation techniques using inputs for the asset or liability that
are not based on observable market data (unobservable inputs). As of January 31, 2014 and 2013, the financial assets or liabilities
measured at fair value are the Company's cash and cash equivalents and marketable securities.



Cash and cash equivalents and
marketable securities are considered Level 1.



Significant accounting judgments
and estimates



The preparation of these consolidated
financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period.
Actual outcomes could differ from these estimates. These consolidated financial statements include estimates that, by their nature,
are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements, and may require accounting
adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is
revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience,
current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable
under the circumstances.



97







| | 2. | Significant Accounting Policies (Continued)
| | -- | -------------------------------------------



[b] Accounting polices (continued)



Significant accounting judgments
and estimates (continued)



Critical accounting estimates



Significant assumptions about
the future that management has made that could result in a material adjustment to the carrying amounts of assets and liabilities,
in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:



| | · | the inputs used in accounting for share
based payment transactions in the consolidated statements of operations;
| | - | ----------------------------------------------------------------------------------------------------------------

| | · | Contingencies – See note 20.
| | - | ----------------------------



Critical accounting judgments



| | · | the categorization of financial assets
and liabilities is an accounting policy that requires management to make judgments or assessments;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------

| | · | the measurement of income taxes payable
and deferred income tax assets and liabilities requires management to make judgments in the interpretation and application of the
relevant tax laws. Deferred tax assets require management to assess the likelihood that the Company will generate taxable income
in future periods in order to utilize recognized deferred tax assets;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | going concern presentation of the consolidated
financial statements which assumes that the Company will continue in operation for the foreseeable future and will be able to realize
its assets and discharge its liabilities in the normal course of operations as they come due; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Management's determination that the functional
currency of the Company is the Canadian Dollar.
| | - | ----------------------------------------------------------------------------------------------



[c] Adoption of new accounting standards



(i) IFRS 10 – Consolidated
financial statements (“IFRS 10”) was issued by the IASB in May 2011. IFRS 10 is a new standard which identifies the
concept of control as the determining factor in assessing whether an entity should be included in the consolidated financial statements
of the parent company. Control is comprised of three elements: power over an investee; exposure to variable returns from an investee;
and the ability to use power to affect the reporting entity’s returns. At February 1, 2013, the Company adopted this pronouncement
and there was no material impact on the Company's consolidated financial statements.



98







| | 2. | Significant Accounting Policies (Continued)
| | -- | -------------------------------------------



[c] Adoption of new accounting standards (continued)



(ii) IFRS 11 – Joint arrangements
(“IFRS 11”) was issued by the IASB in May 2011. IFRS 11 is a new standard which focuses on classifying joint arrangements
by their rights and obligations rather than their legal form. Entities are classified into two groups: parties having rights to
the assets and obligations for the liabilities of an arrangement, and rights to the net assets of an arrangement. Entities in the
former case account for assets, liabilities, revenues and expenses in accordance with the arrangement, whereas entities in the
latter case account for the arrangement using the equity method. At February 1, 2013, the Company adopted this pronouncement and
there was no material impact on the Company's consolidated financial statements.



(iii) IFRS 12 – Disclosure
of interests in other entities (“IFRS 12”) was issued by the IASB in May 2011. IFRS 12 is a new standard which provides
disclosure requirements for entities reporting interests in other entities, including joint arrangements, special purpose vehicles,
and off balance sheet vehicles. At February 1, 2013, the Company adopted this pronouncement and there was no material impact on
the Company's consolidated financial statements.



(iv) IFRS 13 – Fair value
measurement (“IFRS 13”) was issued by the IASB in May 2011. IFRS 13 is a new standard which provides a precise definition
of fair value and a single source of fair value measurement considerations for use across IFRSs. At February 1, 2013, the Company
adopted this pronouncement and there was no material impact on the Company's consolidated financial statements given the existing
asset and liability mix of the Company to which fair value accounting applies.



(v) IAS 1 – Presentation
of financial statements (“IAS 1”) was amended by the IASB in June 2011 in order to align the presentation of items
in other comprehensive income with US GAAP standards. Items in other comprehensive income will be required to be presented in two
categories: items that will be reclassified into profit or loss and those that will not be reclassified. The flexibility to present
a statement of comprehensive income as one statement or two separate statements of profit and loss and other comprehensive income
remains unchanged. At February 1, 2013, the Company adopted this pronouncement and there was no material impact on the Company's
consolidated financial statements.



(vi) IAS 28 - Investments in
Associates and Joint Ventures (“IAS 28”) was issued by the IASB in May 2011 and supersedes IAS 28 - Investments in
Associates and prescribes the accounting for investments in associates and sets out the requirements for the application of the
equity method when accounting for investments in associates and joint ventures. IAS 28 defines significant influence as the power
to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies.
IAS 28 also provides guidance on how the equity method of accounting is to be applied and also prescribes how investments in associates
and joint ventures should be tested for impairment. At February 1, 2013, the Company adopted this pronouncement and there was no
material impact on the Company's consolidated financial statements.



99







| | 2. | Significant Accounting Policies (Continued)
| | -- | -------------------------------------------



[d] Future accounting standards



Certain new standards, interpretations
and amendments to existing standards have been issued by the IASB or IFRIC that are mandatory for accounting periods beginning
on or after January 1, 2014, or later periods. The following have not yet been adopted and are being evaluated to determine their
impact on the Company.



(i) IFRS 9 – Financial
instruments (“IFRS 9”) was issued by the IASB in October 2010 and will replace IAS 39 - Financial Instruments: Recognition
and Measurement (“IAS 39”). IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized
cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial
instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Most of
the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9.
The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS
9 is effective for annual periods beginning on or after January 1, 2018. Earlier adoption is permitted.



(ii) IAS 32 – Financial
Instruments: Presentation (“IAS 32”) was amended by the IASB in December 2011 to clarify certain aspects of the requirements
on offsetting. The amendments focus on the criterion that an entity currently has a legally enforceable right to set off the recognized
amounts and the criterion that an entity intends either to settle on a net basis, or to realize the asset and settle the liability
simultaneously. The amendments to IAS 32 are effective for annual periods beginning on or after January 1, 2014. Earlier adoption
is permitted.



| | 3. | Sale of Property Interests and Related Assets
| | -- | ---------------------------------------------



(a) Fondaway Canyon
and Dixie-Comstock



On August 9, 2013, the Company
completed its transaction with American Innovative Minerals LLC (“AIMLLC”) to sell its interests in the Fondaway Canyon
and Dixie-Comstock properties (the “Transaction”) for cash consideration of $144,000. As a result, the Company recorded
a gain on sale of property interests of $123,228, net of transaction costs.



In addition, as a condition
to the closing of the Transaction, Hale Capital Management, LP and Hale Capital Partners, LP (together, “Hale Capital”)
delivered to the Company a full and final release and settlement agreement relating to the legal action commenced by Hale Capital
on September 27, 2011. A stipulation of dismissal with prejudice was filed with the Supreme Court of the State of New York dismissing
all claims against the Company and Manhattan in connection with that litigation.



|Cash                    |  | $ | 144,000 |  
|----------------------- |  | - | ------- | -
|Less: Transaction costs |  |   | (20,772 | )
|                        |  |   |         |  
|Total gain on sale      |  | $ | 123,228 |  



100







| | 3. | Sale of Property Interests and Related Assets (Continued)
| | -- | ---------------------------------------------------------



(b) Asset Purchase Agreement



On December 19, 2012, the Company
completed a transaction with Scorpio to sell its Goldwedge and Piñon property interests and the assets related thereto to
Scorpio (the “Scorpio Transaction”). The Scorpio Transaction was completed pursuant to the Asset Purchase Agreement.



The completion of the Scorpio
Transaction followed a special meeting of Royal Standard’s shareholders held on November 28, 2012, at which votes representing
50.08% of the total issued and outstanding shares of the Company as at the record date were cast either by proxy or in person,
with 99.46% of such shares voting in favour of the special resolution approving the Scorpio Transaction.



Pursuant to the Scorpio Transaction,
the interests of the Company and Manhattan in the Goldwedge and Piñon properties and the assets related thereto were sold
to Scorpio and its wholly-owned subsidiary Goldwedge LLC.





|Consideration               |  |   |             |  
|--------------------------- |  | - | ----------- | -
|Cash                        |  | $ | 1,252,953   |  
|Scorpio common shares (i)   |  |   | 1,623,827   |  
|Less: Transaction costs     |  |   | (461,361    | )
|                            |  |   |             |  
|Total consideration         |  |   | 2,415,419   |  
|                            |  |   |             |  
|Net liabilities sold        |  |   |             |  
|Reclamation bonds           |  |   | 453,495     |  
|Equipment                   |  |   | 4,699,436   |  
|Asset retirement obligation |  |   | (211,940    | )
|Equipment payable           |  |   | (15,867     | )
|Long-term debt              |  |   | (16,681,110 | )
|                            |  |   |             |  
|Total net liabilities sold  |  |   | (11,755,986 | )
|                            |  |   |             |  
|Total gain on sale          |  | $ | 14,171,405  |  



(i) On January 31, 2013, the
Company entered into a purchase and sale agreement with Waterton Global Value, L.P. to sell all 3,000,000 Scorpio common shares
obtained as a part of the consideration of the Transaction, at a price of $0.55 per share resulting in a gain of $30,071.



(c) Royalty Agreement



On January 31, 2013, the Company
entered into a purchase and sale agreement with XDM Royalty Corp. ("XDM") to sell the Pinon Railroad Royalty, a royalty
retained by the Company on the sale of the Pinon Railroad Project in 2009, and all rights, title and interests to XDM for CDN $900,000
($902,126). Related transaction costs amounted to CDN $35,537 ($35,621).



101







| | 4. | Dissolution of Subsidiaries
| | -- | ---------------------------



(a) On September 5, 2013, the
Kentucky Secretary of State accepted the articles of dissolution for Kentucky and Kentucky has been dissolved. As a result, a gain
on dissolution of subsidiary of $30,100 was recorded as a result of accounts payable and accrued liabilities dissolved.



(b) On November 7, 2013, the
Nevada Secretary of State accepted the articles of dissolution for Manhattan and Manhattan has been dissolved. As a result, a gain
on dissolution of subsidiary of $372,682 was recorded.



|Net liabilities dissolved                |  |   |          |  
|---------------------------------------- |  | - | -------- | -
|Reclamation bonds                        |  |   | 9,550    |  
|Accounts payable and accrued liabilities |  |   | (379,254 | )
|Asset retirement obligation              |  |   | (2,978   | )
|                                         |  |   |          |  
|Total net liabilities dissolved          |  |   | (372,682 | )
|                                         |  |   |          |  
|Total gain on sale                       |  | $ | 372,682  |  



| | 5. | Capital Management
| | -- | ------------------



The Company manages its capital
with the following objectives:



| | · | to ensure sufficient financial flexibility
to achieve the ongoing business objectives; and
| | - | ------------------------------------------------------------------------------------------

| | · | to maximize shareholder return through
enhancing the share value.
| | - | -----------------------------------------------------------------



The Company monitors its capital
structure and makes adjustments according to market conditions in an effort to meet its objectives given the current outlook of
the business and industry in general. The Company may manage its capital structure by issuing new shares, repurchasing outstanding
shares, adjusting capital spending, or disposing of assets. The capital structure is reviewed by Management and the Board of Directors
on an ongoing basis.



The Company's equity comprises
of share capital, reserves, accumulated other comprehensive income and accumulated deficit, which at January 31, 2014 was a deficiency
of $13,557 (January 31, 2013 - deficiency of $147,784). Note that included in the consolidated statements of financial position
presented is a deficit of $39,193,127 as at January 31, 2014 (January 31, 2013 - $39,262,352).



The Company manages capital
through its financial and operational forecasting processes. The Company reviews its working capital and forecasts its future cash
flows based on operating expenditures, and other investing and financing activities. Selected information is provided to the Board
of Directors of the Company. The Company’s capital management objectives, policies and processes have remained unchanged
during the year ended January 31, 2014. The Company is not subject to external capital requirements.



102







| | 6. | Financial Risk Factors
| | -- | ----------------------



The Company’s activities
expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including interest rate and foreign currency
risk).



Risk management is carried out
by the Company's management team with guidance from the Audit Committee under policies approved by the Board of Directors. The
Board of Directors also provides regular guidance for overall risk management.



(i) Credit risk



Credit risk is the risk of loss
associated with a counterparty’s inability to fulfill its payment obligations. The Company's credit risk is primarily attributable
to cash and cash equivalents. The Company has no significant concentration of credit risk arising from operations. Cash and cash
equivalents are held with reputable financial institutions, from which management believes the risk of loss to be minimal.



(ii) Liquidity risk



The Company's approach to managing
liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due (see note 1). As at January 31,
2014, the Company had a cash balance of $16,807 (January 31, 2013 - $201,565) to settle current liabilities of $35,917 (January
31, 2013 - $3,195,672). All of the Company's financial liabilities have contractual maturities of less than 60 days and are subject
to normal trade terms.



(iii) Market risk



Market risk is the risk of loss
that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices.



Interest rate risk

The Company has cash balances
and no interest-bearing debt. The Company's current policy is to invest excess cash in guaranteed investment certificates, bankers
acceptance and money market deposits, with reputable financial institutions. The interest rate risk is remote.



Foreign currency risk

The Company's functional and
reporting currency was previously the United States dollar and major purchases were transacted in United States dollars. Subsequent
to the dissolution of Manhattan (see note 4), the functional currency of the Company changed to Canadian dollars and major purchases
are transacted in Canadian dollars.



| | 7. | Marketable Securities
| | -- | ---------------------



Marketable securities consist
of 2,000,000 common shares of Sharpe Resources Corporation ("Sharpe"). Sharpe is a publicly held Canadian company engaged
in the exploration and development of coal properties in the United States. As a result of the continued and significant decline
in the market value and the delisting of the shares, the Company has taken a provision of loss of $30,000 and written down the
investment to $nil.



103







| | 8. | Sundry Receivables and Prepaids
| | -- | -------------------------------



|                      |  | As at       |       |  | As at       |  
|--------------------- |  | ----------- | ----- |  | ----------- | -
|                      |  | January 31, |       |  | January 31, |  
|                      |  | 2014        |       |  | 2013        |  
|                      |  |             |       |  |             |  
|Sales tax receivables |  | $           | 5,193 |  |             | $
|Other receivables     |  |             | -     |  |             |  
|Prepaid expenses      |  |             | 360   |  |             |  
|                      |  |             |       |  |             |  
|                      |  | $           | 5,553 |  |             | $



Included in other receivables
at January 31, 2013 is $1,651,320 due on the sale of the Scorpio common shares (see note 3(b)), $900,720 due on the sale of the
Royalty (see note 3(c)) and $57,481 due from the Bureau of Land Management in the State of Nevada and a banking institution, in
connection with certain reclamation bonds sold to Scorpio.



| | 9. | Reclamation Bonds
| | -- | -----------------



The Company had posted reclamation
bonds for its mining projects, as required by the States of Nevada and Kentucky, to secure clean-up costs if the projects are abandoned
or closed. As at January 31, 2014, the balance of the reclamation bonds consists of $nil (January 31, 2013 - $9,550) pertaining
to the Fondaway Canyon and Dixie-Comstock Projects, and $nil (January 31, 2013 - $178,700) to the Kentucky Project. As noted under
note 20(a), the reclamation bond pertaining to the Kentucky Project was relinquished.



| | 10. | Exploration and Evaluation Expenditures on Mineral Properties
| | --- | -------------------------------------------------------------



| | (a) | Goldwedge Project
| | --- | -----------------



The Goldwedge Project, a property
previously owned by the Company, represented the Company's most advanced project and was located in the Manhattan District in Nye
County, Nevada, approximately eight miles south of the Round Mountain mine and had been issued a mine and mill permit by the Nevada
Division of Environmental Protection. The Company was completing refurbishment of the on-site processing plant which was used for
the test mining and processing that took place in 2007 and 2008. The process included primary crushing and grinding facilities
that fed a gravity recovery system. In addition, dry stack tailings containment as well as silt and fresh water ponds were in place.
Testing of the various mineral processing functions extracted stockpiles of low grade gold feed material, as well as concurrently
newly mined material. The feed material was processed into gold dore on site. All mineralized material was sampled daily and analyzed
for gold content at the Company's onsite assay laboratory. In addition, the Company sent samples for analysis to an independent
laboratory located offsite.



104







| | 10. | Exploration and Evaluation Expenditures on Mineral Properties
(Continued)
| | --- | -------------------------------------------------------------------------



| | (a) | Goldwedge Project (continued)
| | --- | -----------------------------



Based on the level of terrestrial
disturbance and water treatment and monitoring requirements, the discounted asset retirement obligation's for all projects, where
applicable, were estimated by management. The assumptions for the future payments were based on future expenses being incurred
between 2017 and 2019 and a discount rate of 10%. Under the guidance of IAS 37, the Company had recorded an asset retirement obligation
("ARO") of $183,445 on this project, representing the estimated costs, on a discounted basis, of the Company's obligation
to restore the site to its original condition.



During the year ended January
31, 2013, a total of $2,803,375 of exploration and evaluation expenditures were spent on the Goldwedge Project prior to the sale
of the Goldwedge Project and related assets, including the ARO, to Scorpio (note 3(b)).



| | (b) | Fondaway Canyon and Dixie-Comstock Projects
| | --- | -------------------------------------------



The Fondaway Canyon Project,
a property previously owned by the Company, is located in Churchill County, Nevada.



Also held under the same option
agreement as was the Goldwedge Property is the Dixie-Comstock Mining Company option and other unpatented mining claims located
in Churchill County, Nevada. In 2010, the Company exercised its option to purchase these unpatented and patented mining claim groups.



Under the guidance of IAS 37,
the Company had recorded an ARO of $2,978 on the Dixie-Comstock and Fondaway Canyon Projects, representing the estimated costs,
on a discounted basis, of the Company's obligation to restore the sites to their original condition.



During the year ended January
31, 2014, the Company incurred exploration and evaluation expenditures of $63,573 (year ended January 31, 2013 - $67,817) on these
projects prior to the sale of its interests in the Fondaway Canyon and Dixie-Comstock properties (see note 3(a)).



| | (c) | Piñon Project
| | --- | -------------



The Piñon Project was
a property made up of a number of property leases located in Elko Country, Nevada. Under the guidance of IAS 37, the Company had
recorded an ARO of $28,495 on this project, representing the estimated costs, on a discounted basis, of the Company's obligation
to restore the site to its original condition. During the year ended January 31, 2013, the Company performed minimal exploration
and evaluation expenditures on this project, a total of $104,696, prior to the sale of the Piñon Project and related assets,
including the ARO, to Scorpio (note 3(b)).



105







| | 10. | Exploration and Evaluation Expenditures on Mineral Properties
(Continued)
| | --- | -------------------------------------------------------------------------



| | (d) | Kentucky Project
| | --- | ----------------



On December 7, 2011, the Company
exercised its option to acquire a 50% interest in certain coal projects in Eastern Kentucky. The option was originally acquired
by the Company pursuant to an option and joint venture agreement entered into with Sharpe on November 21, 2008 and amended on September
11, 2009, to jointly pursue the exploration and development of approximately 1,000 acres in Wolfe County, Kentucky.



During the year ended January
31, 2011, the Company wrote off a promissory note receivable from the optionor in the amount of $133,134. Further, the Company
paid for a reclamation bond of $178,700 which was later relinquished, as noted below.



Under the guidance of IAS 37,
the Company had recorded an ARO on its Kentucky Project in the amount of $109,949, representing the estimated costs, on a discounted
basis, of the Company's obligation to restore the property to its original condition.



During the year ended January
31, 2014, the Company incurred exploration and evaluation expenditures of $23,660 (year ended January 31, 2013 - $161,317) on this
project.



Kentucky entered into a settlement
and release agreement on August 27, 2013 with Pick & Shovel Mining ("Pick & Shovel") and Roger and Jacqueline
Stacy pursuant to which in consideration of a cash settlement payment and transfer of certain equipment by Kentucky to Pick &
Shovel, the parties resolved to waive and release any claims relating to a prior claim between the parties (see note 20(a)). In
addition, Kentucky relinquished any interest in a bond posted on Permit No. 919-0066 and Pick & Shovel agreed to be solely
responsible for such Permit and all related claims and issues asserted by the Kentucky Energy and Environment Cabinet.



|Consideration paid                       |  |   |          |  
|---------------------------------------- |  | - | -------- | -
|Cash                                     |  | $ | 8,000    |  
|                                         |  |   |          |  
|Net liabilities settled                  |  |   |          |  
|Reclamation bond                         |  |   | 178,700  |  
|Equipment                                |  |   | 20,158   |  
|Accounts payable and accrued liabilities |  |   | (145,000 | )
|Asset retirement obligation              |  |   | (109,949 | )
|                                         |  |   |          |  
|Total net liabilities settled            |  |   | (56,091  | )
|                                         |  |   |          |  
|Total gain on settlement                 |  | $ | 48,091   |  



106









| | 10. | Exploration and Evaluation Expenditures on Mineral Properties
(Continued)
| | --- | -------------------------------------------------------------------------



During the years ended January
31, 2014 and 2013, the Company's exploration and evaluation expenditures were as follows:



|                                                          |  | Year Ended  |       
|--------------------------------------------------------- |  | ----------- | ------
|                                                          |  | January 31, |       
|                                                          |  | 2014        |       
|Goldwedge Project                                         |  |             |       
|Travel                                                    |  | $           | -     
|Mine development costs                                    |  |             | -     
|Drilling                                                  |  |             | -     
|Consulting, wages and salaries (Note 19)                  |  |             | -     
|Office and general                                        |  |             | -     
|Supplies, equipment and transportation                    |  |             | -     
|Claim staking and maintenance fees                        |  |             | -     
|Milling costs                                             |  |             | -     
|Depreciation                                              |  |             | -     
|Net proceeds from sale of exploration and development ore |  |             | -     
|                                                          |  | $           | -     
|Piñon Project                                             |  |             |       
|Property acquisition costs                                |  | $           | -     
|Consulting, wages and salaries                            |  |             | -     
|Office and general                                        |  |             | -     
|Claim staking and maintenance fees                        |  |             | -     
|                                                          |  | $           | -     
|Fondaway Canyon and Dixie-Comstock Projects               |  |             |       
|Property acquisition costs                                |  | $           | 35,000
|Claim staking and maintenance fees                        |  |             | -     
|Consulting, wages and salaries                            |  |             | 19,711
|Travel                                                    |  |             | 5,714 
|Office and general                                        |  |             | 3,148 
|                                                          |  | $           | 63,573
|Kentucky Project                                          |  |             |       
|Office and general                                        |  | $           | 20,102
|Penalty                                                   |  |             | -     
|Depreciation                                              |  |             | 3,558 
|                                                          |  | $           | 23,660
|Total exploration activities                              |  | $           | 87,233



107







| | 11. | Equipment
| | --- | ---------



|                               |  | Construction |            |   | Exploration |   |            | Office    |  |   |         |  
|------------------------------ |  | ------------ | ---------- | - | ----------- | - | ---------- | --------- |  | - | ------- | -
|COST                           |  | in progress  |            |   | equipment   |   |            | equipment |  |   | Total   |  
|Balance, January 31, 2012      |  | $            | 1,619,341  |   |             | $ | 3,126,000  |           |  | $ | 21,806  |  
|Additions                      |  |              | 2,704,338  |   |             |   | 48,472     |           |  |   | -       |  
|Sale of equipment              |  |              | (4,323,679 | ) |             |   | (3,085,472 | )         |  |   | (21,806 | )
|Balance, January 31, 2013      |  |              | -          |   |             |   | 89,000     |           |  |   | -       |  
|Sale of equipment (Note 10(d)) |  |              | -          |   |             |   | (89,000    | )         |  |   | -       |  
|Balance, January 31, 2014      |  | $            | -          |   |             | $ | -          |           |  | $ | -       |  
|                               |  |              |            |   |             |   |            |           |  |   |         |  
|                               |  | Construction |            |   | Exploration |   |            | Office    |  |   |         |  
|ACCUMULATED DEPRECIATION       |  | in progress  |            |   | equipment   |   |            | equipment |  |   | Total   |  
|Balance, January 31, 2012      |  | $            | -          |   |             | $ | 2,661,758  |           |  | $ | 21,053  |  
|Depreciation for the year      |  |              | -          |   |             |   | 113,615    |           |  |   | 379     |  
|Sale of equipment              |  |              | -          |   |             |   | (2,710,089 | )         |  |   | (21,432 | )
|Balance, January 31, 2013      |  |              | -          |   |             |   | 65,284     |           |  |   | -       |  
|Depreciation for the year      |  |              | -          |   |             |   | 3,558      |           |  |   | -       |  
|Sale of equipment (Note 10(d)) |  |              | -          |   |             |   | (68,842    | )         |  |   | -       |  
|Balance, January 31, 2014      |  | $            | -          |   |             | $ | -          |           |  | $ | -       |  
|                               |  |              |            |   |             |   |            |           |  |   |         |  
|                               |  | Construction |            |   | Exploration |   |            | Office    |  |   |         |  
|CARRYING AMOUNT                |  | in progress  |            |   | equipment   |   |            | equipment |  |   | Total   |  
|Balance, January 31, 2013      |  | $            | -          |   |             | $ | 23,716     |           |  | $ | -       |  
|Balance, January 31, 2014      |  | $            | -          |   |             | $ | -          |           |  | $ | -       |  



Depreciation of exploration
equipment is expensed to exploration and evaluation expenditures and depreciation of office equipment is expensed to general and
administrative on the consolidated statements of operations.



| | 12. | Accounts Payable and Accrued Liabilities
| | --- | ----------------------------------------



|                    |  | As at       |        |  | As at       |  
|------------------- |  | ----------- | ------ |  | ----------- | -
|                    |  | January 31, |        |  | January 31, |  
|                    |  | 2014        |        |  | 2013        |  
|                    |  |             |        |  |             |  
|Trade payables      |  | $           | 18,375 |  |             | $
|Accrued liabilities |  |             | 17,542 |  |             |  
|                    |  | $           | 35,917 |  |             | $



108







| | 13. | Asset Retirement Obligations
| | --- | ----------------------------



The Company is required to recognize
a liability for a legal and constructive obligation to perform asset retirement activities, including decommissioning, reclamation
and environmental monitoring activities once any of its projects are permanently closed. Although these activities are conditional
upon future events, the Company is required to make a reasonable estimate of the fair value of the liability. As at January 31,
2014, the Company had disposed of all of its mineral properties and transferred all obligations to the purchasers.



Determination of the undiscounted
AROs and the timing of these obligations was based on internal estimates using information currently available, existing regulations,
and estimates of closure costs.



|                                                 |  | Year Ended  |          |   | Year Ended  |  
|------------------------------------------------ |  | ----------- | -------- | - | ----------- | -
|                                                 |  | January 31, |          |   | January 31, |  
|                                                 |  | 2014        |          |   | 2013        |  
|                                                 |  |             |          |   |             |  
|Balance, beginning of year                       |  | $           | 107,647  |   |             | $
|Reversal on dissolution of Manhattan (Note 4(b)) |  |             | (2,978   | ) |             |  
|Accretion cost                                   |  |             | 5,280    |   |             |  
|Foreign exchange                                 |  |             | -        |   |             |  
|Sale of AROs (Note 10(d))                        |  |             | (109,949 | ) |             |  
|                                                 |  |             |          |   |             |  
|Balance, end of year                             |  | $           | -        |   |             | $



| | 14. | Long-Term Debt
| | --- | --------------



On August 26, 2011, Manhattan
amended its existing Bridge Loan with Waterton Global Value, L.P. ("Waterton") such that the Bridge Loan was transitioned
into a more permanent senior secured gold stream debt facility (the “Gold Stream Facility”) amongst the parties. Under
the Gold Stream Facility, Waterton agreed to make $8,000,000 (the “Principal Amount”) available to Manhattan. The Principal
Amount was repayable by Manhattan to Waterton in monthly payments commencing in August 2012 and ending in July 2013 (see note 3).
Under the Gold Stream Facility, each monthly repayment of the Principal Amount was to be made by the delivery by Manhattan to Waterton
of gold bullion ounces where the number of ounces to be delivered was to be based on the spot price of gold on the business day
immediately preceding the repayment date less an applicable discount or by the payment of the cash equivalent of such number of
ounces. In addition, there was a profit participation formula which was triggered when the spot price of gold was in excess of
$1,600 an ounce on the business day immediately preceding the repayment ("Profit Participation"). The Principal Amount
accrued interest at 9.0% per annum. The Gold Stream Facility was secured by, amongst other items, Manhattan's real property assets
in Nevada.



The Company considered Profit
Participation as an embedded derivative. Prior to the sale to Scorpio, the gross proceeds received under the Gold Stream Facility
of $11,432,734 was allocated to the embedded derivative based on the initial fair values of the embedded derivative determined
when proceeds were received ($223,630), and then the residual value was allocated to the liability portion. As noted in note 3,
the Company's obligation with Waterton under the Gold Stream Facility was assumed by Scorpio when the Sale Transaction was completed.



109







| | 14. | Long-Term Debt (Continued)
| | --- | --------------------------



As consideration for entering
into the Gold Stream Facility, a structuring fee equal to 2% of the aggregate amount of the Gold Stream Facility and an establishment
fee of $80,000 was payable by Manhattan to Waterton and Manhattan also granted Waterton certain royalty interests over its exploration
stage projects. In addition, Manhattan and Waterton agreed that Waterton shall have the right to purchase all of the gold produced
by Manhattan from its Nevada projects at a price per ounce that would be equal to an agreed discount to the existing spot price
of gold at the time of any such purchase. Bayfront Capital Partners Ltd. acted as placement agent in connection with the Gold Stream
Facility in consideration for a placement fee equal to 4% of the Principal Amounts actually drawn by Manhattan on the Gold Stream
Facility.



The Gold Stream Facility contained
covenants for Manhattan such as, among other things, providing Waterton with updates on its operations, carrying on its business
in accordance with prudent mining industry practices, and providing Waterton with certain rights of inspection. Until all amounts
outstanding under the Gold Stream Facility have been repaid in full or otherwise satisfied in accordance with the terms of such
facility, certain standard restrictive covenants shall apply to Manhattan limiting its ability to (without limitation): incur additional
indebtedness, create liens on its assets or dispose of its assets. These negative covenants were subject to certain carve-outs
that facilitate Manhattan's ability to operate its business efficiently. The Gold Stream Facility also included certain event of
default provisions pursuant to which, immediately and automatically upon the occurrence of an event of default, all amounts outstanding
under the Gold Stream Facility would be automatically accelerated and immediately due and payable to Waterton.



At any time, without penalty,
the Gold Stream Facility provided Manhattan the option to prepay in whole or in part, on 5 business days prior notice. Prepayments
were permitted to be made in physical gold ounces or cash. The amount of any prepayment was to be calculated using the spot price
of gold on the business day immediately preceding the prepayment.



During the year ended January
31, 2013, the Company secured two additional $2,000,000 loan extensions from Waterton, bringing the total facility to $12,000,000.
In consideration for the loan extensions, the Company provided Waterton with additional net smelter return royalties on several
of its properties, including Piñon and Fondaway Canyon, and a 2% structuring fee.



On the completion of the Scorpio
Transaction, Scorpio assumed the Company's total long-term debt balance of $16,681,110 which included interest payable of $973,376
(note 3(b)).



The following table shows the
reconciliation between the gross proceeds received and the carrying value of long-term debt balance assumed by Scorpio.



|Gross proceeds                                      |  | $ | 11,432,734 |  
|--------------------------------------------------- |  | - | ---------- | -
|Less: Initial fair value of the embedded derivative |  |   | (170,721   | )
|Less: Debt issuance cost                            |  |   | (640,000   | )
|Add: Accretion costs                                |  |   | 6,059,097  |  
|                                                    |  |   |            |  
|Long-term debt                                      |  | $ | 16,681,110 |  



110







| | 14. | Long-Term Debt (Continued)
| | --- | --------------------------



In addition to the loan, Waterton
provided the Company with other advances (non-interest bearing) totalling $600,000, presented as other advances under current liabilities.
These advances were secured by certain of Manhattan's real property assets in Nevada and were due May 1, 2013. During the year
end January 31, 2014, the Company repaid these advances.



| | 15. | Share Capital
| | --- | -------------



(a) Authorized



The authorized capital of the
Company consists of an unlimited number of common shares and an unlimited number of preferred shares, each without par value.



(b) Issued



|                                                                              |  | Shares |             |  | Amount |  
|----------------------------------------------------------------------------- |  | ------ | ----------- |  | ------ | -
|                                                                              |  |        |             |  |        |  
|Balance, January 31, 2012                                                     |  |        | 83,853,825  |  |        | $
|Shares issued for lawsuit settlement(i)                                       |  |        | 100,000     |  |        |  
|                                                                              |  |        |             |  |        |  
|Balance, January 31, 2013                                                     |  |        | 83,953,825  |  |        |  
|Private placement - common shares (ii)                                        |  |        | 81,227,436  |  |        |  
|Shares issued for settlement of accounts payable and accrued liabilities(iii) |  |        | 755,654,241 |  |        |  
|                                                                              |  |        |             |  |        |  
|Balance, January 31, 2014                                                     |  |        | 920,835,502 |  |        | $



(i) The Company settled a claim
filed in the District Court, Nye County, Nevada through the issuance of 100,000 shares of the Company and a monetary settlement
of $35,000. The monetary settlement was paid in full prior to January 31, 2013.



(ii) On January 17, 2014, the
Company closed a non-brokered private placement of 81,227,436 common shares at CDN $0.0002216 per share for gross proceeds of CDN
$18,000 ($16,400).



(iii) On January 17, 2014, the
Company issued 755,654,241 shares at CDN $0.0002216 per share as settlement of accounts payable due to a trade creditor.



(iv) The issuance of shares
on January 17, 2014 (Note 15(b)(ii), (iii)) resulted in a change in the Company's major shareholders. See Note 19.



| | 16. | Stock Options
| | --- | -------------



Under the Company's stock option
plan (the "Option Plan"), the directors of the Company can grant options to acquire common shares of the Company to directors,
employees and others who provide ongoing services to the Company. Exercise prices cannot be less than the closing price of the
Company's shares on the trading day preceding the grant date and the maximum term of any option cannot exceed ten years.



111







| | 16. | Stock Options (Continued)
| | --- | -------------------------



The number of common shares
under option at any time under the Option Plan or otherwise cannot exceed 5% of the then outstanding common shares of the Company
for any optionee. In addition, options granted to insiders of the Company cannot exceed more than 10% of the then outstanding common
shares of the Company. A portion of the stock options vest immediately on the grant date and the balance vest over a period of
two years from the grant date.



Option pricing models require
the input of highly subjective assumptions including the expected price volatility. Changes in the subjective input assumptions
can materially affect the fair value estimate, and therefore the existing models do not necessarily provide a reliable measure
of the fair value of the Company's share purchase options.



The following table reflects
the continuity of stock options for the years ended January 31, 2014 and 2013:



|                          |  | Number of     |            |   | Weighted Average |  
|------------------------- |  | ------------- | ---------- | - | ---------------- | -
|                          |  | Stock Options |            |   | Exercise Price   |  
|                          |  |               |            |   |                  |  
|Balance, January 31, 2012 |  |               | 12,060,191 |   |                  | $
|Forfeited                 |  |               | (8,260,191 | ) |                  | $
|                          |  |               |            |   |                  |  
|Balance, January 31, 2013 |  |               | 3,800,000  |   |                  | $
|Forfeited                 |  |               | (1,450,000 | ) |                  | $
|                          |  |               |            |   |                  |  
|Balance, January 31, 2014 |  |               | 2,350,000  |   |                  | $



The following table reflects the stock options outstanding
and exercisable as at January 31, 2014:



|                 |  | Exercise Price |      |  | Options     |  |           | Options     |  |  | Fair      |  |  | Weighted average |        
|---------------- |  | -------------- | ---- |  | ----------- |  | --------- | ----------- |  |  | --------- |  |  | ---------------- | -------
|Expiry Date      |  | ($)            |      |  | Outstanding |  |           | Exercisable |  |  | Value     |  |  | remaining years  |        
|                 |  |                |      |  |             |  |           |             |  |  |           |  |  |                  |        
|June 26, 2014    |  |                | 0.10 |  |             |  | 550,000   |             |  |  | 550,000   |  |  | $                | 299,098
|January 20, 2017 |  |                | 0.30 |  |             |  | 1,800,000 |             |  |  | 1,800,000 |  |  |                  | 511,200
|                 |  |                |      |  |             |  |           |             |  |  |           |  |  |                  |        
|                 |  |                |      |  |             |  | 2,350,000 |             |  |  | 2,350,000 |  |  | $                | 810,298



112







| | 17. | Basic and Diluted Income Per Share
| | --- | ----------------------------------



The following table sets forth
the computation of basic and diluted income per share:



|                                                                                  |  | Year Ended  |            
|--------------------------------------------------------------------------------- |  | ----------- | -----------
|                                                                                  |  | January 31, |            
|                                                                                  |  | 2014        |            
|                                                                                  |  |             |            
|Numerator:                                                                        |  |             |            
|Income for the year                                                               |  | $           | 69,225     
|                                                                                  |  |             |            
|Denominator:                                                                      |  |             |            
|Weighted average number of common shares outstanding for basic income per share   |  |             | 116,053,396
|Weighted average number of common shares outstanding for diluted income per share |  |             | 116,053,396
|                                                                                  |  |             |            
|Basic income per share                                                            |  | $           | 0.00       
|Diluted income per share                                                          |  | $           | 0.00       



The stock options were not included
in the computation of diluted income per share on January 31, 2014 and 2013 as their inclusion would be anti-dilutive.



| | 18. | Income Taxes
| | --- | ------------



The following table reconciles
the expected income tax expense (recovery) at the Canadian statutory income tax rate at 26.50% (2013 - 26.50%) to the amounts recognized
in the consolidated statements of operations:



|                                                      |  | Year Ended  |            
|----------------------------------------------------- |  | ----------- | -----------
|                                                      |  | January 31, |            
|                                                      |  | 2014        |            
|Net income before income taxes                        |  | $           | 69,225     
|Expected tax expense at statutory rate                |  | $           | 18,345     
|Permanent differences                                 |  |             | (115,245   
|Functional currency translation                       |  |             | (271,494   
|Difference between Canadian and foreign tax rates     |  |             | 10,291     
|Tax effect of dissolution of US subsidiaries          |  |             | 10,549,174 
|Utilization of tax benefits not previously recognized |  |             | (42,375    
|Tax benefits not recognized                           |  |             | (10,148,696
|Tax provision                                         |  | $           | -          



113







| | 18. | Income Taxes (Continued)
| | --- | ------------------------



Deferred Tax Assets and Liabilities



Unrecognized deferred tax assets



Deferred tax assets are recognized
for the carry-forward or unused tax losses and unused tax credits to the extent that it is probable that taxable profits will be
available against which the unused tax losses/credits can be utilized. The following represents the deductible temporary differences
by jurisdiction which have not been recognized in the financial statements.



|                                                                                   |  | 2014   |            |  | 2014 |   |   | 2013   |  |   | 2013       | 
|---------------------------------------------------------------------------------- |  | ------ | ---------- |  | ---- | - | - | ------ |  | - | ---------- | 
|                                                                                   |  | Canada |            |  | US   |   |   | Canada |  |   | US         | 
|                                                                                   |  |        |            |  |      |   |   |        |  |   |            | 
|Unclaimed non-capital losses                                                       |  | $      | 10,129,930 |  |      | $ | - |        |  | $ | 8,746,064  | 
|Excess of unclaimed resources pools over  carrying value of exploration properties |  |        | 1,717,499  |  |      |   | - |        |  |   | 1,590,124  | 
|                                                                                   |  | $      | 11,847,429 |  |      | $ | - |        |  | $ | 10,336,188 | 



The excess of unclaimed resources
pools over carrying value of exploration properties can be carried forward indefinitely. The unclaimed non-capital losses carried
forward by expiry date:



|        |      | Canada |           
|------- | ---- | ------ | ----------
|Expires | 2015 |        | $         
|        | 2026 |        |           
|        | 2027 |        |           
|        | 2028 |        |           
|        | 2029 |        |           
|        | 2030 |        |           
|        | 2031 |        |           
|        | 2032 |        |           
|        | 2033 |        |           
|        | 2034 |        |           
|        |      | $      | 10,129,930



| | 19. | Related Party Transactions and Balances
| | --- | ---------------------------------------



Remuneration of Directors and
key management personnel of the Company was as follows:



|                                                          |  | Year Ended  |         
|--------------------------------------------------------- |  | ----------- | --------
|                                                          |  | January 31, |         
|                                                          |  | 2014        |         
|                                                          |  |             |         
|Salaries and benefits paid to  directors and officers (2) |  | $           | 442,925 
|Share-based payments (1)                                  |  | $           | (109,866



(1) Negative amount
is the result of the reversal of previously recorded share-based payments on forfeited unvested options.



114







| | 19. | Related Party Transactions and Balances (Continued)
| | --- | ---------------------------------------------------



(2) Salaries and
benefits include director fees. The Board of Directors do not have employment or service contracts with the Company, except for
Ken Strobbe, a former director, who had a contract with the Company providing mine consulting services at the Goldwedge Project
totaling $nil for the year ended January 31, 2014 (year ended January 31, 2013 - $73,607), included under consulting, wages and
salaries for the Goldwedge Project. The contract terminated on September 14, 2012. Also included above are the fees for the previous
Interim President and Chief Executive Officer whose fees for services were $330,000 for the year ended January 31, 2014 (year ended
January 31, 2013 - $nil). Directors are entitled to director fees and stock options for their services. In addition, James B. Clancy
received an honorarium of $10,000 for the year ended January 31, 2013, included above, for providing consulting services in connection
with the Kentucky Project.



Paul G. Smith, a former director
and Chairman of the Board, was the President and Chief Executive Officer of Equity Financial Holdings Inc. ("Equity"),
a company that provided financial services to the Company until April 5, 2013. Fees for services provided by Equity totaled $4,822
for the year ended January 31, 2014 (year ended January 31, 2013 - $13,223).



Daniel Crandall, the Chief Financial
Officer, is a senior employee of Marrelli Support Services Inc. ("MSSI"), a firm providing accounting services. MSSI's
President, Carmelo Marrelli, beneficially controls 278,960,559 common shares of the Company through his holding company, C. Marrelli
Services Ltd. Fees for services provided by MSSI totaled $750 for the year ended January 31, 2014 (year ended January 31, 2013
- $nil).



To the knowledge of the directors
and senior officers of the Company, as at January 31, 2014, no person or corporation beneficially owns or exercises control over
common shares of the Company carrying more than 10% of the voting rights attached to all common shares of the Company other than
as set out below:



|                                                   |  |               |             |  | Percentage    | 
|-------------------------------------------------- |  | ------------- | ----------- |  | ------------- | 
|                                                   |  |               |             |  | of            | 
|                                                   |  | Number of     |             |  | outstanding   | 
|Major Shareholder                                  |  | common shares |             |  | common shares | 
|                                                   |  |               |             |  |               | 
|Lonnie Kirsh, Chief Executive Officer and Director |  |               | 278,960,559 |  |               | 
|George Duguay, Director                            |  |               | 278,960,559 |  |               | 
|C. Marrelli Services Ltd.                          |  |               | 278,960,559 |  |               | 



None of the Company's major
shareholders have different voting rights than other holders of the Company's common shares.





115







| | 20. | Contingencies
| | --- | -------------



(a) The Company received a claim
against it whereby the Company was requested by a prior lease holder to take any and all steps necessary to ensure that the prior
lease holders bear no responsibilities or liability for the Company’s failure to comply with the rules and regulations of
the Kentucky Energy and Environment Cabinet, Division of Mine Enforcement and Reclamation (the “DMER”). Management
had responded to the DMER and was working on resolving the issue. In the meantime, the DMER had issued penalties of approximately
$145,000 and was seeking forfeiture of the Company's reclamation bond in the amount of $178,700. These penalties were included
in accounts payable and accrued liabilities.



The Company settled this claim
through a settlement and release agreement on August 27, 2013 (see note 10(d)).



(b) On September 27, 2011 Hale
Capital commenced an action in the New York Supreme Court alleging breach of contract in relation to a term sheet entered into
between the Company and Hale Capital on December 11, 2010 (the “Term Sheet”), which set out preliminary terms for Hale
Capital to provide financing of up to $15 million for the Company’s Goldwedge Project (the “Hale Transaction”).
Hale Capital was seeking the “right to participate” in financing the Company on no less favourable terms and conditions
as was agreed upon between the Company and Waterton Global Value, LP on June 29, 2011 or, in the alternative, damages for breach
of the exclusivity provision contained in the Term Sheet. Hale Capital was also seeking expense reimbursement for legal, travel
and due diligence fees incurred by Hale Capital, which allegedly totaled $376,170 as of November 21, 2011. On November 23, 2011,
Hale Capital amended their complaint to include the Company’s subsidiary Manhattan. Management had estimated the expenses
at $330,000 and had accrued this amount in the accounts during the year ended January 31, 2012. Subsequently, an additional amount
of approximately $175,000 relating to additional legal expenses (including interest) incurred by Hale Capital had been accrued.



As disclosed above, the transaction
announced on August 15, 2013 resulted in a full and final release and settlement relating to this legal action. As a result, the
previous outstanding and additional legal expenses (including interest) in the amount of $175,000, have been removed from accounts
payable and accrued liabilities and professional fees (see note 3(a)).



(c) The Company’s previous
wholly-owned subsidiary, Manhattan, received several documents filed in various district courts, one in Shelby County Chancery
Court, Memphis, Tennessee and one in Elko County District Court, Elko, Nevada, from certain suppliers seeking payment of unpaid
services provided to Manhattan and where applicable, interest and court costs. In addition, one of the suppliers is seeking compensation
for unjust enrichment. Management attempted to settle both claims on several occasions, but was unsuccessful.



As noted (see note 4(b)), Manhattan
has been dissolved and the Company is not liable to settle these claims.



116







| | 21. | General and Administrative
| | --- | --------------------------



|                                         |  | Year Ended  |         
|---------------------------------------- |  | ----------- | --------
|                                         |  | January 31, |         
|                                         |  | 2014        |         
|                                         |  |             |         
|Corporate development                    |  | $           | 12,803  
|Insurance                                |  |             | 25,795  
|Office and general                       |  |             | 35,530  
|Professional fees (Note 20)              |  |             | (45,439 
|Consulting, wages and salaries (Note 19) |  |             | 443,194 
|Share-based payments (Note 19)           |  |             | (109,866
|Travel                                   |  |             | 25,675  
|Depreciation                             |  |             | -       
|                                         |  | $           | 387,692 



| | 22. | Segmented Information
| | --- | ---------------------



The Company had one reportable
business segment consisting of the exploration and development of mining properties. Substantially all of the Company’s assets
are located in Canada at January 31, 2014 (January 31, 2013 substantially all located in the United States except for cash and
cash equivalents of $193,135 held in Canadian banks). The Company’s operations in Canada consist of general and administrative
expenses, totaling $325,171 for the year ended January 31, 2014 (year ended January 31, 2013 - $1,556,606), including expenses
necessary to maintain the Company’s public company status. The Company's operations in the United States have ceased as of
January 31, 2014. All exploration and evaluation expenditures for the years ended January 31, 2014 and 2013 were incurred in the
United States together with general and administrative expenses of $62,521 (year ended January 31, 2013 - $687,630).



| | 23. | Subsequent Event
| | --- | ----------------



Subsequent to January 31, 2014,
400,000 stock options with an exercise price of $0.10 and an original expiry date of June 26, 2014 and 1,800,000 stock options
with an exercise price of $0.30 and an original expiry date of January 20, 2017 expired unexercised as a result of the acceleration
of the expiry date of those options held by former directors and officers as they ceased to be service providers to the Company.



117







ROYAL STANDARD MINERALS INC.



MANAGEMENT’S DISCUSSION



AND ANALYSIS



YEAR ENDED JANUARY 31, 2014



118







This Management Discussion and Analysis
(“MD&A”) is dated May 5, 2014 and unless otherwise noted, should be read in conjunction with the Company’s
audited consolidated financial statements (“Financial Statements”) for the years ended January 31, 2014 and 2013 and
the notes thereto. The Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”).
This MD&A was written to comply with the requirements of National Instrument 51-102-Continuous Disclosure Obligations. Unless
otherwise noted, all amounts reported herein are in United States dollars. In the opinion of management, all adjustments (which
consist only of normal recurring adjustments) considered necessary for a fair presentation have been included. The results presented
for the year ended January 31, 2014 are not necessarily indicative of the results that may be expected for any future period.



The Financial Statements include the results
of operations of Manhattan Mining Co. (“Manhattan”) and Kentucky Standard Energy Company, Inc. (“Kentucky”)
up to dissolution, both United States companies.



For the purposes of preparing this MD&A,
management, in conjunction with the Board of Directors, considers the materiality of information. Information is considered material
if (1) such information is a change or a fact that has or would reasonably be expected to have, a significant effect on the market
price or value of the Company’s common shares; or (2) there is a substantial likelihood that a reasonable investor would
consider it important in making an investment decision; or (3) if it would significantly alter the total mix of information available
to investors. Management, in conjunction with the Board of Directors, evaluates materiality with reference to all relevant circumstances,
including potential market sensitivity.



Additional information relating to the
Company can be found on SEDAR at www.sedar.com.



The Company’s common shares are listed
in the United States of America on the Over the Counter Bulletin Board “OTC:BB”, under the symbol RYSMF.



DISCLOSURE REGARDING FORWARD-LOOKING
STATEMENTS



This MD&A contains certain forward-looking
information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as “forward-looking
statements”). These statements relate to future events or the Company’s future performance. All statements other than
statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified
by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”,
“estimates”, “continues”, “forecasts”, “projects”, “predicts”, “intends”,
“anticipates” or “believes”, or variations of, or the negatives of, such words and phrases, or statements
that certain actions, events or results “may”, “could”, “would”, “should”, “might”
or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause actual results to differ materially from those anticipated in such forward-looking statements.
The forward-looking statements in this MD&A speak only as of the date of this MD&A or as of the date specified in such
statement. The following table outlines certain significant forward-looking statements contained in this MD&A and provides
the material assumptions used to develop such forward-looking statements and material risk factors that could cause actual results
to differ materially from the forward looking statements.



119







|Forward-looking statements                                                                                                                                                                                    |  | Assumptions                                                                                                                                                                                                                                                                           |  | Risk factors                                                                                                                                                                                                                                                                                                     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Company believes it has sufficient cash on hand to continue operations for twelve months after January 31, 2014, subject to the Company identifying a business or property requiring additional financing |  | The Company has anticipated all material costs and the operating activities of the Company for the twelve-month period ending January 31, 2015, and the costs associated therewith, will be consistent with the Company’s current expectations                                        |  | Unforeseen costs to the Company will arise; any particular operating costs increase or decrease from the date of the estimation; changes in economic conditions; changes in regulatory requirements                                                                                                              
|                                                                                                                                                                                                              |  |                                                                                                                                                                                                                                                                                       |  |                                                                                                                                                                                                                                                                                                                  
|The Company will be able to carry out anticipated business plans, subject to the Company identifying a business or property requiring additional financing                                                    |  | The operating activities of the Company for the twelve-month period ending January 31, 2015, will be consistent with the Company’s current expectations; debt and equity markets, exchange and interest rates and other applicable economic conditions are favourable to the Company. |  | Changes in debt and equity markets; availability of external financing on acceptable terms, if required in connection with a merger or acquisition transaction; increases in operating expenses and compliance costs; interest rate and exchange rate fluctuations; changes in economic and political conditions.
|                                                                                                                                                                                                              |  |                                                                                                                                                                                                                                                                                       |  |                                                                                                                                                                                                                                                                                                                  
|Management’s outlook regarding future trends                                                                                                                                                                  |  | Financing will be available for the Company’s future business or property acquisition and operating activities.                                                                                                                                                                       |  | Changes in debt and equity markets; interest rate and exchange rate fluctuations; changes in economic and political conditions.                                                                                                                                                                                  



120







|Forward-looking statements                    |  | Assumptions                                                                                                                                                                                                                                                                |  | Risk factors                                                                    
|--------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------
|Sensitivity analysis of financial instruments |  | Based on management's knowledge and experience of the financial markets, the Company believes that there would be no material changes to its results for the year ended January 31, 2014, as a result of the change in liquidity, interest rate and foreign exchange risks |  | Changes in debt and equity markets; interest rate and exchange rate fluctuations



Inherent in forward-looking statements
are risks, uncertainties and other factors beyond the Company’s ability to predict or control. Please also make reference
to those risk factors referenced in the “Risk Factors” section below. Readers are cautioned that the above chart does
not contain an exhaustive list of the factors or assumptions that may affect the forward-looking statements, and that the assumptions
underlying such statements may prove to be incorrect. Actual results and developments are likely to differ, and may differ materially,
from those expressed or implied by the forward-looking statements contained in this MD&A.



Forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements
to be materially different from any of its future results, performance or achievements expressed or implied by forward-looking
statements. All forward-looking statements herein are qualified by this cautionary statement. Accordingly, readers should not place
undue reliance on forward-looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking
statements whether as a result of new information or future events or otherwise, except as may be required by law. If the Company
does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect
to those or other forward-looking statements, unless required by law.



HIGHLIGHTS



On January 17, 2014, the Company announced
that it completed a corporate reorganization consisting of a debt conversion, private placement and change of management.



Under the debt conversion, the Company
issued an aggregate of 755,654,241 common shares at an effective price of CDN $0.0002216 per share to settle aggregate indebtedness
of CDN $167,452.98. Under the non-brokered private placement, the Company issued and sold an aggregate of 81,227,436 common shares
at a price of CDN $0.0002216 per share raising gross proceeds of CDN $18,000. The net proceeds from the placement will be used
by the Company for general corporate purposes and working capital.



To facilitate the completion of the debt
conversion and private placement transactions, the shareholder rights plan of the Company was amended and application of the plan
to the debt conversion and private placement were waived by the board of directors.



121







George Duguay, C. Marrelli Services Limited
and Lonnie Kirsh, Toronto-based investors (collectively, the “Investors”), each acquired ownership of 278,960,559 common
shares of the Company, representing approximately 30.3% of the number of outstanding common shares of the Company following the
debt conversion and private placement.



In conjunction with the debt conversion
and private placement, all directors of the Company resigned and were replaced by Lonnie Kirsh, Carmelo Marrelli and George Duguay.
All officers of the Company also resigned and Mr. Kirsh was appointed as President and Chief Executive Officer and Mr. Dan Crandall
was appointed as Chief Financial Officer.

During the year ended January 31, 2014,
payments of CDN $61,000 and $180,000 were made to the former directors and officers to settle all amounts owing to them and for
the termination of their services.



On August 27, 2013, the Company’s
wholly-owned subsidiary, Kentucky, entered into a settlement and release agreement with Pick & Shovel Mining (“Pick &
Shovel”) and Roger and Jacqueline Stacy pursuant to which, in consideration for a cash settlement payment of $8,000 and transfer
of certain equipment by Kentucky to Pick & Shovel, the parties resolved to waive and release any claims relating to a prior
claim between the parties (see below under “Contingencies” (a)). In addition, Kentucky relinquished its interest in
a bond posted on Permit No. 919-0066 and Pick & Shovel agreed to be solely responsible for such Permit and all related claims
and issues asserted by the Kentucky Energy and Environment Cabinet.



Subsequently, the Company submitted articles
of dissolution for Kentucky to the Kentucky Secretary of State and Kentucky was dissolved on September 5, 2013.



On August 9, 2013, the Company and its
wholly-owned subsidiary, Manhattan, completed the sale of its Fondaway Canyon and Dixie-Comstock Gold Properties (the “Assets”)
to American Innovative Minerals LLC (“AIMLLC”). The Assets were sold on an “as is where is” basis for cash
consideration of $144,000. In addition, as a condition to the closing of the transaction, Hale Capital Management, LP and Hale
Capital Partners, LP (collectively, “Hale Capital”), delivered to the Company a full and final release and settlement
relating to the legal action commenced by Hale Capital on September 27, 2011 (see below under “Contingencies” (b)).
A stipulation of dismissal with prejudice was filed with the Supreme Court of the State of New York dismissing all claims against
the Company and Manhattan in connection with that litigation.



Subsequently, the Company submitted articles
of dissolution for Manhattan to the Nevada Secretary of State and Manhattan was dissolved on November 7, 2013.



The Company has no business operations,
except to fund ongoing operations as a reporting issuer and to repay existing creditors and is currently seeking new business opportunities.
Success in identifying a suitable new asset or business for the Company is uncertain. Unless the Company can identify a suitable
asset or business opportunity and/or obtain additional financing in the near term, there is significant doubt on the ability of
the Company to continue as a going concern. Without a suitable asset or business opportunity and/or additional financing, the Company
will be required to consider the basis on which it will continue as an entity. The Company has no operating revenues and therefore
it must utilize current cash and cash equivalents to satisfy outstanding liabilities.



122







OVERVIEW



The Company was previously a mineral exploration
and mine development company engaged in locating, acquiring, exploring and developing gold and precious metal deposits in Nevada.
As a result of the recent transactions (see above under ‘Highlights”), the Company no longer holds any mining properties,
has no business operations, except to fund ongoing operations as a reporting issuer and to repay existing creditors and is currently
focused on identifying suitable assets or businesses to acquire or merge with, with a view to maximizing value for shareholders.



GOING CONCERN



The Company’s Financial Statements
have been prepared on the basis of accounting principles applicable to a going concern, which assume that the Company will continue
in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course
of operations as they come due. In assessing whether the going concern assumption is appropriate, management takes into account
all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting
period. Management is aware, in making its assessment, of material uncertainties related to events or conditions that cast significant
doubt upon the entity's ability to continue as a going concern. The Company had income of $69,225 during the year ended January
31, 2014 (year ended January 31, 2013 - income of $5,291,142) and has an accumulated deficit of $39,193,127 (January 31, 2013 -
$39,262,352). In addition, the Company has a working capital deficiency of $13,557 at January 31, 2014 (January 31, 2013 - $252,103).



During the last fiscal year, former management
continued its process of raising funds through the sale of its remaining property interests. The Company’s ability to continue
to meet its obligations is uncertain and, as a result, there is significant doubt regarding the going concern assumption and, accordingly,
the ultimate appropriateness of the use of accounting principles applicable to a going concern. With the disposal of its remaining
property interests, as noted above under “Highlights”, the Company has no remaining property interests and no business
operations, except to fund ongoing operations as a reporting issuer and to repay existing creditors and is currently focused on
identifying suitable assets or businesses to acquire or merge with. Success in identifying a suitable new asset or business for
the Company is uncertain. Furthermore, the Company has limited working capital to pursue such opportunities. Unless the Company
can identify a suitable asset or business opportunity and/or obtain additional financing in the near term, there is significant
doubt on the ability of the Company to repay its outstanding liabilities. If the Company is unable to extinguish all of its outstanding
liabilities, the going concern assumption will not be valid. The Financial Statements do not reflect the adjustments to the carrying
values or classifications of assets and liabilities or to the reported expenses that would be necessary if the Company were unable
to realize its assets and settle its liabilities as a going concern in the normal course of operations for the foreseeable future.
These adjustments could be material.



123







MINERAL PROPERTIES



Fondaway Canyon and Dixie-Comstock Projects



As noted above under “Highlights”,
the Company disposed of these gold properties on August 9, 2013.



During the year ended January 31, 2014,
the Company’s exploration and evaluation expenditures on these projects were $63,573 (year ended January 31, 2013 - $67,817).
For a detailed description of the exploration and evaluation expenditures by property, refer to “Additional Disclosure For
Venture Issuers Without Significant Revenue” below.



Kentucky Project



As noted above under “Highlights”,
the Company completed a settlement and release agreement on August 27, 2013, disposing of this project, including the release of
any prior claims between the parties, the relinquishment of the posted bond in the amount of $178,700, the transfer of certain
equipment, the removal of the asset retirement obligation (“ARO”), in the amount of $109,949 and the transfer of all
related claims and issues asserted by the Kentucky Energy and Environment Cabinet. The known claims totaled $145,000. As a result,
a gain on settlement of $48,091 was recorded.



During the year ended January 31, 2014,
the Company incurred exploration and evaluation expenditures of $23,660 (year ended January 31, 2013 - $161,317) on this project.
For a detailed description of the exploration and evaluation expenditures by property, refer to “Additional Disclosure For
Venture Issuers Without Significant Revenue” below.



Recording of Asset Retirement Obligations



Under the guidance of IAS 37, the Company
had recorded asset retirement obligations (“AROs”) on the Fondaway Canyon and Dixie-Comstock Projects in the amount
of $2,978, representing the net present value of the estimated costs to restore each property to its original condition, assuming
future payments of $4,750 being made over a ten year period from the date of initial assessment of the AROs and a discount rate
of 10%.



As a result of the dissolution of Manhattan
noted above under ‘Highlights”, the previously recorded ARO of $2,978 and the reclamation bond $9,550 related to the
Fondaway Canyon and Dixie-Comstock Projects have been reversed on dissolution.



As a result of the recent transactions
noted above under ‘Highlights”, the previously recorded ARO of $109,949 related to the Kentucky Project is no longer
the responsibility of the Company. In addition, the reclamation bond which was posted in the amount of $178,700 for this project
has been relinquished to the new owners.



124







OVERALL PERFORMANCE



The Company’s net income for the
year ended January 31, 2014 was $69,225 ($0.00 income per share) and for the year ended January 31, 2013 was $5,291,142 ($0.06
income per share), a reduction of $5,221,917. The reduction in net income relates mainly to the gain on sale of property interests
and related assets in 2013 of $14,171,405 versus $123,228 in 2014 on the sale of the Fondaway Canyon and Dixie-Comstock Gold Properties
described above and the gain on sale of royalty of $866,505 in 2013 versus $nil in 2014. This was partially offset by a gain on
dissolution of subsidiaries of $402,782, a reduction of $3,049,972 in total exploration and evaluation expenditures as a result
of the sale of all property interests and a decrease in administrative expenses of $1,856,544, primarily as a result of lower corporate
development costs, lower professional fees, including a reversal of legal fees previously accrued related to the dismissal of the
Hale Capital litigation and lower share-based payments, as a result of no new granting of stock options and the reversal of previously
recorded share-based payments on unvested options forfeited during the current year ended January 31, 2014.



Also contributing to the overall reduction
in expenses was a gain in the current period on the lawsuit settlement and release of $48,091 with Pick & Shovel and Roger
and Jacqueline Stacy described above and the absence of finance costs of $4,310,582, due to the assumption of the previous Gold
Stream Facility by Scorpio Gold Corporation and its wholly-owned subsidiary, Goldwedge LLC, (together “Scorpio”), on
December 17, 2012.



125







SELECTED ANNUAL FINANCIAL INFORMATION



The following is selected financial data
derived from the audited consolidated financial statements of the Company as at January 31, 2014, 2013 and 2012 and for the years
then ended.



|                                                |  | Year ended January 31, 2014 |        |  | Year ended January 31, 2013 |   |           | Year ended January 31, 2012 | 
|----------------------------------------------- |  | --------------------------- | ------ |  | --------------------------- | - | --------- | --------------------------- | 
|Net income (loss)                               |  | $                           | 69,225 |  |                             | $ | 5,291,142 |                             | 
|Net income (loss) per share (basic and diluted) |  | $                           | 0.00   |  |                             | $ | 0.06      |                             | 



|                                |  | As at January 31, 2014 |        |  | As at January 31, 2013 |   |           | As at January 31, 2012 | 
|------------------------------- |  | ---------------------- | ------ |  | ---------------------- | - | --------- | ---------------------- | 
|Total assets                    |  | $                      | 22,360 |  |                        | $ | 3,155,535 |                        | 
|Long-term financial liabilities |  | $                      | nil    |  |                        | $ | 107,647   |                        | 



SUMMARY OF QUARTERLY RESULTS



The following is a summary of selected financial information
of the Company for the quarterly periods indicated.



|Three Months Ended
(*) |  | Net Revenues ($) |  | Net Income (Loss) ($) |           
|---------------------- |  | ---------------- |  | --------------------- | ----------
|January 31, 2014       |  | nil              |  |                       | 270,714   
|October 31, 2013       |  | nil              |  |                       | 40,418    
|July 31, 2013          |  | nil              |  |                       | (49,485   
|April 30, 2013         |  | nil              |  |                       | (192,422  
|January 31, 2013       |  | nil              |  |                       | 15,039,966
|October 31, 2012       |  | nil              |  |                       | (3,858,506
|July 31, 2012          |  | nil              |  |                       | (3,658,212
|April 30, 2012         |  | nil              |  |                       | (2,232,106



126







FINANCIAL PERFORMANCE



Three months ended January 31, 2014,
compared with three months ended January 31, 2013



The Company’s net income for the
three months ended January 31, 2014 was $270,714 ($0.00 income per share) compared to $15,039,966 ($0.18 income per share) for
the three months ended January 31, 2013, on no revenue. The decrease of $14,769,252 was principally the result of:



| | · | Finance costs decreased by $165,405 to
$nil for the three months ended January 31, 2014, compared to the same period in 2013. The decrease is a result of the assumption
of the previous Gold Stream Facility by Scorpio on December 17, 2012.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Gain on sale of property interests and
related assets decreased by $14,171,405 to $nil for the three months ended January 31, 2014, compared to the same period in 2013.
The decrease is a result of the one-time gain on the sale of the Goldwedge and Piñon property interests and related assets.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Gain on sale of royalty decreased by $866,505
to $nil for the three months ended January 31, 2014, compared to the same period in 2013. The decrease is a result of the one-time
gain on the sale of the Pinon Railroad Royalty to XDM Royalty Corp.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Gain on dissolution of subsidiaries increased
to $372,682 for the three months ended January 31, 2014, compared to $nil for the same period in 2013. The increase was the result
of the dissolution of Manhattan in the current period.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Professional fees decreased by $495,028
to $(10,638) for the three months ended January 31, 2014, compared to the same period in 2013. The decrease was the result of large
reversals of professional fees in 2013 as the result of the settlement of previous amounts due.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Share-based payments decreased by $139,236
to $(126,266) for the three months ended January 31, 2014, compared to the same period in 2013. The decrease is a result of the
reversal of previously recorded expenses for unvested options forfeited upon terminations of former directors and officers.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Year ended January 31, 2014, compared
with year ended January 31, 2013



The Company’s net income for the
year ended January 31, 2014 was $69,225 ($0.00 income per share) compared to $5,291,142 ($0.06 income per share) for the year ended
January 31, 2013, on no revenue. The decrease of $5,221,917 was principally the result of:



| | · | Exploration and evaluation expenditures
decreased by $3,049,972 to $87,233 for the year ended January 31, 2014, compared to the same period in 2013. The decrease is a
result of the sale of the Goldwedge and Piñon property interests and related assets thereto to Scorpio on December 17, 2012
and the Company incurring minimal exploration and evaluation expenditures on its remaining projects, including Fondaway Canyon,
Dixie-Comstock and Kentucky, prior to their disposal in August 2013, as noted above under “Highlights”.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



127







| | · | Finance costs decreased by $4,310,582
to $nil for the year ended January 31, 2014, compared to the same period in 2013. The decrease is a result of the assumption of
the previous Gold Stream Facility by Scorpio on December 17, 2012.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Gain on sale of property interests and
related assets decreased by $14,048,177 to $123,228 for the year ended January 31, 2014, compared to the same period in 2013. The
decrease is a result of the one-time gain on the sale of the Goldwedge and Piñon property interests and related assets in
2013 partially offset by the one-time gain on the sale of the Fondaway Canyon and Dixie-Comstock Gold property interests and related
assets in 2014, as noted above under “Highlights”.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Gain on sale of royalty decreased by $866,505
to $nil for the year ended January 31, 2014, compared to the same period in 2013. The decrease is a result of the one-time gain
on the sale of the Pinon Railroad Royalty to XDM Royalty Corp.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Gain on dissolution of subsidiaries increased
to $402,782 for the year ended January 31, 2014, compared to $nil for the same period in 2013. The increase was the result of the
dissolution of Kentucky and Manhattan in the current year.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Professional fees decreased by $1,069,995
to $(45,439) for the year ended January 31, 2014, compared to the same period in 2013. The decrease was the result of large legal
fees in 2013 related to the sale of the Goldwedge and Piñon property interests and related assets and legal fees on various
lawsuits. As well, in 2014, certain legal fee accruals were reversed.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Share-based payments decreased by $539,362
to $(109,866) for the year ended January 31, 2014, compared to the same period in 2013. The decrease is a result of the reversal
of previously recorded expenses for unvested options forfeited in the current year upon terminations of former directors and officers
and the expense related to the amount in 2013 for the stock options granted on January 20, 2012.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



LIQUIDITY AND CAPITAL RESOURCES



The Company currently has no positive operating
cash flow and has to date, financed its activities and its ongoing expenditures primarily through equity transactions such as equity
offerings, the exercise of warrants and other financing arrangements. The Company believes that additional financing will be required
to fund its operating expenses as it searches for suitable assets and businesses to merge with or acquire.



As at January 31, 2014, the Company had
cash and cash equivalents of $16,807. Cash provided by operating activities was $275,614 for the year ended January 31, 2014. During
the year ended January 31, 2014, the Company experienced a net increase of $723,247 in non-cash working capital items, which was
due to a decrease in sundry receivables and prepaids of $2,706,451, offset by a decrease in accounts payable and accrued liabilities
of $1,983,204. Cash used in financing activities consisted of $600,000 of other advances paid which was partially offset by the
proceeds from sale of property interests, net of transaction costs of $123,228 and a private placement of $16,400.



The Company's approach to managing liquidity
risk has been to ensure that it will have sufficient liquidity to meet liabilities when due. As at January 31, 2014, the Company
had cash and cash equivalents of $16,807 compared to $201,565 as at January 31, 2013, to settle current liabilities of $35,917
compared to $3,195,672 as at January 31, 2013. The Company currently does not have sufficient cash and cash equivalents to settle
current liabilities. All of the Company's financial liabilities have contractual maturities of less than 60 days and are subject
to normal trade terms. The Company regularly evaluates its cash position in an effort to maintain its liquidity.



128







There is no assurance that future equity
or debt capital will be available to the Company in the amounts or at the times desired, or on terms that are acceptable to the
Company, if at all. See “Risk Factors” below.



As at January 31, 2014, the Company had
920,835,502 common shares issued and outstanding and stock options outstanding to acquire 2,350,000 common shares of the Company.
As at the date of this MD&A, the Company had 920,835,502 common shares issued and outstanding and stock options outstanding
to acquire 150,000 common shares of the Company. The 150,000 stock options would raise $15,000, if exercised in full. The Company’s
liquidity risk with financial instruments is minimal as any excess cash, when present, is deposited with a Schedule I Canadian
bank.



The Company has an investment in Sharpe
Resources Corporation (“Sharpe”), a Canadian publicly held company. As a result of the continued and significant decline
in the market value and the delisting of the shares, the Company has taken a provision of loss of $30,000 and written down the
investment to $nil.



CONTRACTUAL OBLIGATIONS



(a) Under the terms of the option agreement
with Sharpe, the Company was required to incur expenditures of $2,000,000 in total by December 9, 2011 to exercise its option.
The Company exercised this option on December 7, 2011. Pursuant to the terms of the option agreement, the Company requested Sharpe
to provide additional cash to the Kentucky Project, to match that of the Company, which had exceeded $2,000,000. As of the date
hereof, Sharpe had not responded.

With the completion of the settlement and
release agreement on August 27, 2013, as noted above under “Highlights”, the Company is no longer a party to the option
agreement.



(b) The Company had an employment contract
dated January 1, 2011 with a former Chief Executive Officer (“former CEO”). The contract was for a term of five years,
allowing for a base salary of $250,000 per year and also providing for an additional annual bonus payment at the discretion of
the Board of Directors. The contract also contained termination provisions entitling the former CEO to receive the greater of three
years basic compensation and the amount outstanding for the remainder of the term of the employment agreement only if he is terminated
other than for cause or if he terminated his employment for “good reason” which includes material failure by the Company
to substantially comply with the terms of the employment agreement. Management has determined that the former CEO is not entitled
to any additional compensation since he was terminated with cause.



129







The Company’s principal focus continues
to be funding ongoing operations as a reporting issuer and paying existing creditors. The Company has no operating revenues and
therefore it must utilize its current cash reserves, funds obtained from the exercise of stock options and other financing transactions,
in order to maintain its capacity to meet ongoing discretionary operating activities. The Company does not have sufficient funds
on hand to meet its current operating requirements and outstanding liabilities; therefore, the Company will continue to negotiate
with existing suppliers and service providers to settle outstanding liabilities. If the Company is not able to negotiate with existing
suppliers and service providers on a favorable basis, this could have a material adverse effect on the business, operations and
future prospects of the Company and could cause the Company to cease operations or no longer continue to operate as a going concern.
See “Risk Factor – Capital Investment.”



RELATED PARTY TRANSACTIONS



Remuneration of Directors and key management
personnel of the Company was as follows:



|                                                         |  | Year Ended January 31, |         
|-------------------------------------------------------- |  | ---------------------- | --------
|                                                         |  | 2014 ($)               |         
|Salaries and benefits paid to directors and officers (2) |  |                        | 442,925 
|Share-based payments (1)                                 |  |                        | (109,866



| | (1) | Negative amount is the result of previously recorded share-based payments on forfeited unvested
options.
| | --- | --------------------------------------------------------------------------------------------------------

| | (2) | Salaries and benefits include director fees. The Board of Directors do not have employment or service
contracts with the Company, except for Ken Strobbe, a former director, who had a contract with the Company providing mine consulting
services at the Goldwedge Project totaling $nil for the year ended January 31, 2014 (year ended January 31, 2013 - $73,607), included
under consulting, wages and salaries for the Goldwedge Project. The contract terminated on September 14, 2012. Also included above
are the fees for the previous Interim President and Chief Executive Officer, Phillip Gross, whose fees for services were $330,000
for the year ended January 31, 2014 (year ended January 31, 2013 - $nil), included above. Directors are entitled to director fees
and stock options for their services. In addition, James B. Clancy received an honorarium of $10,000 for the year ended January
31, 2013, included above, for providing consulting services in connection with the Kentucky Project.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Paul G. Smith, a former director and Chairman
of the Board, was the President and Chief Executive Officer of Equity Financial Holdings Inc. ("Equity"), a company that
provided financial services to the Company until April 5, 2013. Fees for services provided by Equity totaled $4,822 for the year
ended January 31, 2014 (year ended January 31, 2013 - $13,223).



Daniel Crandall, the Chief Financial Officer,
is a senior employee of Marrelli Support Services Inc. ("MSSI"), a firm providing accounting services. MSSI's President,
Carmelo Marrelli, beneficially controls 278,960,559 common shares of the Company through his holding company, C. Marrelli Services
Ltd. Fees for services provided by MSSI totaled $750 for the year ended January 31, 2014 (year ended January 31, 2013 - $nil).



130







To the knowledge of the directors and senior
officers of the Company, as at January 31, 2014, no person or corporation beneficially owns or exercises control over common shares
of the Company carrying more than 10% of the voting rights attached to all common shares of the Company other than as set out below:



|Major Shareholder                                  |  | Number of common shares |             |  | Percentage of outstanding common shares | 
|-------------------------------------------------- |  | ----------------------- | ----------- |  | --------------------------------------- | 
|Lonnie Kirsh, Chief Executive Officer and Director |  |                         | 278,960,559 |  |                                         | 
|George Duguay, Director                            |  |                         | 278,960,559 |  |                                         | 
|C. Marrelli Services Ltd.                          |  |                         | 278,960,559 |  |                                         | 



None of the Company's major shareholders
have different voting rights than other holders of the Company's common shares.



SHARE CAPITAL



The Company is authorized to issue an unlimited
number of common shares and preferred shares. As of the date of this MD&A, the Company had 920,835,502 common shares outstanding
and the following stock options outstanding:



|Number of Options |         |  | Exercise Price |  |      | Expiry Date
|----------------- | ------- |  | -------------- |  | ---- | -----------
|                  | 150,000 |  |                |  | 0.10 |            



150,000 of the outstanding stock options
have vested and are currently exercisable.



CONTINGENCIES



| | (a) | The Company received a claim against it in respect of the Kentucky Project whereby the Company
was requested, by a prior lease holder, to take any and all steps necessary to ensure that the prior lease holders bear no responsibilities
or liability for the Company’s failure to comply with the rules and regulations of the Kentucky Energy and Environment Cabinet,
Division of Mine Enforcement and Reclamation (the “DMER”). Management had responded to the DMER and was working on
resolving the issue. In the meantime, the DMER had issued penalties of $145,000 and was seeking forfeiture of the Company’s
reclamation bond in the amount of $178,700. These penalties were included in accounts payable and accrued liabilities in the Financial
Statements as at January 31, 2013.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On August 27, 2013, the Company
settled this claim through a settlement and release agreement, as noted above under “Highlights”.



131







| | (b) | On September 27, 2011, Hale Capital commenced an action in the New York Supreme Court alleging
breach of contract in relation to a term sheet entered into between the Company and Hale Capital on December 11, 2010 (the “Term
Sheet”), which set out preliminary terms for Hale Capital to provide financing of up to $15 million for the Company’s
Goldwedge Project (the “Hale Transaction”). Hale Capital was seeking the “right to participate” in financing
the Company on no less favorable terms and conditions as was agreed upon between the Company and Waterton Global Value, LP on June
29, 2011 or, in the alternative, damages for breach of the exclusivity provision contained in the Term Sheet. Hale Capital was
also seeking expense reimbursement for legal, travel and due diligence fees incurred by Hale Capital, which allegedly totaled approximately
$376,170, as of November 21, 2011. On November 23, 2011, Hale Capital amended their complaint to include the Company’s subsidiary,
Manhattan. Management had estimated these expenses at $330,000 and had accrued this amount in the accounts for the year ended January
31, 2012. Subsequently, an additional amount of approximately $175,000 relating to additional legal expenses (including interest)
incurred by Hale Capital had been accrued during the year ended January 31, 2013.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As noted above under “Highlights”,
the transaction completed on August 9, 2013, resulted in a full and final release and settlement to this legal action. As a result,
the previous outstanding and additional legal expenses (including interest) in the amount of $175,000 have been reversed from accounts
payable and accrued liabilities and professional fees.



| | (c) | The Company’s previous wholly-owned subsidiary, Manhattan, received several documents filed
in various district courts, one in Shelby County Chancery Court, Memphis, Tennessee and one in Elko County District Court, Elko,
Nevada, from certain suppliers seeking payment of unpaid services provided to Manhattan and where applicable, interest and court
costs. In addition, one of the suppliers is seeking compensation for unjust enrichment. Management attempted to settle both claims
on several occasions, but was unsuccessful.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As noted above, Manhattan has
been dissolved and the Company is not liable to settle these claims.



SUBSEQUENT EVENT



Subsequent to January 31, 2014, 400,000
stock options with an exercise price of $0.10 and an original expiry date of June 26, 2014 and 1,800,000 stock options with an
exercise price of $0.30 and an original expiry date of January 20, 2017 expired unexercised as a result of the acceleration of
the expiry date of those options held by former directors and officers as they ceased to be service providers to the Company.



132







OFF BALANCE SHEET ARRANGEMENTS



As of the date hereof, management believes
the Company does not have any off balance sheet arrangements that have, or are reasonably likely to have, a current or future effect
on the results of operations or financial condition of the Company, including, and without limitation, such considerations as liquidity
and capital resources.



SIGNIFICANT ACCOUNTING ESTIMATES AND
JUDGMENTS



The preparation of the Company’s
consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting
period. Actual outcomes could differ from those estimates. The Financial Statements for the years ended January 31, 2014 and 2013
include estimates that, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the Financial Statements
for the years ended January 31, 2014 and 2013 and may require accounting adjustments based on future occurrences. Revisions to
accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both
current and future periods. These estimates are based on historical experience, current and future economic conditions and other
factors, including expectations of future events that are believed to be reasonable under the circumstances.



Significant assumptions about the future
that management has made that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event
that actual results differ from assumptions made, relate to, but are not limited to, the following and are explained in detail
in Note 2 of the audited consolidated financial statements for the years ended January 31, 2014 and 2013 which can be found on
SEDAR www.sedar.com:



133







Critical accounting estimates

| | · | the inputs used in accounting for share
based payment transactions in the consolidated statements of operations.
| | - | ----------------------------------------------------------------------------------------------------------------

| | · | Contingencies, as noted above under “Contingencies”
and in note 20 to the consolidated financial statements.
| | - | ------------------------------------------------------------------------------------------------------------



Critical accounting judgments

| | · | the categorization of financial assets
and liabilities is an accounting policy that requires management to make judgments or assessments;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------

| | · | the measurement of income taxes payable
and deferred income tax assets and liabilities requires management to make judgments in the interpretation and application of the
relevant tax laws. Deferred tax assets require management to assess the likelihood that the Company will generate taxable income
in future periods in order to utilize recognized deferred tax assets;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | going concern presentation of the consolidated
financial statements which assumes that the Company will continue in operation for the foreseeable future and will be able to realize
its assets and discharge its liabilities in the normal course of operations as they come due; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | management's determination that the functional
currency of the Company is the Canadian Dollar.
| | - | ----------------------------------------------------------------------------------------------



NEW ACCOUNTING PRONOUNCEMENTS



(i) IFRS 9 – Financial instruments
(“IFRS 9”) was issued by the IASB in October 2010 and will replace IAS 39 - Financial Instruments: Recognition and
Measurement (“IAS 39”). IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized
cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial
instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Most of
the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9.
The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS
9 is effective for annual periods beginning on or after January 1, 2018. Earlier adoption is permitted.



(ii) IAS 32 – Financial Instruments:
Presentation (“IAS 32”) was amended by the IASB in December 2011 to clarify certain aspects of the requirements on
offsetting. The amendments focus on the criterion that an entity currently has a legally enforceable right to set off the recognized
amounts and the criterion that an entity intends either to settle on a net basis, or to realize the asset and settle the liability
simultaneously. The amendments to IAS 32 are effective for annual periods beginning on or after January 1, 2014. Earlier adoption
is permitted.



134







CHANGE IN ACCOUNTING POLICIES



IFRS 10 Consolidated Financial Statements
(“IFRS 10”)



IFRS 10 was issued by the IASB in May 2011.
IFRS 10 is a new standard which identifies the concept of control as the determining factor in assessing whether an entity should
be included in the consolidated financial statements of the parent company. Control is comprised of three elements: power over
an investee; exposure to variable returns from an investee; and the ability to use power to affect the reporting entity’s
returns. At February 1, 2013, the Company adopted this pronouncement and there was no material impact on the Company’s consolidated
financial statements.



IFRS 11 Joint Arrangements (“IFRS
11”)



IFRS 11 was issued by the IASB in May 2011.
IFRS 11 is a new standard which focuses on classifying joint arrangements by their rights and obligations rather than their legal
form. Entities are classified into two groups: parties having rights to the assets and obligations for the liabilities of an arrangement,
and rights to the net assets of an arrangement. Entities in the former case account for assets, liabilities, revenues and expenses
in accordance with the arrangement, whereas entities in the latter case account for the arrangement using the equity method. At
February 1, 2013, the Company adopted this pronouncement and there was no material impact on the Company’s consolidated financial
statements.



IFRS 12 Disclosure of Interests in
Other Entities (“IFRS 12”)



IFRS 12 was issued by the IASB in May 2011.
IFRS 12 is a new standard which provides disclosure requirements for entities reporting interests in other entities, including
joint arrangements, special purpose vehicles, and off balance sheet vehicles. At February 1, 2013, the Company adopted this pronouncement
and there was no material impact on the Company’s consolidated financial statements.



IFRS 13 Fair Value Measurement (“IFRS
13”)



IFRS 13 was issued by the IASB in May 2011.
IFRS 13 is a new standard which provides a precise definition of fair value and a single source of fair value measurement considerations
for use across IFRSs. At February 1, 2013, the Company adopted this pronouncement and there was no material impact on the Company’s
consolidated financial statements given the existing asset and liability mix of the Company to which fair value accounting applies.



IAS 1 Presentation of Financial Statements



IAS 1 was amended by the IASB in June 2011
in order to align the presentation of items in other comprehensive income with US GAAP standards. Items in other comprehensive
income will be required to be presented in two categories: items that will be reclassified into profit or loss and those that will
not be reclassified. The flexibility to present a statement of comprehensive income as one statement or two separate statements
of profit and loss and other comprehensive income remains unchanged. At February 1, 2013, the Company adopted this pronouncement
and there was no material impact on the Company’s consolidated financial statements.



135







IAS 28 Investments in Associates
and Joint Ventures



IAS 28 was issued by the IASB in May 2011
and supersedes IAS 28-Investments in Associates and prescribes the accounting for investments in associates and sets out the requirements
for the application of the equity method when accounting for investments in associates and joint ventures. IAS 28 defines significant
influence as the power to participate in the financial and operating policy decisions of the investee but is not control or joint
control of those policies. IAS 28 also provides guidance on how the equity method of accounting is to be applied and also prescribes
how investments in associates and joint ventures should be tested for impairment. At February 1, 2013, the Company adopted this
pronouncement and there was no material impact on the Company’s consolidated financial statements given the existing asset
and liability mix of the Company to which fair value accounting applies.



MANAGEMENT OF CAPITAL



The Company manages its capital with the
following objectives:



| | · | to ensure sufficient financial flexibility
to achieve the ongoing business objectives; and
| | - | ------------------------------------------------------------------------------------------

| | · | to maximize shareholder return through
enhancing the share value.
| | - | -----------------------------------------------------------------



The Company monitors its capital structure
and makes adjustments according to market conditions in an effort to meet its objectives given the current outlook of the business
and industry in general. The Company may manage its capital structure by issuing new shares, repurchasing outstanding shares, adjusting
capital spending, or disposing of assets. The capital structure is reviewed by Management and the Board of Directors on an ongoing
basis.



The Company's equity comprises of share
capital, reserves, accumulated other comprehensive income and accumulated deficit, which at January 31, 2014 was a deficiency of
$13,557 (January 31, 2013 - deficiency of $147,784). Note that included in the consolidated statements of financial position presented
is a deficit of $39,193,127 as at January 31, 2014 (January 31, 2013 - $39,262,352).



The Company manages capital through its
financial and operational forecasting processes. The Company reviews its working capital and forecasts its future cash flows based
on operating expenditures, and other investing and financing activities. Selected information is provided to the Board of Directors
of the Company. The Company’s capital management objectives, policies and processes have remained unchanged during the year
ended January 31, 2014. The Company is not subject to external capital requirements.



FINANCIAL RISK FACTORS



The Company’s activities expose it
to a variety of financial risks: credit risk, liquidity risk and market risk (including interest rate and foreign currency risk).



136







Risk management is carried out by the Company's
management team with guidance from the Audit Committee under policies approved by the Board of Directors. The Board of Directors
also provides regular guidance for overall risk management.



Credit risk



Credit risk is the risk of loss associated
with a counterparty’s inability to fulfill its payment obligations. The Company's credit risk is primarily attributable to
cash and cash equivalents. The Company has no significant concentration of credit risk arising from operations. Cash and cash equivalents
are held with reputable financial institutions, from which management believes the risk of loss to be minimal.



Liquidity risk



The Company's approach to managing liquidity
risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at January 31, 2014, the Company had
a cash balance of $16,807 (January 31, 2013 - $201,565) to settle current liabilities of $35,917 (January 31, 2013 - $3,195,672).
All of the Company's financial liabilities have contractual maturities of less than 60 days and are subject to normal trade terms.



Market risk



Market risk is the risk of loss that may
arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices.



Interest rate risk

The Company has cash balances and no interest-bearing
debt. The Company's current policy is to invest excess cash in guaranteed investment certificates, bankers acceptance and money
market deposits, with reputable financial institutions. The interest rate risk is remote.



Foreign currency risk

The Company's functional and reporting
currency was previously the United States dollar and major purchases were transacted in United States dollars. Subsequent to the
dissolution of Manhattan, the functional currency of the Company changed to Canadian dollars and major purchases are transacted
in Canadian dollars.



RISK FACTORS



An investment in the securities of the
Company is highly speculative and involves numerous and significant risks. Such investment should be undertaken only by investors
whose financial resources are sufficient to enable them to assume such risks and who have no need for immediate liquidity in their
investment. Prospective investors should carefully consider the risk factors below.



137







Possible Strategic Opportunities and
Transactions



With the disposal of its remaining property
interests, the Company has no mining properties and no business operations and is currently seeking suitable assets or business
opportunities to acquire or merge with. The Company will evaluate from time to time strategic opportunities to acquire or invest
in assets and businesses. These acquisitions or investments may be significant in size, may change the scale of the Company’s
business and may expose it to new geographic, political, operating, financial and geological risks. In addition, the Company will
from time to time seek possible strategic opportunities that may be in the best interests of the Company and accretive to its shareholders.
The Company’s success in pursuing any such strategic opportunities depends on, among other things, its ability to identify
suitable candidates and enter into arrangements with such candidates on acceptable terms. Any strategic opportunity that the Company
may pursue would be accompanied by risks, such as the difficulty of completing a strategic transaction the inability of management
to maximize the financial and strategic position of the Company; additional expenses and resources associated with pursuing and/or
completing such opportunities; possible dilution of the Company’s shareholders or its interest in its subsidiaries, joint
ventures and/or assets; and potential unknown risks and liabilities associated with assets and businesses in whom the Company invests
or enters into some other strategic transaction, among other things. There can be no assurance that the Company will be successful
in identifying, pursuing or completing any proposed or future strategic opportunity or that the Company will be successful in overcoming
any risks associated with any proposed, completed or future strategic opportunity pursued by the Company. Accordingly, such strategic
opportunities and transactions may have a material adverse effect on the Company’s business, results of operations, financial
condition, assets, cash flows and liquidity. In addition, there may be no right for shareholders to evaluate the merits or risks
of any future strategic transaction undertaken by the Company except as required by applicable laws and regulations.



Ability to Continue as a Going Concern



The Company’s ability to continue
as a going concern is uncertain and is dependent upon its ability to identify assets or business opportunities to acquire or merge
with. Success in identifying a new assets or business is uncertain. Furthermore, the Company has limited working capital to pursue
such opportunities. Unless the Company can identify a suitable assets or business opportunity and/or obtain additional financing
in the near term, there is significant doubt on the ability of the Company to continue as a going concern. Any material delays,
or failure of, identifying a suitable business opportunity and/or obtaining additional financing in the near term is likely to
have a material adverse impact on the business, operations and prospects of the Company and the ability of the Company to raise
adequate financing and re-commence business operations, which in turn is likely to have a material adverse impact on the Company's
business, assets and financial condition.



Capital Investment



Due to the recent downturn in mining and
financial markets, it has become significantly more difficult for junior exploration companies to effect financings. If and when
the Company seeks to secure financing, in connection with a merger and acquisition transaction or otherwise, there is no assurance
that adequate financing will be available to the Company or that the terms of such financing will be favorable. If the Company
is unable to raise capital now or when required in the future, and other financing sources are not available, the Company may be
required to further reduce general and administrative expenses. Any such action could have a materially adverse effect on the business,
operations and future prospects of the Company and could cause the Company to cease operations or no longer continue to operate
as a going concern.



138







Conflicts of Interest



Certain of the directors and officers of
the Company may also serve as directors and officers of other companies and consequently, the possibility of conflict exists. Any
decisions made by such directors involving the Company will be made in accordance with the duties and obligations of directors
to deal fairly and in good faith with the Company and such other companies. In addition, such directors declare, and refrain from
voting on, any matters in which such directors may have a conflict of interest.



Litigation Risk



The Company has been named as a defendant
in various legal proceedings as noted above under “Contingencies”, some of which have been settled, but may be threatened
with, or named as a defendant in, or may become subject to additional legal proceedings. Defending lawsuits could require substantial
amounts of management attention, which could divert its focus from operations and could materially adversely affect the Company’s
financial condition. A significant judgment against the Company or the imposition of a significant fine or penalty as a result
of a finding that theCompany failed to comply with laws orregulations could have a significant adverse impact on
the Company’s business, financial condition and results of operations.



RISK MANAGEMENT



Risk management is carried out by the Company's
management team with guidance from the Audit Committee under policies approved by the Board of Directors. The Board of Directors
provides regular guidance for overall risk management.



DISCLOSURE OF INTERNAL CONTROLS



Management has established processes, which
are in place to provide them sufficient knowledge to support management representations that they have exercised reasonable diligence
that (i) the consolidated financial statements do not contain any untrue statement of material fact or omit to state a material
fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it
is made, as of the date of and for the periods presented by the consolidated financial statements, and (ii) the consolidated financial
statements fairly present in all material respects the financial condition, results of operations and cash flows of the Company,
as of the date of and for the periods presented by the consolidated financial statements.



In contrast to the certificate required
for Non-Venture Issuers under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI
52-109), the Company utilizes the Venture Issuer Basic Certificate, which does not include representations relating to the establishment
and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined
in NI 52-109. In particular, the certifying officers filing the Certificate are not making any representations relating to the
establishment and maintenance of:



139







(i) controls and other procedures designed
to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings
or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time
periods specified in securities legislation; and



(ii) a process to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with IFRS.



The Company’s certifying officers
are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations
they are making in this certificate.



Investors should be aware that inherent
limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P
and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim
and annual filings and other reports provided under securities legislation.



ADDITIONAL DISCLOSURE FOR VENTURE ISSUERS
WITHOUT SIGNIFICANT REVENUE



The following tables sets forth a breakdown
of the components of general and administrative expenditures and exploration and evaluation expenditures on mineral properties
for the Company, for the year ended January 31, 2014 and 2013.



140







General and Administrative:



|                               |  | Year Ended January 31, |         
|------------------------------ |  | ---------------------- | --------
|                               |  | 2014 ($)               |         
|Corporate development          |  |                        | 12,803  
|Insurance                      |  |                        | 25,795  
|Office and general             |  |                        | 35,530  
|Professional fees              |  |                        | (45,439 
|Consulting, wages and salaries |  |                        | 443,194 
|Share-based payments           |  |                        | (109,866
|Travel                         |  |                        | 25,675  
|Depreciation                   |  |                        | -       
|Total                          |  |                        | 387,692 



Exploration and Evaluation Expenditures on Mineral Properties:



|                                       |  | Year Ended January 31, |  
|-------------------------------------- |  | ---------------------- | -
|                                       |  | 2014 ($)               |  
|Goldwedge Project                      |  |                        |  
|Travel                                 |  |                        | -
|Mine development costs                 |  |                        | -
|Drilling                               |  |                        | -
|Consulting, wages and salaries         |  |                        | -
|Office and general                     |  |                        | -
|Supplies, equipment and transportation |  |                        | -
|Claim staking and maintenance fees     |  |                        | -
|Milling costs                          |  |                        | -
|Depreciation                           |  |                        | -

141







|                                                          |  | Year Ended January 31, |       
|--------------------------------------------------------- |  | ---------------------- | ------
|                                                          |  | 2014 ($)               |       
|Net proceeds from sale of exploration and development ore |  |                        | -     
|Total Goldwedge Project                                   |  |                        | -     
|                                                          |  |                        |       
|Piñon Project                                             |  |                        |       
|Property acquisition costs                                |  |                        | -     
|Consulting, wages and salaries                            |  |                        | -     
|Office and general                                        |  |                        | -     
|Claim staking and maintenance fees                        |  |                        | -     
|Total Piñon Project                                       |  |                        | -     
|                                                          |  |                        |       
|Fondaway Canyon and Dixie-Comstock Projects               |  |                        |       
|Property acquisition costs                                |  |                        | 35,000
|Claim staking and maintenance fees                        |  |                        | -     
|Consulting, wages and salaries                            |  |                        | 19,711
|Travel                                                    |  |                        | 5,714 
|Office and general                                        |  |                        | 3,148 
|Total Fondaway Canyon and Dixie-Comstock Projects         |  |                        | 63,573
|                                                          |  |                        |       
|Kentucky Project                                          |  |                        |       
|Office and general                                        |  |                        | 20,102
|Penalty                                                   |  |                        | -     
|Depreciation                                              |  |                        | 3,558 
|Total Kentucky Project                                    |  |                        | 23,660
|Total exploration activities                              |  |                        | 87,233



142









REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Shareholders of Royal Standard Minerals Inc.



Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of Royal Standard Minerals Inc., which comprise the consolidated
statements of financial position as at January 31, 2013 and 2012 and the consolidated statements of operations, comprehensive loss,
changes in shareholders’ equity, and cash flows for the years then ended, and a summary of significant accounting policies
and other explanatory information.



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
International Financial Reporting Standards (“IFRS”), and for such internal control as management determines is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.



Auditors' 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 with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free from material misstatement.



The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such
opinion.



An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including
the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation
of the financial statements.



We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.



Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Royal
Standard Minerals Inc. as at January 31, 2013, and 2012, and its financial performance and its cash flows for the years then ended
in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.



Emphasis of Matter
Without modifying our opinion, we draw attention to Note 1 in the consolidated financial statements which describes material uncertainty
and raises substantial doubt about the Company's ability to continue as a going concern.



Signed: “MSCM LLP” Chartered Accountants
Licensed Public Accountants
Toronto, Ontario
May 24, 2013



143









|                                    
|------------------------------------
|Royal Standard Minerals Inc.        
|                                    
|(Expressed in United States Dollars)
|                                    
|Consolidated Financial Statements   
|                                    
|January 31, 2013 and 2012           
|                                    



144











Independent Auditor's Report



To the Shareholders of
Royal Standard Minerals Inc.



Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of Royal Standard Minerals Inc., which comprise the consolidated
statement of financial position as at January 31, 2013 and 2012, and the consolidated statements of operations, comprehensive loss,
changes in shareholders' equity, and cash flows for the years then ended, and a summary of significant accounting policies and
other explanatory information.



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
International Financial Reporting Standards ("IFRS"), and for such internal control as management determines is necessary
to enable the preparation of 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 with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free from material misstatement.



The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.



An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including
the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation
of the financial statements.



We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.







145











Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Royal
Standard Minerals Inc. as at January 31, 2013 and 2012, and its financial performance and its cash flows for the years then ended
in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.



Emphasis of matter
Without modifying our opinion, we draw attention to Note 1 in the consolidated financial statements which describes material uncertainty
and raises substantial doubt about the Company's ability to continue as a going concern.





| | Signed:"MSCM LLP"          
| | ---------------------------
| |                            
| | Chartered Accountants      
| | Licensed Public Accountants





Toronto, Ontario
May 24, 2013



146







|Royal Standard Minerals Inc.                 
|---------------------------------------------
|Consolidated Statements of Financial Position
|(Expressed in United States Dollars)         



|                                                                  |  | As at       |             |   | As at       |  
|----------------------------------------------------------------- |  | ----------- | ----------- | - | ----------- | -
|                                                                  |  | January 31, |             |   | January 31, |  
|                                                                  |  | 2013        |             |   | 2012        |  
|                                                                  |  |             |             |   |             |  
|Assets                                                            |  |             |             |   |             |  
|Current                                                           |  |             |             |   |             |  
|Cash and cash equivalents                                         |  | $           | 201,565     |   |             | $
|Marketable securities (Note 6)                                    |  |             | 30,000      |   |             |  
|Sundry receivables and prepaids (Note 7)                          |  |             | 2,712,004   |   |             |  
|                                                                  |  |             | 2,943,569   |   |             |  
|Reclamation bonds (Note 8)                                        |  |             | 188,250     |   |             |  
|Equipment, net (Note 10)                                          |  |             | 23,716      |   |             |  
|                                                                  |  | $           | 3,155,535   |   |             | $
|                                                                  |  |             |             |   |             |  
|Liabilities                                                       |  |             |             |   |             |  
|Current                                                           |  |             |             |   |             |  
|Accounts payable and accrued liabilities (Note 11)                |  | $           | 2,595,672   |   |             | $
|Due to related parties (Note 18)                                  |  |             | -           |   |             |  
|Other advances (Note 13)                                          |  |             | 600,000     |   |             |  
|Long-term debt - current portion (Note 13)                        |  |             | -           |   |             |  
|Embedded derivative on long-term debt - current portion (Note 13) |  |             | -           |   |             |  
|                                                                  |  |             | 3,195,672   |   |             |  
|                                                                  |  |             |             |   |             |  
|Asset retirement obligations (Note 12)                            |  |             | 107,647     |   |             |  
|Long-term debt (Note 13)                                          |  |             | -           |   |             |  
|Embedded derivative on long-term debt (Note 13)                   |  |             | -           |   |             |  
|                                                                  |  |             | 3,303,319   |   |             |  
|Shareholders' Equity (Deficiency)                                 |  |             |             |   |             |  
|Share capital (Note 14(b))                                        |  |             | 28,104,264  |   |             |  
|Reserves                                                          |  |             | 11,010,304  |   |             |  
|Accumulated deficit                                               |  |             | (39,262,352 | ) |             |  
|Accumulated other comprehensive (loss) income                     |  |             | -           |   |             |  
|                                                                  |  |             | (147,784    | ) |             |  
|                                                                  |  | $           | 3,155,535   |   |             | $
|                                                                  |  |             |             |   |             |  
|Going Concern (Note 1)                                            |  |             |             |   |             |  
|Contingencies (Note 19)                                           |  |             |             |   |             |  



Approved by the Board:



|Paul G. Smith |  | James B. Clancy | 
|------------- |  | --------------- | 
|Director      |  | Director        | 



The accompanying notes are an integral part
of these consolidated financial statements



147







|Royal Standard Minerals Inc.         
|-------------------------------------
|Consolidated Statements of Operations
|(Expressed in United States Dollars) 



|For the years ended January 31,                                                                                                                                                                                                   |  | 2013 |            |   | 2012 |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | -
|                                                                                                                                                                                                                                  |  |      |            |   |      |  
|Expenses                                                                                                                                                                                                                          |  |      |            |   |      |  
|Exploration and evaluation expenditures (Note 9)                                                                                                                                                                                  |  | $    | 3,137,205  |   |      | $
|General and administrative (Note 20)                                                                                                                                                                                              |  |      | 2,244,236  |   |      |  
|                                                                                                                                                                                                                                  |  |      |            |   |      |  
|                                                                                                                                                                                                                                  |  |      | 5,381,441  |   |      |  
|                                                                                                                                                                                                                                  |  |      |            |   |      |  
|Loss before finance income (costs), lawsuit settlement, impairment of and
    gain on disposal of marketable securities, sales of property interests and related assets and sale of royalty, and foreign
    currency translation |  |      | (5,381,441 | ) |      |  
|                                                                                                                                                                                                                                  |  |      |            |   |      |  
|Finance income                                                                                                                                                                                                                    |  |      | 7,274      |   |      |  
|Finance costs (Note 13)                                                                                                                                                                                                           |  |      | (4,310,582 | ) |      |  
|Lawsuit settlement (Note 14(b))                                                                                                                                                                                                   |  |      | (41,685    | ) |      |  
|Impairment of marketable securities                                                                                                                                                                                               |  |      | (56,125    | ) |      |  
|Gain on disposal of marketable securities (Note 2(a))                                                                                                                                                                             |  |      | 30,071     |   |      |  
|Gain on sale of property interests and related assets (Note 2(a))                                                                                                                                                                 |  |      | 14,171,405 |   |      |  
|Gain on sale of royalty (Note 2(b))                                                                                                                                                                                               |  |      | 866,505    |   |      |  
|Foreign currency translation adjustment                                                                                                                                                                                           |  |      | 5,720      |   |      |  
|                                                                                                                                                                                                                                  |  |      |            |   |      |  
|Net income (loss) for the year                                                                                                                                                                                                    |  | $    | 5,291,142  |   |      | $
|                                                                                                                                                                                                                                  |  |      |            |   |      |  
|Basic income (loss) per share (Note 16)                                                                                                                                                                                           |  | $    | 0.06       |   |      | $
|Diluted income (loss) per share (Note 16)                                                                                                                                                                                         |  | $    | 0.06       |   |      | $



|Consolidated Statements of Comprehensive Income (Loss)                   |  |      |           |   |      |   |            |  
|------------------------------------------------------------------------ |  | ---- | --------- | - | ---- | - | ---------- | -
|(Expressed in United States Dollars)                                     |  |      |           |   |      |   |            |  
|                                                                         |  |      |           |   |      |   |            |  
|For the years ended January 31,                                          |  | 2013 |           |   | 2012 |  
|                                                                         |  |      |           |   |      |   |            |  
|Net income (loss) for the year                                           |  | $    | 5,291,142 |   |      | $ | (6,451,698 | )
|                                                                         |  |      |           |   |      |   |            |  
|Other comprehensive (loss) income                                        |  |      |           |   |      |   |            |  
|Net unrealized (loss) income on available-for-sale marketable securities |  |      | (63,875   | ) |      |   | 97,999     |  
|                                                                         |  |      |           |   |      |   |            |  
|Comprehensive income (loss) for the year                                 |  | $    | 5,227,267 |   |      | $ | (6,353,699 | )



The accompanying notes are an integral part
of these consolidated financial statements



148







|Royal Standard Minerals Inc.                                           
|-----------------------------------------------------------------------
|Consolidated Statements of Changes in Shareholders' Equity (Deficiency)
|(Expressed in United States Dollars)                                   



|                                                                            |  |         |            |  |          |   |            |             |  |   | Accumulated   |   |  |       |        
|--------------------------------------------------------------------------- |  | ------- | ---------- |  | -------- | - | ---------- | ----------- |  | - | ------------- | - |  | ----- | -------
|                                                                            |  |         |            |  |          |   |            |             |  |   | Other         |   |  |       |        
|                                                                            |  | Share   |            |  |          |   |            | Accumulated |  |   | Comprehensive |   |  |       |        
|                                                                            |  | Capital |            |  | Reserves |   |            | Deficit     |  |   | Income (Loss) |   |  | Total |        
|                                                                            |  |         |            |  |          |   |            |             |  |   |               |   |  |       |        
|Balance, January 31, 2011                                                   |  | $       | 28,098,264 |  |          | $ | 10,076,866 |             |  | $ | (38,101,796   | ) |  | $     | (34,124
|Share-based payments                                                        |  |         | -          |  |          |   | 503,942    |             |  |   | -             |   |  |       | -      
|Net loss for the year                                                       |  |         | -          |  |          |   | -          |             |  |   | (6,451,698    | ) |  |       | -      
|Net increase in unrealized gain on available-for-sale marketable securities |  |         | -          |  |          |   | -          |             |  |   | -             |   |  |       | 97,999 
|                                                                            |  |         |            |  |          |   |            |             |  |   |               |   |  |       |        
|Balance, January 31, 2012                                                   |  |         | 28,098,264 |  |          |   | 10,580,808 |             |  |   | (44,553,494   | ) |  |       | 63,875 
|Shares issued for lawsuit settlement (Note 14(b))                           |  |         | 6,000      |  |          |   | -          |             |  |   | -             |   |  |       | -      
|Share-based payments                                                        |  |         | -          |  |          |   | 429,496    |             |  |   | -             |   |  |       | -      
|Net income for the year                                                     |  |         | -          |  |          |   | -          |             |  |   | 5,291,142     |   |  |       | -      
|Impairment of available-for-sale marketable securities                      |  |         | -          |  |          |   | -          |             |  |   | -             |   |  |       | (63,875
|                                                                            |  |         |            |  |          |   |            |             |  |   |               |   |  |       |        
|Balance, January 31, 2013                                                   |  | $       | 28,104,264 |  |          | $ | 11,010,304 |             |  | $ | (39,262,352   | ) |  | $     | -      



The accompanying notes are an integral part
of these consolidated financial statements.



149







|Royal Standard Minerals Inc.         
|-------------------------------------
|Consolidated Statements of Cash Flows
|(Expressed in United States Dollars) 



|For the years ended January 31,                                                                   |  | 2013 |             |   | 2012 |  
|------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | -
|                                                                                                  |  |      |             |   |      |  
|Operating activities                                                                              |  |      |             |   |      |  
|Net income (loss) for the year                                                                    |  | $    | 5,291,142   |   |      | $
|Operating items not involving cash:                                                               |  |      |             |   |      |  
|Depreciation                                                                                      |  |      | 113,994     |   |      |  
|Accretion in asset retirement obligations                                                         |  |      | 29,226      |   |      |  
|Accretion expense                                                                                 |  |      | 4,252,521   |   |      |  
|Share-based payments                                                                              |  |      | 429,496     |   |      |  
|Shares issued for lawsuit settlement                                                              |  |      | 6,000       |   |      |  
|Embedded derivative on long-term debt                                                             |  |      | 51,370      |   |      |  
|Impairment of marketable securities                                                               |  |      | 56,125      |   |      |  
|Gain on sale of property interests and related assets (Note 2(a))                                 |  |      | (14,171,405 | ) |      |  
|Gain on sale of royalty (Note 2(b))                                                               |  |      | (866,505    | ) |      |  
|Gain on disposal of marketable securities                                                         |  |      | (30,071     | ) |      |  
|Changes in non-cash working capital:                                                              |  |      |             |   |      |  
|Sundry receivables and prepaids                                                                   |  |      | 62,539      |   |      |  
|Accounts payable and accrued liabilities                                                          |  |      | 524,769     |   |      |  
|Due to related parties                                                                            |  |      | (35,023     | ) |      |  
|                                                                                                  |  |      |             |   |      |  
|Cash used in operating activities                                                                 |  |      | (4,285,822  | ) |      |  
|                                                                                                  |  |      |             |   |      |  
|Financing activities                                                                              |  |      |             |   |      |  
|Other advances                                                                                    |  |      | 600,000     |   |      |  
|Increase in long-term debt                                                                        |  |      | 5,442,384   |   |      |  
|Finance costs paid on long-term debt                                                              |  |      | (280,000    | ) |      |  
|Proceeds from sale of property interests and related assets, net of transaction costs (Note 2(a)) |  |      | 698,157     |   |      |  
|                                                                                                  |  |      |             |   |      |  
|Cash provided by financing activities                                                             |  |      | 6,460,541   |   |      |  
|                                                                                                  |  |      |             |   |      |  
|Investing activities                                                                              |  |      |             |   |      |  
|Increase in reclamation bonds                                                                     |  |      | (8,711      | ) |      |  
|Purchase of equipment                                                                             |  |      | (2,593,996  | ) |      |  
|                                                                                                  |  |      |             |   |      |  
|Cash used in investing activities                                                                 |  |      | (2,602,707  | ) |      |  
|                                                                                                  |  |      |             |   |      |  
|Change in cash and cash equivalents                                                               |  |      | (427,988    | ) |      |  
|                                                                                                  |  |      |             |   |      |  
|Cash and cash equivalents, beginning of year                                                      |  |      | 629,553     |   |      |  
|                                                                                                  |  |      |             |   |      |  
|Cash and cash equivalents, end of year                                                            |  | $    | 201,565     |   |      | $



The accompanying notes are an integral part
of these consolidated financial statements.





150







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|1. | The Company and Operations and Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Royal Standard Minerals Inc. (the "Company") is a publicly held company, engaged in the acquisition, exploration and development of gold and precious metal properties in the United States of America. The Company is continued under the Canada Business Corporations Act and its common shares are traded in the United States of America on the Over-the-Counter ("OTC") Bulletin Board. Inception has been deemed to be June 26, 1996, the date on which the Company acquired all of the outstanding common shares of Southeastern Resources Inc. ("SRI"), which acquisition was accounted for as a reverse takeover of the Company by SRI. The Company's head office is located at 36 Toronto Street, Suite 1000, Toronto, Ontario, M5C 2C5.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Consolidated Financial Statements (the "Statements") were approved by the Board of Directors on May 24, 2013.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | These Statements have been prepared on the basis of accounting principles applicable to a going concern, which assume that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. Management is aware, in making its assessment, of material uncertainties related to events or conditions that cast significant doubt upon the entity's ability to continue as a going concern. The Company has incurred net income of $5,291,142, as a result of the one-time gain on the sale of property interests and related assets of $14,171,405 and the gain on sale of the royalty of $866,505 during the year ended January 31, 2013 (2012 - loss of $6,451,698), has an accumulated deficit of $39,262,352 (2012 - $44,553,494). In addition, the Company has a working capital deficiency of $252,103 at January 31, 2013 (2012 - $5,184,281).                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The underlying value of the resource properties is dependent upon the existence and profitable recovery of reserves, confirmation of the Company’s interest in the underlying mineral claims, the ability to raise long- term financing to complete the development of the properties and upon future profitable production or, alternatively, upon the Company’s ability to dispose of some or all of its interests on an advantageous basis, all of which are uncertain. There is no assurance that any such initiatives will be sufficient and, as a result, there is significant doubt regarding the going concern assumption and, accordingly, the ultimate appropriateness of the use of accounting principles applicable to a going concern. The Company’s ability to continue to meet its obligations and carry out its planned exploration activities is uncertain and dependent upon the continued financial support of its shareholders, securing additional financing or disposing of some or all of its interests on an advantageous basis. These consolidated financial statements do not reflect the adjustments to the carrying values or classifications of assets and liabilities or to the reported expenses that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations for the foreseeable future. These adjustments could be material.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Management continues to raise funds through the sale of some or all of its remaining property interests.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  



151







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|2. | Sale of Property Interests and Related Assets                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (a) Asset Purchase Agreement                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On October 10, 2012, the Company entered into a definitive asset purchase and sale agreement (the "Asset Purchase Agreement") with Scorpio Gold Corporation ("Scorpio") and Scorpio's wholly-owned subsidiary, Goldwedge LLC to sell its Goldwedge and Piñon property interests and the assets related thereto. The Asset Purchase Agreement replaced a non-binding letter of intent entered into by the Company and Scorpio dated August 28, 2012.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On December 19, 2012, the Company announced the completion of its transaction with Scorpio to sell its Goldwedge and Piñon property interests and the assets related thereto to Scorpio (the “Transaction”). The Transaction was completed pursuant to the Asset Purchase Agreement.                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The completion of the Transaction followed a special meeting of Royal Standard’s shareholders held on November 28, 2012, at which votes representing 50.08% of the total issued and outstanding shares of the Company as at the record date were cast either by proxy or in person, with 99.46% of such shares voting in favour of the special resolution approving the Transaction.                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Pursuant to the Transaction, the interests of the Company and its wholly-owned subsidiary, Manhattan Mining Co., in the Goldwedge and Piñon properties and the assets related thereto were sold to Scorpio and its wholly-owned subsidiary Goldwedge LLC.                                                                                                                                                                                          



|Consideration               |  |   |             |  
|--------------------------- |  | - | ----------- | -
|Cash                        |  | $ | 1,252,953   |  
|Scorpio common shares (i)   |  |   | 1,623,827   |  
|Less: Transaction costs     |  |   | (461,361    | )
|Total consideration         |  |   | 2,415,419   |  
|                            |  |   |             |  
|Net liabilities sold        |  |   |             |  
|Reclamation bonds           |  |   | 453,495     |  
|Equipment                   |  |   | 4,699,436   |  
|Asset retirement obligation |  |   | (211,940    | )
|Equipment payable           |  |   | (15,867     | )
|Long-term debt              |  |   | (16,681,110 | )
|Total net liabilities sold  |  |   | (11,755,986 | )
|                            |  |   |             |  
|Total gain on sale          |  | $ | 14,171,405  |  



(i) On January 31, 2013, the Company entered into
a purchase and sale agreement with Waterton Global Value, L.P. to sell all 3,000,000 Scorpio common shares obtained as a part of
the consideration of the Transaction, at a price of $0.55 per share resulting in a gain of $30,071.



152







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|2. | Sale of Property Interests and Related Assets (Continued)                                                                                                                                                                                                                                                                                                                                                 
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                           
|   | (b) Royalty Agreement                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                           
|   | On January 31, 2013, the Company entered into a purchase and sale agreement with XDM Royalty Corp. ("XDM") to sell the Pinon Railroad Royalty, a royalty retained by the Company on the sale of the Pinon Railroad Project in 2009, and all rights, title and interests to XDM for $900,000 Canadian dollars ($902,126 USD). Related transaction costs amounted to $35,537 Canadian dollars ($35,621 USD).
|   |                                                                                                                                                                                                                                                                                                                                                                                                           
|3. | Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                           
|   | [a] Statement of compliance with International Financial Reporting Standards (“IFRS”)                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The financial statements have been prepared in accordance with IFRS issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the IFRS Interpretations Committee of the IASB. The policies set out below have been consistently applied to all periods presented.                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                           
|   | [b] Accounting policies                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Principles of consolidation                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                           
|   | These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Kentucky Standard Energy Company, Inc. and Manhattan Mining Co., both United States companies. All intercompany transactions and balances have been eliminated upon consolidation.                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Equipment                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Equipment is recorded at cost less accumulated depreciation. Depreciation is provided using the declining balance method using the following rates:                                                                                                                                                                                                                                                       



| | Exploration equipment    | - 25% to 30%                
| | ------------------------ | ----------------------------
| | Office equipment         | - 20%                       
| | Construction in progress | - nil, as not yet in service



At the end of each reporting period, the Company
reviews the carrying amounts of its equipment to determine whether there is any indication that the equipment has suffered an impairment
loss. Where such an indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss. The recoverable amount is the higher of the equipment's fair value less cost to sell or its value in use.



153







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|3. | Significant Accounting Policies (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | [b] Accounting polices (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Exploration and evaluation expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The Company expenses exploration and evaluation expenditures as incurred. Exploration and evaluation expenditures include acquisition costs of mineral properties, property option payments and evaluation activity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Once a project has been established as commercially viable and technically feasible, related development expenditure is capitalized. This includes costs incurred in preparing the site for mining operations. Capitalization ceases when the mine is capable of commercial production, with the exception of development costs that give rise to a future benefit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Restoration, rehabilitation and environmental obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | A legal or constructive obligation to incur restoration, rehabilitation and environmental costs may arise when environmental disturbance is caused by the exploration, development or ongoing production of a mineral property interest. Such costs arising from the decommissioning of plant and other site preparation work, discounted to their net present value, are provided for and recorded in the exploration and evaluation expenditures, as soon as the obligation to incur such costs arises. Discount rates using a pretax rate that reflects the time value of money are used to calculate the net present value. These costs are charged against profit or loss over the economic life of the related asset, through amortization using either a unit-of- production or the straight-line method as appropriate. The related liability is adjusted for each period for the unwinding of the discount rate and for changes to the current market-based discount rate, amount or timing of the underlying cash flows needed to settle the obligation.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Share-based payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The fair value of the stock options granted to directors, officers and employees is determined using the Black-Scholes option pricing model and management's assumptions as disclosed in Note 15 and recorded as share-based payments expense over the vesting period of the stock options, with the offsetting credit recorded as an increase in reserves. The fair value of stock options issued to other than employees are measured at the fair value of the goods or services received unless this cannot be reliably estimated, and are recognized over the period of service.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | If the stock options are exercised, the proceeds are credited to share capital and the fair value at the date of grant is reclassified from reserves to share capital.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         





154







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|3. | Significant Accounting Policies (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | [b] Accounting polices (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Income taxes (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Income (loss) per common share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Basic income (loss) per share is computed by dividing the income (loss) for the year by the weighted average number of common shares outstanding during the year, including contingently issuable shares which are included when the conditions necessary for issuance have been met. Diluted income (loss) per share is calculated in a similar manner, except that the weighted average number of common shares outstanding is increased to include potentially issuable common shares from the assumed exercise of common share purchase options and warrants, if dilutive. The number of additional shares included in the calculation is based on the treasury stock method for options and warrants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Foreign currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The United States dollar is the functional and presentation currency of the Company. Functional currency is also determined for each of the Company’s subsidiaries, and items included in the financial statements of the subsidiary are measured using that functional currency.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Transactions in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities not denominated in the functional currency are translated at the year end rates of exchange. Foreign exchange gains and losses are recognized in the statements of operations. Intercompany amounts with foreign operations for which settlement is neither planned nor likely to occur in the foreseeable future are part of the Company’s net investment in the foreign operation. Foreign exchange gains and losses related to these intercompany amounts are included in accumulated other comprehensive income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          





155







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|3. | Significant Accounting Policies (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | [b] Accounting polices (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company recognizes financial assets and financial liabilities when the Company becomes a party to a contract. Financial assets and financial liabilities, with the exception of financial assets classified as at fair value through profit or loss, are measured at fair value plus transaction costs on initial recognition. Financial assets at fair value through profit or loss are measured at fair value on initial recognition and transaction costs are expensed when incurred. Securities are accounted for at the trade date.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Measurement in subsequent periods depends on the classification of the financial instrument.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | i) Financial assets at fair value through profit or loss (FVTPL)                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Financial assets are classified as FVTPL when acquired principally for the purpose of trading, if so designated by management (fair value option), or if they are derivative assets that are not part of an effective and designated hedging relationship. Financial assets classified as FVTPL are measured at fair value, with changes recognized in the consolidated statements of operations.                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company’s financial assets classified as FVTPL include cash and cash equivalents. The Company does not currently hold any derivative instruments or apply hedge accounting.                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | ii) Available-for-sale financial assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Financial assets are classified as available-for-sale when so designated by management. Financial assets classified as available-for-sale are measured at fair value, with changes recognized in the other comprehensive income.                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company’s financial assets classified as available-for-sale include marketable securities.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | iii) Loans and receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Loans and receivables are non-derivative financial assets that have fixed or determinable payments and are not quoted in an active market. Subsequent to initial recognition, loans and receivables are carried at amortized cost using the effective interest method.                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Sundry receivables are classified as loans and receivables.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | iv) Financial liabilities at fair value through profit or loss ("FVTPL")                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | This category comprises derivatives, or liabilities acquired or incurred principally for the purpose of being sold or repurchased in the near term. They are carried in the consolidated statements of financial position at fair value with changes in fair value recognized in the consolidated statements of operations.                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Embedded derivative on long-term debt is classified as FVTPL.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               





156







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|3. | Significant Accounting Policies (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | [b] Accounting polices (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Financial instruments (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | iv) Financial liabilities at fair value through profit or loss ("FVTPL") (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Company may enter into certain financial derivative contracts in order to manage the exposure to market risks from fluctuations in commodity prices. The Company’s policy is not to utilize derivative financial instruments for speculative purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through the profit or loss. Changes in the fair value of separable embedded derivatives are recognized immediately in profit or loss.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | v) Other financial liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Other financial liabilities are financial liabilities that are not classified as FVTPL. Subsequent to initial recognition, other financial liabilities that are not subject to hedge accounting, are measured at amortized cost using the effective interest method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Accounts payable and accrued liabilities, due to related parties, other advances and long-term debt are classified as other financial liabilities. The Company does not currently apply hedge accounting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The effective interest method is a method of calculating the amortized cost of an instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument to the net carrying amount on initial recognition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | vi) Financial instruments recorded at fair value:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Financial instruments recorded at fair value on the consolidated statements of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: Level 1 - valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - valuation techniques based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 - valuation techniques using inputs for the asset or liability that are not based on observable market data (unobservable inputs). As of January 31, 2013 and 2012, the only financial assets or liabilities measured at fair value are the Company's cash and cash equivalents, investment in Sharpe Resources Corporation ("Sharpe") and embedded derivative on long-term debt. As at January 31, 2013, Sharpe's fair market value was determined to be $30,000 (2012 - $150,000), and the embedded derivative on long-term debt's fair market value was determined to be $nil (2012 - $170,721).



157







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|3. | Significant Accounting Policies (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | [b] Accounting polices (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Financial instruments (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | vi) Financial instruments recorded at fair value: (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Cash and cash equivalents and marketable securities are considered Level 1 and embedded derivative on long-term debt is considered Level 2 for purposes of the fair value hierarchy.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Significant accounting judgments and estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The preparation of these consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. These consolidated financial statements include estimates that, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Critical accounting estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Significant assumptions about the future that management has made that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



| | · | the recoverability of sundry receivables that are included in the consolidated statements of financial position;
| | - | ----------------------------------------------------------------------------------------------------------------
| | · | the inputs used in accounting for share based payment transactions in the consolidated statements of operations.
| | · | Contingencies - See note 19                                                                                     



Critical accounting judgments



| | · | the categorization of financial assets and liabilities is an accounting policy that requires management to make judgments or assessments;                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | management's assumption of material restoration, rehabilitation and environmental obligations, based on the facts and circumstances that existed during the period;                                                                                                                                                                                                             
| | · | the measurement of income taxes payable and deferred income tax assets and liabilities requires management to make judgments in the interpretation and application of the relevant tax laws. Deferred tax assets require management to assess the likelihood that the Company will generate taxable income in future periods in order to utilize recognized deferred tax assets;



158







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|3. | Significant Accounting Policies (Continued)                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                      
|   | [b] Accounting polices (continued)                                                                                   
|   |                                                                                                                      
|   | Significant accounting judgments and estimates (continued)
        
        Critical accounting judgments (continued)



| | · | going concern presentation of the consolidated financial statements which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | Management's determination that the functional currency of the Company and each of its subsidiaries is                                                                                                                                                                                



[c] New standards



Certain new standards, interpretations and amendments
to existing standards have been issued by the IASB or IFRIC that are mandatory for accounting periods beginning after December
31, 2012, or later periods. The following have not yet been adopted and are being evaluated to determine their impact on the Company.



(i) IFRS 9 – Financial instruments (“IFRS
9”) was issued by the IASB in October 2010 and will replace IAS 39 - Financial Instruments: Recognition and Measurement (“IAS
39”). IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing
the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context
of its business model and the contractual cash flow characteristics of the financial assets. Most of the requirements in IAS 39
for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9. The new standard also requires
a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods
beginning on or after January 1, 2015. Earlier adoption is permitted.



(ii) IFRS 10 – Consolidated financial statements
(“IFRS 10”) was issued by the IASB in May 2011. IFRS 10 is a new standard which identifies the concept of control as
the determining factor in assessing whether an entity should be included in the consolidated financial statements of the parent
company. Control is comprised of three elements: power over an investee; exposure to variable returns from an investee; and the
ability to use power to affect the reporting entity’s returns. IFRS 10 is effective for annual periods beginning on or after
January 1, 2013.



(iii) IFRS 11 – Joint arrangements (“IFRS
11”) was issued by the IASB in May 2011. IFRS 11 is a new standard which focuses on classifying joint arrangements by their
rights and obligations rather than their legal form. Entities are classified into two groups: parties having rights to the assets
and obligations for the liabilities of an arrangement, and rights to the net assets of an arrangement. Entities in the former case
account for assets, liabilities, revenues and expenses in accordance with the arrangement, whereas entities in the latter case
account for the arrangement using the equity method. IFRS 11 is effective for annual periods beginning on or after January 1, 2013.



159







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|3. | Significant Accounting Policies (Continued)                                                                                                                                                                                                                                                                                                                                                         
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                     
|   | [c] New standards (continued)                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (iv) IFRS 12 – Disclosure of interests in other entities (“IFRS 12”) was issued by the IASB in May 2011. IFRS 12 is a new standard which provides disclosure requirements for entities reporting interests in other entities, including joint arrangements, special purpose vehicles, and off balance sheet vehicles. IFRS 12 is effective for annual periods beginning on or after January 1, 2013.
|   |                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (v) IFRS 13 – Fair value measurement (“IFRS 13”) was issued by the IASB in May 2011. IFRS 13 is a new                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                     
|   | standard which provides a precise definition of fair value and a single source of fair value measurement considerations for use across IFRSs. The key points of IFRS 13 are as follows:                                                                                                                                                                                                             



| | · | fair value is measured using the price in a principal market for the asset or liability, or in the absence of a principal market, the most advantageous market;                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | financial assets and liabilities with offsetting positions in market risks or counterparty credit risks can be measured on the basis of an entity’s net risk exposure;               
| | · | disclosures regarding the fair value hierarchy have been moved from IFRS 7 to IFRS 13, and further guidance has been added to the determination of classes of assets and liabilities;
| | · | a quantitative sensitivity analysis must be provided for financial instruments measured at fair value;                                                                               
| | · | a narrative must be provided discussing the sensitivity of fair value measurements categorized under Level 3 of the fair value hierarchy to significant unobservable inputs; and     
| | · | information must be provided on an entity’s valuation processes for fair value measurements categorized under Level 3 of the fair value hierarchy.                                   



IFRS 13 is effective for annual periods beginning
on or after January 1, 2013.



(vi) IAS 1 – Presentation of financial statements
(“IAS 1”) was amended by the IASB in June 2011 in order to align the presentation of items in other comprehensive income
with US GAAP standards. Items in other comprehensive income will be required to be presented in two categories: items that will
be reclassified into profit or loss and those that will not be reclassified. The flexibility to present a statement of comprehensive
income as one statement or two separate statements of profit and loss and other comprehensive income remains unchanged. The amendments
to IAS 1 are effective for annual periods beginning on or after July 1, 2012.



(vii) IAS 28 - Investments in Associates and Joint
Ventures (“IAS 28”) was issued by the IASB in May 2011 and supersedes IAS 28 - Investments in Associates and prescribes
the accounting for investments in associates and sets out the requirements for the application of the equity method when accounting
for investments in associates and joint ventures. IAS 28 defines significant influence as the power to participate in the financial
and operating policy decisions of the investee but is not control or joint control of those policies. IAS 28 also provides guidance
on how the equity method of accounting is to be applied and also prescribes how investments in associates and joint ventures should
be tested for impairment. The amendments to IAS 28 are effective for annual periods beginning on or after January 1, 2013.



160







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|3. | Significant Accounting Policies (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | [c] New standards (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | (viii) IAS 32 – Financial Instruments: Presentation (“IAS 32”) was amended by the IASB in December 2011 to clarify certain aspects of the requirements on offsetting. The amendments focus on the criterion that an entity currently has a legally enforceable right to set off the recognized amounts and the criterion that an entity intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. The amendments to IAS 32 are effective for annual periods beginning on or after January 1, 2014. Earlier adoption is permitted.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4. | Capital Management                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Company manages its capital with the following objectives:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   



| | · | to ensure sufficient financial flexibility to achieve the ongoing business objectives including funding of future growth opportunities, and pursuit of accretive acquisitions; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | to maximize shareholder return through enhancing the share value.                                                                                                                 



The Company monitors its capital structure and makes
adjustments according to market conditions in an effort to meet its objectives given the current outlook of the business and industry
in general. The Company may manage its capital structure by issuing new shares, repurchasing outstanding shares, adjusting capital
spending, or disposing of assets. The capital structure is reviewed by Management and the Board of Directors on an ongoing basis.



The Company's equity comprises of share capital,
reserves, accumulated deficit and accumulated other comprehensive income, which at January 31, 2013 was a deficiency of $147,784
(2012 - deficiency of $5,810,547). Note that included in the statements of financial position presented is a deficit of $39,262,352
as at January 31, 2013 (2012 - $44,553,494).



The Company manages capital through its financial
and operational forecasting processes. The Company reviews its working capital and forecasts its future cash flows based on operating
expenditures, and other investing and financing activities. The forecast is regularly updated based on activities related to its
mineral properties. Selected information is provided to the Board of Directors of the Company. The Company’s capital management
objectives, policies and processes have remained unchanged during the years ended January 31, 2013 and 2012. The Company is not
subject to external capital requirements.



161







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|5. | Property and Financial Risk Factors                                                                                                                                                                                                                                                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                 
|   | (a) Property risk                                                                                                                                                                                                                                                                                                                                                               
|   | Unless the Company acquires or develops additional significant resource properties, the Company will be solely dependent upon its current projects. If no additional mineral properties are acquired by the Company, any adverse development affecting its current projects would have a material adverse effect on the Company's financial condition and results of operations.
|   |                                                                                                                                                                                                                                                                                                                                                                                 
|   | (b) Financial risk factors                                                                                                                                                                                                                                                                                                                                                      
|   | The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including interest rate, foreign exchange rate, and commodity price risk).                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                 
|   | Risk management is carried out by the Company's management team with guidance from the Audit Committee under policies approved by the Board of Directors. The Board of Directors also provides regular guidance for overall risk management.                                                                                                                                    



(i) Credit risk



Credit risk is the risk of loss associated with a
counterparty’s inability to fulfill its payment obligations. The Company's credit risk is primarily attributable to cash,
sundry receivables and reclamation bonds. The Company has no significant concentration of credit risk arising from operations.
Cash and reclamation bonds are held with reputable financial institutions, from which management believes the risk of loss to be
minimal. Sundry receivables relate to the disposal of marketable securities and the sale of royalty and these balances are in good
standing.



(ii) Liquidity risk



The Company's approach to managing liquidity risk
is to ensure that it will have sufficient liquidity to meet liabilities when due (see note 1). As at January 31, 2013, the Company
had a cash balance of $201,565 (2012 - $629,553) to settle current liabilities of $3,195,672 (2012 - $6,120,109). All of the Company's
financial liabilities have contractual maturities of less than 60 days and are subject to normal trade terms.



(iii) Market risk



Market risk is the risk of loss that may arise from
changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices.



Interest rate risk

The Company has cash balances and no interest-bearing
debt. The Company's current policy is to invest excess cash in guaranteed investment certificates, bankers acceptance and money
market deposits, with reputable financial institutions. The interest rate risk is remote.



162







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|5. | Property and Financial Risk Factors (Continued)
|-- | -----------------------------------------------



(b) Financial risk factors (continued)



(iii) Market risk (continued)



Foreign currency risk

The Company's functional and reporting currency is
the United States dollar and major purchases are transacted in United States dollars. An operating account is maintained in Canadian
dollars primarily for settlement of general and corporate expenditures.



Commodity price risk

The Company is exposed to price risk with respect
to commodity and equity prices. Equity price risk is defined as the potential adverse impact on the Company's earnings due to movements
in individual equity prices or general movements in the level of the stock market. Commodity price risk is defined as the potential
adverse impact on earnings and economic value due to commodity price movements and volatilities. The Company closely monitors commodity
prices, as they relate to gold and precious metals in the United States, individual equity movements, and the stock market to determine
the appropriate course of action to be taken by the Company.



(c) Sensitivity analysis

As of January 31, 2013, the carrying and fair value
amounts of the Company's financial instruments are approximately equivalent.



Based on management's knowledge and experience of
the financial markets, the Company believes the following movements are "reasonably possible" over a twelve month period:



| | · | The Company's marketable securities are subject to fair value fluctuations. As at January 31, 2013, if the fair value of the marketable securities had decreased/increased by 10% with all other variables held constant, net income (loss) and comprehensive income (loss) for the year ended January 31, 2013 would have been approximately $3,000 higher/lower. Similarly, as at January 31, 2013, reported shareholders' equity would have been approximately $3,000 lower/higher as a result of a 10% decrease/increase in the fair value of marketable securities.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | · | Cash, sundry receivables, and accounts payable and accrued liabilities denominated in Canadian dollars are subject to foreign currency risk. As at January 31, 2013, had the US dollar weakened/strengthened by 5% against the Canadian dollar with all other variables held constant, it would affect net income (loss) and comprehensive income (loss) by approximately $104,000.                                                                                                                                                                                     



163







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|5. | Property and Financial Risk Factors (Continued) (c) Sensitivity analysis (continued)
|-- | ------------------------------------------------------------------------------------



| | · | Commodity price risk could adversely affect the Company. In particular, the Company’s future profitability and viability of development depends upon the world market price of gold and precious metals. Gold and precious metals have fluctuated widely in recent years. There is no assurance that, even if commercial quantities of gold and precious metals may be produced in the future, a profitable market will exist for them. A decline in the market price of gold and precious metals may also require the Company to reduce its mineral properties, which could have a material and adverse effect on the Company’s value. As of January 31, 2013, the Company is not a gold or precious metals producer. As a result, commodity price risk may affect the completion of future equity transactions such as equity offerings and the exercise of stock options and warrants. This may also affect the Company's liquidity and its ability to meet its ongoing obligations.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|6. | Marketable Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Marketable securities consist of 2,000,000 common shares of Sharpe. Sharpe is a publicly held Canadian company engaged in the exploration and development of coal properties in the United States. Sharpe was considered to be related to the Company because of common management prior to the termination of the former CEO's employment in December 2011. The market value of the shares at January 31, 2013 was $30,000 (2012 - $150,000). On January 31, 2013, it was determined that the common shares of Sharpe were impaired based on a continued and significant decline in market value. As a result an impairment of marketable securities of $56,125 was recorded during the year.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|7. | Sundry Receivables and Prepaids                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



|                      |  | As at       |           |  | As at       |  
|--------------------- |  | ----------- | --------- |  | ----------- | -
|                      |  | January 31, |           |  | January 31, |  
|                      |  | 2013        |           |  | 2012        |  
|                      |  |             |           |  |             |  
|Sales tax receivables |  | $           | 53,589    |  |             | $
|Other receivables     |  |             | 2,618,794 |  |             |  
|Prepaid expenses      |  |             | 39,621    |  |             |  
|                      |  |             |           |  |             |  
|                      |  | $           | 2,712,004 |  |             | $



Included in other receivables is $1,651,320 due on
the sale of the Scorpio common shares (see note 2(a)), $900,720 due on the sale of the Royalty (see note 2(b)) and $57,481 due
from the Bureau of Land Management in the State of Nevada and a banking institution, in connection with certain reclamation bonds
sold to Scorpio.



164







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|8. | Reclamation Bonds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Company has posted reclamation bonds for its mining projects, as required by the States of Nevada and Kentucky, to secure clean-up costs if the projects are abandoned or closed. As part of the sale of its Goldwedge and Piñon property interests and related assets (see note 2(a)), $453,495 of reclamation bonds were sold to Scorpio. As at January 31, 2013, the balance consists of $9,550 of the reclamation bonds pertaining to the Fondaway Canyon and Dixie-Comstock Projects, and $178,700 (see note 19(c)) to the Kentucky Project.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|9. | Exploration and Evaluation Expenditures on Mineral Properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | (a) Goldwedge Project                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Goldwedge Project, a property previously owned by the Company, represented the Company's most advanced project and was located in the Manhattan District in Nye County, Nevada, approximately eight miles south of the Round Mountain mine and had been issued a mine and mill permit by the Nevada Division of Environmental Protection. The Company was completing refurbishment of the on-site processing plant which was used for the test mining and processing that took place in 2007 and 2008. The process included primary crushing and grinding facilities that fed a gravity recovery system. In addition, dry stack tailings containment as well as silt and fresh water ponds were in place. Testing of the various mineral processing functions extracted stockpiles of low grade gold feed material, as well as concurrently newly mined material. The feed material was processed into gold dore on site. All mineralized material was sampled daily and analyzed for gold content at the Company's onsite assay laboratory. In addition, the Company sent samples for analysis to an independent laboratory located offsite.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Based on the existing level of terrestrial disturbance and water treatment and monitoring requirements, the discounted ARO's for all projects, where applicable, has been estimated by management. The assumptions for the future payments are based on future expenses being incurred between 2017 and 2019 and a discount rate of 10%. Under the guidance of IAS 37, the Company had recorded an asset retirement obligation ("ARO") of $183,445 on this project, representing the estimated costs, on a discounted basis, of the Company's obligation to restore the site to its original condition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | During the year ended January 31, 2013, a total of $2,803,375 of exploration and evaluation expenditures were spent on the Goldwedge Project prior to the sale of the Goldwedge Project and related assets, including the ARO, to Scorpio (note 2(a)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | (b) Dixie-Comstock Project                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Also held under the same option agreement as was the Goldwedge Property is the Dixie-Comstock Mining Company option and other unpatented mining claims located in Churchill County, Nevada. In 2010, the Company exercised its option to purchase these unpatented and patented mining claim groups. Under the guidance of IAS 37, the Company has recorded an ARO of $2,774 on the Dixie-Comstock and Fondaway Canyon Projects, representing the estimated costs, on a discounted basis, of the Company's obligation to restore the sites to their original condition. During the year ended January 31, 2013, the Company did not perform any exploration on this project.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     



165







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|9. | Exploration and Evaluation Expenditures on Mineral Properties (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | (c) Piñon Project                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The Piñon Project was a property made up of a number of property leases located in Elko Country, Nevada. Under the guidance of IAS 37, the Company had recorded an ARO of $28,495 on this project, representing the estimated costs, on a discounted basis, of the Company's obligation to restore the site to its original condition. During the year ended January 31, 2013, the Company performed minimal exploration and evaluation expenditures on this project, a total of $104,696, prior to the sale of the Piñon Project and related assets, including the ARO, to Scorpio (note 2(a)).
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | (d) Fondaway Canyon Project                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Fondaway Canyon Project is located in Churchill County, Nevada. During the year ended January 31, 2013, the Company performed minimal exploration on this project.                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | (e) Kentucky Project                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | On December 7, 2011, the Company exercised its option to acquire a 50% interest in certain coal projects in Eastern Kentucky. The option was originally acquired by the Company pursuant to an option and joint venture agreement entered into with Sharpe on November 21, 2008 and amended on September 11, 2009, to jointly pursue the exploration and development of approximately 1,000 acres in Wolfe County, Kentucky.                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | During the year ended January 31, 2011, the Company wrote off a promissory note receivable from the optionor in the amount of $133,134. Further, the Company paid for a reclamation bond of $178,700, included in the consolidated statements of financial position under reclamation bonds.                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Under the guidance of IAS 37, the Company has recorded an ARO on its Kentucky Project in the amount of $104,873, representing the estimated costs, on a discounted basis, of the Company's obligation to restore the property to its original condition.                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | During the year ended January 31, 2013, the Company incurred exploration and evaluation expenditures of $161,317 on this project.                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | In August 2009, the Company retained a 1% net smelter royalty on the sale of the Piñon Railroad Project, which it sold during the year ended January 31, 2013 (note 2(b)).                                                                                                                                                                                                                                                                                                                                                                                                                      



166







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|9. | Exploration and Evaluation Expenditures on Mineral Properties (Continued)                                               
|-- | ------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                         
|   | During the years ended January 31, 2013 and 2012, the Company's exploration and evaluation expenditures were as follows:



|Years ended January 31,                                   |  | 2013 |           |   | 2012 |  
|--------------------------------------------------------- |  | ---- | --------- | - | ---- | -
|                                                          |  |      |           |   |      |  
|Goldwedge Project                                         |  |      |           |   |      |  
|Travel                                                    |  | $    | 27,709    |   |      | $
|Mine development costs                                    |  |      | 1,878,956 |   |      |  
|Drilling                                                  |  |      | 71,884    |   |      |  
|Professional fees                                         |  |      | -         |   |      |  
|Consulting, wages and salaries (Note 18)                  |  |      | 736,060   |   |      |  
|Office and general                                        |  |      | 130,011   |   |      |  
|Analysis and assays                                       |  |      | -         |   |      |  
|Supplies, equipment and transportation                    |  |      | 48,240    |   |      |  
|Claim staking and maintenance fees                        |  |      | 11,743    |   |      |  
|Milling costs                                             |  |      | 161,474   |   |      |  
|Depreciation                                              |  |      | 104,819   |   |      |  
|Net proceeds from sale of exploration and development ore |  |      | (367,521  | ) |      |  
|                                                          |  | $    | 2,803,375 |   |      | $
|                                                          |  |      |           |   |      |  
|Piñon Project                                             |  |      |           |   |      |  
|Property acquisition costs                                |  | $    | 46,158    |   |      | $
|Consulting, wages and salaries                            |  |      | 20,859    |   |      |  
|Office and general                                        |  |      | 11,479    |   |      |  
|Claim staking and maintenance fees                        |  |      | 26,200    |   |      |  
|                                                          |  | $    | 104,696   |   |      | $
|                                                          |  |      |           |   |      |  
|Fondaway Canyon and Dixie-Comstock Projects               |  |      |           |   |      |  
|Property acquisition costs                                |  | $    | 35,000    |   |      | $
|Claim staking and maintenance fees                        |  |      | 32,817    |   |      |  
|                                                          |  | $    | 67,817    |   |      | $
|                                                          |  |      |           |   |      |  
|Kentucky Project                                          |  |      |           |   |      |  
|Travel                                                    |  | $    | -         |   |      | $
|Consulting, wages and salaries                            |  |      | -         |   |      |  
|Office and general                                        |  |      | 7,521     |   |      |  
|Penalty (Note 19 (c))                                     |  |      | 145,000   |   |      |  
|Professional fees                                         |  |      | -         |   |      |  
|Supplies, equipment and transportation                    |  |      | -         |   |      |  
|Depreciation                                              |  |      | 8,796     |   |      |  
|                                                          |  | $    | 161,317   |   |      | $
|                                                          |  |      |           |   |      |  
|Total exploration activities                              |  | $    | 3,137,205 |   |      | $



167







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|10. | Equipment
|--- | ---------



|                              |  | Construction |            |   | Exploration |   |            | Office    |  |   |         |  
|----------------------------- |  | ------------ | ---------- | - | ----------- | - | ---------- | --------- |  | - | ------- | -
|COST                          |  | in progress  |            |   | equipment   |   |            | equipment |  |   | Total   |  
|Balance, January 31, 2011     |  | $            | -          |   |             | $ | 2,977,464  |           |  | $ | 21,806  |  
|Additions                     |  |              | 1,619,341  |   |             |   | 148,536    |           |  |   | -       |  
|Balance, January 31, 2012     |  |              | 1,619,341  |   |             |   | 3,126,000  |           |  |   | 21,806  |  
|Additions                     |  |              | 2,704,338  |   |             |   | 48,472     |           |  |   | -       |  
|Sale of equipment (Note 2(a)) |  |              | (4,323,679 | ) |             |   | (3,085,472 | )         |  |   | (21,806 | )
|Balance, January 31, 2013     |  | $            | -          |   |             | $ | 89,000     |           |  | $ | -       |  



|                              |  | Construction |   |  | Exploration |   |            | Office    |  |   |         |  
|----------------------------- |  | ------------ | - |  | ----------- | - | ---------- | --------- |  | - | ------- | -
|ACCUMULATED DEPRECIATION      |  | in progress  |   |  | equipment   |   |            | equipment |  |   | Total   |  
|Balance, January 31, 2011     |  | $            | - |  |             | $ | 2,525,415  |           |  | $ | 20,122  |  
|Depreciation for the year     |  |              | - |  |             |   | 136,343    |           |  |   | 931     |  
|Balance, January 31, 2012     |  |              | - |  |             |   | 2,661,758  |           |  |   | 21,053  |  
|Depreciation for the year     |  |              | - |  |             |   | 113,615    |           |  |   | 379     |  
|Sale of equipment (Note 2(a)) |  |              | - |  |             |   | (2,710,089 | )         |  |   | (21,432 | )
|Balance, January 31, 2013     |  | $            | - |  |             | $ | 65,284     |           |  | $ | -       |  



|                          |  | Construction |           |  | Exploration |   |         | Office    |  |   |       | 
|------------------------- |  | ------------ | --------- |  | ----------- | - | ------- | --------- |  | - | ----- | 
|CARRYING AMOUNT           |  | in progress  |           |  | equipment   |   |         | equipment |  |   | Total | 
|Balance, January 31, 2012 |  | $            | 1,619,341 |  |             | $ | 464,242 |           |  | $ | 753   | 
|Balance, January 31, 2013 |  | $            | -         |  |             | $ | 23,716  |           |  | $ | -     | 



|    | Construction in progress relates to the refurbishment of the mill at the Company's Goldwedge Project. Included in the construction in progress are capitalized interest costs of $895,055 (January 31, 2012 - $54,216). During the year ended January 31, 2013, the construction in progress was sold to Scorpio (note 2(a)).
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                              
|    | Depreciation of exploration equipment is expensed to exploration and evaluation expenditures and depreciation of office equipment is expensed to general and administrative on the consolidated statements of operations.                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                              
|11. | Accounts Payable and Accrued Liabilities                                                                                                                                                                                                                                                                                     



|                    |  | As at       |           |  | As at       |  
|------------------- |  | ----------- | --------- |  | ----------- | -
|                    |  | January 31, |           |  | January 31, |  
|                    |  | 2013        |           |  | 2012        |  
|                    |  |             |           |  |             |  
|Trade payables      |  | $           | 2,145,407 |  |             | $
|Accrued liabilities |  |             | 450,265   |  |             |  
|                    |  |             |           |  |             |  
|                    |  | $           | 2,595,672 |  |             | $



Included in accrued liabilities are accrued finance
costs of $nil (2012 - $78,814) and accrued costs in connection with the construction in progress, totaling $nil (2012 - $895,223).



168







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|12. | Asset Retirement Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The Company is required to recognize a liability for a legal and constructive obligation to perform asset retirement activities, including decommissioning, reclamation and environmental monitoring activities once any of its projects are permanently closed. Although these activities are conditional upon future events, the Company is required to make a reasonable estimate of the fair value of the liability. Based on the existing level of terrestrial disturbance and water treatment and monitoring requirements, the discounted asset retirement obligations ("AROs") were estimated to be $107,647 as at January 31, 2013, assuming future payments of $188,250 being made over a ten year period from the date of initial assessment of the AROs and a discount rate of 10%.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Determination of the undiscounted AROs and the timing of these obligations were based on internal estimates using information currently available, existing regulations, and estimates of closure costs. During the year ended January 31, 2012, the Company determined an additional $52,165 increase in AROs related to the Company's Goldwedge Project. The following is the reconciliation of the AROs:                                                                                                                                                                                                                                                                                                                                                                                   



|Year ended January 31,                   |  | 2013 |          |   | 2012 |  
|---------------------------------------- |  | ---- | -------- | - | ---- | -
|                                         |  |      |          |   |      |  
|Balance, beginning of year               |  | $    | 292,315  |   |      | $
|Increase in asset retirement obligations |  |      | -        |   |      |  
|Accretion cost                           |  |      | 29,226   |   |      |  
|Foreign exchange                         |  |      | (1,954   | ) |      |  
|Sale of AROs (Note 2(a))                 |  |      | (211,940 | ) |      |  
|                                         |  |      |          |   |      |  
|Balance, end of year                     |  | $    | 107,647  |   |      | $



|13. | Long-Term Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | On August 26, 2011, Manhattan amended its existing Bridge Loan with Waterton Global Value, L.P. ("Waterton") such that the Bridge Loan was transitioned into a more permanent senior secured gold stream debt facility (the “Gold Stream Facility”) amongst the parties. Under the Gold Stream Facility, Waterton agreed to make $8,000,000 (the “Principal Amount”) available to Manhattan. The Principal Amount was repayable by Manhattan to Waterton in monthly payments commencing in August 2012 and ending in July 2013 (see note 2). Under the Gold Stream Facility, each monthly repayment of the Principal Amount was to be made by the delivery by Manhattan to Waterton of gold bullion ounces where the number of ounces to be delivered was to be based on the spot price of gold on the business day immediately preceding the repayment date less an applicable discount or by the payment of the cash equivalent of such number of ounces. In addition, there was a profit participation formula which was triggered when the spot price of gold was in excess of $1,600 an ounce on the business day immediately preceding the repayment ("Profit Participation"). The Principal Amount accrued interest at 9.0% per annum. The Gold Stream Facility was secured by, amongst other items, Manhattan's real property assets in Nevada.



169







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|13. | Long-Term Debt (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Company considered Profit Participation as an embedded derivative. Prior to the sale to Scorpio, the gross proceeds received under the Gold Stream Facility of $11,432,734 was allocated to the embedded derivative based on the initial fair values of the embedded derivative determined when proceeds were received ($223,630), and then the residual value was allocated to the liability portion. As noted in note 2, the Company's obligation with Waterton under the Gold Stream Facility was assumed by Scorpio when the Sale Transaction was completed, and as such, the value of the embedded derivative was determined using the gold spot price as at October 30, 2012.                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | As consideration for entering into the Gold Stream Facility, a structuring fee equal to 2% of the aggregate amount of the Gold Stream Facility and an establishment fee of $80,000 was payable by Manhattan to Waterton and Manhattan also granted Waterton certain royalty interests over its exploration stage projects. In addition, Manhattan and Waterton agreed that Waterton shall have the right to purchase all of the gold produced by Manhattan from its Nevada projects at a price per ounce that would be equal to an agreed discount to the existing spot price of gold at the time of any such purchase. Bayfront Capital Partners Ltd. acted as placement agent in connection with the Gold Stream Facility in consideration for a placement fee equal to 4% of the Principal Amounts actually drawn by Manhattan on the Gold Stream Facility.                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Gold Stream Facility contained covenants for Manhattan such as, among other things, providing Waterton with updates on its operations, carrying on its business in accordance with prudent mining industry practices, and providing Waterton with certain rights of inspection. Until all amounts outstanding under the Gold Stream Facility have been repaid in full or otherwise satisfied in accordance with the terms of such facility, certain standard restrictive covenants shall apply to Manhattan limiting its ability to (without limitation): incur additional indebtedness, create liens on its assets or dispose of its assets. These negative covenants were subject to certain carve-outs that facilitate Manhattan's ability to operate its business efficiently. The Gold Stream Facility also included certain event of default provisions pursuant to which, immediately and automatically upon the occurrence of an event of default, all amounts outstanding under the Gold Stream Facility would be automatically accelerated and immediately due and payable to Waterton.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | At any time, without penalty, the Gold Stream Facility provided Manhattan the option to prepay in whole or in part, on 5 business days prior notice. Prepayments were permitted to be made in physical gold ounces or cash. The amount of any prepayment was to be calculated using the spot price of gold on the business day immediately preceding the prepayment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | During the year ended January 31, 2013, the Company secured two additional $2,000,000 loan extensions from Waterton, bringing the total facility to $12,000,000. In consideration for the loan extensions, the Company provided Waterton with additional net smelter return royalties on several of its properties, including Piñon and Fondaway Canyon, and a 2% structuring fee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | On the completion of the Transaction, Scorpio assumed the Company's total long-term debt balance of $16,681,110 which included interest payable of $973,376 (note 2(a)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



170







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|13. | Long-Term Debt (Continued)
|--- | --------------------------



The following table shows the reconciliation between
the gross proceeds received and the carrying value of long-term debt balance assumed by Scorpio.



|Gross proceeds                                      |  | $ | 11,432,734 |  
|--------------------------------------------------- |  | - | ---------- | -
|Less: Initial fair value of the embedded derivative |  |   | (170,721   | )
|Less: Debt issuance cost                            |  |   | (640,000   | )
|Add: Accretion costs                                |  |   | 6,059,097  |  
|Long-term debt                                      |  | $ | 16,681,110 |  



In addition to the loan, Waterton provided the Company
with other advances (non-interest bearing) totalling $600,000, presented as other advances under current liabilities. These advances
were secured by certain of Manhattan's real property assets in Nevada and were due May 1, 2013. Subsequent to year end, the Company
repaid these advances.



|14. | Share Capital
|--- | -------------



(a) Authorized



The authorized capital of the Company consists of
an unlimited number of common shares without par value.



(b) Issued



|                                         |  | Shares |            |  | Amount |  
|---------------------------------------- |  | ------ | ---------- |  | ------ | -
|                                         |  |        |            |  |        |  
|Balance, January 31, 2011 and 2012       |  |        | 83,853,825 |  |        | $
|                                         |  |        |            |  |        |  
|Shares issued for lawsuit settlement (i) |  |        | 100,000    |  |        |  
|                                         |  |        |            |  |        |  
|Balance, January 31, 2013                |  |        | 83,953,825 |  |        | $



During the year, the Company settled a claim filed
in the District Court, Nye County, Nevada through the issuance of 100,000 shares of the Company and a monetary settlement of $35,000.
The monetary settlement was paid by year-end.



|15. | Stock Options
|--- | -------------



Under the Company's stock option plan (the "Option
Plan"), the directors of the Company can grant options to acquire common shares of the Company to directors, employees and
others who provide ongoing services to the Company. Exercise prices cannot be less than the closing price of the Company's shares
on the trading day preceding the grant date and the maximum term of any option cannot exceed ten years.



171







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|15. | Stock Options (Continued)
|--- | -------------------------



The number of common shares under option at any time
under the Option Plan or otherwise cannot exceed 5% of the then outstanding common shares of the Company for any optionee. In addition,
options granted to insiders of the Company cannot exceed more than 10% of the then outstanding common shares of the Company. A
portion of the stock options vest immediately on the grant date and the balance vest over a period of two years from the grant
date.



Option pricing models require the input of highly
subjective assumptions including the expected price volatility. Changes in the subjective input assumptions can materially affect
the fair value estimate, and therefore the existing models do not necessarily provide a reliable measure of the fair value of the
Company's share purchase options.



The following table reflects the continuity of stock
options for the years ended January 31, 2013 and 2012:



|                          |  | Number of     |            |   | Weighted Average |  
|------------------------- |  | ------------- | ---------- | - | ---------------- | -
|                          |  | Stock Options |            |   | Exercise Price   |  
|Balance, January 31, 2011 |  |               | 7,904,691  |   |                  | $
|Cancelled                 |  |               | (544,500   | ) |                  | $
|Granted                   |  |               | 4,700,000  |   |                  | $
|                          |  |               |            |   |                  |  
|Balance, January 31, 2012 |  |               | 12,060,191 |   |                  | $
|Forfeited                 |  |               | (8,260,191 | ) |                  | $
|Balance, January 31, 2013 |  |               | 3,800,000  |   |                  | $



The following table reflects the stock options outstanding
and exercisable as at January 31, 2013:



|                 |  | Exercise Price |      |  | Options     |  |           | Options     |  |  | Fair      |  |  | Weighted average |          
|---------------- |  | -------------- | ---- |  | ----------- |  | --------- | ----------- |  |  | --------- |  |  | ---------------- | ---------
|Expiry Date      |  | ($)            |      |  | Outstanding |  |           | Exercisable |  |  | Value     |  |  | remaining years  |          
|                 |  |                |      |  |             |  |           |             |  |  |           |  |  |                  |          
|June 26, 2014    |  |                | 0.10 |  |             |  | 650,000   |             |  |  | 650,000   |  |  | $                | 353,480  
|January 20, 2017 |  |                | 0.30 |  |             |  | 3,150,000 |             |  |  | 2,400,000 |  |  |                  | 894,600  
|                 |  |                |      |  |             |  |           |             |  |  |           |  |  |                  |          
|                 |  |                |      |  |             |  | 3,800,000 |             |  |  | 3,050,000 |  |  | $                | 1,248,080



172







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|16. | Basic and Diluted Income (Loss) Per Share                                                   
|--- | --------------------------------------------------------------------------------------------
|    |                                                                                             
|    | The following table sets forth the computation of basic and diluted income (loss) per share:



|For the years ended January 31,                                                          |  | 2013 |            |  | 2012 |  
|---------------------------------------------------------------------------------------- |  | ---- | ---------- |  | ---- | -
|                                                                                         |  |      |            |  |      |  
|Numerator:                                                                               |  |      |            |  |      |  
|Income (loss) for the year                                                               |  | $    | 5,291,142  |  |      | $
|                                                                                         |  |      |            |  |      |  
|Denominator:                                                                             |  |      |            |  |      |  
|Weighted average number of common shares outstanding for basic income (loss) per share   |  |      | 83,885,036 |  |      |  
|Weighted average number of common shares outstanding for diluted income (loss) per share |  |      | 83,986,566 |  |      |  
|                                                                                         |  |      |            |  |      |  
|Basic income (loss) per share                                                            |  | $    | 0.06       |  |      | $
|Diluted income (loss) per share                                                          |  | $    | 0.06       |  |      | $



|    | The stock options were not included in the computation of diluted loss per share on January 31, 2012 as their inclusion would be anti-dilutive.                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                      
|17. | Income Taxes                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                      
|    | The following table reconciles the expected income tax expense (recovery) at the Canadian statutory income tax rate at 26.50% (2012 - 28.08%) to the amounts recognized in the consolidated statements of operations:



|                                                      |  | 2013 |            |   | 2012 |  
|----------------------------------------------------- |  | ---- | ---------- | - | ---- | -
|Net income (loss) before income taxes                 |  | $    | 5,291,142  |   |      | $
|Expected tax expense (recovery) at statutory rate     |  | $    | 1,402,153  |   |      | $
|Permanent differences                                 |  |      | 113,816    |   |      |  
|Difference between Canadian and foreign tax rates     |  |      | 598,950    |   |      |  
|Utilization of tax benefits not previously recognized |  |      | (2,466,265 | ) |      |  
|Tax benefits not recognized                           |  |      | 351,346    |   |      |  
|Tax provision                                         |  | $    | -          |   |      | $



The Canadian statutory tax rate changed from 28.08%
for the year ended January 31, 2012 to 26.50% for the year ended January 31, 2013 as a result of the enacted reduction of Canadian
corporate tax rates.



173







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|17. | Income Taxes (Continued)
|--- | ------------------------



Deferred Tax Assets and Liabilities



(a) Unrecognized deferred tax assets



Deferred tax assets are recognized for the carry-forward
or unused tax losses and unused tax credits to the extent that it is probably that taxable profits will be available against which
the unused tax losses/credits can be utilized. The following represents the deductible temporary differences by jurisdiction which
have not been recognized in the financial statements.



|                                                                                  |  | 2013   |            |  | 2013 |   |            | 2012   |  |   | 2012      | 
|--------------------------------------------------------------------------------- |  | ------ | ---------- |  | ---- | - | ---------- | ------ |  | - | --------- | 
|                                                                                  |  | Canada |            |  | US   |   |            | Canada |  |   | US        | 
|                                                                                  |  |        |            |  |      |   |            |        |  |   |           | 
|Unclaimed non-capital losses                                                      |  | $      | 8,746,064  |  |      | $ | 30,140,498 |        |  | $ | 7,476,735 | 
|Excess of unclaimed resources pools over carrying value of exploration properties |  |        | 1,590,124  |  |      |   | -          |        |  |   | 1,475,829 | 
|                                                                                  |  | $      | 10,336,188 |  |      | $ | 30,140,498 |        |  | $ | 8,952,564 | 



The excess of unclaimed resources pools over carrying
value of exploration properties can be carried forward indefinitely. The unclaimed non-capital losses carried forward by expiry
date:



|        |  |      |  | Canada |          
|------- |  | ---- |  | ------ | ---------
|Expires |  | 2015 |  | $      | 634,757  
|        |  | 2026 |  |        | 859,708  
|        |  | 2027 |  |        | 839,699  
|        |  | 2028 |  |        | 1,035,352
|        |  | 2029 |  |        | 647,277  
|        |  | 2030 |  |        | 1,147,781
|        |  | 2031 |  |        | 492,214  
|        |  | 2032 |  |        | 1,819,945
|        |  | 2033 |  |        | 1,269,331
|        |  |      |  | $      | 8,746,064



|    | The Company also has US tax losses of $30,140,498 that will expire between 2027 and 2032.
|--- | -----------------------------------------------------------------------------------------
|    |                                                                                          
|18. | Related Party Transactions and Balances                                                  
|    |                                                                                          
|    | Remuneration of Directors and key management personnel of the Company was as follows:    



|For the years ended January 31,                          |  | 2013 |         |  | 2012 |  
|-------------------------------------------------------- |  | ---- | ------- |  | ---- | -
|                                                         |  |      |         |  |      |  
|Salaries and benefits paid to directors and officers (1) |  | $    | 505,259 |  |      | $
|Share-based payments                                     |  | $    | 403,231 |  |      | $



174







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|18. | Related Party Transactions and Balances (Continued)
|--- | ---------------------------------------------------



(1)Salaries and benefits include
director fees. The Board of Directors do not have employment or service contracts with the Company, except for Ken Strobbe, who
provided mine consulting services at the Goldwedge Project totaling $73,607 for the year ended January 31, 2013 (2012 - $nil),
included under consulting, wages and salaries for the Goldwedge Project. Directors are entitled to director fees and stock options
for their services. In addition, James B. Clancy received an honorarium of $10,000, included above, for providing consulting services
in connection with the Kentucky Project for the year ended January 31, 2013 (2012 - $nil) and John Fitzgerald, a past director,
received $9,900 for services in connection with the due diligence process for the Scorpio transaction. The payment is included
in transactions costs (see note 2(a)).



Paul G. Smith, a director and Chairman of the Board,
is the President and Chief Executive Officer of Equity Financial Holdings Inc. ("Equity"), a company providing financial
services to the Company. Services provided by Equity totaled $13,223 for the year ended January 31, 2013 (2012 - $8,387).



Due to related parties balance at January 31, 2013
consists of $nil (2012 - $22,607) owing to the former CEO and $nil owing to Sharpe (2012 - $12,416). In addition, included in accounts
payable and accrued liabilities is $nil (2012 - $18,677) owing to the former CEO.



|19. | Contingencies
|--- | -------------



(a) The Company received documents filed in the District
Court, Nye County, Nevada, whereby an optionor of mining claims in Nye County, Nevada acquired by the Company, is contending the
surface rights acquired by the Company for a patented mining claim. In the opinion of management, the legal proceedings are without
merit and the Company intends to vigorously defend itself against this claim.



(b) The Company's wholly-owned subsidiary, Manhattan
Mining Co., received documents filed in the District Court, Nye County, Nevada, from a former vendor contending damages for breach
of contract. The vendor is also seeking damages for unjust enrichment and related attorneys' fees and costs of the suit. The damages
sought for breach of contract and unjust enrichment total $37,500. On April 24, 2013, a court appointed arbitrator found in favour
of the plaintiff in the amount of $20,612. This amount has been included in accounts payable and accrued liabilities.



(c) The Company received an action against it whereby
the Company was requested by a prior lease holder to take any and all steps necessary to ensure that the prior lease holders bear
no responsibilities or liability for the Company’s failure to comply with the rules and regulations of the Kentucky Energy
and Environment Cabinet, Division of Mine Enforcement and Reclamation (the “DMER”). Management has responded to the
DMER and is working on resolving the issue. In the meantime, the DMER has issued penalties of approximately $145,000 and is seeking
forfeiture of the Company's reclamation bond in the amount of $178,700. These penalties have been included in accounts payable
and accrued liabilities.



175







|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2013 and 2012                 



|19. | Contingencies (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | (d) On September 27, 2011 Hale Capital Management, LP and Hale Capital Partners, LP (together, “Hale Capital”) commenced an action in the New York Supreme Court alleging breach of contract in relation to a term sheet entered into between the Company and Hale Capital on December 11, 2010 (the “Term Sheet”), which set out preliminary terms for Hale to provide financing of up to $15 million for the Company’s Goldwedge Project (the “Hale Transaction”). Hale Capital is seeking the “right to participate” in financing the Company on no less favourable terms and conditions as was agreed upon between the Company and Waterton on June 29, 2011 or, in the alternative, damages for breach of the exclusivity provision contained in the Term Sheet. Hale is also seeking expense reimbursement for legal, travel and due diligence fees incurred by Hale Capital, which allegedly totaled $376,170 as of November 21, 2011. On November 23, 2011, Hale Capital amended their complaint to include the Company’s subsidiary Manhattan Mining Co. Management had estimated the expenses at $330,000 and had accrued this amount in the accounts during the year ended January 31, 2012. Subsequently, an additional amount of $171,000 relating to additional legal expenses (including interest) incurred by Hale Capital had been accrued. At January 31, 2013, $171,000 remains outstanding.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | (e) During the year ended January 31, 2013, the Secretary of Labour, Mine Safety and Health Administration (MSHA), as the petitioner, filed a complaint made by a former employee of Manhattan, charging discrimination pursuant to Section 105 (c) 1 of the Federal Mine Safety and Health Act of 1977. The Office of Assessments has assessed a civil penalty of $20,875 which has been included in accounts payable and accrued liabilities for the year ended January 31, 2013. The amount was paid subsequent to year end.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|20. | General and Administrative                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     



|For the years ended January 31,          |  | 2013 |           |  | 2012 |  
|---------------------------------------- |  | ---- | --------- |  | ---- | -
|Corporate development                    |  | $    | 180,146   |  |      | $
|Insurance                                |  |      | 28,533    |  |      |  
|Office and general                       |  |      | 30,643    |  |      |  
|Professional fees                        |  |      | 1,024,556 |  |      |  
|Consulting, wages and salaries (Note 18) |  |      | 511,545   |  |      |  
|Share-based payments (Note 18)           |  |      | 429,496   |  |      |  
|Travel                                   |  |      | 38,938    |  |      |  
|Depreciation                             |  |      | 379       |  |      |  
|                                         |  | $    | 2,244,236 |  |      | $



|21. | Segmented Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The Company has one reportable business segment consisting of the exploration and development of mining properties. Substantially all of the Company’s assets are located in the United States except for cash and cash equivalents totaling $193,135 at January 31, 2013 (January 31, 2012 - $426,596) held in Canadian banks. The Company’s operations in Canada consist of general and administrative expenses, totaling $1,556,606 for the year ended January 31, 2013 (2012 - $2,459,866), including expenses necessary to maintain the Company’s public company status.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|22. | Comparative Figures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Certain comparative figures have been reclassified to conform with the current year's presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          





176







Item 18. Exhibits.



|ExhibitNo. |  | Description of Exhibit                                                                                                                                                                                                                                                                                
|---------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|           |  |                                                                                                                                                                                                                                                                                                       
|1.1        |  | Articles of Incorporation of the Company, as amended. (incorporated by reference to Exhibit 1.1 to Form 20-F filed with the SEC on June 14, 2012).                                                                                                                                                    
|           |  |                                                                                                                                                                                                                                                                                                       
|1.2        |  | By-law No. 2 of the Company (incorporated by reference to Exhibit 99.1 to Form 6-K filed with the SEC on January 12, 2012).                                                                                                                                                                           
|           |  |                                                                                                                                                                                                                                                                                                       
|2.1        |  | Shareholder Rights Plan Agreement dated December 23, 2010 between the Company and Equity Financial Trust Company (incorporated by reference to Exhibit 2.1 to the Company’s Amendment to Annual Report on Form 20-F/A for the fiscal year ended January 31, 2012 filed with the SEC on June 14, 2012).
|           |  |                                                                                                                                                                                                                                                                                                       
|2.2        |  | Amendment to Shareholder Rights Plan Agreement
    dated January 8, 2014 between the Company and Equity Financial Trust Company (incorporated by reference to Exhibit 99.9 to Form 6-K filed with the SEC on February 3, 2014).                                                                       
|           |  |                                                                                                                                                                                                                                                                                                       
|12.1       |  | Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a).*                                                                                                                                                                                                 
|           |  |                                                                                                                                                                                                                                                                                                       
|12.2       |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a).*                                                                                                                                                                                                               
|           |  |                                                                                                                                                                                                                                                                                                       
|13.1       |  | Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*                                                                                                                                 
|           |  |                                                                                                                                                                                                                                                                                                       
|13.2       |  | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*                                                                                                                                               
|           |  |                                                                                                                                                                                                                                                                                                       
|15.1       |  | Consent of MNP LLP.*                                                                                                                                                                                                                                                                                  



|* | Filed herewith.                                                                                                                                                                                  
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|# | Confidential treatment has been requested for the redacted portions of this agreement. A complete copy of the agreement, including the redacted portions, has been filed separately with the SEC.



177







SIGNATURES



The registrant hereby certifies that it
meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual
report on its behalf.



|                      | ROYAL STANDARD MINERALS INC.                
|--------------------- | --------------------------------------------
|                      | (Registrant)                                
|                      |                                             
|                      | /s/ Lonnie Kirsh                            
|                      | Name: Lonnie Kirsh                          
|                      | Title: President and Chief Executive Officer
|                      |                                             
|Dated: April 29, 2016 |                                             



178