---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C.
20549

FORM 20-F

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

OR

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

For the fiscal year ended **January 31,
2013**

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)

George Duguay36 Toronto Street, Suite 1000,
Toronto, Ontario M5C 2C5(416) 848-7744
george@dsacorp.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.

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|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, 2013: 83,953,825 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
[   ] No [X]

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 [   ] No
[X]

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.Yes [X] No [   ]

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

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of accelerated filer and large accelerated filer in Rule 12b-2 of
the Exchange Act.

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

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

ii

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

If Other has been checked in response to the previous
question, indicate by check mark which financial statement item the registrant
has elected to follow. [   ] Item
17     [   ] 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 [   ] No [X]

iii

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TABLE OFCONTENTS

|PART I                                                              | 3 
|------------------------------------------------------------------- | --
|                                                                    |   
|Item
      1. Identity of Directors, Senior Management and Advisers | 3 
|Item 2. Offer
      Statistics and Expected Timetable               | 3 
|Item
      3. Key Information                                       | 3 
|A. Selected financial data                                          | 3 
|B. Capitalization and indebtedness.                                 | 4 
|C. Reasons for the offer and use of proceeds                        | 4 
|D. Risk factors                                                     | 5 
|Item 4. Information
      on the Company                            | 5 
|A. History and development of the Company                           | 5 
|B. Business overview                                                | 8 
|C. Organizational structure.                                        | 9 
|D. Property, plants and equipment                                   | 9 
|Item
      4A. Unresolved Staff Comments                            | 15
|Item 5. Operating
      and Financial Review and Prospects          | 15
|A. Operating results                                                | 15
|B. Liquidity and capital resources                                  | 16
|C. Research and development, patents and licenses, etc              | 19
|D. Trend information                                                | 19
|E. Off-balance sheet arrangements                                   | 19
|F. Tabular disclosures of contractual obligations                   | 19
|G. Safe harbor.                                                     | 20
|Item 6. Directors,
      Senior Management and Employees            | 21
|A. Directors and senior management.                                 | 21
|B. Compensation                                                     | 23
|C. Board practices                                                  | 30
|D. Employees.                                                       | 35
|E. Share ownership                                                  | 35
|Item 7. Major
      Shareholders and Related Party Transactions     | 35
|A. Major shareholders.                                              | 35
|B. Related party transactions                                       | 36
|C. Interests of experts and counsel                                 | 36
|Item 8. Financial
      Information                                 | 36
|A. Consolidated Statements and Other Financial Information          | 36
|B. Significant Changes                                              | 36
|Item
      9. The Offer and Listing                                 | 38
|A. Offer and listing details                                        | 38
|B. Plan of distribution.                                            | 39
|C. Markets                                                          | 40
|D. Selling shareholders.                                            | 40
|E. Dilution                                                         | 40
|F. Expenses of the issue.                                           | 40
|Item 10. Additional
      Information                               | 40

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|A. Share capital                                                                                  | 40 
|------------------------------------------------------------------------------------------------- | ---
|B. Memorandum and articles of association.                                                        | 40 
|C. Material contracts.                                                                            | 45 
|D. Exchange controls.                                                                             | 45 
|E. Taxation                                                                                       | 45 
|F. Dividends and paying agents.                                                                   | 51 
|G. Statement by experts.                                                                          | 51 
|H. Documents on display.                                                                          | 51 
|I. Subsidiary Information.                                                                        | 51 
|Item 11.
      Quantitative and Qualitative Disclosures About Market Risk                         | 51 
|Item 12. Description of Securities Other than Equity
      Securities                             | 53 
|PART II                                                                                           | 53 
|Item 13. Defaults, Dividend Arrearages and Delinquencies                                          | 53 
|Item 14.
      Material Modifications to the Rights of Security Holders and Use of
      Proceeds | 53 
|Item 15. Controls and Procedures                                                                  | 57 
|A. Disclosure Controls and Procedures                                                             | 57 
|B. Management's Annual Report on Internal Control over
      Financial Reporting                  | 58 
|C. Attestation Report of the Registered Public Accounting
      Firm                              | 58 
|D. Changes in Internal Control over Financial Reporting                                           | 58 
|Item 16.
      [Reserved]                                                                         | 58 
|Item 16A. Audit Committee Financial Expert                                                        | 58 
|Item 16B.
      Code of Ethics                                                                    | 59 
|Item 16C. Principal Accountant Fees and Services                                                  | 59 
|Item 16D.
      Exemptions from the Listing Standards for Audit Committees                        | 60 
|Item 16E. Purchases of Equity Securities by the Issuer and
      Affiliated Purchasers            | 60 
|Item 16F.
      Change in Registrant's Certifying Accountant                                      | 60 
|Item 16G. Corporate Governance                                                                    | 60 
|Item 16H.
      Mine Safety Disclosure                                                            | 60 
|PART III                                                                                          | 61 
|Item 17.
      Financial Statements                                                               | 61 
|Item 18. Financial Statements                                                                     | 161
|Item 19.
      Exhibits                                                                           | 162
|SIGNATURES                                                                                        | 164

ii

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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, 2013, based upon the Bank of Canada noon exchange
rate, was U.S.$1.00 = Cdn$1.0027.

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.

Statements concerning mineral reserves and resource estimates
may also be deemed to constitute forward-looking statements to the extent that
they involve estimates of the mineralization that may be encountered if any of
the, Fondaway Canyon, Dixie-Comstock or Kentucky projects are developed, and in
the case of mineral reserves or resources, such statements reflect the
conclusion based on certain assumptions that the mineral deposit can be
economically exploited. 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:

- precious metal and coal price fluctuations;
- volatility in the financial markets;
- operating hazards and risks;
- risks and uncertainties relating to the exploration and development of
  mineral properties;
- uncertainty attributable to the calculation of reserves, resources and
  metal recoveries;
- uncertainty of title to mining properties;

1

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- risks associated with dilution;· risks related to environmental regulation and liability;
- 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.

CAUTIONARY NOTE REGARDING RESOURCE AND RESERVE
ESTIMATES

The terms mineral reserve, proven mineral reserve and
probable mineral reserve used in the Companys disclosure are Canadian mining
terms that are defined in accordance with National Instrument 43-101  Standards
of Disclosure for Mineral Projects (NI 43-101) under the guidelines set out in
the Canadian Institute of Mining, Metallurgy and Petroleum (the CIM) Best
Practice Guidelines for the Estimation of Mineral Resource and Mineral Reserves
(the CIM Standards), adopted by the CIM Council on November 23, 2003. These
definitions differ from the definitions in the United States Securities and
Exchange Commission (the SEC) Industry Guide 7 under the Securities Act. Under
Industry Guide 7 standards, mineralization may not be classified as a reserve
unless the determination has been made that the mineralization could be
economically and legally produced or extracted at the time the reserve
determination is made. Under Industry Guide 7 standards, a final or bankable
feasibility study is required to report reserves, the three-year historical
average price is used in any reserve or cash flow analysis to designate reserves
and the primary environmental analysis or report must be filed with the
appropriate governmental authority.

The terms mineral resource, measured mineral resource,
indicated mineral resource and inferred mineral resource used in the
Companys disclosure are Canadian mining terms that are defined in accordance
with NI 43-101 under the guidelines set out in the CIM Standards; however, these
terms are not defined terms under Industry Guide 7 and are normally not
permitted to be used in reports and registration statements filed with the SEC.
Investors are cautioned not to assume that any part or all of mineral deposits
in these categories will ever be converted into reserves. Inferred mineral
resources have a great amount of uncertainty as to their existence, and great
uncertainty as to their economic and legal feasibility. It cannot be assumed
that all or any part of an inferred mineral resource will ever be upgraded to a
higher category. Under Canadian rules, estimates of inferred mineral resources
may not form the basis of feasibility or pre-feasibility studies, except in rare
cases. Investors are cautioned not to assume that all or any part of an inferred
mineral resource exists or is economically or legally mineable. Disclosure of
contained ounces in a resource is permitted disclosure under Canadian
regulations; however, the SEC normally only permits issuers to report
mineralization that does not constitute reserves by SEC Industry Guide 7
standards as in place tonnage and grade without reference to unit measures.

Accordingly, information contained in this annual report on
Form 20-F and the documents incorporated by reference herein containing
descriptions of the Companys mineral deposits may not be comparable to similar
information made public by U.S. companies subject to the reporting and
disclosure requirements under the United States federal securities laws and the
rules and regulations thereunder.

2

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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, 2013, 2012 and 2011. The selected financial data
presented herein for the fiscal years ended January 31, 2011, 2012 and 2013 is
prepared in accordance with International Financial Reporting Standards. The
financial data includes the accounts of the Company and its wholly-owned
subsidiaries, Kentucky Standard Energy Company, Inc., and Manhattan Mining Co.
(Manhattan), both United States companies. See Item 4. Information on the
Company.

3

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

|                                |   | 2013         |   |   | 2012         |   |   | 2011         |  
|------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------ | -
|                                |   |              |   |   |              |   |   |              |  
|Revenue                         | $ | 0            |   | $ | 0            |   | $ | 0            |  
|Finance Income                  | $ | 7,274        |   | $ | 4,291        |   | $ | 3,221        |  
|Expenses                        |   | ($5,381,441  | ) |   | ($5,763,475  | ) |   | ($1,786,180  | )
|Net income (loss) for the year  | $ | 5,291,142    |   |   | ($6,451,698  | ) |   | ($1,632,845  | )
|Deficit, beginning of year      |   | ($44,553,494 | ) |   | ($38,101,796 | ) |   | ($36,468,951 | )
|Income (loss) per common share: |   |              |   |   |              |   |   |              |  
|Basic income (loss) per share   | $ | 0.06         |   |   | ($0.08       | ) |   | ($0.02       | )
|Diluted income (loss) per share | $ | 0.06         |   |   | ($0.08       | ) |   | ($0.02       | )
|Weighted Average Shares         |   |              |   |   |              |   |   |              |  
|Outstanding-Basic               |   | 83,885,036   |   |   | 83,853,825   |   |   | 83,853,825   |  
|Outstanding-Diluted             |   | 83,986,566   |   |   | 83,853,825   |   |   | 83,853,825   |  

|Balance Sheet       |   | January 31, 2013 |   |   | January 31, 2012 |   |   | January 31, 2011 | 
|------------------- | - | ---------------- | - | - | ---------------- | - | - | ---------------- | 
|Current Assets      | $ | 2,943,569        |   | $ | 935,828          |   | $ | 215,315          | 
|Equipment, net      | $ | 23,716           |   | $ | 2,084,336        |   | $ | 453,733          | 
|Total Assets        | $ | 3,155,535        |   | $ | 3,653,198        |   | $ | 1,206,908        | 
|Current Liabilities | $ | 3,195,672        |   | $ | 6,120,109        |   | $ | 935,688          | 
|Net Assets          |   | ($147,784        | ) |   | ($5,810,547      | ) | $ | 39,210           | 

The Company has not set forth selected financial data for the
fiscal years ended January 31, 2010 and 2009 as such information cannot be
provided, or cannot be provided on a restated basis, without unreasonable effort
or expense.

B.Capitalization and indebtedness.

Not applicable.

C.Reasons for the offer and use of
proceeds.

Not applicable.

4

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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, 2013, 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.

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.

5

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The registered office of the Company is located at 36 Toronto
Street, Suite 1000, Toronto, Ontario M5C 2C5. The Companys two wholly-owned
subsidiaries, Manhattan Mining Co. and Kentucky Standard Energy Company, Inc.,
have offices at 36 Toronto Street, Suite 1000, Toronto, Ontario and 11945 North
Big Creek Road, Hadfield, Kentucky, 41514, respectively. The Companys telephone
number at its registered office is [(416) 848-7744].

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, Canadian
dollars, 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.

Project Expenditures

During the year ending January 31, 2013, expenses on the
Goldwedge Project were $2,803,375 with cumulative expenditures to January 31,
2013 of $22,360,314. These costs were incurred in connection with various
activities performed by the Company on a discretionary basis. A table of
detailed expenditures follows:

6

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|                                                                     |   |             |   |   |             |  |   |             |   |   | Cumulative from      |  
|-------------------------------------------------------------------- | - | ----------- | - | - | ----------- |  | - | ----------- | - | - | -------------------- | -
|                                                                     |   | January 31, |   |   | January 31, |  |   | January 31, |   |   | date of inception of |  
|For the years
      ending                                           |   | 2013        |   |   | 2012        |  |   | 2011        |   |   | exploration phase    |  
|Goldwedge Project                                                    |   |             |   |   |             |  |   |             |   |   |                      |  
|Opening balance                                                      | $ | 19,556,939  |   | $ | 16,874,710  |  | $ | 16,087,544  |   | $ | 0                    |  
|Property acquisition costs, claim staking
      and maintenance fees | $ | 11,743      |   | $ | 11,743      |  | $ | 40,492      |   | $ | 1,215,653            |  
|Travel                                                               | $ | 27,709      |   | $ | 71,292      |  | $ | 65,983      |   | $ | 497,261              |  
|Mine development costs                                               | $ | 1,878,956   |   | $ | 397,626     |  | $ | 42,312      |   | $ | 3,365,682            |  
|Drilling                                                             | $ | 71,884      |   | $ | 40,206      |  |   | 0           |   | $ | 1,060,883            |  
|General exploration                                                  |   | 0           |   |   | 0           |  |   | 0           |   | $ | 133,353              |  
|Professional fees                                                    |   | 0           |   | $ | 113,442     |  | $ | 65,550      |   | $ | 259,156              |  
|Consulting                                                           | $ | 736,060     |   | $ | 1,238,299   |  | $ | 240,392     |   | $ | 7,196,462            |  
|Office and general                                                   | $ | 130,011     |   | $ | 324,686     |  | $ | 84,314      |   | $ | 2,213,317            |  
|Analysis and assays                                                  |   | 0           |   | $ | 7,392       |  | $ | 2,225       |   | $ | 165,227              |  
|Supplies, equipment and transportation                               | $ | 48,240      |   | $ | 353,312     |  |   | ($9,010     | ) | $ | 4,079,293            |  
|Milling costs                                                        | $ | 161,474     |   |   | 0           |  |   | 0           |   | $ | 161,474              |  
|Depreciation                                                         | $ | 104,819     |   | $ | 124,231     |  | $ | 254,908     |   | $ | 2,710,089            |  
|Less: Proceeds from sale of exploration ore                          |   | ($367,521   | ) |   | 0           |  |   | 0           |   |   | ($697,536            | )
|Activity during
      the period                                     | $ | 2,803,375   |   | $ | 2,682,229   |  | $ | 787,166     |   | $ | 22,360,314           |  
|Closing balance                                                      | $ | 22,360,314  |   | $ | 19,556,939  |  | $ | 16,874,710  |   | $ | 22,360,314           |  

Project Expenditures

During the year ended January 31, 2013, expenditures on the
Piñon Project were $104,696 with cumulative expenditures to January 31, 2013 of
$2,300,596. These costs were incurred in connection with various activities
performed by the Company on a discretionary basis. A table of detailed
expenditures follows:

7

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|                                             |   |             |  |   |             |  |   |             |   |   | Cumulative from date |  
|-------------------------------------------- | - | ----------- |  | - | ----------- |  | - | ----------- | - | - | -------------------- | -
|                                             |   | January 31, |  |   | January 31, |  |   | January 31, |   |   | of inception of      |  
|For the years
      ending                   |   | 2013        |  |   | 2012        |  |   | 2011        |   |   | exploration phase    |  
|Piñon Project                                |   |             |  |   |             |  |   |             |   |   |                      |  
|Opening balance                              | $ | 2,195,900   |  | $ | 2,088,512   |  | $ | 2,001,517   |   | $ | 0                    |  
|Property acquisition costs                   | $ | 46,158      |  | $ | 79,571      |  | $ | 102,706     |   | $ | 838,652              |  
|Claim staking and maintenance fees           | $ | 26,200      |  | $ | 26,200      |  |   | 0           |   | $ | 52,400               |  
|Travel                                       |   | 0           |  |   | 0           |  |   | 0           |   | $ | 78,326               |  
|Drilling                                     |   | 0           |  |   | 0           |  |   | 0           |   | $ | 130,600              |  
|General exploration                          |   | 0           |  |   | 0           |  |   | 0           |   | $ | 7,765                |  
|Professional fees                            |   | 0           |  |   | 0           |  |   | 0           |   | $ | 85,941               |  
|Office and general                           | $ | 11,479      |  |   | 0           |  |   | 0           |   | $ | 109,599              |  
|Geologist                                    |   | 0           |  |   | 0           |  |   | 0           |   | $ | 32,653               |  
|Consulting, wages and
      salaries         | $ | 20,859      |  | $ | 1,617       |  |   | ($15,711    | ) | $ | 666,100              |  
|Reclamation costs                            |   | 0           |  |   | 0           |  |   | 0           |   | $ | 167,785              |  
|Analysis and assays                          |   | 0           |  |   | 0           |  |   | 0           |   | $ | 74,042               |  
|Supplies,
      equipment and transportation |   | 0           |  |   | 0           |  |   | 0           |   | $ | 56,733               |  
|Activity during the period                   | $ | 104,696     |  | $ | 107,388     |  | $ | 86,995      |   | $ | 2,300,596            |  
|Closing
      balance                        | $ | 2,300,596   |  | $ | 2,195,900   |  | $ | 2,088,512   |   | $ | 2,300,596            |  
|                                             |   |             |  |   |             |  |   |             |   |   |                      |  
|Railroad Project                             |   |             |  |   |             |  |   |             |   |   |                      |  
|Opening balance                              | $ | 0           |  | $ | 0           |  | $ | 0           |   | $ | 0                    |  
|Property acquisition costs                   |   | 0           |  |   | 0           |  |   | 0           |   | $ | 465,993              |  
|Professional fees                            |   | 0           |  |   | 0           |  |   | 0           |   | $ | 123,580              |  
|Consulting, wages and salaries               |   | 0           |  |   | 0           |  |   | 0           |   | $ | 27,727               |  
|Sale of property                             |   | 0           |  |   | 0           |  |   | 0           |   |   | ($617,300            | )
|Activity during
      the period             |   | 0           |  |   | 0           |  |   | 0           |   | $ | 0                    |  
|Closing balance                              | $ | 0           |  | $ | 0           |  | $ | 0           |   | $ | 0                    |  

B.Business overview.

Royal Standard is a mineral exploration company primarily
engaged in locating, acquiring, exploring and developing gold and precious metal
deposits in the State of Nevada. 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. The Company currently owns two projects in two separate gold-silver
districts in Nevada, namely the Fondaway Canyon and Dixie-Comstock Projects in
Churchill County.

At the present time, the Company's activities include
exploratory searches for gold ore in Nevada and coal in Kentucky. The Company
continues evaluating the potential for economic extraction of known deposits of
ore grade material on the Company's mineral exploration properties. The Company
has not generated any revenues from operations at this time. See Item 3.D. Risk
Factors.

The Companys activities in the State of Nevada are regulated
by U.S. Department of Labor, Division of Mine Safety and Health Administration
(MSHA). MSHA is responsible for ensuring that all miners on the worksite
operate in a safe environment according to all training, safety and health
standards they set forth. The Nevada Division of Water Resources (NDWR), has
the responsibility of granting permission to mining companies the right to
appropriate water for mining, milling and domestic use. The Nevada Division of
Environmental Protection (NDEP) has the responsibility of granting and
regulating permits required for mining and other similar activities in the
state.

8

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The Companys activities in the State of Kentucky are subject
to regulation and permitting by the Kentucky Division of Mine Reclamation and
Enforcement and the Kentucky Division of Mine Permits, both divisions of the
Kentucky Energy and Environment Cabinet.

C.Organizational structure.

The Company has 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.

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. The
Companys wholly-owned subsidiary Manhattan Mining Co. is also located at this
office and the Companys wholly-owned subsidiary Kentucky Standard Energy
Company, Inc. has an office at 11945 North Big Creek Road, Hadfield, Kentucky,
41514.

9

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Fondaway Canyon and Dixie-Comstock
Projects

The 100% controlled Fondaway Canyon gold project is located in
Churchill County, Nevada in the Stillwater range. The Fondaway Canyon property
is accessible from Fallon east along U.S. Highway 50, then north on Hwy 116 to
the settlement of Stillwater, then north on an improved gravel road for 30 miles
along the front range of the Stillwater Mountains to Fondaway Canyon. The
elevation of the property ranges from 5000 to 6000 feet. Access east into
Fondaway Canyon is steep but adequate with existing mine roads. The Fondaway Canyon deposit is located on the west
flank of the Stillwater Range in Sections 1 and 2, T22N, R33E, and Sections 5
and 6, T22N, R34E.

10

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The Fondaway Canyon property consists of 148 contiguous
unpatented lode-mining claims (approximately 3000 acres) on Bureau of Land
Management (BLM) land held under a lease agreement assigned from Nevada
Contact Inc. (NCI) to the Company. Eighteen claims were staked by NCI,
quitclaimed to the owner, and included in the assignment to the Company. The
lease terms include a 3% net smelter return royalty (NSR) to the owner Richard
Fisk and advanced royalty payments of $25,000 per year commencing in 2003. The
annual payments graduated to $35,000 in 2006 and years following. Details of the
option agreement are as follows:

Required Cash Paymentsto
      Optionors
    
    Royalty
    
    Exercise of OptionCommencing in fiscal 2003. $25,000 in year one, $30,000
      in years two and three and $35,000 in each of the next twenty-two years
      apply to the purchase price
    
    3% NSR
    
    By July 10, 2027
      $600,000


All of the claim staking and maintenance filing fees are
current and in good standing.

Nearly-vertical, east-west trending mineralized shear zones
host the Half Moon, Paperweight, Hamburger Hill and South Pit gold resources
that are hosted within a Mesozoic sedimentary package. The Mesozoic sedimentary
package has been intruded by a Mesozoic-Tertiary aged intrusive. The vertical
extent tested by historic drilling of the higher grade gold mineralized shear
zones is greater than 1,000 feet. Horizontal continuation of gold mineralization
at the Paperweight and Hamburger Hill mineralized shear zone is 3,700 feet with
widths commonly 5'-20+ feet. Records indicate that 568 holes have been drilled
for a total estimated footage of 200,000 feet of RC drilling and 22,000 feet of
core drilling: 455 reverse circulation, 49 core and 64 air track holes over a
strike length of approximately 12,000 feet. Tenneco Minerals Inc., the most
active company, drilled approximately 350 holes (130,000 feet) and drove a 500'
adit for sulfide metallurgical sampling during the period 1987-1996. Tenneco
also operated a small oxide gold open pit mine for a short time during this
period. NCI acquired the property in 2001 and drilled 11 reverse circulation
holes. The Company acquired the property from NCI in early 2003 as part of a
property swap with NCI retaining a 1% NSR overriding royalty in the Fondaway
Canyon property and $25,000 advance minimum royalty payments to the claim holder
until 2006 at which time the payments increase to $35,000 per year that includes
a 3% NSR royalty until buyout. There is a buyout option of $600,000 for the
owners' interest.

11

---

Estimates of prior expenditures on this property are
approximately $5-6 million. The largest portion of these expenditures was
contributed by Tenneco Minerals and Tundra Mines LTD. This work included
extensive drilling, development of a small open pit production project and an
advanced exploration adit on the property.

The Dixie-Comstock property consists of unpatented mining
claims located in Churchill, Nevada.

Project Expenditures

During the year ended January 31, 2013, expenditures on the
Fondaway Canyon and Dixie-Comstock Projects were $67,817, with cumulative
expenditures to January 31, 2013 of $533,447. 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                        |   | 2013        |  |   | 2012        |  |   | 2011        |  |   | exploration phase    | 
|Fondaway Canyon and
      Dixie-Comstock Projects | $ | 465,630     |  | $ | 397,813     |  | $ | 339,776     |  | $ | 0                    | 
|Opening balance                                   |   |             |  |   |             |  |   |             |  |   |                      | 
|Property acquisition costs                        | $ | 35,000      |  | $ | 35,000      |  | $ | 35,000      |  | $ | 425,500              | 
|                                                  |   |             |  |   |             |  |   |             |  |   |                      | 
|Claim stacking and maintenance
      fees         | $ | 32,817      |  | $ | 32,817      |  | $ | 23,037      |  | $ | 88,671               | 
|                                                  |   |             |  |   |             |  |   |             |  |   |                      | 
|Travel                                            |   | 0           |  |   | 0           |  |   | 0           |  | $ | 15,646               | 
|Drilling                                          |   | 0           |  |   | 0           |  |   | 0           |  | $ | 351                  | 
|                                                  |   |             |  |   |             |  |   |             |  |   |                      | 
|Analysis and
      assays                         |   | 0           |  |   | 0           |  |   | 0           |  | $ | 3,279                | 
|Activity during the period                        | $ | 67,817      |  | $ | 67,817      |  | $ | 58,037      |  | $ | 533,447              | 
|Closing
      balance                             | $ | 533,447     |  | $ | 465,630     |  | $ | 397,813     |  | $ | 533,447              | 

12

---

Future Programs

The Company does not anticipate performing exploration
activities until additional funding is obtained. The Company will continue to
maintain its 2013 lease payment obligations and claim staking and maintenance
fees in good standing.

The property is without known reserves and any proposed program
would be exploratory in nature. See Item 3.D. Risk Factors.

Kentucky Project

In an effort to achieve diversity within its natural resource
portfolio on November 19, 2008, the Company and Sharpe Resources Corporation
(Sharpe) entered into an option agreement whereby the Company agreed to an
option to acquire a 50% interest in coal properties in Kentucky by advancing to
the project $2 million prior to December 9, 2009. With the option having been exercised
by the Company, a 50/50 Joint Venture agreement was to be entered into between the
Company and Sharpe and all expenditures incurred and revenues earned
from the coal projects would be shared 50% by the Company and 50% by Sharpe.

Under the terms of the option agreement a 100% interest in a
surface mine coal project in Wolfe County, Kentucky was acquired. The
transaction costs included $250,000 to acquire the project and $178,700 for a
reclamation bond to cover the state of Kentucky reclamation requirements for
this property. The property consists of approximately 1,000 acres of coal
mineral rights under lease and includes an approved Kentucky Mining Permit, I.D.
No. 919-0066.

On September 11, 2009 this option agreement was amended to
allow the Company to acquire its 50% interest in the properties by advancing to
the project $2 million by December 9, 2011. As consideration for this amendment
the Company cancelled the promissory note receivable from Sharpe held by the
Company and received a new note from Sharpe in the amount of $120,409 on
September 9, 2009 repayable in three equal installments on September 9, 2011,
2012, and 2013. During 2011, the Company wrote off the promissory note
receivable.

On December 7, 2011, the Company exercised its option. Pursuant
to the terms of the 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 has not responded. The
Company is currently reviewing its options for the Kentucky Project.

The Kentucky Project is approximately 5 miles southeast of the
Town of Campton adjacent to paved highway 15 and is situated in Wolfe County at
an elevation of 900 feet. The topography is gently rising to rolling and
moderately steep terrain that reflects a dendritic drainage pattern of valleys
and ridges that occur at the head of these drainages. The ridge elevations
within the project area are on the order of 900-1,250 above sea level with the
valley floors in the 900-1000 feet above sea level. The area is covered with a
hard wood forest that is well supplied with regular rainfall and ample
vegetation. Electrical power was installed from a nearby power line crossing the
property from the Licking River Electric Cooperative. The nearest large city is
Lexington, Kentucky located approximately 70 miles northwest of the project
area.

13

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Within Wolfe County, the Company holds mining interests on
seven properties, containing six coal seams capable of production, namely, in
order from the bottom sequence to the top: 1) Vires, 2) Grassy, 3) Cannel City,
4) Whitesburg, 5) Fire Clay and 6) Fire Clay Rider, hereinafter known as the
Seams. The Seams range in thickness from 12 inches up to nearly 30 inches within
the leasehold boundary. These are all surface-minable seams. The Campton mine is
made up of seven (7) separately owned land parcels having coal mining rights by
any mining methods, aggregating 974 acres. Of the 974 acres, 272.19 acres are
permitted for surface mining.

Original Owner or Lessor
    Area (Acres)
    Mining Types
    Kentucky Seams
    Royalty RateDavid Rudd
    280 +/-
    C/Area
    All Seams
    6% F.O.B. PitKevin and Tara Patton
    85 +/-
    C/Area
    All Seams
    6% F.O.B. PitEarl Patton
    150 +/-
    C/Area
    All Seams
    6% F.O.B. PitWilliam and Maggie Hutton
    90 +/-
    C/Area
    All Seams
    6% F.O.B. PitElizabeth and Taylor Caldwell
    109 +/-
    C/Area
    All Seams
    6% F.O.B. PitPauline Caldwell
    110 +/-
    C/Area
    All Seams
    6% F.O.B. PitWick & Phyllis Clemons
    150 +/-
    C/Area
    All Seams
    6% F.O.B. Pit


C/Area = Contour and Auger/Area or
Mountain-top Removal; F.O.B. = Freight on Board sales prices, with
deductions for freight and sales commissions

The Company has recorded an asset retirement obligation in the
amount of $104,873 on its Kentucky Project, representing the estimated costs of
the Company's obligation to restore the property site to its original condition
as required by the State of Kentucky regulatory authorities.

Project Expenditures

During the year ended January 31, 2013, expenditures on the
Kentucky Project were $161,317 with cumulative expenditures to January 31, 2012
of $1,741,795, which together with expenditures which indirectly were made for
the benefit of the Kentucky Project totals in excess of $2 million. These costs
were incurred in connection with various activities performed by the Company on
a discretionary basis. Included in the expenditures for the year ended January
31, 2013 were penalties totaling $145,000 issued by the Kentucky Energy and
Environment Cabinet, Division of Mine Enforcement and Reclamation (DMER) who
is seeking forfeiture of the Companys reclamation bond. The Company continues
to review all its options. A detailed table of expenditures follows:

14

---

|                                       |   |             |  |   |             |  |   |             |   |   | Cumulative from   | 
|-------------------------------------- | - | ----------- |  | - | ----------- |  | - | ----------- | - | - | ----------------- | 
|                                       |   |             |  |   |             |  |   |             |   |   | date of inception | 
|                                       |   | January 31, |  |   | January 31, |  |   | January 31, |   |   | of exploration    | 
|For the years
      ending             |   | 2013        |  |   | 2012        |  |   | 2011        |   |   | phase             | 
|Kentucky Project                       |   |             |  |   |             |  |   |             |   |   |                   | 
|Opening balance                        | $ | 1,580,478   |  | $ | 1,483,556   |  | $ | 1,370,849   |   | $ | 0                 | 
|Property acquisition costs             |   | 0           |  |   | 0           |  |   | ($300       | ) | $ | 418,000           | 
|Travel                                 |   | 0           |  | $ | 12,764      |  | $ | 62          |   | $ | 38,815            | 
|Reclamation costs                      |   | 0           |  |   | 0           |  | $ | 444         |   | $ | 22,646            | 
|Professional fees                      |   | 0           |  | $ | 2,400       |  | $ | 17,786      |   | $ | 98,539            | 
|Consulting, wages and
      salaries   |   | 0           |  | $ | 46,300      |  | $ | 49,150      |   | $ | 302,972           | 
|Office and general                     | $ | 7,521       |  | $ | 12,794      |  | $ | 15,223      |   | $ | 132,018           | 
|Penalty                                | $ | 145,000     |  |   | 0           |  |   | 0           |   | $ | 145,000           | 
|Supplies, equipment and transportation |   | 0           |  | $ | 10,552      |  | $ | 13,646      |   | $ | 424,511           | 
|Rent                                   |   | 0           |  |   | 0           |  |   | 0           |   | $ | 94,010            | 
|Amortization                           |   | 0           |  |   | 0           |  |   | 0           |   | $ | 0                 | 
|Depreciation                           | $ | 8,796       |  | $ | 12,112      |  | $ | 16,696      |   | $ | 65,284            | 
|Activity during
      the period       | $ | 161,317     |  | $ | 96,922      |  | $ | 112,707     |   | $ | 1,741,795         | 
|Closing balance                        | $ | 1,741,795   |  | $ | 1,580,478   |  | $ | 1,483,556   |   | $ | 1,741,795         | 

Future Programs

The Company is currently reviewing its options regarding the
Kentucky Project.

Item 4A. Unresolved Staff Comments

Not applicable.

Item 5.Operating and Financial Review and Prospects

A.Operating results.

Royal Standard is an exploration and pre-development stage
enterprise and is in the process of exploring its resource properties and has
not determined whether the properties contain economically recoverable reserves.

The Companys financial success will be dependent on the
economic viability of its remaining mineral exploration properties to the extent
that it can establish reserves and its ability to secure ongoing financing
and/or the ability to dispose of one or more of its remaining interests on an
advantageous basis.

15

---

As Royal Standard is an exploration and pre-development stage
enterprise, it currently has no producing properties and no operating income or
cash flow, other than interest earned on funds invested in short-term deposits.
(See Item 3.D. - Risk Factors.)

Year Ended January 31, 2013 Compared to the Year Ended
January 31, 2012

The Companys net income for the year ended January 31, 2013
was $5,291,142 ($0.06 income per share) and for the year ended January 31, 2012
a net loss of $6,451,698 ($0.08 loss per share), an increase of $11,742,840. The
increase is the result of the one-time gain of $14,171,405 on the Transaction
with Scorpio and the gain on the sale of the royalty of $866,505, offset
substantially, by the increased finance cost of $3,597,760, on the Gold Stream
Facility (as defined herein) provided by Waterton. The funds made available by
the Gold Stream Facility allowed the Company to carry out its mine development
and mill construction activities. In addition, general and administrative
expenditures were reduced by $564,883, primarily due to lower professional fees
and corporate development costs.

As a result of the slowdown at the end of August 2012, the
Goldwedge mine was operating on a maintenance and upkeep basis after such date.
During the period of the slowdown and to the present, management negotiated with
major suppliers in an effort to settle outstanding obligations. These
negotiations resulted in savings of approximately $344,000 in amounts previously
expensed. In addition, similar negotiations with the two contractors hired to
carry out the completion of the mill, resulted in savings of approximately
$686,000 of amounts previously outstanding and were accounted for as a reduction
of the construction costs of the mill.

Year Ended January 31, 2012 Compared to the Year Ended
January 31, 2011

The Companys net loss totaled $6,451,698 for the year ended
January 31, 2012, with basic and diluted losses per share of $0.08. This
compares with net loss of $1,632,845 with basic and diluted losses per share of
$0.02 for the year ended January 31, 2011. The increase of $4,818,853 in net
loss was principally due to increased exploration activities at the Goldwedge
property, professional legal fees for various activities and claims during the
year and the fair value of the stock options granted during the year ended
January 31, 2012.

B.Liquidity and capital resources.

The principal activity of the Company is the acquisition of
gold and precious metal properties, financed through the completion of equity or
debt financing, the exercise of stock options or the sale of exploration
properties or marketable securities owned by the Company. During the year ended
January 31, 2013, the cash resources of the Company were reduced by $427,988.
The decrease in cash resources is a result of cash used in operating and
investing activities. This is offset by the Gold Stream Facility provided by
Waterton and the cash received on the sale of property interests and related
assets to Scorpio and the sale of the royalty on the Piñon Railroad Property to
XDM. There is no assurance that future sales and 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, 2013 Compared to the Year Ended
January 31, 2012

As at January 31, 2013, the Company had $201,565 in cash (2012-
$629,553). The Company had a working capital deficiency of $252,103 as of
January 31, 2013, compared to a working capital deficiency of $5,184,281 as of
January 31, 2012. Working capital has increased for the current period presented
as a result of the one-time gain on the sale of the Goldwedge and Piñon Project
properties and related assets to Scorpio in the amount of $14,171,405 and the
sale of the royalty on the Piñon Railroad Property to XDM in the amount of $866,505. The one-time gain included the
assumption of the Gold Stream Facility by Scorpio. Prior to the assumption of
the Gold Stream Facility by Scorpio, the Company was able to secure financing
with Waterton, finalizing an $8,000,000 Gold Stream Facility during the prior
years third quarter and a further $4,000,000 in two loan extensions, $2,000,000
on May 8, 2012 and $2,000,000 on June 27, 2012, bringing the total on the
facility to $12,000,000. The Gold Stream Facility had allowed the Company to
focus primarily on its Goldwedge Project and its primary objective of completing
the processing plant (mill). As at January 31, 2013, the Company had current
liabilities of $3,195,672 compared to $6,120,109 as at January 31, 2012. Current
liabilities have decreased primarily due to the assumption of the Gold Stream
Facility by Scorpio. Included in current liabilities as at January 31, 2013 were
other advances provided by Waterton, in the amount of $600,000. These advances
were non-interest bearing and were paid in full, subsequent to the year end. The
Company's cash and marketable securities as at January 31, 2013 were not
sufficient to pay these liabilities. The market value of the Companys
investment in Sharpe a Canadian publicly held company, as at January 31, 2013,
was $30,000. The Company believes that the certificate representing the Sharpe
shares was in the possession of former management of the Company. Current
management of the Company has been unable to locate the certificate and the
Company is currently attempting to have Sharpe and/or its transfer agent issue a
replacement certificate. If a replacement certificate is not obtained in due
course, management may consider taking other action to obtain a replacement
certificate including initiating a legal claim. With a replacement certificate,
the Company would be in a position to sell the shares to raise funds to settle
outstanding obligations.

16

---

On June 29, 2011, the Company's wholly owned subsidiary,
Manhattan, entered into a secured bridge loan agreement (the Bridge Loan) with
Waterton pursuant to which Waterton agreed to provide an $8,000,000 bridge loan
(the Credit Facility) available to Manhattan. Of the total $8,000,000 Bridge
Loan, $4,000,000 was available on closing and the remaining $4,000,000 after the
satisfaction of certain covenants. Under the Bridge Loan, the amounts drawn down
earned interest at 6% per annum, and the scheduled repayment date of the Credit
Facility was 16 months after the initial closing date. In connection with the
Credit Facility, Manhattan agreed to pay Waterton a structuring fee, and also
provided Waterton with certain royalty interests relating to its Goldwedge
Property. Manhattan and Waterton had also entered into a gold purchase agreement
pursuant to which Waterton had agreed to purchase Manhattans production. The
Credit Facility was secured by, among other items, the Companys real property
assets in Nevada.

On August 26, 2011, Manhattan amended its existing Bridge Loan
with Waterton such that the Bridge Loan was transitioned into a more permanent
senior secured gold stream debt facility, the Gold Stream Facility, among the
parties. Under the Gold Stream Facility, Waterton made $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. 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 per 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 the Profit Participation as an embedded
derivative. Prior to the sale to Scorpio, the gross proceeds received under the
Gold Stream Facility were $11,432,734, which 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 previously noted, 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 31, 2012.

17

---

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 had agreed that Waterton had
the right to purchase all of the gold produced by Manhattan from its Nevada
projects at a price per ounce that was 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 any Principal
Amounts actually drawn by Manhattan under 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 had been repaid in full or otherwise
satisfied in accordance with the terms of such facility, certain standard
restrictive covenants applied 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
facilitated 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 five business days prior
notice. Prepayments were 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.

As previously noted, 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.

As of January 31, 2013, the Company had met its capital
commitment obligations to keep all of its property agreements in good
standing.

For a discussion of the Companys material commitments for
capital expenditures, see Item 5.F. -Tabular disclosure of contractual
obligations.

Year Ended January 31, 2012 Compared to the Year Ended
January 31, 2011

As at January 31, 2012, the Company had $629,553 in cash and
cash equivalents (January 31, 2011: $102,038). The Company had a working capital
deficiency of $5,184,281 as of January 31, 2012, compared to a working capital
deficiency of $720,373 as of January 31, 2011. Working capital has decreased for
such period as a result of funds spent on gold and coal projects and maintaining
the Company's reporting issuer status and operating activities
offset by the sale of the marketable securities in the amount of $275,695.

18

---

Current liabilities as at January 31, 2012 were of $6,120,109
compared to $935,688 as at January 31, 2011, primarily due to the obligations
under the Gold Stream Facility. The Company's cash and cash equivalents and
short-term investments as at January 31, 2012 were not sufficient to pay these
liabilities.

See Item 4.D  Property, plants and equipment and Item 5.A.
 Operating results.

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

Not applicable

D.Trend information.

The mineral exploration business continues to undergo massive
scaling down. Capital investment in mineral exploration has dramatically
declined with major new projects being cancelled and delayed, and producing
properties are subject to shut downs and reduced production. Credit markets have
become increasingly inaccessible and many exploration companies that previously
had large cash resources to invest in exploration activities are now struggling
to finance day-to-day operations.

There are uncertainties regarding the price of commodities and
the availability of equity and debt financing for the purpose of mineral
exploration and development. The financial markets have made it difficult to
raise new capital.

Current financial markets are likely to be volatile in Canada
and the United States for the remainder of 2013 and potentially into 2014,
reflecting ongoing concerns about the stability of the global economy and
weakening global growth prospects. As well, concern about global growth has led
to sustained drops in the commodity markets. Unprecedented uncertainty in the
credit markets has also led to increased difficulties in borrowing or raising
funds. As a result, the Company may have difficulties raising equity or debt
financing for the purposes of project development. See Item 3.D.  Risk
Factors and Item 5.A. Operating results.

E.Off-balance sheet arrangements.

None.

F.Tabular disclosures of contractual
obligations.

The Company has the following outstanding contractual
obligations as at January 31, 2013:

19

---

Less Than
    
    
    
    
    
    
    
    
    More than 5Contractual
      Obligations
    
    Total
    
    
    1
      Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    YearsFondaway CanyonProject-Lease
    $
    525,000
    
    $
    35,000
    
    $
    105,000
    
    $
    105,000
    
    $
    280,000


Goldwedge and Piñon Projects

As a result of the sale of the Goldwedge and Piñon property
interests and related assets to Scorpio, the Company no longer has any claim
renewal, maintenance fees and/or other obligations on these property interests.

Fondaway Canyon and Dixie-Comstock
Projects

In order to maintain the lease agreement on the Fondaway Canyon
Project, the Company must make annual option payments of $35,000 and must pay
claim renewal and maintenance fees to the BLM of approximately $23,000. For the
Dixie-Comstock Project, the company must make annual claim renewal and
maintenance fees of approximately $10,000.

Management believes that the Company's cash and cash
equivalents and marketable securities are not sufficient to meet its
expenditures for the next five years as the Company had a working capital
deficiency balance of $252,103 as of January 31, 2013. As a result, the
Companys financial success will be dependent on the economic viability of its
remaining mineral exploration properties to the extent that it can establish
reserves and its ability to secure ongoing financing and/or the ability to
dispose of one or more of its remaining interests on an advantageous basis.
There is no guarantee that the five year time horizon that management has
presented will be realized. See Item 3.D.  Risk Factors.

G.Safe harbor.

Not applicable.

20

---

Item 6.Directors, Senior Management and Employees

A.Directors and senior management.

Name and Residence
    Position with the Company
    Date First Elected a Director/
      Held OfficeJames B. Clancy(1)(2)(3)Toronto,
      Ontario, Canada
    Director
    March 2009John Fitzgerald(1) (2)(3)(4)Oakville,
      Ontario, Canada
    Director
    January 2012Riyaz Lalani(2) (3)(5)Toronto, Ontario,
      Canada
    Director
    January 2012Ken M. Strobbe(3)(6)Arizona, U.S.A.
    Director
    January 2012Paul G. Smith(1) (2) (3)Toronto, Ontario,
      Canada
    Chairman and Director
    March 2009Philip Gross(1) (7)London, U.K.
    Interim President and Chief Executive Officer
      and Director
    October 2011Ike Makrimichalos Newmarket, Ontario, Canada
    Chief Financial Officer
    August 2011George A. Duguay Toronto, Ontario, Canada
    Secretary
  March 2009


|Notes:
|------
|(1)   
|(2)   
|(3)   
|(4)   
|(5)   
|(6)   
|(7)   

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

James B. Clancy

Mr. Clancy has been Senior Advisor of SableRidge Capital
Partners Inc. since March 2011 and President of Clancy Consultants Inc. since
October 2009. Prior thereto, Mr. Clancy was Director-Finance for Techint E.
& C. Canada, a federally incorporated private company, from March 2006 to
October 2009. Mr. Clancy has been involved as General Manager and/or Chief
Financial Officer in the pipeline construction industry in Canada and overseas
for over thirty years. He has an Honours Commerce degree from the University of
Toronto and is a member of the Canadian Institute of Chartered Accountants. Mr.
Clancy presently sits on the board, and is Chairman, of the
Audit Committee of Galantas Gold Corporation (a federal company listed on the
TSX-V).

21

---

John Fitzgerald

Mr. Fitzgerald has over 20-years experience in the mining
industry. Mr. Fitzgerald is Director of Mining at AuRico Gold Inc. (formerly,
Northgate Minerals Corporation), an Ontario company. Prior thereto, Mr.
Fitzgerald was: Associate Director at Scotia Capital Inc. company from 2010 to
2011; an independent consultant in Toronto and Brisbane, Australia from 2008 to
2010; Principal Adviser  Underground Mining with Rio Tinto Ltd., an Australian
company in Brisbane from 2007 to 2008; and Manager, Engineering, at Barrick Gold
Corporation, an Ontario company from 2004 to 2007; as well as engineer with
various other mining companies from 1990. Mr. Fitzgerald holds a B. Eng. degree
from Nottingham University and an MBA from Durham University, England.

Riyaz Lalani

Mr. Lalani is the Chief Operating Officer of Kingsdale
Shareholder Services Inc., Canadas largest and most active proxy solicitation
and shareholder services advisory firm. He has been involved in, and led the
client services teams tasked with, completing dozens of high profile client
engagements, including hostile bids, complex M&A transactions and proxy
contests. Mr. Lalani is frequently called upon to brief public issuers and their
directors on shareholder engagement and corporate governance practices. Prior to
joining Kingsdale, Mr. Lalani was employed by Acqua Capital Management LP
(international asset management company) in New York and Toronto from 2003 to
February 2010. Mr. Lalani worked in a variety of analytical, business
development and operational roles at the firm, eventually heading up the overall
research and operational efforts. Teamed with the Chief Investment Officer, he
helped originate, negotiate and structure billions of dollars of direct and
secondary market equity investments into small, mid and large cap public
companies in North America, Asia, Europe and the Middle East. Mr. Lalanis prior
experience includes roles with two Canadian bank-owned investment dealers. He is
also a director of Difference Capital Funding Inc. (formerly TriNorth Capital
Inc.) (a federal company listed on the TSX-V) and was previously a director of
URSA Major Minerals Incorporated (an Ontario company listed on the TSX).

Ken M. Strobbe

Mr. Strobbe has been a consultant since August 2011. He was
employed at Barrick Gold Corporation, an Ontario company, as a Manager,
Underground Projects, Capital Projects Group (January 2009 to August 2011) and
Senior Engineer Operations, Corporate Group (May 2006 to January 2008). From
2004 until 2006, Mr. Strobbe was a Production Planning Team Member, Integrated
Business Systems at Placer Dome Inc. (now Barrick Gold Corporation). From 2001
until 2004, he was an Underground Supervisor and Production Planner at Placer
Dome Canadas Musselwhite Mine in Northern Ontario. Prior thereto, he held the
position of Mine Engineer at the Lupin Mine (Echo Bay Mines Ltd., a mining
company) and was a Senior Mine Engineer, Planning Engineer and Ventilation
Engineer at the Giant Mine (Royal Oak Mines Ltd., a mining company). Mr. Strobbe
has extensive experience in the areas of mine design, underground development
and production planning and execution, and evaluating underground mining
projects, including participation in scoping, pre-feasibility and feasibility
studies. Mr. Strobbe holds a Bachelor of Applied Science (BASc.) in Mining
Engineering from the University of British Columbia.

Paul G. Smith

Mr. Smith has been President, Chief Executive Officer since
January 2009, Executive Vice President and Chief Financial Officer from December
2004 to December 2008 and a director of Equity Financial Holdings Inc. (listed on the TSX as (Equity), a financial
services firm, whose principal subsidiary is Equity Financial Trust Company.
Prior to Equity, Mr. Smith held management positions at BCE Inc., a federal
company; served as Executive Assistant to the Prime Minister of Canada; and was
an aide to the Minister of External Affairs and to the Minister of International
Cooperation. He holds an MBA from INSEAD, an MPA from Carleton University, and
undergraduate degrees (Accounting, Political Science) from the University of
Ottawa. He is a graduate of the Directors Education Program of the Institute of
Corporate Directors and holds the institutes ICD.D designation. He is also a member of
the board of directors of StorageVault Canada Inc., (a Canadian public company
listed on the TSX-V).

22

---

Philip Gross

Mr. Gross possesses many years of experience in the commodities
industry and has worked extensively in both the physical and financial aspects
of the industry. Mr. Gross has previously worked for one of the largest global
commodities supply chain management firms, where he was the Head of Non-Ferrous
Metals. Mr. Gross managed the firms non-ferrous metals team from incubation to
successful maturity and, ultimately, oversaw the firms relevant commercial
operations in India, South Korea, Taiwan, Singapore, Venezuela, Brazil and
Australia. Over the course of his career, Mr. Gross has assisted firms of
various sizes in developing and sustaining their commodities portfolio
management businesses.

Ike Makrimichalos

Mr. Makrimichalos is a Chartered Accountant with a BA from the
University of Toronto, with over 27 years of experience in servicing public and
private companies for Deloitte & Touche LLP in Toronto. In addition, Mr.
Makrimichalos also provides services as a CFO and consultant for several private
companies and was recently a Controller for Mukuba Resources Limited, a junior
mining exploration company.

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 is a
Certified General Accountant (C.G.A.) and a Fellow of the Institute of Chartered
Secretaries.

B.Compensation.

Compensation Discussion and Analysis

Background

The Company is an exploration stage company and as at January
31, 2013, was engaged in the acquisition, exploration and development of
precious metal and coal properties in the United States. The Company has no commercial operations and does not earn any
operating revenues from its mineral properties.

23

---

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 Company has
delegated these responsibilities to the Corporate Governance and Compensation
Committee (the CGC Committee). The CGC Committee annually reviews, and
recommends to the Board, the base salary, incentive compensation and long-term
compensation for the Companys executive officers to determine if the
compensation package for executive officers continues to be appropriate or if
any modifications are required. Factors considered by the CGC Committee in
establishing suitable compensation packages for its executive officers include,
the early stage of development of the Company, 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
CGC Committee has determined that the current compensation is appropriate for
the risk and responsibilities assumed by the officers.

Corporate Governance and Compensation
Committee

The CGC Committee consisted of Messrs. Lalani, Smith,
Fitzgerald and Clancy, all of whom are independent directors and have direct and
indirect expertise, experience and education relevant to their role as members
of the Committee.

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 CGC
Committee to endeavor to ensure that the compensation of executive officers is
sufficiently competitive to achieve the objectives of the executive compensation
program. The CGC Committee 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 CGC Committee 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.

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 CGC Committee 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 CGC Committee 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 CGC Committee does not believe that its compensation practices
and policies are reasonably likely to have a material adverse effect on the
Company.

24

---

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, on the
recommendation of the CGC Committee 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 CGC Committee administers the Stock Option Plan that is
designed to provide a long-term incentive that is linked to shareholder value.
The Board, on the recommendation of the CGC Committee, 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 CGC Committee
regularly reviews and where appropriate adjusts the number of options granted to
individuals and determines the vesting provisions of such options. The Board, on
the recommendation of the CGC Committee, 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, 2013.

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.

25

---

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.

Name and
      Principal Position
    Fiscal
      Year Ended January 31
    Salary
      ($)
    Share-based awards
      ($)
    Option-based awards
      ($)
    Non-equity
      incentive plan compensation ($)
    Pension
      Value ($)
    All other
      compensation ($)
    Total
      compensation ($)Annual
      incentive plans ($)
    Long-term
      incentive plans ($)Philip Gross, Interim
      President & Chief Executive Officer(1)
    2013
    180,000
    Nil
    Nil
    Nil
    Nil
    N/A
    75,000
    255,0002012
    27,620
    Nil
    142,000(6)
    Nil
    Nil
    N/A
    Nil
    169,620Ike Makrimichalos
      Chief Financial Officer(2)
    2013
    122,088
    Nil
    Nil
    Nil
    Nil
    N/A
    Nil
    122,0882012
    56,616
    Nil
    28,400
    Nil
    Nil
    N/A
    Nil
    85,016Roland M. Larsen,
      President & Chief Executive Officer(3)
    2013
    Nil
    Nil
    Nil
    Nil
    Nil
    N/A
    Nil
    Nil2012
    227,876
    Nil
    Nil
    Nil
    Nil
    N/A
    7,853(4)
    235,7292011
    249,995
    Nil
    Nil
    Nil
    Nil
    N/A
    10,520(4)
    260,515J. Allan Ringler, Chief
      Financial Officer(5)
    2013
    Nil
    Nil
    Nil
    Nil
    Nil
    N/A
    Nil
    Nil2012
    14,129
    Nil
    Nil
    Nil
    Nil
    N/A
    Nil
    14,1292011
    40,921
    Nil
    Nil
    Nil
    Nil
    N/A
    Nil
  40,921


26

---

|Notes:
|------
|(1)   
|(2)   
|(3)   
|(4)   
|(5)   
|(6)   

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, 2013.

Name
    Option-based
      Awards(1)
    Share-based
      AwardsNumber ofsecuritiesunderlyingunexercisedoptions(#)
    Optionexerciseprice(U.S. $)
    Optionexpirationdate
    Value ofunexercisedin-the-moneyoptions($)(1)
    Numberof Sharesor units ofSharesthat havenot vested(#)
    Market orpayoutvalue ofshare-basedawardsthat have**not vested**($)Philip Gross
    500,000
    0.30
    January 20, 2017
    Nil
    Nil
    NilIke Makrimichalos
    100,000
    0.30
    January 20, 2017
    Nil
    Nil
    NilRoland Larsen
    Nil(2)
    0.10
    June 26, 2014
    Nil
    Nil
  Nil


|Notes:
|------
|(1)   
|(2)   

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

27

---

There was no value of option-based awards granted to Named
Executive Officers which vested during the year ended January 31, 2013. 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, 2013.

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)James B. Clancy
    Cdn40,000
    Nil
    Nil
    Nil
    Nil
    Cdn10,000
    Cdn50,000John Fitzgerald(1)
    Cdn5,000
    Nil
    Nil
    Nil
    Nil
    Cdn9,900
    Cdn14,900Riyaz Lalani(1)
    Cdn5,000
    Nil
    Nil
    Nil
    Nil
    Nil
    Cdn5,000Ken M. Strobbe(1)
    Cdn9,250
    Nil
    Nil
    Nil
    Nil
    Nil
    Cdn9,250Paul G. Smith
    Cdn60,000
    Nil
    Nil
    Nil
    Nil
    Nil
  Cdn60,000


|(1) | Messrs. Lalani, Fitzgerald and Strobbe resigned July 27,
      2012, October 4, 2012 and January 2, 2013,
respectively.
|--- | -----------------------------------------------------------------------------------------------------------------------

Board Fees

During the financial year ended January 31, 2013, each of the
non-executive directors was entitled to annual compensation in the amount of
Cdn$10,000 and the payments in connection with attending meetings of the Board
and meetings of the Boards committees. The Chairman of the Audit Committee was
entitled to additional annual compensation of Cdn$5,000. In addition, James B.
Clancy received a Cdn$10,000 honorarium in connection with services provided on
the Kentucky Project and John Fitzgerald received Cdn$9,900 for services in
connection with the due diligence process on the sale to Scorpio. And, Paul G.
Smith and James B. Clancy received Cdn$50,000 and Cdn$25,000 respectively, as
special fees for their services in addition to their attendance
at the regular Board and meetings of the Boards committees.

28

---

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

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, 2013.

Option-based Awards
    Share-based
      AwardsName
      (a)
    Option grant
      date
    Number
      ofsecurities underlying
      unexercisedoptions (#)(1)(b)
    **Option**
      exerciseprice **(U.S.$)**
      (c)
    Option
      **expiration**date
      (d)
    Value
      of**unexer-** cised in-the-
      money options (U.S.$)(1)(e)
    **Number
      of**shares orunits of shares that
      have not vested (#) (f)
    **Market or**
      **payout value** of share- based
      awards that have not vested
      ($) (g)James Clancy(1)
    June 26, 2009
    200,000
    0.10
    June 26, 2014
    Nil
    Nil
    NilJanuary 20, 2012
    850,000
    0.30
    January 20, 2017
    Nil
    Nil
    NilJohn Fitzgerald(1)(2)
    January 20, 2012
    750,000
    0.30
    January 20, 2017
    Nil
    Nil
    NilRiyaz Lalani(1)(2)
    January 20, 2012
    750,000
    0.30
    January 20, 2017
    Nil
    Nil
    NilKen M. Strobbe(1)(2)
    January 20, 2012
    750,000
    0.30
    January 20, 2017
    Nil
    Nil
    NilPaul G. Smith(1)
    June 26, 2009
    200,000
    0.10
    June 26, 2014
    Nil
    Nil
    NilJanuary 20, 2012
    850,000
    0.30
    January 20, 2017
    Nil
    Nil
  Nil


|Notes
|-----
|(1)  
|(2)  

See Compensation Discussion and Analysis  Elements of the
Compensation Program and Compensation Discussion and Analysis  Option-based
Awards, above.

29

---

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.

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.

30

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- 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 are  three committees of the Board being the
    Audit Committee, the CGC Committee and the Health, Safety, Environmental and
    Technical Committee (the Technical Committee). In addition to regularly
    scheduled meetings of the Board, its members are in continuous contact with one
    another and with the members of senior management. During the slowdown in
    activity in August and the ultimate sale of the Companys Goldwedge and Piñon
    properties and related assets in December, meetings of the CGC and Technical
  Committees had ceased.

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: James
  B. Clancy (Chair), Paul G. Smith and Philip Gross.

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.

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:

31

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(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;

32

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(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;

(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

33

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(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.

Corporate Governance and Compensation
  Committee

The CGC Committee shall be composed of a minimum of three
    directors, each of whom shall be independent for the purposes of National
    Instrument 58-101 Disclosure of Corporate Governance Practices. Members
    shall be appointed annually from among the members of the Board. The Chair of
    the CGC Committee shall be appointed by the Board. All members of the CGC
    Committee shall, subject to applicable exemptions therefrom, satisfy the
    experience requirements, if any, imposed by applicable securities regulatory
    authorities. The following persons had been appointed to the CGC Committee:
  Riyaz Lalani (Chair), James B. Clancy, John Fitzgerald and Paul G. Smith.

The overall purpose of the CGC Committee is to assist the Board
    in maintaining high standards of corporate governance by developing,
    recommending and monitoring effective guidelines and procedures applicable to
    the Company and to fulfil its oversight responsibilities in relation to
    compensation by developing, monitoring and assessing the Companys approach to
    the compensation of its directors and senior management. The mandate of the CGC
    Committee includes reviewing and making recommendations to the Board, on an
    annual basis, the compensation paid to the Companys executive officers and the
    Board and overseeing the administration of the Companys compensation programs.
    The CGC Committee also recommends to the Board candidates for chief executive
    officer, the size and composition of the Board, qualification criteria for the
    selection of new directors, director nominees and nominees for the Chairman of
  the Board (and if applicable, the lead director).

Health, Safety, Environmental and Technical
  Committee

The Technical Committee shall be composed of a minimum of three
    directors, each of whom shall satisfy independence requirements of National
    Instrument 58-101 Disclosure of Corporate Governance Practices. Members shall be
    appointed annually from among the members of the Board. The Chair of the
    Technical Committee shall be appointed by the Board. All members of the CGC
    Technical Committee shall satisfy the experience requirements, if any, imposed
    by applicable securities regulatory authorities. The following persons had been
    appointed to the Technical Committee: John Fitzgerald (Chair), Riyaz Lalani, Ken
  Strobbe and Paul G. Smith.

The overall purpose of the Technical Committee is to assist the
    Board in its oversight responsibilities relating the Companys establishment of
    health, safety and environmental policies for its mining operations and to
    review their appropriateness on an ongoing basis to reflect the Companys
    commitment to the health and safety of workers at its sites; and the Companys
    commitment to environmental stewardship, public responsibility, social progress
    and economic growth. The Technical Committee also is charged with the
    responsibility for reviewing the technical aspects of the Companys exploration,  development, permitting, construction and mining programs and,
      in the Technical Committees discretion, make recommendations to the Board for
  consideration.

34

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Conflicts of Interest

Some of the directors and officers of Royal Standard also serve
    as directors and officers of other companies involved in the resource
    exploration sector. 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,
    2013, the Company had one full-time and no part-time employees, from eighteen
    full-time employees at the end of January 31, 2012. This remaining employee
    holds the position of General Manager and is stationed at the previously owned Goldwedge property in Manhattan, Nevada.

E.Share ownership.

|                  |                                                                  | Number of Common    | ***Percentage of
      Common***
|----------------- | ---------------------------------------------------------------- | ------------------- | --------------------------------
|                  |                                                                  | Shares Beneficially | Shares Beneficially             
|                  |                                                                  | Owned as of         | Owned as of April 30,           
|Name              | Office Held                                                      | April 30, 2013      | 2013                            
|James B. Clancy   | Director                                                         | Nil                 | 0%                              
|John Fitzgerald   | Director                                                         | Nil                 | 0%                              
|Riyaz Lalani      | Director                                                         | Nil                 | 0%                              
|Ken M. Strobbe    | Director                                                         | Nil                 | 0%                              
|Paul G. Smith     | Chairman and Director                                            | Nil                 | 0%                              
|Philip Gross      | Interim President and Chief Executive
      Officer and Director | Nil                 | 0%                              
|Ike Makrimichalos | Chief Financial Officer                                          | Nil                 | 0%                              

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, Sprott Asset
      Management LP exercises direction or control over 11.8% of the outstanding
      voting securities of the Company of which the Sprott Canadian Equity Fund
  beneficially owns 6.9%.

35

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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.

The Company paid salaries and benefits to directors and
    officers in the amount of $505,259 for the year ended January 31, 2013
    (2012-$471,380). 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). 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 on the Goldwedge Project.

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).

C.Interests of experts and counsel.

Not applicable.

Item 8.Financial Information

A.Consolidated Statements and Other Financial
  Information.

Financial StatementsSee Item 17. Financial Statements.Legal ProceedingsSee note 19. Contingencies in the notes to the
  above-referenced financial statements.
  In addition, during the year, the Company settled previously
    reported litigation in Nye County, Nevada, through the issuance of 100,000
    common shares of the Company and a monetary settlement of $35,000. See note 19.
    Contingencies in the notes to the Companys financial statements for the fiscal
  years ended January 31, 2013 and 2012 included in Item 17 of this Form 20-F.DividendsThe Company does not anticipate paying dividends in the
  foreseeable future.

B.Significant Changes.

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, 2013, or later periods. The following have
    not yet been adopted and are being evaluated to determine their impact on the
  Company.

36

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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, 2015. Earlier
  adoption is permitted.

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. IFRS 10 is effective for
  annual periods beginning on or after January 1, 2013.

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. IFRS 11 is effective for annual periods
  beginning on or after January 1, 2013.

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. IFRS 12 is effective for annual periods beginning on
  or after January 1, 2013.

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 IFRS. 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;

37

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- a narrative must be provided discussing the sensitivity of fair value
        measurements categorised 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.

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.

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.

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.

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TSXV (Cdn$)

Period
        High(Cdn$)
      Low(Cdn$)Fiscal year ended January 31, 2008
        0.90
      0.34Fiscal year ended January 31, 2009
        0.45
    0.04


OTC Bulletin Board (US$)

Period
        High
      LowFiscal year ended January 31, 2009
        0.46
      0.04Fiscal year ended January 31, 2010
        0.15
      0.03Fiscal year ended January 31, 2011
        0.12
      0.06Fiscal year ended January 31, 2012
        0.29
      0.06Fiscal year ended January 31, 2013
        0.29
    0.015


Period
        High
      LowQuarter ended April 30, 2011
        0.12
      0.07Quarter ended July 31, 2011
        0.14
      0.06Quarter ended October 31, 2011
        0.18
      0.10Quarter ended January 31, 2012
        0.29
      0.14Quarter ended April 30, 2012
        0.29
      0.23Quarter ended July 31, 2012
        0.25
      0.15Quarter ended October 31, 2012
        0.15
      0.05Quarter ended January 31, 2013
        0.07
    0.015


Period
        High
      LowDecember 2012
        0.042
      0.017January 2013
        0.018
      0.015February 2013
        0.02
      0.015March 2013
        0.014
      0.006April 2013
        0.005
      0.004May 2013
        0.039
    0.002


B.Plan of distribution.

Not applicable.

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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.

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.

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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.

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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.

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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.

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.

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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.

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.

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C.Material contracts.

In order to maintain the lease agreement (dated July 20, 2012)
    on the Fondaway Canyon Project, the Company has to make option payments of
    $35,000 annually and has to pay claim renewal fees to the BLM of approximately
  $23,000 annually.

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").

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.

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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.

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.

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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.

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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.

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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.

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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.

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.

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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.

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.

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Credit risk.Credit risk is the risk of
    loss associated with 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.

Liquidity risk.Liquidity risk refers to
    the risk that the Company will not be able to meet its financial obligations
    when they become due, or can only do so at excessive cost. 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, 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. The Company regularly evaluates its cash position in an effort to
    maintain its liquidity. In addition, the Company has proceeds on sales completed
    before year-end, which were received after year-end. These amounts approximate
    $2,552,000 and are included in sundry receivables and prepaids in the financial
    statements. The Company continues to seek sources of additional capital to
    improve its liquidity position or dispose of one or more of its remaining
  property interests on an advantageous basis.

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

(a) Interest rate risk

Interest rate risk is the risk that the
    fair value of a financial instrument will fluctuate due to changes in market
    interest rates. 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 Company regularly monitors its cash management
  policy.

(b) Foreign currency risk

Foreign exchange risk arises from
    future commercial transactions and recognized assets and liabilities denominated
    in a currency that is not the entity's functional currency. The risk is measured
    using cash flow forecasting. The Company's functional and reporting currency is
    the United States dollar ("U.S. dollar") and major purchases are transacted in
    U.S. dollars. An operating account is maintained in Canadian dollars primarily
  for settlement of general and corporate expenditures.

(c) 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 volatility. The Company
    closely monitors commodity prices, as it relates to coal and precious metals in
    the United States, individual equity movements and the stock market in general
  to determine the appropriate course of action to be taken by the Company.

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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 sensitivity analysis discussed below may differ
materially from actual results.

- 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 twelve
    months 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 U.S. dollar weakened/strengthened by 5%
    against the Canadian dollar with all other variables held constant, the net
    income (loss) and comprehensive income (loss) would be affected by approximately
  $104,000.
- 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 coal and precious metals. Coal and
    precious metals have fluctuated widely in recent years. There is no assurance
    that, even as commercial quantities of coal and precious metals may be produced
    in the future, a profitable market will exist for them. A decline in the market
    price of coal and precious metals may also require the Company to reduce its
    mineral properties, which could have a material adverse effect on the Company's
    value. As at January 31, 2013, the Company was not a coal or precious metal
    producer. As a result, commodity price risk may affect the completion of future
    equity transactions such as equity offerings, debt offerings and the exercise of
    stock options. This may also affect the Company's liquidity and its ability to
  meet its ongoing obligations.

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.

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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.

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.

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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.

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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.

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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).

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, 2013 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.

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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, 2013. 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,
    2013, 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.

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, 2013
    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. James Clancy, a director and
    Audit Committee member of the Company is an audit committee financial expert
    as defined in Form 20-F. Mr. Clancy is independent, as such term is defined
  under the Nasdaq Stock Market Rules.

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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

MSCM LLP has served as the Companys auditing firm since March
    26, 2009. Aggregate fees billed to the Company for professional services
    rendered by MSCM LLP and its affiliates during the fiscal years ended January
  31, 2013 and January 31, 2012 are detailed below:

Year Ended January 31,(Cdn$)2013
        
        
        2012Audit Fees
        $
        45,000
        
        $
        60,000Audit-Related Fees
        $
        7,227
        
        $
        14,680Tax Fees
        $
        845
        
        $
        0All Other Fees
        $
        3,370
        
        $
        1,200


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.

59

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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, 2013, $48,370, or 86% 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.

Item 16G. Corporate Governance

Not applicable.

Item 16H. Mine Safety Disclosure

Not applicable.

60

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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, 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 Changes in 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.
- Management's Discussion and Analysis for the year ended
  January 31, 2013.
- Auditor's Report for Royal Standard Minerals Inc. for the
    years ended January 31, 2012 and 2011. Consolidated Statements of Financial
    Position of Royal Standard Minerals Inc. as at January 31, 2012, January 31,
  2011 and February 1, 2010.
- Consolidated Statements of Operations of Royal Standard
  Minerals Inc. for the years ended January 31, 2012 and 2011.
- Consolidated Statements of Comprehensive Loss of Royal Standard Minerals
  Inc. for the years ended January 31, 2012 and 2011.
- Consolidated Statements of Shareholders' Equity of Royal Standard Minerals
  Inc. for the years ended January 31, 2012 and 2011.
- Consolidated Statements of Cash Flows of Royal Standard
  Minerals Inc. for the years ended January 31, 2012 and 2011.
- 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.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders of Royal Standard Minerals Inc.

Report on the Consolidated Financial StatementsWe
    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
    StatementsManagement 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.

61

---

Auditors' ResponsibilityOur 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.

OpinionIn 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 MatterWithout 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

62

---















Royal Standard
          Minerals Inc.(Expressed in United States Dollars)Consolidated Financial StatementsJanuary 31,
          2013 and 2012


63

---



Independent Auditor's Report

To the Shareholders of 
    Royal Standard Minerals Inc.

Report on the Consolidated Financial StatementsWe
    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
    StatementsManagement 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 ResponsibilityOur 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.



64

---



OpinionIn 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 matterWithout 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



65

---

|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     |   | $ | 629,553     |  
|Marketable securities (Note 6)                                            |   | 30,000      |   |   | 150,000     |  
|Sundry receivables and prepaids
        (Note 7)                          |   | 2,712,004   |   |   | 156,275     |  
|                                                                          |   | 2,943,569   |   |   | 935,828     |  
|Reclamation bonds (Note 8)                                                |   | 188,250     |   |   | 633,034     |  
|Equipment, net
        (Note 10)                                          |   | 23,716      |   |   | 2,084,336   |  
|                                                                          | $ | 3,155,535   |   | $ | 3,653,198   |  
|                                                                          |   |             |   |   |             |  
|Liabilities                                                               |   |             |   |   |             |  
|Current                                                                   |   |             |   |   |             |  
|Accounts payable
        and accrued liabilities (Note 11)                | $ | 2,595,672   |   | $ | 3,033,763   |  
|Due to related parties (Note 18)                                          |   | -           |   |   | 35,023      |  
|Other advances
        (Note 13)                                          |   | 600,000     |   |   | -           |  
|Long-term debt - current portion
        (Note 13)                        |   | -           |   |   | 2,965,962   |  
|Embedded derivative on
        long-term debt - current portion (Note 13) |   | -           |   |   | 85,361      |  
|                                                                          |   | 3,195,672   |   |   | 6,120,109   |  
|                                                                          |   |             |   |   |             |  
|Asset retirement obligations (Note 12)                                    |   | 107,647     |   |   | 292,315     |  
|Long-term debt (Note 13)                                                  |   | -           |   |   | 2,965,961   |  
|Embedded
        derivative on long-term debt (Note 13)                   |   | -           |   |   | 85,360      |  
|                                                                          |   | 3,303,319   |   |   | 9,463,745   |  
|Shareholders' Equity (Deficiency)                                         |   |             |   |   |             |  
|Share capital (Note 14(b))                                                |   | 28,104,264  |   |   | 28,098,264  |  
|Reserves                                                                  |   | 11,010,304  |   |   | 10,580,808  |  
|Accumulated deficit                                                       |   | (39,262,352 | ) |   | (44,553,494 | )
|Accumulated other
        comprehensive (loss) income                     |   | -           |   |   | 63,875      |  
|                                                                          |   | (147,784    | ) |   | (5,810,547  | )
|                                                                          | $ | 3,155,535   |   | $ | 3,653,198   |  
|                                                                          |   |             |   |   |             |  
|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.

66

---

|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  |   | $ | 2,954,356  |  
|General and administrative (Note 20)                                                                                                                                                                                                                                                  |   | 2,244,236  |   |   | 2,809,119  |  
|                                                                                                                                                                                                                                                                                      |   |            |   |   |            |  
|                                                                                                                                                                                                                                                                                      |   | 5,381,441  |   |   | 5,763,475  |  
|                                                                                                                                                                                                                                                                                      |   |            |   |   |            |  
|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 | ) |   | (5,763,475 | )
|                                                                                                                                                                                                                                                                                      |   |            |   |   |            |  
|Finance income                                                                                                                                                                                                                                                                        |   | 7,274      |   |   | 4,291      |  
|Finance costs (Note 13)                                                                                                                                                                                                                                                               |   | (4,310,582 | ) |   | (712,822   | )
|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      |   |   | 20,308     |  
|                                                                                                                                                                                                                                                                                      |   |            |   |   |            |  
|Net income
        (loss) for the year                                                                                                                                                                                                                                                | $ | 5,291,142  |   | $ | (6,451,698 | )
|                                                                                                                                                                                                                                                                                      |   |            |   |   |            |  
|Basic income (loss) per share (Note 16)                                                                                                                                                                                                                                               | $ | 0.06       |   | $ | (0.08      | )
|Diluted income (loss) per share (Note 16)                                                                                                                                                                                                                                             | $ | 0.06       |   | $ | (0.08      | )
|                                                                                                                                                                                                                                                                                      |   |            |   |   |            |  
|                                                                                                                                                                                                                                                                                      |   |            |   |   |            |  
|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.

67

---

|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       | ) | $ | 39,210     |  
|Share-based payments                                                                                    |   | -          |  |   | 503,942    |  |   | -           |   |   | -             |   |   | 503,942    |  
|Net loss for the year                                                                                   |   | -          |  |   | -          |  |   | (6,451,698  | ) |   | -             |   |   | (6,451,698 | )
|Net
        increase in unrealized gain on available-for-sale 
          
        marketable securities |   | -          |  |   | -          |  |   | -           |   |   | 97,999        |   |   | 97,999     |  
|                                                                                                        |   |            |  |   |            |  |   |             |   |   |               |   |   |            |  
|Balance, January 31, 2012                                                                               |   | 28,098,264 |  |   | 10,580,808 |  |   | (44,553,494 | ) |   | 63,875        |   |   | (5,810,547 | )
|Shares issued for lawsuit
        settlement (Note 14(b))                                               |   | 6,000      |  |   | -          |  |   | -           |   |   | -             |   |   | 6,000      |  
|Share-based payments                                                                                    |   | -          |  |   | 429,496    |  |   | -           |   |   | -             |   |   | 429,496    |  
|Net income for the year                                                                                 |   | -          |  |   | -          |  |   | 5,291,142   |   |   | -             |   |   | 5,291,142  |  
|Impairment of available-for-sale marketable securities                                                  |   | -          |  |   | -          |  |   | -           |   |   | (63,875       | ) |   | (63,875    | )
|                                                                                                        |   |            |  |   |            |  |   |             |   |   |               |   |   |            |  
|Balance, January 31, 2013                                                                               | $ | 28,104,264 |  | $ | 11,010,304 |  | $ | (39,262,352 | ) | $ | -             |   | $ | (147,784   | )



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

68

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|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   |   | $ | (6,451,698 | )
|Operating items not involving cash:                                                                       |   |             |   |   |            |  
|Depreciation                                                                                              |   | 113,994     |   |   | 137,274    |  
|Accretion in
        asset retirement obligations                                                         |   | 29,226      |   |   | 60,305     |  
|Accretion expense                                                                                         |   | 4,252,521   |   |   | 611,108    |  
|Share-based
        payments                                                                              |   | 429,496     |   |   | 503,942    |  
|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      |   |   | (94,998    | )
|Accounts payable and accrued
        liabilities                                                          |   | 524,769     |   |   | 1,481,098  |  
|Due to related parties                                                                                    |   | (35,023     | ) |   | (322,038   | )
|                                                                                                          |   |             |   |   |            |  
|Cash used in operating activities                                                                         |   | (4,285,822  | ) |   | (4,075,007 | )
|                                                                                                          |   |             |   |   |            |  
|Financing activities                                                                                      |   |             |   |   |            |  
|Other advances                                                                                            |   | 600,000     |   |   | -          |  
|Increase in long-term debt                                                                                |   | 5,442,384   |   |   | 5,970,350  |  
|Finance costs paid on long-term debt                                                                      |   | (280,000    | ) |   | (400,000   | )
|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   |   |   | 5,570,350  |  
|                                                                                                          |   |             |   |   |            |  
|Investing activities                                                                                      |   |             |   |   |            |  
|Increase in reclamation bonds                                                                             |   | (8,711      | ) |   | (95,174    | )
|Purchase of equipment                                                                                     |   | (2,593,996  | ) |   | (872,654   | )
|                                                                                                          |   |             |   |   |            |  
|Cash used in investing activities                                                                         |   | (2,602,707  | ) |   | (967,828   | )
|                                                                                                          |   |             |   |   |            |  
|Change in cash and cash equivalents                                                                       |   | (427,988    | ) |   | 527,515    |  
|                                                                                                          |   |             |   |   |            |  
|Cash and cash equivalents, beginning of year                                                              |   | 629,553     |   |   | 102,038    |  
|                                                                                                          |   |             |   |   |            |  
|Cash and cash equivalents, end of year                                                                    | $ | 201,565     |   | $ | 629,553    |  



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

69

---

|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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



70

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|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.



71

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|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.



72

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|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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



73

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|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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



74

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|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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



75

---

|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).



76

---

|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;



77

---

|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.



78

---

|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.



79

---

|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.



80

---

|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 riskThe
    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.



81

---

|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 riskThe
    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 riskThe
    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 analysisAs
    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.                                                                                                                                                                                                     



82

---

|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      |  | $ | 71,415      | 
| | Other receivables     |   | 2,618,794   |  |   | 60,094      | 
| | Prepaid expenses      |   | 39,621      |  |   | 24,766      | 
| |                       |   |             |  |   |             | 
| |                       | $ | 2,712,004   |  | $ | 156,275     | 

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.



83

---

|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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     



84

---

|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)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



85

---

|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    |   | $ | 71,292    | 
| | Mine development costs                                            |   | 1,878,956 |   |   | 397,626   | 
| | Drilling                                                          |   | 71,884    |   |   | 40,206    | 
| | Professional fees                                                 |   | -         |   |   | 113,442   | 
| | Consulting, wages and salaries (Note
        18)                  |   | 736,060   |   |   | 1,238,299 | 
| | Office and general                                                |   | 130,011   |   |   | 324,686   | 
| | Analysis and assays                                               |   | -         |   |   | 7,392     | 
| | Supplies, equipment and transportation                            |   | 48,240    |   |   | 353,312   | 
| | Claim staking and maintenance fees                                |   | 11,743    |   |   | 11,743    | 
| | Milling costs                                                     |   | 161,474   |   |   | -         | 
| | Depreciation                                                      |   | 104,819   |   |   | 124,231   | 
| | Net proceeds
        from sale of exploration and development ore |   | (367,521  | ) |   | -         | 
| |                                                                   | $ | 2,803,375 |   | $ | 2,682,229 | 
| |                                                                   |   |           |   |   |           | 
| | Piñon Project                                                     |   |           |   |   |           | 
| | Property acquisition costs                                        | $ | 46,158    |   | $ | 79,571    | 
| | Consulting, wages and salaries                                    |   | 20,859    |   |   | 1,617     | 
| | Office and general                                                |   | 11,479    |   |   | -         | 
| | Claim staking and maintenance fees                                |   | 26,200    |   |   | 26,200    | 
| |                                                                   | $ | 104,696   |   | $ | 107,388   | 
| |                                                                   |   |           |   |   |           | 
| | Fondaway Canyon and Dixie-Comstock Projects                       |   |           |   |   |           | 
| | Property acquisition costs                                        | $ | 35,000    |   | $ | 35,000    | 
| | Claim
        staking and maintenance fees                        |   | 32,817    |   |   | 32,817    | 
| |                                                                   | $ | 67,817    |   | $ | 67,817    | 
| |                                                                   |   |           |   |   |           | 
| | Kentucky Project                                                  |   |           |   |   |           | 
| | Travel                                                            | $ | -         |   | $ | 12,764    | 
| | Consulting, wages and salaries                                    |   | -         |   |   | 46,300    | 
| | Office and general                                                |   | 7,521     |   |   | 12,794    | 
| | Penalty (Note 19 (c))                                             |   | 145,000   |   |   | -         | 
| | Professional fees                                                 |   | -         |   |   | 2,400     | 
| | Supplies, equipment and
        transportation                    |   | -         |   |   | 10,552    | 
| | Depreciation                                                      |   | 8,796     |   |   | 12,112    | 
| |                                                                   | $ | 161,317   |   | $ | 96,922    | 
| |                                                                   |   |           |   |   |           | 
| | Total exploration activities                                      | $ | 3,137,205 |   | $ | 2,954,356 | 



86

---

|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    |   | $ | 2,999,270  |  
| | Additions                     |   | 1,619,341    |   |   | 148,536     |   |   | -         |   |   | 1,767,877  |  
| | Balance, January 31, 2012     |   | 1,619,341    |   |   | 3,126,000   |   |   | 21,806    |   |   | 4,767,147  |  
| | Additions                     |   | 2,704,338    |   |   | 48,472      |   |   | -         |   |   | 2,752,810  |  
| | Sale of equipment (Note 2(a)) |   | (4,323,679   | ) |   | (3,085,472  | ) |   | (21,806   | ) |   | (7,430,957 | )
| | Balance, January 31, 2013     | $ | -            |   | $ | 89,000      |   | $ | -         |   | $ | 89,000     |  

| |                               |   | Construction |  |   | Exploration |   |   | Office    |   |   |            |  
| | ----------------------------- | - | ------------ |  | - | ----------- | - | - | --------- | - | - | ---------- | -
| | ACCUMULATED DEPRECIATION      |   | in progress  |  |   | equipment   |   |   | equipment |   |   | Total      |  
| | Balance, January 31, 2011     | $ | -            |  | $ | 2,525,415   |   | $ | 20,122    |   | $ | 2,545,537  |  
| | Depreciation for the year     |   | -            |  |   | 136,343     |   |   | 931       |   |   | 137,274    |  
| | Balance, January 31, 2012     |   | -            |  |   | 2,661,758   |   |   | 21,053    |   |   | 2,682,811  |  
| | Depreciation for the year     |   | -            |  |   | 113,615     |   |   | 379       |   |   | 113,994    |  
| | Sale of equipment (Note 2(a)) |   | -            |  |   | (2,710,089  | ) |   | (21,432   | ) |   | (2,731,521 | )
| | Balance, January 31, 2013     | $ | -            |  | $ | 65,284      |   | $ | -         |   | $ | 65,284     |  

| |                           |   | Construction |  |   | Exploration |  |   | Office    |  |   |           | 
| | ------------------------- | - | ------------ |  | - | ----------- |  | - | --------- |  | - | --------- | 
| | CARRYING AMOUNT           |   | in progress  |  |   | equipment   |  |   | equipment |  |   | Total     | 
| | Balance, January 31, 2012 | $ | 1,619,341    |  | $ | 464,242     |  | $ | 753       |  | $ | 2,084,336 | 
| | Balance, January 31, 2013 | $ | -            |  | $ | 23,716      |  | $ | -         |  | $ | 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   |  | $ | 579,664     | 
| | Accrued
        liabilities |   | 450,265     |  |   | 2,454,099   | 
| |                             |   |             |  |   |             | 
| |                             | $ | 2,595,672   |  | $ | 3,033,763   | 

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).



87

---

|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  |   | $ | 232,010 | 
| | Increase in asset retirement obligations |   | -        |   |   | 52,165  | 
| | Accretion cost                           |   | 29,226   |   |   | 8,140   | 
| | Foreign exchange                         |   | (1,954   | ) |   | -       | 
| | Sale of AROs (Note 2(a))                 |   | (211,940 | ) |   | -       | 
| |                                          |   |          |   |   |         | 
| | Balance, end of year                     | $ | 107,647  |   | $ | 292,315 | 

|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.



88

---

|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)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     



89

---

|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 |  | $ | 28,098,264 | 
| |                                          |  |            |  |   |            | 
| | Shares issued for lawsuit settlement (i) |  | 100,000    |  |   | 6,000      | 
| |                                          |  |            |  |   |            | 
| | Balance, January 31, 2013                |  | 83,953,825 |  | $ | 28,104,264 | 

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.

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.



90

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
        2013 and 2012         

15.      Stock Options
    (Continued)

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     |   | $ | 0.10             | 
| | Cancelled                 |  | (544,500      | ) | $ | 0.10             | 
| | Granted                   |  | 4,700,000     |   | $ | 0.30             | 
| |                           |  |               |   |   |                  | 
| | Balance, January 31, 2012 |  | 12,060,191    |   | $ | 0.17             | 
| | Forfeited                 |  | (8,260,191    | ) | $ | 0.14             | 
| | Balance, January 31, 2013 |  | 3,800,000     |   | $ | 0.27             | 

The following table reflects the stock
    options outstanding and exercisable as at January 31, 2013:

Exercise Price
        
        
        Options
        
        
        Options
        
        
        Fair
        
        
        Weighted averageExpiry Date
        
        ($)
        
        
        Outstanding
        
        
        Exercisable
        
        
        Value
        
        
        remaining yearsJune 26, 2014
        
        0.10
        
        
        650,000
        
        
        650,000
        
        $
        353,480
        
        
        1.40January 20, 2017
        
        0.30
        
        
        3,150,000
        
        
        2,400,000
        
        
        894,600
        
        
        3.973,800,000
        
        
        3,050,000
        
        $
        1,248,080
        
        
        3.53




91

---

|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  |  | $ | (6,451,698 | )
| |                                                                                                  |   |            |  |   |            |  
| | Denominator:                                                                                     |   |            |  |   |            |  
| | Weighted average number of common shares
        outstanding for basic income (loss) per share   |   | 83,885,036 |  |   | 83,853,825 |  
| | Weighted average
        number of common shares outstanding for diluted income (loss) per share |   | 83,986,566 |  |   | 83,853,825 |  
| |                                                                                                  |   |            |  |   |            |  
| | Basic income (loss) per share                                                                    | $ | 0.06       |  | $ | (0.08      | )
| | Diluted income (loss) per share                                                                  | $ | 0.06       |  | $ | (0.08      | )

|    | 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  |   | $ | (6,451,698 | )
| | Expected tax expense (recovery) at statutory rate             | $ | 1,402,153  |   | $ | (1,811,637 | )
| | Permanent differences                                         |   | 113,816    |   |   | 141,507    |  
| | Difference between Canadian and foreign tax rates             |   | 598,950    |   |   | (270,193   | )
| | Utilization of tax benefits not previously
        recognized |   | (2,466,265 | ) |   | -          |  
| | Tax benefits not
        recognized                           |   | 351,346    |   |   | 1,940,323  |  
| | 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.



92

---

|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 |  | $ | 37,465,416 | 
| | 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 |  | $ | 37,465,416 | 

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 |  | $ | 471,380 | 
| | Share-based
        payments                                     | $ | 403,231 |  | $ | 501,799 | 



93

---

|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.



94

---

|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   |  | $ | 263,251   | 
| | Insurance                                |   | 28,533    |  |   | 22,841    | 
| | Office and general                       |   | 30,643    |  |   | 1,719     | 
| | Professional fees                        |   | 1,024,556 |  |   | 1,489,989 | 
| | Consulting, wages and salaries (Note 18) |   | 511,545   |  |   | 526,446   | 
| | Share-based payments (Note 18)           |   | 429,496   |  |   | 503,942   | 
| | Travel                                   |   | 38,938    |  |   | -         | 
| | Depreciation                             |   | 379       |  |   | 931       | 
| |                                          | $ | 2,244,236 |  | $ | 2,809,119 | 

|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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  



95

---













ROYAL STANDARD MINERALS INC.

MANAGEMENTS DISCUSSION 
    AND ANALYSIS



YEAR ENDED JANUARY 31, 2013

96

---

|Royal Standard Minerals Inc.        
|------------------------------------
|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

This Management Discussion and Analysis (MD&A) is dated
    May 24, 2013 and unless otherwise noted, should be read in conjunction with the
    Companys consolidated financial statements (Financial Statements) for the
    year January 31, 2013 and the comparable year ended January 31, 2012 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, 2013 are not necessarily indicative of the results that may be
    expected for any future period.

The Financial Statements include the Companys wholly owned
    subsidiaries, Kentucky Standard Energy Company, Inc. and Manhattan Mining Co.,
    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 forward-looking statements, including in
    respect of the timing of project development. These forward-looking statements
    entail various risks and uncertainties that could cause actual results to differ
    materially from those reflected in these forward-looking statements. Such
    statements are based on current expectations, are subject to a number of
    uncertainties and risks, and actual results may differ materially from those
    contained in such statements. These uncertainties and risks include, but are not
    limited to, the strength of the Canadian and US economies; the price of gold;
    operational, funding and liquidity risks; the degree to which mineral resource
    estimates are reflective of actual mineral resources; the degree to which
    factors which would make a mineral deposit commercially viable are present; the
    risks and hazards associated with underground operations. Risks and
    uncertainties about the Companys business are more fully discussed under Risk
    Factors contained elsewhere in this MD&A. The Company assumes no obligation to update any forward-looking
    statement or to update the reasons why actual results could differ from such
    statements unless required by law.

97

---

|Royal Standard Minerals Inc.        
|------------------------------------
|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

HIGHLIGHTS

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, Canadian
    dollars, 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 $900,000 Canadian dollars
    ($902,126 US dollars).

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 $1,650,000 Canadian
    dollars ($1,651,320 US dollars).

98

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|Royal Standard Minerals Inc.        
|------------------------------------
|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

OVERVIEW

The Company is a mineral exploration and mine development
    company engaged in locating, acquiring, exploring and developing gold and
    precious metal deposits in Nevada. The Company's flagship Goldwedge Project was
    located southeast of the Round Mountain gold mine in central Nevada. The
    Goldwedge Project was the property of primary focus and with the sale of that
    property together with the Piñon property pursuant to the Transaction, the
    Companys principal focus is to fund ongoing operations and to pay existing
    creditors including through the sale of its remaining properties and assets. The
    Goldwedge Project was considered to be an advanced exploration development
    project that was fully permitted by the Nevada Division of Environmental
    Protection (NDEP) for a mine and mill. The Companys current portfolio of gold
    exploration projects consists of the Fondaway Canyon and Dixie-Comstock
    properties. The Company also has a venture in a coal exploration project, namely
    the Kentucky Project. See Mineral Properties  Remaining Properties and Assets
    below.

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 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 the sale
    of the royalty of $866,505 during the year ended January 31, 2013 (2012-loss of
    $6,451,698) and 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 and confirmation of the
    Companys interest in the underlying mineral claims, both of which are
    uncertain. The Company continues an ongoing effort to dispose of one or more of
    its remaining interests on an advantageous basis. 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 is uncertain
    and dependent upon the ability to raise financing and/or to dispose of one or
    more of its remaining interests on an advantageous basis. 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.

99

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|Royal Standard Minerals Inc.        
|------------------------------------
|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

MINERAL PROPERTIES

Goldwedge Project

The Goldwedge Project, represented the Companys most advanced
    project and was located in the Manhattan district of Nye County, Nevada,
    approximately eight miles south of the Round Mountain mine and had been issued a
    mine and mill permit by the NDEP. The Company had been completing, prior to the
    slowdown in activity, the refurbishment of the on-site processing plant which
    was used for the test mining and processing that took place in 2007 and 2008.
    The mill was commissioned in April 2012. 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 commenced during April 2007,
    and continued throughout 2008, using previously extracted stockpiles of low
    grade gold feed material, as well as concurrently, newly mined material. The
    plant feed material was processed into gold doré on site. The Company had
    completed construction of the Rapid Infiltration Basins (RIB), dewatered the
    previously completed underground development and also commenced phase 2 of the
    underground development program. This phase of the development included the
    exploration of defined mineralized zones concurrently with the second phase of
    decline development. The previous work had concentrated on the development of a
    spiral decline as a means to explore the deposit at depth. As part of the
    earlier program, a series of crosscuts were constructed at specific intervals to
    effectively assess the potential mineralized zones. Phase 2 of the development
    was concentrated on developing along the strike of known mineralized zones to
    assess continuity and grade as well as prepare areas for future test stoping.
    Prior to the current slowdown, mineralized material was sampled daily and
    analyzed for gold content at the Companys onsite assay laboratory. The assay
    laboratory was refurbished and had been approved by the NDEP.

Prior to the Transaction with Scorpio, the Company had recorded
    an asset retirement obligation (ARO) on its Goldwedge Project in the amount of
    $183,445, representing the net present value of managements estimated costs to
    restore the property site to its original condition. In determining these
    estimated costs, management also reviewed calculations prepared by and provided
    by the state of Nevada, using the Nevada Standardized Reclamation Cost Estimator
    (SRCE). The SRCE is used by the state in calculating the reclamation bond
    being requested from the Company. This ARO was assumed by Scorpio.

Based on the existing level of terrestrial disturbance and
    water treatment and monitoring requirements, the discounted ARO for all
    projects, where applicable, has been estimated by management assuming that the
    future payments will be made over a ten year period from the date of initial
    assessment of the AROs using a discount rate of 10%.

100

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|Royal Standard Minerals Inc.        
|------------------------------------
|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

Project Expenditures

During the year ended January 31, 2013, the Company's
    exploration and evaluation expenditures on the Goldwedge Project were $2,803,375
    (2012-$2,682,229). For a detailed description of the exploration and evaluation
    expenditures by property, refer to note 9 in the Financial Statements.

Future Programs

As a result of the recent Transaction with Scorpio, the Company
    sold the Goldwedge Project and will no longer be incurring expenditures on the
    Goldwedge Project.

Piñon Project

The Piñon property was made up of certain lease agreements to
    lease certain properties in Elko County, Nevada. During the year ended January
    31, 2013, the Company's exploration and evaluation expenditures on the Piñon
    property were $104,696 (2012-$107,388). As a result of the recent Transaction
    with Scorpio, the Company sold the Piñon Project and will no longer be incurring
    expenditures on the Piñon Project. The ARO, in the amount of $28,495, was
    assumed by Scorpio. For a detailed description of the exploration and evaluation
    expenditures by property, refer to note 9 in the Financial Statements.

Remaining Properties and Assets

Dixie-Comstock Project

On June 29, 2005, the Company entered into a five year Purchase
    Option Agreement with a private individual for all of his patented and
    unpatented mining claims in the Manhattan Mining District located in Nye County,
    Nevada. The land package totaled approximately 1,600 acres (four patented and 70
    unpatented claims). The propertys position adjoined the Company's Goldwedge
    Mine. The land package included a number of exploration targets which were of
    interest to the Company. This land package was included in the Transaction with
    Scorpio. In addition, the Company's option included the Dixie-Comstock claim
    group located in Churchill County, Nevada. Dixie-Comstock is a 1,500 acre
    property containing a gold system that has been explored by a number of major
    mining companies over the past 20 years. Annual option payments of $48,000 were
    to be applied to a total purchase price of $600,000. This option was exercised
    prior to August 31, 2009 and as a result, currently, the property included in
    the Dixie-Comstock claim group, is 100% owned by the Company. For a detailed
    description of the exploration and evaluation expenditures by property, refer to
    note 9 in the Financial Statements.

Fondaway Canyon Project

The Fondaway Canyon property is located in Churchill County,
    Nevada. During the year ended January 31, 2013, the Companys exploration and
    evaluation expenditures on the Fondaway Canyon and Dixie-Comstock Properties
    were $67,817 (2012-$67,817). For a detailed description of the exploration and evaluation expenditures by property,
    refer to note 9 in the Financial Statements.

101

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|Royal Standard Minerals Inc.        
|------------------------------------
|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

Kentucky Project

The Kentucky Project is located in Wolfe County, Kentucky.
    During the year ended January 31, 2013, the Companys exploration and evaluation
    expenditures on the Kentucky Project were $161,317 (2012-$96,922). Included in
    the total exploration and evaluation expenditures were penalties totaling
    $145,000 issued by the Kentucky Energy and Environment Cabinet, Division of Mine
    Enforcement and Reclamation (DMER) and is seeking forfeiture of the Companys
    reclamation bond. Refer also to Contingencies (b), below. The Kentucky Project
    represents the Companys sole venture in coal exploration. The Company continues
    to review all options with this project. For a detailed description of the
    exploration and evaluation expenditures by property, refer to note 9 in the
    Financial Statements.

Recording of Asset Retirement Obligations

Under the guidance of IAS 37, the Company has recorded asset
    retirement obligations (AROs) on the Fondaway Canyon and Dixie-Comstock
    Projects in the amount of $2,774 and on the Kentucky Project $104,873,
    representing the net present value of the estimated costs to restore each
    property to its original condition, 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%. In connection with the recent Transaction with Scorpio,
    as noted above, the AROs with respect to the Goldwedge and Piñon Projects were
    assumed by Scorpio.

Sale of Royalty

In August 2009, the Company retained a 1% net smelter royalty
    on the sale of the Piñon Railroad Project. This royalty was sold to XDM on
    January 31, 2013 for $900,000 Canadian dollars ($902,126).

ENVIRONMENTAL LIABILITIES

The Companys projects in Nevada are subject to regulation and
    permitting by the NDEP and in Kentucky, by the Kentucky Division of Mine
    Reclamation and Enforcement and the Kentucky Division of Mine Permits, both
    divisions of the Kentucky Energy and Environment Cabinet. The Company is not
    aware of any other environmental liabilities or obligations associated with its
    mining interests. The Company believes it is conducting its operations in a
    manner that is consistent with governing environmental legislation.

102

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|Royal Standard Minerals Inc.        
|------------------------------------
|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

OVERALL PERFORMANCE

The Company was able to secure financing with Waterton,
    finalizing an $8,000,000 Gold Stream Facility during the prior years third
    quarter and a further $4,000,000 in two loan extensions, $2,000,000 on May 8,
    2012 and $2,000,000 on June 27, 2012, bringing the total on the facility to
    $12,000,000. The Gold Stream Facility had allowed the Company to focus primarily
    on its Goldwedge Project and its primary objective of completing the processing
    plant (mill). During the prior years fourth quarter, management hired two main
    contractors to carry out the completion of the mill, which was commissioned
    earlier in the year. The Company continued to prepare the mill for production
    before the slowdown in operations. During the year ended January 31, 2013, the
    Company had incurred $2,704,338 (2012-$1,619,341) in expenditures, including
    capitalized interest of $895,055 (2012-$54,216), on the mill construction. The
    Company benefited from negotiations management held with the two contractors
    hired to carry out the completion of the mill during the fourth quarter and was
    able to reduce the amounts outstanding to these two contractors by approximately
    $686,000, which was accounted as a reduction of the construction costs. The mill
    construction costs included significant electrical upgrades, new installations
    and expenditures related to various test runs. During the construction, the
    Company encountered many challenges with the existing equipment, due to
    mechanical failure requiring repeated repairs and replacement. These costs would
    have begun to be depreciated, once the mill was in production, but the mill was
    included in the recent Transaction with Scorpio.

The Companys net income for the year ended January 31, 2013
    was $5,291,142 ($0.06 income per share) and for the year ended January 31, 2012
    a net loss of $6,451,698 ($0.08 loss per share), an increase of $11,742,840. The
    increase is the result of the one-time gain of $14,171,405 on the Transaction
    with Scorpio and the gain on the sale of the royalty of $866,505, offset
    substantially, by the increased finance costs of $3,597,760, on the Gold Stream
    Facility. The funds made available by the Gold Stream Facility allowed the
    Company to carry out its mine development and mill construction activities. In
    addition, general and administrative expenditures were reduced by $564,883,
    primarily due to lower professional fees and corporate development costs.

The Companys future financial condition and operations is
    dependent on many factors including, the underlying value of the remaining
    resource properties which is dependent on the underlying mineral claims and the
    Companys ability to dispose of one or more of its remaining interests, on an
    advantageous basis.

103

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|Royal Standard Minerals Inc.        
|------------------------------------
|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

SELECTED FINANCIAL INFORMATION

|                                                                                      | Twelve       | Twelve      
|------------------------------------------------------------------------------------- | ------------ | ------------
|                                                                                      | months ended | months ended
|                                                                                      | January 31,  | January 31, 
|                                                                                      | 2013         | 2012        
|                                                                                      |              |             
|Total revenues                                                                        | nil          | nil         
|                                                                                      |              |             
|Net income (loss) for the
        year                                                | $5,291,142   | $(6,451,698)
|                                                                                      |              |             
|Basic and diluted income
        (loss) per share                                     | $0.06        | $(0.08)     
|                                                                                      |              |             
|Total issued common shares                                                            | 83,953,825   | 83,853,825  
|                                                                                      |              |             
|Equipment, net                                                                        | $23,716      | $2,084,336  
|                                                                                      |              |             
|Total liabilities (excluding
        long- term debt and related embedded derivative) | $3,303,319   | $3,361,101  
|                                                                                      |              |             
|Total long-term debt and
        related embedded derivative                          | -            | $6,102,644  

SUMMARY OF QUARTERLY RESULTS

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

Ended Jan-31 2013 $
        Ended 
          Oct-31 
          2012 
          $
        Ended 
          July-31 
          2012 
          $
        Ended 
          Apr-30 
          2012 
          $
        Ended 
          Jan-31 
          2012 
          $
        Ended 
          Oct-31 
          2011 
          $
        Ended 
          Jul-31 
          2011 
          $
        Ended 
          Apr-30 
          2011 
          $Finance Income
        3,048
        3,103
        511
        612
        2,285
        801
        708
        497Exploration
        (75,902)
        (393,582)
        (1,260,127)
        (1,407,594)
        (1,056,814)
        (999,865)
        (722,789)
        (174,888)General & administrative
        279,927
        (266,758)
        (1,555,326)
        (702,079)
        (2,278,160)
        (202,442)
        (257,793)
        (70,724)Gain on sale of royalty
        866,505
        -
        -
        -
        -
        -
        -
        -Gain on sale of property interests
        14,171,405
        -
        -
        -
        -
        -
        -
        -Other 
          (expenses) income
        (205,017)
        (3,201,269)
        (843,270)
        (123,045)
        608,991
        (1,280,855)
        (12,481)
        (8,169)


104

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|Royal Standard Minerals Inc.        
|------------------------------------
|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

Net income (loss)
        15,039,966
        (3,858,506)
        (3,658,212)
        (2,232,106)
        (2,723,698)
        (2,482,361)
        (992,355)
        (253,284)Basic & diluted income (loss) per share
        0.18
        (0.05)
        (0.04)
        (0.03)
        (0.03)
        (0.03)
        (0.01)
        (0.00)Weighted average number of shares
        83,885,036
        83,878,202
        83,853,825
        83,853,825
        83,853,825
        83,853,825
        83,853,825
        83,853,825


FINANCIAL PERFORMANCE

Revenue

The Companys Goldwedge Project was the property of main focus.
    It was still in the exploration and development stage. Until sufficient work had
    been completed to confirm the technical feasibility and commercial viability of
    this project, no material revenue had or will be earned. No revenue has been
    earned during the year or any previous years on any of the Companys properties.

Expenses

The Companys net income for the year ended January 31, 2013
    was $5,291,142 ($0.06 income per share) compared to a loss of $6,451,698 ($0.08
    loss per share) for the year ended January 31, 2012, an increase of $11,742,840.
    The primary reasons for the significant increase over the prior year, was the
    result of the one-time gain on the sale of property interests and related assets
    to Scorpio in the amount of $14,171,405 and the gain on the sale of the royalty
    of $866,505, offset substantially, by the increased finance cost of $3,597,760,
    on the Gold Stream Facility. As a result of the slowdown at the end of August
    2012, the Goldwedge mine was operating on a maintenance and upkeep basis after
    this date and exploration and evaluation expenditures increased by only $121,146
    on the Goldwedge Project and $182,849 overall on all properties, for the year
    ended January 31, 2013 compared to the year ended January 31, 2012. The Company
    also benefited from the progress made by management with several major suppliers
    to settle outstanding balances owing, resulting in a savings of approximately $
    187,000 of expenditures previously expensed. On an ongoing basis, management
    continued to assess the performance of its workforce, making changes where
    necessary, many of which were carried out in the first quarter. Management was
    continually challenged with recruiting quality employees who were willing to
    accept the challenges of working in this remote location. Until the slowdown,
    the Company continued to focus on mine development, maintaining a full shift of
    underground miners to the end of August. Consulting, wages and salaries
    decreased by $502,239 on the Goldwedge Project and $ 529,297 on all properties,
    for the year ended January 31, 2013 compared to the year ended January 31, 2012,
    primarily due to the slowdown at the end of August. The Company was also able to
    benefit from the net proceeds on the sale of exploration and development ore in the amount of $367,521, during the year,
    with no comparable amount in the prior year.

105

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|Royal Standard Minerals Inc.        
|------------------------------------
|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

General and administrative expenses decreased by $564,883,
    mainly attributable to a reduction in professional fees of $465,433 compared to
    the prior year. Again, through negotiation with certain significant service
    providers to settle outstanding balances owing, the Company was able to save
    approximately $157,000 of expenditures previously expensed. In addition, legal
    fees in connection with ongoing litigation reduced towards the end of the year.
    Share based payments totaled $429,496 which represented the vested amount during
    the year for the stock options granted on January 20, 2012. Corporate
    development expenses were also lower for the year ended January 31, 2013
    compared to the prior year, in the amount of $83,105, due to the reduction in
    services provided by the investor relations consultant after the slowdown and
    not having incurred expenses in the absence of a January annual general meeting,
    as in the prior year. Also, significantly impacting the net income for the year,
    were the financing costs associated with the Gold Stream Facility, a total of
    $4,310,582, an increase of $3,597,760 over the prior year. The increase in the
    financing costs was attributable to the fair value of the Gold Stream Facility,
    prior to the sale to Scorpio and the higher interest incurred for the year ended
    January 31, 2013 compared to the prior year.

LIQUIDITY AND CAPITAL RESOURCES

The Company currently has no operating cash flow and has to
    date, financed its mineral exploration activities and its ongoing expenditures,
    primarily through equity transactions such as equity offerings, the exercise of
    warrants and its recent financing arrangement with Waterton. The Companys
    financial success will be dependent on the economic viability of its remaining
    mineral exploration properties to the extent that it can establish reserves and
    its ability to secure ongoing financing and/or the ability to dispose of one or
    more of its remaining interests on an advantageous basis.

As at January 31, 2013, the Company had cash and cash
    equivalents of $201,565. Cash used in operating activities was $4,285,822 for
    the year ended January 31, 2013. During the year ended January 31, 2013, the
    Company experienced a net increase in non-cash working capital items of
    $552,285, which was due to an increase in accounts payable and accrued
    liabilities of $524,769 and a reduction in sundry receivables and prepaids of
    $62,539, offset by a decrease in due to related parties of $35,023. As at
    January 31, 2013 and the date hereof, the Company had met its capital commitment
    obligations to keep its property agreements in good standing.

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, 2013, the Company had cash and cash equivalents of $201,565 compared
    to $629,553 as at January 31, 2012, to settle current liabilities of $3,195,672
    compared to $6,120,109 as at January 31, 2012. 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. In addition, included in sundry receivables and prepaids are
    amounts receivable on the sale of the Scorpio common shares to Waterton, in the
    amount of $1,651,320 and on the sale of the royalty to XDM of $900,720.

106

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|Royal Standard Minerals Inc.        
|------------------------------------
|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

There is no assurance that future sales or 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.

During the year ended January 31, 2013, the Company had
    received additional advances from Waterton, in the amount of $600,000. These
    advances were non-interest bearing and were paid subsequent to the year-end. In
    addition, on the Transaction with Scorpio, the Gold Stream Facility was fully
    extinguished.

As at January 31, 2013, the Company had 83,953,825 common
    shares issued and outstanding and stock options outstanding to acquire 3,800,000
    common shares of the Company. As of the date hereof 3,050,000 stock options were
    outstanding of which 2,550,000 stock options were exercisable that would raise
    $635,000 if exercised in full. The Companys liquidity risk with financial
    instruments is minimal as any excess cash, when present, is invested in highly
    liquid bank-backed guaranteed investment certificates.

The market value of the Companys investment in Sharpe, a
    Canadian publicly held company, as at January 31, 2013, was $30,000. The Company
    believes that the certificate representing the Sharpe shares was in the
    possession of former management of the Company. Current management of the
    Company has been unable to locate the certificate and the Company is currently
    attempting to have Sharpe and/or its transfer agent issue a replacement
    certificate. If a replacement certificate is not obtained in due course,
    management may consider taking other action to obtain a replacement certificate
    including initiating a legal claim. With a replacement certificate, the Company
    would be in a position to sell the shares to raise funds to settle outstanding
    obligations. The investment is considered an available for sale investment and
    the Company has recorded other comprehensive loss on this investment of $63,875
    and recorded an impairment loss on the investment in the amount of $56,125 for
    the year ended January 31, 2013.

CONTRACTUAL OBLIGATIONS

(a) Under the terms of the option agreement with Sharpe
    Resources Corporation (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 the 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.

(b) The Company had an employment contract dated January 1,
    2011 with the 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.

107

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|Royal Standard Minerals Inc.        
|------------------------------------
|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

With the sale to Scorpio of the Goldwedge and Pinon properties
    and assets referred to in Highlights above, the Companys principal focus is
    to fund ongoing operations and to pay existing creditors including through the
    sale of its remaining properties and assets. Management continues to review all
    contractual obligations and other payables in relation to the Companys
    properties and operations. The Company has no operating revenues and therefore
    it must utilize its current cash reserves, certain amounts received after
    year-end and included in sundry receivable and prepaids as at January 31, 2013,
    funds obtained from the exercise of stock options, other financing transactions
    and possibly the disposal of one or more of its remaining interests on an
    advantageous basis, 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; therefore, the Company may
    continue to seek additional equity or debt financing to generate funds.

RELATED PARTY TRANSACTIONS

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

|Years ended January 31,                                          |   | 2013    |  |   | 2012    | 
|---------------------------------------------------------------- | - | ------- |  | - | ------- | 
|Salaries and benefits paid to directors and
        officers (1) | $ | 505,259 |  | $ | 471,380 | 
|Share-based payments                                             | $ | 403,231 |  | $ | 501,799 | 

| | (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 (included in transactions costs, in the notes to the Financial
        Statements, under note 2(a)).
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

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 as 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.

SHARE CAPITAL

The Company is authorized to issue an unlimited number of
    common shares and special shares. As at January 31, 2013 and the date hereof,
    the Company had 83,953,825 common shares outstanding.

As of the date hereof, the Company had 3,050,000 stock options
    outstanding, as follows:

|Number of Options | Exercise Price | Expiry Date     
|----------------- | -------------- | ----------------
|650,000           | $0.10          | June 26, 2014   
|2,400,000         | $0.30          | January 20, 2017

2,550,000 of the outstanding stock options are exercisable.

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 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 had responded to
        the DMER and is working on resolving the issue. In the meantime, the DMER
        has issued penalties of $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.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (c) | 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 attorneys fees and the
        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 favor of the plaintiff in the amount of $20,612. The amount is
        included in accounts payable and accrued liabilities.                                                                                                                                                     

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|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

| | (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 favorable 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 approximately $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 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 $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
        Labor, 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 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 complaint was settled
        and paid subsequent to the year-end.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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.

PROPOSED TRANSACTIONS

As noted under Highlights, the Company completed the recent
    Transaction with Scorpio. Management continues to meet with potential buyers of
    its remaining property interests.

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|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

NEW SIGNIFICANT ACCOUNTING POLICIES

No new accounting policies were adopted during the year ended
    January 31, 2013.

SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

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 year ended January 31, 2013 and 2012 include
    estimates that, by their nature, are uncertain. The impacts of such estimates
    are pervasive throughout the Financial Statements for the year ended January 31,
    2013 and 2012 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 3 of the audited consolidated financial statements for the years
    ended January 31, 2013 and 2012:

Critical accounting estimates

- 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, as noted above under Contingencies and in note 19 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;
- 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;

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|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

- 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 the United States Dollar.

NEW ACCOUNTING PRONOUNCEMENTS

Certain new standards, interpretations and amendments to
    existing standards have been issued by the International Accounting Standards
    Board (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.

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, 2015.

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. IFRS 10 is effective for
    annual periods beginning on or after January 1, 2013.

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. IFRS 11 is effective for annual periods beginning on or after
    January 1, 2013.

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|------------------------------------
|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

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. IFRS 12 is effective for annual periods beginning on
    or after January 1, 2013.

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. 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.

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.

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|------------------------------------
|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

IAS 28 Investments in Associates and Joint
    Ventures

As a consequence of the issue of IFRS 10, IFRS 11 and IFRS 12,
    IAS 28 has been amended and will further provide the accounting guidance for
    investments in associates and will set out the requirements for the application
    of the equity method when accounting for investments in associates and joint
    ventures. This standard will be applied by the Company when there is joint
    control, or significant influence over an investee. Significant influence is the
    power to participate in the financial and operating policy decisions of the
    investee but does not include control or joint control of those policy
    decisions. When determined that the Company has an interest in a joint venture,
    the Company will recognize an investment and will account for it using the
    equity method in accordance with IAS 28. IAS 28 is required to be applied for
    annual periods beginning on or after January 1, 2013, with earlier adoption
    permitted.

IAS 32 Financial Instuments;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.

MANAGEMENT OF CAPITAL

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 considers its deficiency to be equity, comprising
    share capital, reserves, accumulated deficit and accumulated other comprehensive
    loss which as at January 31, 2013 totaled $147,782 (2012 - $5,810,547). Included
    in the Financial Statements is an accumulated deficit of $39,262,352 as at
    January 31, 2013 (2012  $44,553,494).

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|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

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 year ended
    January 31, 2013 and 2012.

The Company has cash balances and no interest-bearing debt. The
    Company's current policy is to invest excess cash, when present, in guaranteed
    investment certificates, bankers acceptance and money market deposits, with
    reputable financial institutions. The Company regularly monitors its cash
    management policy. At January 31, 2013 and the date hereof, the Company did not
    have any interest bearing debt. The Companys interest bearing debt, the Gold
    Stream Facility, was assumed by Scorpio.

The Companys functional and reporting currency is the US
    dollar and major purchases are transacted in US dollars. An operating account is
    maintained in Canadian dollars primarily for settlement of general corporate
    expenditures.

Sensitivity analysis

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 sensitivity analysis shown in the notes below
    may differ materially from actual results.

- 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 deficiency 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, the net income (loss)
        and comprehensive income (loss) would be affected by approximately $104,000.
- 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 coal and precious metals. Coal and precious metals have
        fluctuated widely in recent years. There is no assurance that, even as
        commercial quantities of coal and precious metals may be produced in the
        future, a profitable market will exist for them. A decline in the market price
        of coal 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 at January 31,
        2013 and the date hereof, the Company is not a coal or precious metal producer.
        As a result, commodity price risk may affect the completion of future equity
        transactions such as equity offerings, debt offerings and the exercise of stock
        options. This may also affect the Companys liquidity and its ability to meet
        its ongoing obligations. See Risk Factors.

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|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

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.

Exploration Stage Company and Exploration Risks

The Company is a junior resource company focused primarily on
    the acquisition and exploration of mineral properties located in the United
    States and, as such, is engaged in a highly speculative business. The properties
    of the Company have no established reserves. There is no assurance that any of
    the projects can be mined profitably. Accordingly, it is not assured that the
    Company will realize any profits in the short to medium term, if at all, from
    its mineral properties. Any profitability in the future from the business of
    exploration will be dependent upon developing and commercially mining an
    economic deposit of minerals, which in itself, is subject to numerous risk
    factors. The exploration and development of mineral deposits involve a high
    degree of financial risk over a significant period of time that even a
    combination of managements careful evaluation, experience and knowledge may not
    eliminate. There are a number of uncertainties inherent in any exploration and
    development program, including the location of economic ore bodies, the
    development of appropriate metallurgical processes, the receipt of necessary
    governmental permits, and the construction of mining and processing
    facilities.

While discovery of ore-bearing structures may result in
    substantial rewards, few properties that are explored are ultimately developed
    into producing mines. Major expenses may be required to establish reserves by
    drilling and to construct mining and processing facilities at a particular site.
    It is impossible to ensure that the current exploration, development and
    production programs of the Company will result in profitable commercial mining
    operations. The profitability of the Companys operations will be, in part,
    directly related to the cost and success of its exploration and development
    programs, which may be affected by a number of factors. Substantial expenditures
    are required to establish reserves that are sufficient to commercially mine some
    of the Companys properties and construct, complete and install mining and
    processing facilities on those properties that are actually mined and developed.

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|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

No History of Profitability from Mineral Exploration

The Company is a development stage company with no history of
    profitability from mineral exploration. There can be no assurance that the
    operations of the Company will be profitable in the future. The Company has
    limited financial resources and will require additional financing to further
    explore, develop, acquire, retain and engage in commercial production on its
    property interests and, if financing is unavailable for any reason, the Company
    may become unable to acquire and retain its mineral concessions and carry out
    its business plan.

Market Fluctuations and Commercial Quantities

The market for minerals is influenced by many factors beyond
    the control of the Company such as changing production costs, the supply and
    demand for minerals, the rate of inflation, the inventory of mineral producing
    companies, the international economic and political environment, changes in
    international investment patterns, global or regional consumption patterns,
    costs of substitutes, currency availability and exchange rates, interest rates,
    speculative activities in connection with minerals, and increased production due
    to improved mining and production methods. The metals industry in general is
    intensely competitive and there is no assurance that, even if commercial
    quantities and qualities of metals are discovered, a market will exist for the
    profitable sale of such metals. Commercial viability of precious and base metals
    and other mineral deposits may be affected by other factors that are beyond the
    Companys control including particular attributes of the deposit such as its
    size, quantity and quality, the cost of mining and processing, proximity to
    infrastructure and the availability of transportation and sources of energy,
    financing, government legislation and regulations including those relating to
    prices, taxes, royalties, land tenure, land use, import and export restrictions,
    exchange controls, restrictions on production, as well as environmental
    protection. It is impossible to assess with certainty the impact of various
    factors that may affect commercial viability so that any adverse combination of
    such factors may result in the Company not receiving an adequate return on
    invested capital.

Mining Risks and Insurance

The Company is subject to risks normally encountered in the
    mining industry, such as unusual or unexpected geological formations, cave-ins
    or flooding. The Company may become subject to liability for pollution, damage
    to life or property and other hazards if mineral exploration against which it or
    the operator of its exploration programs cannot insure or against which it or
    such operator may elect not to insure because of high premium costs or other
    reasons. In addition, insurance coverage may not continue to be available or may
    not be adequate to cover any resulting liability. Losses from these events may
    cause the Company to incur significant costs that could have a material adverse
    effect upon the Companys financial condition and results of operations.

Environmental Risk

The mining and mineral processing industries are subject to
    extensive governmental regulations for the protection of the environment,
    including regulations relating to air and water quality, mine reclamation, solid and hazardous waste handling and disposal
    and the promotion of occupational health and safety, which may adversely affect
    the Company or require it to expend significant funds.

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|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

Title Risk

The validity of unpatented mining claims on public lands, which
    constitute most of the Companys property holdings, is often uncertain and may
    be contested and subject to title defects.

Property Interests

The Company's gold and coal interests being the Dixie-Comstock
    Project, Fondaway Canyon Project and Kentucky Project (collectively Property
    Interests) are the Companys remaining material projects. As noted under
  Highlights, the Company completed the recent Transaction with Scorpio and will
    currently be solely dependent upon these remaining Property Interests. As a
    result, any adverse developments affecting the Company's existing Property
    Interests would have a material adverse effect on the Companys financial
    condition and results of its operations.

Credit Risk

Credit risk is the risk of loss associated with counterpartys
    inability to fulfill its payment obligations. The Company's credit risk is
    primarily attributable to cash, sundry receivables and reclamation bonds. As of
    the date hereof, the Company has no significant concentration of credit risk
    arising from operations. While cash and reclamation bonds are held with
    reputable financial institutions from which management believes the risk of loss
    to be minimal, there can be no assurances that such institutions will not
    encounter economic difficulties, which may, in turn, have a material adverse
    effect on the Company.

Liquidity Risk

There is a risk that the Company will not be able to meet its
    financial obligations when they become due, or can only do so at excessive cost.
    The Company's approach to managing liquidity risk is to ensure that it will have
    sufficient liquidity to meet liabilities when due. However, since the Company
    does not have any revenue, there is a risk that the Company will not have
    sufficient cash resources to meet liabilities as they come due.

Commodity Prices

The value and price of the Companys securities, its financial
    results, and its exploration, development and mining activities may be
    significantly adversely affected by declines in the price of gold, other
    precious metals and coal. Gold prices fluctuate widely and are affected by
    numerous factors beyond the Companys control, such as interest rates, exchange
    rates, inflation or deflation, fluctuation in the value of the U.S. dollar and
    foreign currencies, global and regional supply and demand, and the political and economic conditions of gold
    producing countries throughout the world.

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|Royal Standard Minerals Inc.        
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|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

Government Regulation

The Companys mineral exploration and development activities,
    if any, are subject to various laws governing prospecting, mining, development,
    production, taxes, labor standards and occupational health, mine safety, toxic
    substances, land use, water use, land claims of local people and other matters.
    The Company can provide no assurance that new rules and regulations will not be
    enacted or that existing rules and regulations will not be applied in a manner
    which could limit or curtail the Companys exploration, production or
    development activities. There is no guarantee that the Companys exploration
    licenses will be extended or that new exploration licenses will be approved. In
    addition, such exploration licenses could be changed and there can be no
    assurances that any application to renew any existing licenses will be approved.
    Failure to comply with applicable laws, regulations and permitting requirements
    may result in enforcement actions there under, including orders issued by
    regulatory or judicial authorities causing operations to cease or be curtailed,
    and may include corrective measures requiring capital expenditures, installation
    of additional equipment, or remedial actions. Government approvals and permits
    are currently, and may in the future be, required in connection with the
    Companys operations, if any. There can be no assurance that the Company will be
    able to obtain these permits in a timely manner.

Capital Investment

The ability of the Company to continue exploration and
    development of its property interests, should this be entertained, will be
    dependent upon its ability to raise significant additional financing hereafter.
    There is no assurance that adequate financing will be available to the Company
    or that the terms of such financing will be favorable. Should the Company not be
    able to obtain such financing, or be able to dispose of any or all of its
    remaining properties, they may be lost entirely.

Conflicts of Interest

Certain of the directors and officers of the Company may also
    serve as directors and officers of other companies involved in base, precious
    metal or coal exploration and development 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.

Dependence on Key Employees

The Companys business is dependent on retaining the services
    of a small number of key employees. The success of the Company is, and will
    continue to be, to a significant extent, dependent on the expertise and experience of these employees.
    The loss of one or more of these employees could have a materially adverse
    effect on the Company.

119

---

|Royal Standard Minerals Inc.        
|------------------------------------
|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

Litigation Risk

The Company has been named as a defendant in various legal
    proceedings as noted above under Contingencies and 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 their 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:

(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

120

---

|Royal Standard Minerals Inc.        
|------------------------------------
|Managements Discussion and Analysis
|Year Ended January 31, 2013         
|Discussion Dated May 24, 2013       
|                                    

(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

The following table sets forth a breakdown of the components of
    general and administrative expenditures for the Company, for the years ended
    January 31, 2013 and 2012.

January 31, 2013 $
        January 31, 
          2012 
          $DetailCorporate development
        180,146
        263,251Insurance
        28,533
        22,841Office and general
        30,643
        1,719Professional fees
        1,024,556
        1,489,989Consulting, wages and salaries
        511,545
        526,446Share-based payments
        429,496
        503,942Travel
        38,938
        -Depreciation
        379
        931Total
        2,244,236
        2,809,119


121

---



---



---

Royal Standard Minerals Inc.

(Expressed in United States Dollars)

Consolidated Financial Statements

January 31, 2012 and 2011

---

122

---

MANAGEMENT'S RESPONSIBILITY FORCONSOLIDATED
FINANCIAL REPORTING

The accompanying audited annual financial statements of Royal
Standard Minerals Inc. (the "Company") are the responsibility of the Board of Directors.

The audited annual financial statements have been prepared by
management, on behalf of the Board of Directors, in accordance with the
accounting policies disclosed in the notes to the audited annual financial
statements. Where necessary, management has made informed judgments and
estimates in accounting for transactions which were not complete at the
reporting date. In the opinion of management, the financial statements have been
prepared within acceptable limits of materiality and are in compliance with all
applicable International Financial Reporting Standards.

Management has established processes, which are in place to
provide it sufficient knowledge to support management representations that it
has exercised reasonable diligence that (i) the audited annual 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 audited annual financial
statements; and (ii) the audited annual financial statements fairly present in
all material respects the financial condition, financial performance and cash
flows of the Company, as of the date of and for the periods presented by the
audited annual financial statements.

The Board of Directors is responsible for reviewing and
approving the audited annual financial statements together with other financial
information of the Company and for ensuring that management fulfills its
financial reporting responsibilities. An Audit Committee assists the Board of
Directors in fulfilling this responsibility. The Audit Committee meets with
management to review the financial reporting process and the audited annual
financial statements together with other financial information of the Company.
The Audit Committee reports its findings to the Board of Directors for its
consideration in approving the audited annual financial statements together with
other financial information of the Company for issuance to the shareholders.

Management recognizes its responsibility for conducting the
Companys affairs in compliance with established financial standards, and
applicable laws and regulations, and for maintaining proper standards of conduct
for its activities.

|(signed) "Philip Gross"                       | (signed) "Ike Makrimichalos"
|--------------------------------------------- | ----------------------------
|                                              |                             
|Philip Gross                                  | Ike Makrimichalos           
|Interim President and Chief Executive Officer | Chief Financial Officer     

Toronto, CanadaMay 29, 2012

123

---



Independent Auditors' Report

To the Shareholders ofRoyal Standard Minerals Inc.

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial
statements of Royal Standard Minerals Inc. (the Company), which comprise the
consolidated statements of financial position as at January 31, 2012, January
31, 2011 and February 1, 2010, and the consolidated statements of operations,
changes in shareholders equity and cash flows for the years ended January 31,
2012 and 2011 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 as issued by the International
Accounting Standards Board, 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 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 audits
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, 2012, January 31, 2011 and February 1, 2010, and
its financial performance and its cash flows for the years ended January 31,
2012 and 2011 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 to
the consolidated financial statements which indicates that the Company has no
sources of recurring revenue and has incurred losses amounting to $44,553,494
since its inception. These conditions, along with other matters as set forth in
Note 1, indicate the existence of material uncertainties that may cast
significant doubt about the Companys ability to continue as a going
concern.

|                 | Signed: MSCM LLP         
|---------------- | ---------------------------
|                 |                            
|                 | Chartered Accountants      
|                 | Licensed Public Accountants
|Toronto, Ontario |                            
|May 29, 2012     |                            

701 Evans Avenue, 8th Floor, Toronto ON M9C 1A3, Canada T
(416) 626-6000 F (416) 626-8650 MSCM.CA

124

---

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

|                                                   |   | As at       |   |   | As at       |   |   | As at       |  
|-------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ----------- | -
|                                                   |   | January 31, |   |   | January 31, |   |   | February 1, |  
|                                                   |   | 2012        |   |   | 2011        |   |   | 2010        |  
|                                                   |   |             |   |   | (Note 21)   |   |   | (Note 21)   |  
|                                                   |   |             |   |   |             |   |   |             |  
|Assets                                             |   |             |   |   |             |   |   |             |  
|Current                                            |   |             |   |   |             |   |   |             |  
|Cash                                               | $ | 629,553     |   | $ | 102,038     |   | $ | 745,779     |  
|Marketable
      securities (Note 5)               |   | 150,000     |   |   | 52,000      |   |   | 60,500      |  
|Sundry receivables and prepaids
      (Note 6)     |   | 156,275     |   |   | 61,277      |   |   | 24,537      |  
|                                                   |   | 935,828     |   |   | 215,315     |   |   | 830,816     |  
|                                                   |   |             |   |   |             |   |   |             |  
|Due from related parties (Note 17)                 |   | -           |   |   | -           |   |   | 121,740     |  
|Reclamation bonds (Note 7)                         |   | 633,034     |   |   | 537,860     |   |   | 534,984     |  
|Equipment, net (Note 9)                            |   | 2,084,336   |   |   | 453,733     |   |   | 725,906     |  
|                                                   | $ | 3,653,198   |   | $ | 1,206,908   |   | $ | 2,213,446   |  
|                                                   |   |             |   |   |             |   |   |             |  
|Liabilities                                        |   |             |   |   |             |   |   |             |  
|Current                                            |   |             |   |   |             |   |   |             |  
|Accounts payable and accrued liabilities (Note 10) | $ | 3,033,763   |   | $ | 578,627     |   | $ | 301,381     |  
|Due to related
      parties (Note 17)             |   | 35,023      |   |   | 357,061     |   |   | -           |  
|Long-term debt - current portion (Note 12)         |   | 2,965,962   |   |   | -           |   |   | -           |  
|Embedded
      derivative on long-term debt        |   |             |   |   |             |   |   |             |  
|- current portion (Note 12)                        |   | 85,361      |   |   | -           |   |   | -           |  
|                                                   |   |             |   |   |             |   |   |             |  
|                                                   |   | 6,120,109   |   |   | 935,688     |   |   | 301,381     |  
|                                                   |   |             |   |   |             |   |   |             |  
|Asset retirement obligations
      (Note 11)       |   | 292,315     |   |   | 232,010     |   |   | 232,010     |  
|Long-term debt (Note 12)                           |   | 2,965,961   |   |   | -           |   |   | -           |  
|Embedded derivative on long-term debt (Note 12)    |   | 85,360      |   |   | -           |   |   | -           |  
|                                                   |   | 9,463,745   |   |   | 1,167,698   |   |   | 533,391     |  
|                                                   |   |             |   |   |             |   |   |             |  
|Shareholders' (Deficiency) Equity                  |   |             |   |   |             |   |   |             |  
|Share capital (Note 13(b))                         |   | 28,098,264  |   |   | 28,098,264  |   |   | 28,098,264  |  
|Reserves                                           |   | 10,580,808  |   |   | 10,076,866  |   |   | 10,076,866  |  
|Accumulated deficit                                |   | (44,553,494 | ) |   | (38,101,796 | ) |   | (36,468,951 | )
|Accumulated other comprehensive (loss) income      |   | 63,875      |   |   | (34,124     | ) |   | (26,124     | )
|                                                   |   | (5,810,547  | ) |   | 39,210      |   |   | 1,680,055   |  
|                                                   | $ | 3,653,198   |   | $ | 1,206,908   |   | $ | 2,213,446   |  

Going Concern(Note 1)Contingencies(Note
18)Subsequent events(Note 22)

Approved by the Board:

|Paul
      G. Smith |  | James B. Clancy | 
|------------------- |  | --------------- | 
|Director            |  | Director        | 









The accompanying notes are an integral part of these
consolidated financial statements.125

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Consolidated Statements of Operations     
|(expressed in
      United States Dollars)

|For the years ended January 31                                                           |   | 2012       |   |   | 2011       |  
|---------------------------------------------------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                                                                         |   |            |   |   | (Note 21)  |  
|                                                                                         |   |            |   |   |            |  
|Expenses                                                                                 |   |            |   |   |            |  
|Exploration and evaluation expenditures (Note
      8)                                   | $ | 2,954,356  |   | $ | 1,044,905  |  
|General and administrative (Note 19)                                                     |   | 2,809,119  |   |   | 741,275    |  
|                                                                                         |   | 5,763,475  |   |   | 1,786,180  |  
|                                                                                         |   |            |   |   |            |  
|Other items                                                                              |   |            |   |   |            |  
|Finance income                                                                           |   | 4,291      |   |   | 3,221      |  
|Finance costs (Note 12)                                                                  |   | (712,822   | ) |   | -          |  
|Write down of advances to
      related Company                                          |   | -          |   |   | (132,060   | )
|Gain on disposal of marketable securities                                                |   | -          |   |   | 275,194    |  
|Foreign currency translation adjustment                                                  |   | 20,308     |   |   | 6,980      |  
|                                                                                         |   |            |   |   |            |  
|Net loss for the year                                                                    | $ | (6,451,698 | ) | $ | (1,632,845 | )
|                                                                                         |   |            |   |   |            |  
|Basic and diluted loss per share (Note 15)                                               | $ | (0.08      | ) | $ | (0.02      | )
|                                                                                         |   |            |   |   |            |  
|Consolidated Statements of Comprehensive Loss
      (expressed in United States Dollars) |   |            |   |   |            |  
|                                                                                         |   |            |   |   |            |  
|For the years ended
      January 31                                                     |   | 2012       |   |   | 2011       |  
|                                                                                         |   |            |   |   | (Note 21)  |  
|                                                                                         |   |            |   |   |            |  
|Net loss for the year                                                                    | $ | (6,451,698 | ) | $ | (1,632,845 | )
|                                                                                         |   |            |   |   |            |  
|Other comprehensive income (loss)                                                        |   |            |   |   |            |  
|Net unrealized income (loss) on available-for-sale
      marketable securities           |   | 97,999     |   |   | (8,000     | )
|                                                                                         |   |            |   |   |            |  
|Comprehensive loss for the year                                                          | $ | (6,353,699 | ) | $ | (1,640,845 | )









The accompanying notes are an integral part of these
consolidated financial statements.126

---

|Royal Standard Minerals Inc.                                    
|----------------------------------------------------------------
|Consolidated Statements of Changes in Shareholders'
      Equity
|(Expressed in
      United States Dollars)                      

|                                                                                    |   |            |  |   |            |  |   |             |   |   | Accumulated   |   |   |            |  
|----------------------------------------------------------------------------------- | - | ---------- |  | - | ---------- |  | - | ----------- | - | - | ------------- | - | - | ---------- | -
|                                                                                    |   |            |  |   |            |  |   |             |   |   | Other         |   |   |            |  
|                                                                                    |   | Share      |  |   |            |  |   | Accumulated |   |   | Comprehensive |   |   |            |  
|January 31, 2011                                                                    |   | Capital    |  |   | Reserves   |  |   | Deficit     |   |   | Income (Loss) |   |   | Total      |  
|                                                                                    |   |            |  |   |            |  |   |             |   |   |               |   |   |            |  
|Balance, February 1, 2010                                                           | $ | 28,098,264 |  | $ | 10,076,866 |  | $ | (36,468,951 | ) | $ | (26,124       | ) | $ | 1,680,055  |  
|Net loss for the year                                                               |   | -          |  |   | -          |  |   | (1,632,845  | ) |   | -             |   |   | (1,632,845 | )
|Net decrease in unrealized losses on available-for-sale
      marketable securities |   | -          |  |   | -          |  |   | -           |   |   | (8,000        | ) |   | (8,000     | )
|Balance, January 31, 2011                                                           | $ | 28,098,264 |  | $ | 10,076,866 |  | $ | (38,101,796 | ) | $ | (34,124       | ) | $ | 39,210     |  

|                                                                                  |   |            |  |   |            |  |   |             |   |   | Accumulated   |   |   |            |  
|--------------------------------------------------------------------------------- | - | ---------- |  | - | ---------- |  | - | ----------- | - | - | ------------- | - | - | ---------- | -
|                                                                                  |   |            |  |   |            |  |   |             |   |   | Other         |   |   |            |  
|                                                                                  |   | Share      |  |   |            |  |   | Accumulated |   |   | Comprehensive |   |   |            |  
|January 31, 2012                                                                  |   | Capital    |  |   | Reserves   |  |   | Deficit     |   |   | Income (Loss) |   |   | Total      |  
|                                                                                  |   |            |  |   |            |  |   |             |   |   |               |   |   |            |  
|Balance, February 1, 2011                                                         | $ | 28,098,264 |  | $ | 10,076,866 |  | $ | (38,101,796 | ) | $ | (34,124       | ) | $ | 39,210     |  
|Stock-based payments                                                              |   | -          |  |   | 503,942    |  |   | -           |   |   | -             |   |   | 503,942    |  
|Net loss for the year                                                             |   | -          |  |   | -          |  |   | (6,451,698  | ) |   | -             |   |   | (6,451,698 | )
|Net
      increase in unrealized gain on available-for-sale marketable securities |   | -          |  |   | -          |  |   | -           |   |   | 97,999        |   |   | 97,999     |  
|Balance, January 31, 2012                                                         | $ | 28,098,264 |  | $ | 10,580,808 |  | $ | (44,553,494 | ) | $ | 63,875        |   | $ | (5,810,547 | )









The accompanying notes are an integral part of these
consolidated financial statements.127

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Consolidated Statements of Cash Flows     
|(expressed in
      United States Dollars)

|For the years ended January 31                        |   | 2012       |   |   | 2011       |  
|----------------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                                      |   |            |   |   | (Note 21)  |  
|                                                      |   |            |   |   |            |  
|Operating activities                                  |   |            |   |   |            |  
|Net loss for the year                                 | $ | (6,451,698 | ) | $ | (1,632,845 | )
|Operating items not involving
      cash:             |   |            |   |   |            |  
|Depreciation                                          |   | 137,274    |   |   | 272,172    |  
|Increase in asset retirement obligation               |   | 60,305     |   |   | -          |  
|Accretion expense                                     |   | 611,108    |   |   | -          |  
|Stock-based payments                                  |   | 503,942    |   |   | -          |  
|Gain on disposal
      of marketable securities       |   | -          |   |   | (275,194   | )
|Write down of advances to related Company             |   | -          |   |   | 132,060    |  
|Changes in non-cash working capital:                  |   |            |   |   |            |  
|Sundry receivables and prepaids                       |   | (94,998    | ) |   | (36,740    | )
|Accounts payable
      and accrued liabilities        |   | 1,481,098  |   |   | 277,246    |  
|Due to related parties                                |   | (322,038   | ) |   | 346,741    |  
|                                                      |   |            |   |   |            |  
|Cash used in operating activities                     |   | (4,075,007 | ) |   | (916,560   | )
|                                                      |   |            |   |   |            |  
|Financing activities                                  |   |            |   |   |            |  
|Increase in long-term debt                            |   | 5,970,350  |   |   | -          |  
|Finance costs paid on long-term debt                  |   | (400,000   | ) |   | -          |  
|                                                      |   |            |   |   |            |  
|Cash provided by financing activities                 |   | 5,570,350  |   |   | -          |  
|                                                      |   |            |   |   |            |  
|Investing activities                                  |   |            |   |   |            |  
|Increase in reclamation bonds                         |   | (95,174    | ) |   | (2,876     | )
|Purchase of equipment                                 |   | (872,654   | ) |   | -          |  
|Proceeds on disposal of marketable securities         |   | -          |   |   | 275,695    |  
|                                                      |   |            |   |   |            |  
|Cash
      (used in) provided by investing activities |   | (967,828   | ) |   | 272,819    |  
|                                                      |   |            |   |   |            |  
|Change in cash                                        |   | 527,515    |   |   | (643,741   | )
|                                                      |   |            |   |   |            |  
|Cash, beginning of year                               |   | 102,038    |   |   | 745,779    |  
|                                                      |   |            |   |   |            |  
|Cash, end of year                                     | $ | 629,553    |   | $ | 102,038    |  









The accompanying notes are an integral part of these
consolidated financial statements.128

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 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 50 Richmond Street East, Suite 101, Toronto, Ontario,
M5C1N7.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The consolidated financial statements were approved by the Board of Directors on May 29, 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | 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 has incurred a loss in the current and prior periods, with a current net loss of $6,451,698 during the year ended January 31, 2012 (2011 - $1,632,845) and has an accumulated deficit of
$44,553,494 (January 31, 2011 - $38,101,796, February 1, 2010 - $36,468,951).                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The underlying value of the resource properties is dependent upon the existence and economic recovery of economic 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 its interest 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, its current creditors and securing
additional financing. During the year ended January 31, 2012, the Company secured financing of $8,000,000 (see note 12). These 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.









129

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|2. | Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | [a] Statement of compliance and
      conversion to International Financial Accounting Standards
  (IFRS)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | These consolidated financial statements of the Company
      have been prepared in accordance with IFRS as issued by the International
      Accounting Standards Board (IASB).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | These consolidated financial statements have been
      prepared in accordance with IFRS with a changeover date of February 1,
      2011 and a transition date of February 1, 2010. Previously, the Company
      prepared its financial statements in accordance with Canadian Generally
      Accepted Accounting Principles (GAAP). The disclosures required by the
      provision of IFRS 1, First-time adoption of International Financial
      Reporting Standards, explaining how the transition to IFRS has affected
      the reported loss and comprehensive loss, cash flows, changes of equity
      and financial position of the Company, are presented in note 21.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The policies applied in these consolidated financial
      statements are presented below and are based on IFRS issued and
      outstanding as of May 29, 2012, the date the Board of Directors approved
      the consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | [b] Accounting polices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Principles of consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | These consolidated financial statements include the
      accounts of the Company and its wholly-owned subsidiaries, Kentucky
      Standard Energy 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 the equipment's fair value less cost to
sell or its value in use.









130

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|2. | 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 14 and
      recorded as stock-based compensation 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              









131

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2012                          

|2. | Significant Accounting Policies (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | [b] Accounting polices (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Income taxes (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Loss per common share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Basic loss per share is computed by dividing the 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 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            









132

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2012                          

|2. | Significant Accounting Policies (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | [b] Accounting polices (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Foreign currency translation (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | 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 statement of earnings (loss). 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Assets and liabilities of entities with functional currencies other than United States dollars are translated at the year end rates of exchange, and the results of their operations are translated at average rates of exchange for
the year. The resulting translation adjustments are included in accumulated other comprehensive income in shareholders' equity.                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | 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 income (loss).                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         









133

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2012                          

|2. | Significant Accounting Policies (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | [b] Accounting polices (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 and due from related parties 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | 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, long-term debt, and asset retirement obligations are classified as other financial liabilities. The Company does not currently apply hedge accounting.                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The effective interest method is a method of calculating the amortised 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.









134

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2012                          

|2. | Significant Accounting Policies (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | [b] Accounting polices (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, 2012, January 31, 2011 and February 1, 2010, the only financial assets or liability measured at fair value is the Company's cash and cash equivalents, investment in Sharpe Resources Corporation ("Sharpe"),
and embedded derivative on long-term debt. As at January 31, 2012, Sharpe's fair market value was determined to be $150,000 (January 31, 2011 - $52,000 and February 1, 2010 - $60,500), and the embedded derivative on long-term debt's fair
market value was determined to be $170,721.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Cash and cash equivalents, Sharpe, and embedded derivative on long-term debt are considered Level 1 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:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

- management's assumption of material restoration, rehabilitation and environmental obligations, based on the facts and circumstances that existed during the period; and
- management's assumption used to determine the fair value of the embedded derivative on long-term debt.









135

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|2. | Significant Accounting Policies
  (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | [b] Accounting polices
    (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Significant accounting judgments and estimates
      (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Critical accounting judgments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The categorization of financial assets and liabilities is
      an accounting policy that requires management to make judgments or
      assessments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Long-term debt instruments are initially recognized at
      fair value, net of debt issuance costs incurred. Long- term debt
      instruments are subsequently valued at amortized cost. Debt issue costs
      are deducted from the balance of the underlying debt and amortized using
      the effective interest rate method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Embedded derivative on Long-term
    debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | 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. All financial
      derivative contracts are classified as fair value through profit or
      loss.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | 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 profit
      or loss.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | [c] New standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | 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, 2015. The Company has not yet
      assessed the impact of the standard or determined whether it will adopt
      the standard early.









136

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2012                          

|2. | Significant Accounting Policies (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | [c] New standards (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | IFRS 10 Consolidated Financial Statements (“IFRS 10”)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | IFRS 10 provides a single model to be applied in the control analysis for all investees, including entities that currently are SPEs ("Special purpose entities") in the scope of SIC-12. In addition, the consolidation procedures are
carried forward substantially unmodified from IAS 27 (2008). IFRS 10 is effective for annual periods beginning on or after January 1, 2013, with early adoption permitted. The Company has not yet assessed the impact of the standard or determined
whether it will adopt the standard early.                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | IFRS 11 Joint Arrangements (“IFRS 11”)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | IFRS 11 replaces the guidance in IAS 31 Interests in Joint Ventures and SIC 13 - Joint Controlled Entities - Non-Monetary Contributions by Venturers. IFRS 11 is effective for annual periods beginning on or after January 1, 2013,
with early adoption permitted. The Company has not yet assessed the impact of the standard or determined whether it will adopt the standard early.                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | 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. IFRS 12 is effective for annual periods beginning on or after January 1, 2013. The Company has not yet assessed the impact of the standard or determined whether it will adopt the standard early.                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | IFRS 13, Fair Value Measurement ("IFRS 13")                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | IFRS 13, Fair Value Measurement was issued by the IASB on May 12, 2011. The new standard converges IFRS and US GAAP on how to measure fair value and the related fair value disclosures. The new standard creates a single source of
guidance for fair value measurements, where fair value is required or permitted under IFRS, by not changing how fair value is used but how it is measured. The focus will be on an exit price. IFRS 13 is effective for annual periods beginning on or
after January 1, 2013, with early adoption permitted. The Company has not yet assessed the impact of the standard or determined whether it will adopt the standard early.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | 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.                                                       









137

---

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

|2. | Significant Accounting Policies
  (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | [c] New standards (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | IAS 28 Investments in Associates and Joint
      Ventures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | As a consequence of the issue of IFRS 10, IFRS 11 and
      IFRS 12, IAS 28 has been amended and will further provide the accounting
      guidance for investments in associates and will set out the requirements
      for the application of the equity method when accounting for investments
      in associates and joint ventures. This standard will be applied by the
      Company when there is joint control, or significant influence over an
      investee. Significant influence is the power to participate in the
      financial and operating policy decisions of the investee but does not
      include control or joint control of those policy decisions. When
      determined that the Company has an interest in a joint venture, the
      Company will recognize an investment and will account for it using the
      equity method in accordance with IAS 28. IAS 28 is required to be applied
      for annual periods beginning on or after January 1, 2013, with earlier
      adoption permitted. The Company has not yet assessed the impact of the
      standard or determined whether it will adopt the standard early.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3. | 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 considers its capital
(deficiency) to be equity, comprising share capital, reserves, accumulated
deficit and accumulated other comprehensive loss, which at January 31, 2012,
totalled $(5,810,547) (January 31, 2011 - $39,210, February 1, 2010 -
$1,680,055). Note that included in the balance presented is a deficit of
$44,553,494 as at January 31, 2012 (January 31, 2011 - $38,101,796, February 1,
2010 -$36,468,951).

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
year ended January 31, 2012. The Company is not subject to external capital
requirements.









138

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|4. | Property and Financial Risk Factors                                                                                                                                                                                                                                                                                                                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | (a) Property risk                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Company's significant mineral property is the
      Goldwedge Project.                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Unless the Company acquires or develops additional
      significant resource properties, the Company will be solely dependent upon
      the Goldwedge Project. If no additional mineral properties are acquired by
      the Company, any adverse development affecting the Goldwedge Project 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.                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 









139

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|4. | Property and Financial Risk Factors
    (Continued)                                                                                                                                    
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                        
|   | (b) Financial risk factors
      (continued)                                                                                                                                           
|   |                                                                                                                                                                                        
|   |                                                                                                                                                                                        
|   |                                                                                                                                                                                        
|   |                                                                                                                                                                                        
|   |                                                                                                                                                                                        
|   |                                                                                                                                                                                        
|   |                                                                                                                                                                                        
|   |                                                                                                                                                                                        
|   |                                                                                                                                                                                        
|   |                                                                                                                                                                                        
|   |                                                                                                                                                                                        
|   | (c) Sensitivity analysis                                                                                                                                                               
|   |                                                                                                                                                                                        
|   | As of January 31, 2012, 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, 2012, if the fair value of the marketable
  securities had decreased/increased by 10% with all other variables held
  constant, comprehensive loss for the year ended January 31, 2012 would have
  been approximately $15,000 higher/lower. Similarly, as at January 31, 2012,
  reported shareholders' equity would have been approximately $15,000
  lower/higher as a result of a 10% decrease/increase in the fair value of
  marketable securities.
- Cash, sundry receivables, due from and to related parties, and accounts
  payable and accrued liabilities denominated in Canadian dollars are subject to
  foreign currency risk. As at January 31, 2012, had the US dollar
  weakened/strengthened by 5% against the Canadian dollar with all other
  variables held constant, it would affect net loss and comprehensive loss by
  approximately $36,000.









140

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|4. | 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, 2012, 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.
- The fair value of embedded derivatives on long-term debt is determined by
  the gold price at the repayment dates. When the gold price is over $1,600 per
  ounce, the embedded derivative would have a value. As at January 31, 2012, had
  the future gold price increased/decreased $50 dollars per ounce, it would
  affect net loss and comprehensive loss by approximately $57,000.

|5. | Marketable Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Marketable securities consist of 2,000,000 common shares
      of Sharpe Resources Corporation ("Sharpe"), 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,
      2012 was $150,000 (January 31, 2011 - $52,000, February 1, 2010 -
      $60,500).
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|6. | Sundry Receivables and
Prepaids                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

| |                       |   | As at       |  |   | As at       |  |   | As at       | 
| | --------------------- | - | ----------- |  | - | ----------- |  | - | ----------- | 
| |                       |   | January 31, |  |   | January 31, |  |   | February 1, | 
| |                       |   | 2012        |  |   | 2011        |  |   | 2010        | 
| |                       |   |             |  |   |             |  |   |             | 
| | Sales tax receivables | $ | 71,415      |  | $ | 18,290      |  | $ | 1,573       | 
| | Other receivables     |   | 60,094      |  |   | 31,592      |  |   | 12,080      | 
| | Prepaid expenses      |   | 24,766      |  |   | 11,395      |  |   | 10,884      | 
| |                       |   |             |  |   |             |  |   |             | 
| |                       | $ | 156,275     |  | $ | 61,277      |  | $ | 24,537      | 

|7. | 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. $397,676 of the
      reclamation bonds pertains to the Goldwedge Project, $56,658 to the Piñon
      Project and $178,700 to the Kentucky Project.









141

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|8. | Exploration and Evaluation Expenditures on Mineral
      Properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | (a) Goldwedge Project                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Goldwedge Project, a property owned by the Company,
      represents the Company's most advanced project and is located in the
      Manhattan District in Nye County, Nevada, approximately eight miles south
      of the Round Mountain mine and has been issued a mine and mill permit by
      the Nevada Division of Environmental Protection. The Company is completing
      refurbishment of the on-site processing plant which was used for the test
      mining and processing that took place between 2007 and 2008. The process
      includes primary and secondary crushing and grinding facilities that feed
      a gravity recovery system. In addition, dry stack tailings containment as
      well as silt and fresh water ponds are 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. The Company has recently completed
      construction of the Rapid Infiltration Basins (RIB), dewatered the
      previously completed underground development and also commenced phase 2 of
      the underground development program. This phase of the development
      includes the exploration of defined mineralized zones concurrently with
      the second phase of decline development. The previous work had
      concentrated on the development of a spiral decline as a means to explore
      the deposit at depth. As part of the program, a series of crosscuts were
      constructed at specific intervals to effectively assess the potential
      mineralized zones. Phase 2 of the development is concentrated on
      developing along the strike of known mineralized zones to assess
      continuity and grade as well as prepare areas for future test stoping. All
      material is sampled daily and analyzed for gold onsite at the Company's
      assay laboratory. In addition, the Company sends samples for analysis to
      an independent laboratory located offsite.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Also held under the same option agreement as the
      Goldwedge Property was the Dixie-Comstock Mining Company option, in Nye
      County located within the Manhattan District 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
      asset retirement obligation ("ARO") of $168,276 on this project,
      representing the estimated costs, on a discounted basis, of the Company's
      obligation to restore the site to its original condition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | 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%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | (b) Piñon Project                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Piñon Project is a property made up of a number of
      property leases located in Elko Country, Nevada. Under the guidance of IAS
      37, the Company has recorded an ARO of $28,724 on this project,
      representing the estimated costs, on a discounted basis, of the Company's
      obligation to restore the site to its original condition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | (c) Fondaway Canyon Project                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Fondaway Canyon Project is located in Churchill
      County, Nevada. During the years ended January 31, 2011 and 2012, the
      Company did not perform any exploration on this
project.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             









142

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|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|8. | 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In the prior year, 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 $95,315, representing the
      estimated costs, on a discounted basis, of the Company's obligation to
      restore the property to its original condition.                                                                                                                                                                                   









143

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|8. | Exploration and Evaluation Expenditures on Mineral
      Properties (Continued)                                     
|-- | --------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                     
|   | During the year ended January 31, 2012, the Company's
      exploration and evaluation expenditures were as
follows:

| |                                              |   | Years Ended | 
| | -------------------------------------------- | - | ----------- | 
| |                                              |   | January 31, | 
| |                                              |   | 2012        | 
| |                                              |   |             | 
| | Gold Wedge Project                           |   |             | 
| | Property acquisition costs                   | $ | 10,000      | 
| | Travel                                       |   | 71,292      | 
| | Mine development costs                       |   | 397,626     | 
| | Drilling                                     |   | 40,206      | 
| | Professional fees                            |   | 113,442     | 
| | Consulting, wages and
      salaries         |   | 1,238,299   | 
| | Office and general                           |   | 393,149     | 
| | Analysis and assays                          |   | 7,392       | 
| | Supplies, equipment and transportation       |   | 353,312     | 
| | Depreciation                                 |   | 124,231     | 
| |                                              | $ | 2,748,949   | 
| |                                              |   |             | 
| | Piñon Project                                |   |             | 
| | Property acquisition costs                   | $ | 69,571      | 
| | Consulting, wages and salaries               |   | 1,617       | 
| |                                              | $ | 71,188      | 
| |                                              |   |             | 
| | Fondaway Project                             |   |             | 
| | Property acquisition costs                   | $ | 35,000      | 
| | Office and general                           |   | 2,297       | 
| |                                              | $ | 37,297      | 
| |                                              |   |             | 
| | Kentucky Project                             |   |             | 
| | Property acquisition costs                   | $ | -           | 
| | Travel                                       |   | 12,764      | 
| | Reclamation                                  |   | -           | 
| | Professional fees                            |   | 2,400       | 
| | Consulting, wages and
      salaries         |   | 46,300      | 
| | Office and general                           |   | 12,794      | 
| | Supplies, equipment and
      transportation |   | 10,552      | 
| | Depreciation                                 |   | 12,112      | 
| |                                              | $ | 96,922      | 
| |                                              |   |             | 
| | Total exploration activities                 | $ | 2,954,356   | 









144

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

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

| |                           |   | Construction |  |   | Exploration     |  |   | Office    |  |   |           | 
| | ------------------------- | - | ------------ |  | - | --------------- |  | - | --------- |  | - | --------- | 
| | COST                      |   | in progress  |  |   | equipment       |  |   | equipment |  |   | Total     | 
| | Balance, February 1, 2010 | $ | -            |  | $ | 2,977,464       |  | $ | 21,253    |  | $ | 2,998,717 | 
| | Additions                 |   | -            |  |   | -               |  |   | 553       |  |   | 553       | 
| | Balance, January 31, 2011 | $ | -            |  | $ | 2,977,464       |  | $ | 21,806    |  | $ | 2,999,270 | 
| | Additions                 |   | 1,619,341    |  |   | 148,536         |  |   | -         |  |   | 1,767,877 | 
| | Balance, January 31, 2012 | $ | 1,619,341    |  | $ | 3,126,000       |  | $ | 21,806    |  | $ | 4,767,147 | 
| |                           |   |              |  |   |                 |  |   |           |  |   |           | 
| |                           |   | Construction |  |   | Exploration     |  |   | Office    |  |   |           | 
| | ACCUMULATED DEPRECIATION  |   | in progress  |  |   | equipment       |  |   | equipment |  |   | Total     | 
| | Balance, February 1, 2010 | $ | -            |  | $ | 2,253,811       |  | $ | 19,000    |  | $ | 2,272,811 | 
| | Depreciation for the year |   | -            |  |   | 271,604         |  |   | 1,122     |  |   | 272,726   | 
| | Balance, January 31, 2011 | $ | -            |  | $ | 2,525,415       |  | $ | 20,122    |  | $ | 2,545,537 | 
| | Depreciation for the year |   | -            |  |   | 136,343         |  |   | 931       |  |   | 137,274   | 
| | Balance, January 31, 2012 | $ | -            |  | $ | 2,661,758       |  | $ | 21,053    |  | $ | 2,682,811 | 
| |                           |   |              |  |   |                 |  |   |           |  |   |           | 
| |                           |   | Construction |  |   | **Exploration** |  |   | Office    |  |   |           | 
| | CARRYING AMOUNT           |   | in progress  |  |   | **equipment**   |  |   | equipment |  |   | Total     | 
| | Balance, February 1, 2010 | $ | -            |  | $ | 723,653         |  | $ | 2,253     |  | $ | 725,906   | 
| | Balance, January 31, 2011 | $ | -            |  | $ | 452,049         |  | $ | 1,684     |  | $ | 453,733   | 
| | Balance, January 31, 2012 | $ | 1,619,341    |  | $ | 464,242         |  | $ | 753       |  | $ | 2,084,336 | 

Construction in progress relates to the
refurbishment of the mill at the Company's Goldwedge Project.

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.

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

| |                     |   | As at       |  |   | As at       |  |   | As at       | 
| | ------------------- | - | ----------- |  | - | ----------- |  | - | ----------- | 
| |                     |   | January 31, |  |   | January 31, |  |   | February 1, | 
| |                     |   | 2012        |  |   | 2011        |  |   | 2010        | 
| |                     |   |             |  |   |             |  |   |             | 
| | Trade payables      | $ | 579,664     |  | $ | 231,432     |  | $ | 68,002      | 
| | Accrued liabilities |   | 2,454,099   |  |   | 347,195     |  |   | 233,379     | 
| |                     | $ | 3,033,763   |  | $ | 578,627     |  | $ | 301,381     | 

Included in accrued liabilities are
accrued finance costs of $78,814 and accrued costs in connection with the

construction in progress, and purchase
of exploration equipment, totaling $895,223.









145

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|11. | 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
      ("ARO's") were estimated to be $292,315 as at January 31, 2012, assuming
      future payments of $484,706 being made over a ten year period from the
      date of initial assessment of the ARO's and a discount rate of
  10%.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Determination of the undiscounted ARO and the timing of
      these obligations were based on internal estimates using information
      currently available, existing regulations, and estimates of closure costs.
      There was no significant change in the present value of the obligation for
      the year ended January 31, 2011. Accordingly, no accretion cost has been
      expensed in the year ended January 31, 2011. During the year ended January
      31, 2012, the Company determined an additional $52,165 increase in ARO
      related to the Company's Goldwedge Project. The following is the
      reconciliation of the asset retirement
obligations:                                                                                                                                                                            

| |                                          |   | Year ended  |  |   | Year ended  |  |   | Year ended  | 
| | ---------------------------------------- | - | ----------- |  | - | ----------- |  | - | ----------- | 
| |                                          |   | January 31, |  |   | January 31, |  |   | February 1, | 
| |                                          |   | 2012        |  |   | 2011        |  |   | 2010        | 
| |                                          |   |             |  |   |             |  |   |             | 
| | Balance, beginning of year               | $ | 232,010     |  | $ | 232,010     |  | $ | 232,010     | 
| | Increase in asset retirement obligations |   | 52,165      |  |   | -           |  |   | -           | 
| | Accretion cost                           |   | 8,140       |  |   | -           |  |   | -           | 
| |                                          |   |             |  |   |             |  |   |             | 
| | Balance, end of year                     | $ | 292,315     |  | $ | 232,010     |  | $ | 232,010     | 

|12. | Long-Term Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | On June 29, 2011, the Company's wholly owned subsidiary,
      Manhattan Mining Co. ("Manhattan") entered into a secured bridge loan
      agreement (the Bridge Loan) with Waterton Global Value, L.P.
      (Waterton) pursuant to which Waterton agreed to provide an $8,000,000
      bridge loan (the Credit Facility) available to Manhattan. Of the total
      $8,000,000 Bridge Loan, $4,000,000 was available on closing and the
      remaining $4,000,000 after the satisfaction of certain covenants. Under
      the Bridge Loan agreement, the amounts drawn down under the Credit
      Facility would incur interest at 6% per annum, and the scheduled repayment
      date of the Credit Facility was 16 months after the initial closing date.
      In connection with the Credit Facility, Manhattan agreed to pay Waterton a
      structuring fee, and also provided Waterton with certain royalty interests
      relating to its Goldwedge Property. Manhattan and Waterton have also
      entered into a gold purchase agreement pursuant to which Waterton had
      agreed to purchase Manhattans production. The Credit Facility was secured
      by, amongst other items, the Companys real property assets in
    Nevada.









146

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31, 2012                          

|12. | Long-Term Debt (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | On August 26, 2011, Manhattan amended its existing Bridge Loan with 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 will make $8,000,000 (the “Principal Amount”) available to Manhattan. The Principal Amount is repayable by Manhattan to Waterton in monthly payments commencing in August
2012 and ending in July 2013. Under the Gold Stream Facility, each monthly repayment of the Principal Amount will be made by the delivery by Manhattan to Waterton of gold bullion ounces where the number of ounces to be delivered shall 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 is a profit participation formula which is
triggered when the spot price of gold is in excess of $1,600 an ounce on the business day immediately preceding the repayment ("Profit Participation"). The Principal Amount will accrue interest at 9.0% per annum. The Gold Stream Facility is
secured by, amongst other items, Manhattan's real property assets in Nevada.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The Company considers Profit Participation as an embedded derivative. As at January 31, 2012, the gross proceeds received under the Gold Stream Facility was $5,970,350, which was allocated to the embedded derivative based on
the initial fair values of the embedded derivative determined when proceeds were received ($170,721), and then the residual value was allocated to the liability portion. The Company estimates the future cash flow needs in terms of Profit
Participation using the gold future contract prices of repayment periods and discounted to the present value using 9% as annual discount rate. As of January 31, 2012, the Company estimates the gold future price during the repayment period from
August 2012 to July 2013 to be $1,750 per ounce.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | 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 in cash
and Manhattan also granted Waterton certain royalty interests over its exploration stage projects. In addition, Manhattan and Waterton have 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 will 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 any Principal Amounts actually drawn by Manhattan under the Gold Stream Facility.                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The Gold Stream Facility contains 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 are subject to certain carve-outs that facilitate Manhattan's ability to
operate its business efficiently. The Gold Stream Facility also includes 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.                                                                                                                                                                                              









147

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|12. | Long-Term Debt (Continued)                                                                                                                                                                                                                                                                                                                                                       
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                  
|    | At any time, without penalty, the Gold Stream Facility
      provides Manhattan the option to prepay in whole or in part, on 5 business
      days prior notice. Prepayments may be made in physical gold ounces or
      cash. The amount of any prepayment shall be calculated using the spot
      price of gold on the business day immediately preceding the
    prepayment.
|    |                                                                                                                                                                                                                                                                                                                                                                                  
|    | The following table shows the reconciliation between the
      gross proceeds received and the carrying value of the Gold Stream
      Facility.                                                                                                                                                                                                                                 

| | Gross proceeds                                                | $ | 5,970,350 |  
| | ------------------------------------------------------------- | - | --------- | -
| | Less: Initial fair value of the embedded
      derivative (i) |   | (170,721  | )
| | Less: Debt issuance cost (ii)                                 |   | (478,814  | )
| | Add:
      Accretion costs                                    |   | 611,108   |  
| |                                                               |   |           |  
| | Long-term debt (iii)                                          | $ | 5,931,923 |  

(i) There was no significant change in
the fair value of the embedded derivative during the year ended January 31,
2012. Accordingly, no such change was recorded in the consolidated statements of
operations. The fair value of the embedded derivative is presented as
follows:

| | Current portion     | $ | 85,361  | 
| | ------------------- | - | ------- | 
| | Non-current portion |   | 85,360  | 
| |                     | $ | 170,721 | 

(ii) Debt issuance costs consist of the
following:

| | Structuring and establishment
      fee | $ | 240,000 | 
| | --------------------------------------- | - | ------- | 
| | Placement fee                           |   | 238,814 | 
| |                                         | $ | 478,814 | 

(iii) The long-term debt balance is
presented as follows:

| | Current portion     | $ | 2,965,962 | 
| | ------------------- | - | --------- | 
| | Non-current portion |   | 2,965,961 | 
| |                     | $ | 5,931,923 | 

(iv) Minimum long-term debt repayments
under the Gold Stream Facility are as follows:

| | 12 months ended January 31,
      2013 | $ | 3,980,232 | 
| | -------------------------------------- | - | --------- | 
| | 12
      months ended January 31, 2014 |   | 3,980,233 | 
| |                                        | $ | 7,960,465 | 

As of January 31, 2012, the Company had
an interest payable balance of $155,930 related to the Gold Stream Facility. The balance was
recorded in the accounts payable and accrued liabilities.









148

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|13. | Share Capital                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------
|    |                                                                                                                
|    | (a) Authorized                                                                                                 
|    |                                                                                                                
|    | The authorized capital of the Company consists of an
      unlimited number of common shares without par value.
|    |                                                                                                                
|    | (b) Issued                                                                                                     

| | Common shares issued                                                   |  | Shares     |  |   | Amount     | 
| | ---------------------------------------------------------------------- |  | ---------- |  | - | ---------- | 
| | Balance, February 1, 2010, January 31, 2011 and January
      31, 2012 |  | 83,853,825 |  | $ | 28,098,264 | 

|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. The options vest when
      granted.                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | 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:                                                                                                                                                                                                                                                                                                                                                                                      

| |                                                      |  | Number of     |   |   | Weighted Average | 
| | ---------------------------------------------------- |  | ------------- | - | - | ---------------- | 
| |                                                      |  | Stock Options |   |   | Exercise Price   | 
| |                                                      |  |               |   |   |                  | 
| | Balance, February 1, 2010
      and January 31, 2011 |  | 7,904,691     |   | $ | 0.10             | 
| | Cancelled during the year                            |  | (544,500      | ) | $ | 0.10             | 
| | Granted (i)                                          |  | 4,700,000     |   | $ | 0.30             | 
| |                                                      |  |               |   |   |                  | 
| | Balance, January 31, 2012                            |  | 12,060,191    |   | $ | 0.17             | 









149

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|14. | Stock Options (continued)                                                                               
|--- | --------------------------------------------------------------------------------------------------------
|    |                                                                                                         
|    | The following table reflects the stock options
      outstanding and exercisable as at January 31,
2012:

| |                  |  | Exercise Price |  |  | Options     |  |  | Options     |  |   | Fair      |  |  | Weighted average | 
| | ---------------- |  | -------------- |  |  | ----------- |  |  | ----------- |  | - | --------- |  |  | ---------------- | 
| | Expiry Date      |  | ($)            |  |  | Outstanding |  |  | Exercisable |  |   | Value     |  |  | remaining years  | 
| |                  |  |                |  |  |             |  |  |             |  |   |           |  |  |                  | 
| | June 26, 2014    |  | 0.10           |  |  | 7,360,191   |  |  | 7,360,191   |  | $ | 4,002,581 |  |  | 2.40             | 
| | January 20, 2017 |  | 0.30           |  |  | 4,700,000   |  |  | 1,700,000   |  |   | 1,334,800 |  |  | 4.98             | 
| |                  |  |                |  |  |             |  |  |             |  |   |           |  |  |                  | 
| |                  |  |                |  |  | 12,060,191  |  |  | 9,060,191   |  | $ | 5,337,381 |  |  | 3.36             | 

|    | (i) On January 20, 2012, 4,700,000 options to purchase
      common shares of the Company at a price of $0.30 have been granted to
      consultants, officers and directors of the Company expiring on January 20,
      2017. A value of $1,334,800 was assigned using the Black-Scholes option
      pricing model with the following assumptions: dividend yield of 0%,
      expected volatility of 206.2% based on historical trends, share price on
      the date of grant of $0.29, risk-free interest rate of 1.29%, and an
      expected life of 5 years. 3,750,000 of these options vest as to one third
      immediately, one third after one year and one third after two years from
      the date of grant; 500,000 of these options vest one half immediately and
      one half after one year from the date of grant; 150,000 of these options
      vest after one year from the date of grant; 100,000 of these options vest
      after six months from the date of grant; and 200,000 of these options vest
      immediately. For the year ended January 31, 2012, the impact on salaries
      and benefits was $503,942.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|15. | Basic and Diluted Loss Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The following table sets forth the computation of basic
      and diluted loss per share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| |                                                                                                 |   | Year Ended  |  
| | ----------------------------------------------------------------------------------------------- | - | ----------- | -
| |                                                                                                 |   | January 31, |  
| |                                                                                                 |   | 2012        |  
| |                                                                                                 |   |             |  
| | Numerator:                                                                                      |   |             |  
| | Loss
      for the year                                                                         | $ | (6,451,698  | )
| |                                                                                                 |   |             |  
| | Denominator:                                                                                    |   |             |  
| | Weighted average number of common shares outstanding for
      basic and diluted loss per share |   | 83,853,825  |  
| |                                                                                                 |   |             |  
| | Basic and diluted loss per share                                                                | $ | (0.08       | )

The stock options and common share
purchase options were not included in the computation of diluted loss

per share on January 31, 2012 and 2011
as their inclusion would be anti-dilutive.









150

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|16. | Income Taxes                                                                                                                                                                                                                           
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                        
|    | The following table reconciles the expected income tax
      expense (recovery) at the Canadian statutory income tax rate at 28.08%
      (2011 - 30.17%) to the amounts recognized in the consolidated statements
      of operations:

| |                                                         |   | 2012       |   |   | 2011       |  
| | ------------------------------------------------------- | - | ---------- | - | - | ---------- | -
| |                                                         |   |            |   |   |            |  
| | Net loss before income taxes                            | $ | (6,451,698 | ) | $ | (1,632,845 | )
| | Expected tax recovery at statutory rate                 |   | (1,811,637 | ) |   | (492,629   | )
| | Permanent differences                                   |   | 141,507    |   |   | -          |  
| | Effects of expiration of non-capital losses             |   | -          |   |   | 214,082    |  
| | Difference between Canadian
      and foreign tax rates |   | (270,193   | ) |   | (27,000    | )
| | Tax
      benefits not recognized                       |   | 1,940,323  |   |   | 305,547    |  
| | Tax provision                                           | $ | -          |   | $ | -          |  

The Canadian statutory tax rate changed
from 30.17% for the year ended January 31, 2011 to 28.08% for the 2011 taxation
year as a result of the enacted reduction of Canadian corporate tax rates.

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.

| |                                                                                            |   | 2012       |  |   | 2012       |  |   | 2011       |  |   | 2011       | 
| | ------------------------------------------------------------------------------------------ | - | ---------- |  | - | ---------- |  | - | ---------- |  | - | ---------- | 
| |                                                                                            |   | Canada     |  |   | US         |  |   | Canada     |  |   | US         | 
| |                                                                                            |   |            |  |   |            |  |   |            |  |   |            | 
| | Unclaimed non-capital losses                                                               | $ | 7,487,313  |  | $ | 24,183,584 |  | $ | 5,643,790  |  | $ | 17,731,886 | 
| | Excess of undepreciated capital cost
      allowance over carrying value of capital assets |   | 3,093,265  |  |   | -          |  |   | 2,994,884  |  |   | -          | 
| | Excess of unclaimed resources pools over carrying value of
      exploration properties    |   | 1,459,616  |  |   | -          |  |   | 1,564,552  |  |   | -          | 
| |                                                                                            | $ | 12,040,194 |  | $ | 24,183,584 |  | $ | 10,203,226 |  | $ | 17,731,886 | 









151

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|16. | Income Taxes (Continued)                                              
|--- | ----------------------------------------------------------------------
|    |                                                                       
|    | The unclaimed non-capital losses carried forward by
      expiry date:

| |         |  |      |  |   | Canada    |  |   | US         | 
| | ------- |  | ---- |  | - | --------- |  | - | ---------- | 
| | Expires |  | 2015 |  | $ | 630,952   |  | $ | -          | 
| |         |  | 2026 |  |   | 854,554   |  |   | -          | 
| |         |  | 2027 |  |   | 834,665   |  |   | 5,431,480  | 
| |         |  | 2028 |  |   | 1,029,144 |  |   | 1,175,212  | 
| |         |  | 2029 |  |   | 643,397   |  |   | 872,981    | 
| |         |  | 2030 |  |   | 1,140,900 |  |   | 821,104    | 
| |         |  | 2031 |  |   | 489,264   |  |   | 9,431,109  | 
| |         |  | 2032 |  |   | 1,864,437 |  |   | 6,451,698  | 
| |         |  |      |  | $ | 7,487,313 |  | $ | 24,183,584 | 

|17. | Related Party Transactions and Balances                                                    
|--- | -------------------------------------------------------------------------------------------
|    |                                                                                            
|    | Remuneration of Directors and key management personnel of
      the Company was as follows:

| |                                                                |   | Years Ended | 
| | -------------------------------------------------------------- | - | ----------- | 
| |                                                                |   | January 31, | 
| |                                                                |   | 2012        | 
| |                                                                |   |             | 
| | Salaries and benefits paid to
      directors and officers (1) | $ | 471,380     | 
| | Stock-based payments                                           | $ | 501,799     | 

|    | (1)Salaries and benefits include director
      fees. The board of directors does not have employment or service contracts
      with the Company. Directors are entitled to director fees and stock
      options for their services.                                                                                                                                                                                     
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Paul G. Smith, a director and Chairman of the Board, is
      the President and Chief Executive Officer of Equity Financial Holdings
      Inc., a company providing financial services to the Company.                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Due to related parties balance at January 31, 2012
      consists of $22,607 (January 31, 2011 - $357,061, February 1, 2010 - $nil)
      owing to the former CEO and $12,416 owed to Sharpe (January 31, 2011 -
      $nil, February 1, 2010 - $121,740). In addition, included in accounts
      payable and accrued liabilities is $18,677 (2011 - $nil), owing to the
      former CEO.                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                            
|18. | Contingencies                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | (a) The Company received documents filed in the
      District Court, Nye County, Nevada, whereby a optionor of a property
      acquired by the Company has requested payment for machinery and equipment
      stored in the vicinity of the acquired property. In the opinion of
      management, the legal proceedings are without merit and the Company
      intends to vigorously defend itself against this
claim.









152

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|18. | Contingencies (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | (b) 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 are rectifying the notice received from the DMER
      and as a result no penalty will be assessed and the Company will be in
      compliance with the rules and regulations of the DMER.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | (c) 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 has
      estimated the expenses at $330,000 and has accrued this amount in the
      accounts.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|19. | General and
Administrative                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

| |                                                |   | Years Ended | 
| | ---------------------------------------------- | - | ----------- | 
| |                                                |   | January 31, | 
| |                                                |   | 2012        | 
| |                                                |   |             | 
| | Corporate development                          | $ | 263,251     | 
| | Insurance                                      |   | 22,841      | 
| | Office and general                             |   | 1,719       | 
| | Professional fees                              |   | 1,489,989   | 
| | Consulting, wages and
      salaries (Note 17) |   | 526,446     | 
| | Share based payments                           |   | 503,942     | 
| | Depreciation                                   |   | 931         | 
| |                                                |   |             | 
| |                                                | $ | 2,809,119   | 

|20. | 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 totaling $426,596 at January 31, 2012 (January 31, 2011 -
      $100,065, February 1, 2010 - $678,589) held in Canadian banks. The
      Companys operations in Canada consist of general and administrative
      expenses, totaling $2,459,866 for the year ended January 31, 2012 (2011 -
      $309,735), including expenses necessary to maintain the Companys public
      company status.









153

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|21. | Conversion to IFRS                                                                                                                                                                                                                                                                                                                                                                                         
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                            
|    | (i) Overview                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                            
|    | As stated in Significant Accounting Policies (note 2),
      these consolidated financial statements are prepared in accordance with
      IFRS as issued by the IASB.                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The policies set out in the Significant Accounting
      Policies section have been applied in preparing the financial statements
      for the years ended January 31, 2012 and 2011 and in the preparation of an
      opening IFRS balance sheet at February 1, 2010 (the Companys Transition
      Date).                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                            
|    | (ii) First-time adoption of
  IFRS                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The adoption of IFRS requires the application of IFRS 1,
      which provides guidance for an entitys initial adoption of IFRS. IFRS 1
      generally requires retrospective application of IFRS as effective at the
      end of its first annual IFRS reporting period. However, IFRS 1 also
      provides certain optional exemptions and mandatory exceptions to this
      retrospective treatment.
|    |                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Company has elected to apply the following optional
      exemptions in its preparation of an opening IFRS statement of financial
      position as at February 1, 2010.                                                                                                                                                                                                                               



- To apply IFRS 2 Share-based Payments only to equity
instruments that were issued after November 7, 2002 and had not vested by the
Transition Date.
- To apply IFRS 3 Business Combinations prospectively from the
Transition Date, therefore not restating business combinations that took place
prior to the Transition Date.
- To apply IAS 23 Borrowing Costs prospectively from the
Transition Date. IAS 23 requires the capitalization of borrowing costs directly
attributable to the acquisition, production or construction of certain assets.

IFRS 1 does not permit changes to
estimates that have been made previously. Accordingly, estimates used in the
preparation of the Companys opening IFRS statement of financial position as at
the Transition Date are consistent with those that were made under Canadian
GAAP.

(iii) Changes to accounting
policies

The Company has changed certain
accounting policies to be consistent with IFRS effective on January 31, 2012
(note 2), the Company's first annual IFRS reporting date. The changes to its
accounting policies have resulted in certain changes to the recognition and
measurement of assets, liabilities, equity, revenue and expenses within its
financial statements.

The following summarizes the
significant changes to the Companys accounting policies on adoption of IFRS.

(a) Impairment of non-financial assets
IFRS requires a write down of assets if the higher of the fair value less costs
to sell and the value in use of a group of assets is less than its carrying
value. Value in use is determined using discounted estimated future cash flows.
Previously, Canadian GAAP required a write down to estimated fair value only if
the undiscounted estimated future cash flows of a group of assets are less than
its carrying value.









154

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|21. | Conversion to IFRS (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | (iii) Changes to accounting policies
      (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | (a) Impairment of non-financial assets
    (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The Company's accounting policies related to impairment
      of non-financial assets have been changed to reflect these differences.
      There was no impact on the consolidated financial statements.                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | (b) Decommissioning Liabilities (Asset Retirement
      Obligations)                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | IFRS requires the recognition of a decommissioning
      liability for legal or constructive obligations. A constructive obligation
      exists when an entity has created reasonable expectations that it will
      take certain actions.                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The Company's accounting policies related to
      decommissioning liabilities have been changed to reflect these
      differences. There is no impact on the consolidated financial
      statements.                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | (c) Exploration and evaluation expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | On transition to IFRS, the Company adopted a policy to
      expense exploration and evaluation expenditures as incurred. Previously,
      the Company's Canadian GAAP policy was to capitalize exploration and
      evaluation expenditures as incurred. As a result of this adoption, all
      previously capitalized mineral property costs were written off against
      accumulated deficit, and to the extent relating to cost incurred in the
      current period, against the statement of operations.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | In fiscal 2011, the Company wrote down mineral properties
      amounting to $8,437,355 in relation to the Goldwedge Project, primarily
      due to the lack of financing to fund exploration activities at the time.
      The impairment loss recognized under Canadian GAAP would not have been
      recognized under IFRS because the expenditures to which it related would
      not have been recognized as assets.                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Impact on Consolidated Statements of Financial
      Position                                                                                                                                                                                                                                                                                                                                                                                                                                                      

| |                                   |   | As at       |   |   | As at       |  
| | --------------------------------- | - | ----------- | - | - | ----------- | -
| |                                   |   | January 31  |   |   | February 1, |  
| |                                   |   | 2011        |   |   | 2010        |  
| | Adjustment to mineral properties  | $ | (12,009,423 | ) | $ | (19,799,686 | )
| | Adjustment to accumulated deficit | $ | (12,009,423 | ) | $ | (19,799,686 | )

Impact on Consolidated Statements of
Operations

| |                                                       |   | Year        | 
| | ----------------------------------------------------- | - | ----------- | 
| |                                                       |   | ended       | 
| |                                                       |   | January 31, | 
| |                                                       |   | 2011        | 
| | Adjustment to exploration and evaluation expenditures | $ | 7,790,263   | 
| | Adjustment to loss                                    | $ | 7,790,263   | 









155

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|21. | Conversion to IFRS (Continued)                               
|--- | -------------------------------------------------------------
|    |                                                              
|    | *(iii) Changes to accounting policies
      (continued)*     
|    |                                                              
|    | (c) Exploration and evaluation expenditures
      (continued)
|    |                                                              
|    | Impact on Consolidated Statements of Cash
      Flows        

| |                                                          |   | Year        | 
| | -------------------------------------------------------- | - | ----------- | 
| |                                                          |   | ended       | 
| |                                                          |   | January 31, | 
| |                                                          |   | 2011        | 
| | Adjustment to loss                                       | $ | 7,790,263   | 
| | Depreciation                                             | $ | 271,050     | 
| | Mineral resource properties and exploration expenditures | $ | 8,061,313   | 

(d) Presentation

Certain amounts on the consolidated
statements of financial position, statements of operations and comprehensive
loss and statements of cash flows have been reclassified to conform to the
presentation adopted under IFRS.









156

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|21. | Conversion to IFRS (Continued)                                                                                  
|--- | ----------------------------------------------------------------------------------------------------------------
|    |                                                                                                                 
|    | (iv) Reconciliation between IFRS and Canadian
      GAAP                                                        
|    |                                                                                                                 
|    | The February 1, 2010 Canadian GAAP statement of financial
      position has been reconciled to IFRS as
follows:

| |                                             |   | February 1, 2010 |  
| | ------------------------------------------- | - | ---------------- | -
| |                                             |   | Canadian         |  
| |                                             |   | GAAP             |  
| | Assets                                      |   |                  |  
| |                                             |   |                  |  
| | Current                                     |   |                  |  
| | Cash                                        | $ | 745,779          |  
| | Marketable securities                       |   | 60,500           |  
| | Sundry receivables and prepaids             |   | 24,537           |  
| |                                             |   | 830,816          |  
| |                                             |   |                  |  
| | Due from related parties                    |   | 121,740          |  
| | Reclamation bonds                           |   | 534,984          |  
| | Mineral properties (Note
      21(iii)(c))  |   | 19,799,686       |  
| | Equipment, net                              |   | 725,906          |  
| |                                             | $ | 22,013,132       |  
| |                                             |   |                  |  
| | Liabilities                                 |   |                  |  
| | Current                                     |   |                  |  
| | Accounts payable and accrued liabilities    | $ | 301,381          |  
| |                                             |   | 301,381          |  
| |                                             |   |                  |  
| | Asset retirement obligations                |   | 232,010          |  
| |                                             |   | 533,391          |  
| |                                             |   |                  |  
| | Shareholders' equity                        |   |                  |  
| | Share capital                               |   | 28,098,264       |  
| | Contributed surplus (Note
      21(iii)(d)) |   | 10,076,866       |  
| | Reserves (Note 21(iii)(d))                  |   | -                |  
| | Deficit (Note 21(iii)(c))                   |   | (16,669,265      | )
| | Accumulated other                           |   |                  |  
| | comprehensive loss                          |   | (26,124          | )
| |                                             |   |                  |  
| |                                             |   | 21,479,741       |  
| |                                             |   |                  |  
| |                                             | $ | 22,013,132       |  









157

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|21. | Conversion to IFRS (Continued)                                                                                  
|--- | ----------------------------------------------------------------------------------------------------------------
|    |                                                                                                                 
|    | (iv) Reconciliation between IFRS and Canadian GAAP
      (continued)                                            
|    |                                                                                                                 
|    | The January 31, 2011 Canadian GAAP statement of financial
      position has been reconciled to IFRS as
follows:

| |                                                |   | January 31, 2011 |  
| | ---------------------------------------------- | - | ---------------- | -
| |                                                |   | Canadian         |  
| |                                                |   | GAAP             |  
| |                                                |   |                  |  
| | Assets                                         |   |                  |  
| | Current                                        |   |                  |  
| | Cash                                           | $ | 102,038          |  
| | Marketable securities                          |   | 52,000           |  
| | Sundry receivables and prepaids                |   | 61,277           |  
| |                                                |   | 215,315          |  
| | Due from related parties                       |   | -                |  
| | Reclamation bonds                              |   | 537,860          |  
| | Mineral properties (Note
      21(iii)(c))     |   | 12,009,423       |  
| | Equipment, net                                 |   | 453,733          |  
| |                                                | $ | 13,216,331       |  
| |                                                |   |                  |  
| |                                                |   |                  |  
| | Liabilities                                    |   |                  |  
| |                                                |   |                  |  
| | Current                                        |   |                  |  
| | Accounts payable and accrued
      liabilities | $ | 578,627          |  
| | Due
      to related parties                   |   | 357,061          |  
| |                                                |   | 935,688          |  
| | Asset retirement obligations                   |   | 232,010          |  
| |                                                |   | 1,167,698        |  
| |                                                |   |                  |  
| | Shareholders' equity                           |   |                  |  
| | Share capital                                  |   | 28,098,264       |  
| | Contributed surplus (Note
      21(iii)(d))    |   | 10,076,866       |  
| | Reserves (Note 21(iii)(d))                     |   | -                |  
| | Deficit (Note 21(iii)(c))                      |   | (26,092,373      | )
| | Accumulated other comprehensive loss           |   | (34,124          | )
| |                                                |   |                  |  
| |                                                |   | 12,048,633       |  
| |                                                |   |                  |  
| |                                                | $ | 13,216,331       |  









158

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|21. | Conversion to IFRS (Continued)                                                                                                          
|--- | ----------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                         
|    | (iv) Reconciliation between IFRS and Canadian GAAP
      (continued)                                                                    
|    |                                                                                                                                         
|    | The year ended January 31, 2011 Canadian GAAP statement
      of loss and comprehensive loss has been reconciled to IFRS as
    follows:

| |                                                                       |       | Canadian       |       |   | IFRS        |   |   | IFRS              |   |       |                |      
| | --------------------------------------------------------------------- | ----- | -------------- | ----- | - | ----------- | - | - | ----------------- | - | ----- | -------------- | -----
| |                                                                       |       | GAAP           |       |   | adjustments |   |   | reclassifications |   |       | IFRS           |      
| |                                                                       |       |                |       |   |             |   |   |                   |   |       |                |      
| | EXPENSES:                                                             |       |                |       |   |             |   |   |                   |   |       |                |      
| | Exploration and evaluation expenditures(Note
      21(iii)(c))        | $     | -              |       | $ | (7,790,263  | ) | $ | 8,835,168         |   | **$** | **1,044,905**  |      
| | General and administrative
      expenses (Note 21(iii)(d))           |       | 674,394        |       |   | -           |   |   | 66,881            |   |       | 741,275        |      
| | Consulting, wages and salaries (Note
      21(iii)(d))                |       | 65,759         |       |   | -           |   |   | (65,759           | ) |       | -              |      
| | Depreciation (Note 21(iii)(d))                                        |       | 1,122          |       |   | -           |   |   | (1,122            | ) |       | -              |      
| |                                                                       |       | (741,275       | )     |   | 7,790,263   |   |   | 8,835,168         |   |       | (1,786,180     | )    
| |                                                                       |       |                |       |   |             |   |   |                   |   |       |                |      
| | Other                                                                 |       |                |       |   |             |   |   |                   |   |       |                |      
| | Finance income                                                        |       | 3,221          |       |   | -           |   |   | -                 |   |       | 3,221          |      
| | Write down of advances to related company                             |       | (132,060       | )     |   | -           |   |   | -                 |   |       | (132,060       | )    
| | Write-off of exploration
      properties                             |       | (8,835,168     | )     |   | -           |   |   | 8,835,168         |   |       | -              |      
| | Gain on disposal of marketable securities                             |       | 275,194        |       |   | -           |   |   | -                 |   |       | 275,194        |      
| | Foreign currency translation adjustment (Note 21(iii)(d))             |       | 6,980          |       |   | -           |   |   | -                 |   |       | 6,980          |      
| |                                                                       |       |                |       |   |             |   |   |                   |   |       |                |      
| | Net loss for the year                                                 | $     | (9,423,108     | )     | $ | 7,790,263   |   | $ | 8,835,168         |   | **$** | **(1,632,845** | **)**
| |                                                                       |       |                |       |   |             |   |   |                   |   |       |                |      
| | Net unrealized loss on available-for-sale marketable
      securities |       | (8,000         | )     |   | -           |   |   | -                 |   |       | (8,000         | )    
| |                                                                       |       |                |       |   |             |   |   |                   |   |       |                |      
| | Comprehensive loss for the year                                       | **$** | **(9,431,108** | **)** | $ | 7,790,263   |   | $ | -                 |   | **$** | **(1,640,845** | **)**









159

---

|Royal Standard Minerals Inc.              
|------------------------------------------
|Notes to Consolidated Financial Statements
|(Expressed in United States Dollars)      
|January 31,
      2012                    

|21. | Conversion to IFRS (Continued)                                                                                     
|--- | -------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                    
|    | (iv) Reconciliation between IFRS and Canadian GAAP
      (continued)                                               
|    |                                                                                                                    
|    | The year ended January 31, 2011 Canadian GAAP statement
      of cash flows has been reconciled to IFRS as
follows:

| |                                                         |   | Canadian   |   |   | IFRS        |   |   | IFRS              |  |       |             |  
| | ------------------------------------------------------- | - | ---------- | - | - | ----------- | - | - | ----------------- |  | ----- | ----------- | -
| |                                                         |   | GAAP       |   |   | adjustments |   |   | reclassifications |  |       | IFRS        |  
| |                                                         |   |            |   |   |             |   |   |                   |  |       |             |  
| | Operating activities                                    |   |            |   |   |             |   |   |                   |  |       |             |  
| | Net loss for the period                                 | $ | (9,423,108 | ) | $ | 7,790,263   |   | $ | -                 |  | $     | (1,632,845  | )
| | Operating items not involving
      cash:               |   |            |   |   |             |   |   |                   |  |       |             |  
| | Depreciation                                            |   | 1,122      |   |   | 271,050     |   |   | -                 |  |       | 272,172     |  
| | Write-off of exploration properties                     |   | 8,835,168  |   |   | (8,835,168  | ) |   | -                 |  |       | -           |  
| | Gain on disposal
      of marketable securities         |   | (275,194   | ) |   | -           |   |   | -                 |  |       | (275,194    | )
| | Write down of advances to related company               |   | 132,060    |   |   | -           |   |   | -                 |  |       | 132,060     |  
| | Changes in non-cash working capital:                    |   |            |   |   |             |   |   |                   |  |       |             |  
| | Sundry receivables and prepaids                         |   | (36,740    | ) |   | -           |   |   | -                 |  |       | (36,740     | )
| | Accounts payable and
      accrued liabilities          |   | 277,246    |   |   | -           |   |   | -                 |  |       | 277,246     |  
| | Due from (due to) related
      parties                 |   | 346,741    |   |   | -           |   |   | -                 |  |       | 346,741     |  
| |                                                         |   |            |   |   |             |   |   |                   |  |       |             |  
| | Cash used in operating activities                       |   | (142,705   | ) |   | (773,855    | ) |   | -                 |  |       | (916,560    | )
| |                                                         |   |            |   |   |             |   |   |                   |  |       |             |  
| | Investing activities                                    |   |            |   |   |             |   |   |                   |  |       |             |  
| | Purchase of reclamation bonds                           |   | (2,876     | ) |   | -           |   |   | -                 |  |       | (2,876      | )
| | Additions to mineral
      properties (Note 21(iii)(c)) |   | (773,855   | ) |   | 773,855     |   |   | -                 |  |       | -           |  
| | Proceeds on disposal of marketable securities           |   | 275,695    |   |   | -           |   |   | -                 |  |       | 275,695     |  
| |                                                         |   |            |   |   |             |   |   |                   |  |       |             |  
| | Cash
      used in investing activities                 |   | (501,036   | ) |   | 773,855     |   |   | -                 |  |       | 272,819     |  
| |                                                         |   |            |   |   |             |   |   |                   |  |       |             |  
| | Change in cash and cash equivalents                     |   | (643,741   | ) |   | -           |   |   | -                 |  |       | (643,741    | )
| |                                                         |   |            |   |   |             |   |   |                   |  |       |             |  
| | Cash
      and cash equivalents, beginning of year      |   | 745,779    |   |   | -           |   |   | -                 |  |       | 745,779     |  
| |                                                         |   |            |   |   |             |   |   |                   |  |       |             |  
| | Cash and cash equivalents, end of year                  | $ | 102,038    |   | $ | -           |   | $ | -                 |  | **$** | **102,038** |  

|22. | Subsequent Events
|--- | -----------------
|    |                  
|    | (a)              
|    |                  
|    | (b)              
|    |                  
|    | (c)              









160

---



Item 18.Financial Statements

Not applicable.

161

---

Item 19.Exhibits.

Exhibit

|No.    | 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).                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                           
|4.1    | 2011 Amended and Restated Stock Option Plan (incorporated
          by reference to Exhibit 4.1 to the Companys Form S-8 filed with the SEC
      on June 26, 2012).                                                                                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                                                                                           
|4.2.1# | Senior Secured Gold Stream Credit Agreement by and
          between Manhattan Mining Co., certain guarantors and Waterton Global
          Value, L.P., by the general partner of its general partner, Cortleigh
          Limited, dated August 26, 2011 (incorporated by reference to Exhibit 99.2
          to the Companys Amendment No. 2 to Form 6-K/A filed with the SEC on July
      24, 2012).
|       |                                                                                                                                                                                                                                                                                                                                                                                                           
|4.2.2  | First Amendment to Credit Agreement by and between
          Manhattan Mining Co. and Waterton Global Value, L.P., by the general
          partner of its general partner, Cortleigh Limited, dated May 2, 2012
          (incorporated by reference to Exhibit 99.3 to the Companys Amendment No.
      2 to Form 6-K filed with the SEC on May 14, 2012).                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                                           
|4.2.3  | Second Amendment to Credit Agreement by and between
          Manhattan Mining Co. and Waterton Global Value, L.P., by the general
          partner of its general partner, Cortleigh Limited, dated June 28, 2012
          (incorporated by reference to Exhibit 99.2 to the Companys Form 6-K filed
      with the SEC on July 10, 2012).                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                           
|4.3.1# | Royalty Agreement by and between Manhattan Mining Co. and
          Waterton Global Value, L.P., dated August 26, 2011 (incorporated by
          reference to Exhibit 99.4 to the Companys Amendment No. 2 to Form 6-K/A
      filed with the SEC on July 24, 2012).                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                                                                                                                                           
|4.3.2  | Amendment to Royalty Agreement by and between Manhattan
          Mining Co. and Waterton Global Value, L.P., dated May 2, 2012
          (incorporated by reference to Exhibit 99.5 to the Companys Amendment No.
      1 to Form 6-K/A filed with the SEC on June 7, 2012).                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                           
|4.4    | Asset Purchase and Sale Agreement by and between the
          Company, Manhattan Mining Co., Scorpio Gold Corporation and Goldwedge LLC
          dated October 10, 2012 (incorporated by reference to Exhibit 99.2 to the
      Companys Form 6-K filed with the SEC on October 23, 2012).                                                                                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                                           
|8.1    | List of Subsidiaries of the Company.*                                                                                                                                                                                                                                                                                                                                                                     

162

---

|12.1 | Certification of Interim 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 Interim 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 MSCM LLP.*                                                                                                                                                                        
|     |                                                                                                                                                                                              
|15.2 | Consent of Donald G.
    Strachan.*                                                                                                                                                          

|* | 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.

163

---

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/
      Philip Gross                                    
|                     | Name: Phillip Gross                                       
|                     | Title: Interim President and Chief Executive
      Officer
|                     |                                                           
|Dated: June 14, 2013 |                                                           

164

---