---

UNITED STATESSECURITIES AND EXCHANGE COMMISSION
  Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2009

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

For the transition period from ________to ________

COMMISSION FILE NUMBER000-50033

IRELAND INC.(Exact name of
registrant as specified in its charter)

|NEVADA                                                               | 91-2147049                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|2441 West Horizon Ridge Parkway, Suite 100                           |                                     
|Henderson, Nevada                                                    | 89052                               
|(Address of principal executive offices)                             | (Zip Code)                          

(702) 932-0353(Registrant's telephone number,
including area code)

Not Applicable(Former name, former address and
former fiscal year, if changed since last report)

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. [
  x ]Yes[ ]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 (s. 232.405
  of this chapter) 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, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

|Large accelerated filer [ ]                                                   | Accelerated filer [ ]         
|----------------------------------------------------------------------------- | ------------------------------
|Non-accelerated filer [ ] (Do not check if a smaller
      reporting company) | Smaller reporting company[ x ]

Indicate by check mark whether the registrant is a shell company
  (as defined in Rule 12b-2 of the Exchange Act). [ ]Yes[
  x ]No

Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date: As of
August 10, 2009, the Registrant had 97,010,087 shares of common stock
outstanding.

---

PART I - FINANCIAL INFORMATION

|ITEM 1. | FINANCIAL STATEMENTS.
|------- | ---------------------

The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of
Regulation S-X, and, therefore, do not include all information and footnotes
necessary for a complete presentation of financial position, results of
operations, cash flows, and stockholders' equity in conformity with generally
accepted accounting principles. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations and
financial position have been included and all such adjustments are of a normal
recurring nature. Operating results for the six months ended June 30, 2009 are
not necessarily indicative of the results that can be expected for the year
ending December 31, 2009.

As used in this Quarterly Report, the terms we, us, our,
Ireland, and the Company mean Ireland Inc. and its subsidiaries, unless
otherwise indicated. All dollar amounts in this Quarterly Report are expressed
in U.S. dollars, unless otherwise indicated.

2

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|IRELAND INC.                     
|---------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)
|CONSOLIDATED BALANCE SHEETS      
|(UNAUDITED)                      

|                                                            |   | June
      30, 2009 |   |   | December 31, 2008 |  
|----------------------------------------------------------- | - | ------------------- | - | - | ----------------- | -
|                                                            |   |                     |   |   |                   |  
|ASSETS                                                      |  
|                                                            |   |                     |   |   |                   |  
|Current assets                                              |   |                     |   |   |                   |  
|Cash                                                        | $ | 722,527             |   | $ | 2,565,823         |  
|Refunds receivable                                          |   | -                   |   |   | 27,394            |  
|Prepaid expenses                                            |   | 126,147             |   |   | 141,335           |  
|                                                            |   |                     |   |   |                   |  
|Total current assets                                        |   | 848,674             |   |   | 2,734,552         |  
|                                                            |   |                     |   |   |                   |  
|Property and equipment, net                                 |   | 3,580,314           |   |   | 3,378,177         |  
|Mineral properties                                          |   | 31,948,053          |   |   | 31,948,053        |  
|Reclamation bonds                                           |   | 908,368             |   |   | 933,088           |  
|Deposits                                                    |   | 22,200              |   |   | 22,200            |  
|                                                            |   |                     |   |   |                   |  
|Total non-current
      assets                              |   | 36,458,935          |   |   | 36,281,518        |  
|                                                            |   |                     |   |   |                   |  
|Total assets                                                | $ | 37,307,609          |   | $ | 39,016,070        |  
|                                                            |   |                     |   |   |                   |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                        |  
|                                                            |   |                     |   |   |                   |  
|Current liabilities                                         |   |                     |   |   |                   |  
|Accounts payable                                            | $ | 301,129             |   | $ | 89,543            |  
|Accounts payable - related party                            |   | 159,498             |   |   | 50,417            |  
|Accrued payroll and related taxes                           |   | 12,651              |   |   | 11,799            |  
|Due to related party                                        |   | 23,290              |   |   | 23,290            |  
|                                                            |   |                     |   |   |                   |  
|Total current liabilities                                   |   | 496,568             |   |   | 175,049           |  
|                                                            |   |                     |   |   |                   |  
|Long-term liabilities                                       |   |                     |   |   |                   |  
|Accrued reclamation and remediation costs                   |   | 275,338             |   |   | 275,338           |  
|Deferred tax liability                                      |   | 8,357,940           |   |   | 9,066,600         |  
|                                                            |   |                     |   |   |                   |  
|Total long-term
      liabilities                           |   | 8,633,278           |   |   | 9,341,938         |  
|                                                            |   |                     |   |   |                   |  
|Total liabilities                                           |   | 9,129,846           |   |   | 9,516,987         |  
|                                                            |   |                     |   |   |                   |  
|Stockholders' equity                                        |   |                     |   |   |                   |  
|Common stock, $0.001 par value; 400,000,000 shares          |   |                     |   |   |                   |  
|authorized, 97,010,087
      shares, issued and outstanding |   | 97,010              |   |   | 97,010            |  
|Additional paid-in capital                                  |   | 36,064,585          |   |   | 36,059,449        |  
|Accumulated deficit during exploration
      stage          |   | (7,983,832          | ) |   | (6,657,376        | )
|                                                            |   |                     |   |   |                   |  
|Total stockholders'
      equity                            |   | 28,177,763          |   |   | 29,499,083        |  
|                                                            |   |                     |   |   |                   |  
|Total liabilities
      and stockholders' equity            | $ | 37,307,609          |   | $ | 39,016,070        |  

See Accompanying Notes to these Consolidated Financial Statements
  
  F-2

---

|IRELAND INC.                         
|-------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)    
|CONSOLIDATED STATEMENTS OF OPERATIONS
|(UNAUDITED)                          

|                                                   |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   | For the period from |  
|-------------------------------------------------- | - | -------------------------- | - | - | ------------------------ | - | - | ------------------- | - | - | ------------------- | - | - | ------------------- | -
|                                                   |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   | February 20, 2001   |  
|                                                   |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   | (Date of Inception) |  
|                                                   |   | For the three months ended |   |   | For the six months ended |   |   | Through             |  
|                                                   |   | June
      30, 2009        |   |   | June
      30, 2008      |   |   | June
      30, 2009 |   |   | June
      30, 2008 |   |   | June 30, 2009       |  
|                                                   |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|                                                   |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Revenue                                            | $ | -                          |   | $ | -                        |   | $ | -                   |   | $ | -                   |   | $ | -                   |  
|                                                   |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Operating expenses                                 |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Mineral exploration and evaluation expenses        |   | 687,033                    |   |   | 643,569                  |   |   | 1,274,738           |   |   | 841,189             |   |   | 4,850,848           |  
|Mineral exploration and evaluation                 |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|expenses - related party                           |   | 135,000                    |   |   | 235,000                  |   |   | 240,000             |   |   | 340,000             |   |   | 1,766,314           |  
|General and administrative                         |   | 248,356                    |   |   | 323,230                  |   |   | 478,576             |   |   | 639,700             |   |   | 2,813,560           |  
|Depreciation                                       |   | 10,901                     |   |   | 2,806                    |   |   | 21,736              |   |   | 5,445               |   |   | 42,095              |  
|Mineral and property holding costs                 |   | 15,000                     |   |   | 15,000                   |   |   | 30,000              |   |   | 51,000              |   |   | 380,500             |  
|Mineral and property holding costs -               |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|reimbursed to related party                        |   | -                          |   |   | -                        |   |   | -                   |   |   | -                   |   |   | 295,000             |  
|Write-off of mineral rights                        |   | -                          |   |   | -                        |   |   | -                   |   |   | -                   |   |   | 14,000              |  
|                                                   |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Total operating expenses                           |   | 1,096,290                  |   |   | 1,219,605                |   |   | 2,045,050           |   |   | 1,877,334           |   |   | 10,162,317          |  
|                                                   |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Loss from operations                               |   | (1,096,290                 | ) |   | (1,219,605               | ) |   | (2,045,050          | ) |   | (1,877,334          | ) |   | (10,162,317         | )
|                                                   |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Other income (expense)                             |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Interest income                                    |   | 2,617                      |   |   | 30,820                   |   |   | 10,360              |   |   | 104,026             |   |   | 275,657             |  
|Interest expense                                   |   | (300                       | ) |   | -                        |   |   | (426                | ) |   | -                   |   |   | (426                | )
|                                                   |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Total other income (expense)                       |   | 2,317                      |   |   | 30,820                   |   |   | 9,934               |   |   | 104,026             |   |   | 275,231             |  
|                                                   |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Loss before income taxes                           |   | (1,093,973                 | ) |   | (1,188,785               | ) |   | (2,035,116          | ) |   | (1,773,308          | ) |   | (9,887,086          | )
|                                                   |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Income tax benefit                                 |   | 381,183                    |   |   | 405,187                  |   |   | 708,660             |   |   | 549,172             |   |   | 1,903,254           |  
|                                                   |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Net loss                                           | $ | (712,790                   | ) | $ | (783,598                 | ) | $ | (1,326,456          | ) | $ | (1,224,136          | ) | $ | (7,983,832          | )
|                                                   |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|                                                   |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Loss per common share - basic and diluted          | $ | (0.01                      | ) | $ | (0.01                    | ) | $ | (0.01               | ) | $ | (0.01               | ) |   |                     |  
|                                                   |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Weighted average common shares outstanding
      - |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Basic and diluted                                  |   | 97,010,087                 |   |   | 97,010,087               |   |   | 97,010,087          |   |   | 94,081,491          |   |   |                     |  

See Accompanying Notes to these Consolidated Financial Statements
  
  F-3

---

|IRELAND INC.                                  
|----------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)             
|CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
|(UNAUDITED)                                   

|                                     |  |              |  |   |            |  |   |                 |  |   | Accumulated    |   |   |            |  
|------------------------------------ |  | ------------ |  | - | ---------- |  | - | --------------- |  | - | -------------- | - | - | ---------- | -
|                                     |  |              |  |   |            |  |   |                 |  |   | Deficit During |   |   | Total      |  
|                                     |  | Common Stock |  |   | Additional |  |   | Exploration     |  |   | Stockholders'  |  
|                                     |  | Shares       |  |   | Amount     |  |   | Paid-in Capital |  |   | Stage          |   |   | Equity     |  
|                                     |  |              |  |   |            |  |   |                 |  |   |                |   |   |            |  
|Balance, December 31, 2008           |  | 97,010,087   |  | $ | 97,010     |  | $ | 36,059,449      |  | $ | (6,657,376     | ) | $ | 29,499,083 |  
|                                     |  |              |  |   |            |  |   |                 |  |   |                |   |   |            |  
|Amortization of stock options issued |  |              |  |   |            |  |   |                 |  |   |                |   |   |            |  
|to employee over vesting period      |  | -            |  |   | -          |  |   | 5,136           |  |   | -              |   |   | 5,136      |  
|                                     |  |              |  |   |            |  |   |                 |  |   |                |   |   |            |  
|Net loss, June 30, 2009              |  | -            |  |   | -          |  |   | -               |  |   | (1,326,456     | ) |   | (1,326,456 | )
|                                     |  |              |  |   |            |  |   |                 |  |   |                |   |   |            |  
|Balance, June 30, 2009               |  | 97,010,087   |  | $ | 97,010     |  | $ | 36,064,585      |  | $ | (7,983,832     | ) | $ | 28,177,763 |  

See Accompanying Notes to these Consolidated Financial Statements
  
  F-4

---

|IRELAND INC.                         
|-------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)    
|CONSOLIDATED STATEMENTS OF CASH FLOWS
|(UNAUDITED)                          

|                                                           |   |                          |   |   |                     |   |   | For the period from |  
|---------------------------------------------------------- | - | ------------------------ | - | - | ------------------- | - | - | ------------------- | -
|                                                           |   |                          |   |   |                     |   |   | February 20, 2001   |  
|                                                           |   |                          |   |   |                     |   |   | (Date of inception) |  
|                                                           |   | For the six months ended |   |   | through             |  
|                                                           |   | June
      30, 2009      |   |   | June
      30, 2008 |   |   | June 30, 2009       |  
|CASH FLOWS FROM OPERATING ACTIVITIES                       |   |                          |   |   |                     |   |   |                     |  
|Net loss                                                   | $ | (1,326,456               | ) | $ | (1,224,136          | ) | $ | (7,983,832          | )
|Adjustments to reconcile loss from operating               |   |                          |   |   |                     |   |   |                     |  
|to net cash used in operating activities:                  |   |                          |   |   |                     |   |   |                     |  
|Depreciation                                               |   | 21,736                   |   |   | 5,445               |   |   | 42,095              |  
|Write-off of mineral rights                                |   | -                        |   |   | -                   |   |   | 14,000              |  
|Consulting
      accrual                                   |   | -                        |   |   | -                   |   |   | 15,000              |  
|Stock based expenses                                       |   | 5,136                    |   |   | 39,410              |   |   | 1,561,211           |  
|Changes in operating assets and liabilities:               |   |                          |   |   |                     |   |   |                     |  
|Refunds receivable                                         |   | 27,394                   |   |   | -                   |   |   | 27,394              |  
|Prepaid expenses                                           |   | 23,765                   |   |   | (242,993            | ) |   | (267,645            | )
|Other assets                                               |   | -                        |   |   | -                   |   |   | (2,200              | )
|Reclamation
      deposit                                  |   | 24,720                   |   |   | (28,762             | ) |   | (925,042            | )
|Mineral property acquisition
      costs                   |   | -                        |   |   | (188,791            | ) |   | (1,022,663          | )
|Accounts
      payable and accrued liabilities             |   | 334,311                  |   |   | 214,803             |   |   | 382,468             |  
|Deferred income taxes                                      |   | (708,660                 | ) |   | (549,172            | ) |   | (1,903,254          | )
|Accrued reclamation
      and remediation costs            |   | -                        |   |   | -                   |   |   | 275,338             |  
|                                                           |   |                          |   |   |                     |   |   |                     |  
|Net cash used in operating activities                      |   | (1,598,054               | ) |   | (1,974,196          | ) |   | (9,787,130          | )
|                                                           |   |                          |   |   |                     |   |   |                     |  
|CASH FLOW FROM INVESTING ACTIVITIES                        |   |                          |   |   |                     |   |   |                     |  
|Purchase of property and equipment                         |   | (245,242                 | ) |   | (785,713            | ) |   | (2,494,730          | )
|                                                           |   |                          |   |   |                     |   |   |                     |  
|Net cash used in investing activities                      |   | (245,242                 | ) |   | (785,713            | ) |   | (2,494,730          | )
|                                                           |   |                          |   |   |                     |   |   |                     |  
|CASH FLOW FROM FINANCING ACTIVITIES                        |   |                          |   |   |                     |   |   |                     |  
|Proceeds from stock issuance                               |   | -                        |   |   | 1,000               |   |   | 13,239,750          |  
|Stock issuance costs                                       |   | -                        |   |   | -                   |   |   | (243,653            | )
|Proceeds from borrowings from related
      party          |   | -                        |   |   | -                   |   |   | 8,290               |  
|                                                           |   |                          |   |   |                     |   |   |                     |  
|Net cash provided by financing activities                  |   | -                        |   |   | 1,000               |   |   | 13,004,387          |  
|                                                           |   |                          |   |   |                     |   |   |                     |  
|NET CHANGE IN CASH                                         |   | (1,843,296               | ) |   | (2,758,909          | ) |   | 722,527             |  
|                                                           |   |                          |   |   |                     |   |   |                     |  
|CASH AT BEGINNING OF PERIOD                                |   | 2,565,823                |   |   | 8,759,605           |   |   | -                   |  
|                                                           |   |                          |   |   |                     |   |   |                     |  
|CASH AT END OF PERIOD                                      | $ | 722,527                  |   | $ | 6,000,696           |   | $ | 722,527             |  
|                                                           |   | -                        |   |   |                     |   |   |                     |  
|                                                           |   | -                        |   |   |                     |   |   |                     |  
|                                                           |   |                          |   |   |                     |   |   |                     |  
|SUPPLEMENTAL INFORMATION                                   |   |                          |   |   |                     |   |   |                     |  
|                                                           |   |                          |   |   |                     |   |   |                     |  
|Interest Paid                                              | $ | 426                      |   | $ | -                   |   | $ | 426                 |  
|                                                           |   |                          |   |   |                     |   |   |                     |  
|Income Taxes Paid                                          | $ | -                        |   | $ | -                   |   | $ | -                   |  
|                                                           |   |                          |   |   |                     |   |   |                     |  
|Non-cash investing and financing activities:               |   |                          |   |   |                     |   |   |                     |  
|                                                           |   |                          |   |   |                     |   |   |                     |  
|Assets acquired for common stock and
      warrants issued |   |                          |   |   |                     |   |   |                     |  
|for mineral properties                                     | $ | -                        |   | $ | 21,359,351          |   | $ | 21,584,351          |  
|                                                           |   |                          |   |   |                     |   |   |                     |  
|Net deferred tax liability assumed                         | $ | -                        |   | $ | 10,261,194          |   | $ | 10,261,194          |  

See Accompanying Notes to these Consolidated Financial Statements
  F-5

---

|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
        POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Basis of presentation The accompanying
        unaudited financial statements have been prepared in accordance with Securities
        and Exchange Commission requirements for interim financial statements.
        Therefore, they do not include all of information and footnotes required
        by accounting principles generally accepted in the United States for complete
        financial statements. The financial statements should be read in conjunction
        with the Form 10-K for the year ended December 31, 2008 of Ireland Inc.
        (the Company).                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The interim financial statements present the consolidated
        balance sheets, statements of operations, stockholders equity, and
        cash flows of the Company. The financial statements have been prepared
        in accordance with accounting principles generally accepted in the United
        States.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | These financial statements have been prepared by the
        Company without audit, and include all adjustments (which consist solely
        of normal recurring adjustments) which, in the opinion of management,
        are necessary for a fair presentation of financial position and results
        of operations. Certain information and footnotes disclosure normally included
        in financial statements prepared in accordance with generally accepted
        accounting principles have been condensed or omitted, although the Company
        believes that the disclosures are adequate to make the information presented
        not misleading. It is suggested that these financial statements be read
        in conjunction with the Companys audited financial statements and
        the notes thereto for the year ended December 31, 2008.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In preparing these interim financial statements, the
        Company has evaluated events and transactions for potential recognition
        or disclosure through August 12, 2009, the date the financial statements
        were issued.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Description of business The Company is
        considered an exploration stage company since its formation and the Company
        has not yet realized any revenues from its planned operations. The Company
        is primarily focused on the acquisition and exploration of mining properties.
        Upon identification of commercially minable reserves, the Company expects
        to actively prepare the site for its extraction and enter the development
        stage.                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | History The Company was incorporated on
        February 20, 2001 under the laws of the State of Nevada under the name
        Merritt Ventures Corp. On December 19, 2005, the Company changed its name
        to Ireland Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Going concern- The accompanying financial statements
        have been prepared assuming the Company will continue as a going concern.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company incurred cumulative net losses since date
        of inception of $7,983,832 from operations as of June 30, 2009, and has
        no revenue. The future of the Company is dependent upon its ability to
        obtain financing and upon future profitable operations from the development
        of its mineral properties. Management has plans to seek additional capital
        through private placements and public offerings of its common stock. The
        financial statements do not include any adjustments relating to the recoverability
        and classification of recorded assets, or the amounts of and classification
        of liabilities that might be necessary if the Company is unable to continue
        as a going concern.                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Principles of consolidation The consolidated
        financial statements include the accounts of the Company and its wholly-owned
        subsidiaries, CBI Acquisition, Inc. (CBIA) (including its wholly-owned
        single-member LLC subsidiary Columbus Salt Marsh LLC (CSM)) and Rand Metals
        LLC (Rand). Significant intercompany accounts and transactions have been
        eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                

F-6

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|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
        POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Exploration costs- Mineral exploration costs
        are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Mineral rights- The Company capitalizes acquisition
        and option costs of mineral property rights. The amount capitalized represents
        fair value at the time the mineral rights were acquired.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Company capitalizes acquisition and option costs
        of mineral rights as tangible assets. Upon commencement of commercial
        production, the mineral rights will be amortized using the unit-of- production
        method over the life of the mineral rights. If the Company does not continue
        with exploration after the completion of the feasibility study, the mineral
        rights will be expensed at that time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Mineral property acquisition costs Costs
        of acquiring mining properties are capitalized upon acquisition. Mine
        development costs incurred either to develop new ore deposits, to expand
        the capacity of mines, or to develop mine areas substantially in advance
        of current production are also capitalized once proven and probable reserves
        exist and the property is a commercially mineable property. Costs incurred
        to maintain current production or to maintain assets on a standby basis
        are charged to operations. Costs of abandoned projects are charged to
        operations upon abandonment. The Company evaluates the carrying value
        of capitalized mining costs and related property and equipment costs,
        to determine if these costs are in excess of their recoverable amount
        whenever events or changes in circumstances indicate that their carrying
        amounts may not be recoverable. The periodic evaluation of carrying value
        of capitalized costs and any related property and equipment costs are
        based upon expected future cash flows and/or estimated salvage value in
        accordance with Statement of Financial Accounting Standards (SFAS) No.
        144, Accounting for Impairment or Disposal of Long-Lived Assets.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Property and equipment Property and equipment
        is stated at cost less accumulated depreciation. Depreciation is provided
        principally on the straight-line method over the estimated useful lives
        of the assets, which are generally 3 to 39 years. The cost of repairs
        and maintenance is charged to expense as incurred. Expenditures for property
        betterments and renewals are capitalized. Upon sale or other disposition
        of a depreciable asset, cost and accumulated depreciation are removed
        from the accounts and any gain or loss is reflected in other income (expense).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Company periodically evaluates whether events and
        circumstances have occurred that may warrant revision of the estimated
        useful life of property and equipment or whether the remaining balance
        of property and equipment should be evaluated for possible impairment.
        If events and circumstances warrant evaluation, the Company uses an estimate
        of the related undiscounted cash flows over the remaining life of the
        property and equipment in measuring their recoverability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Impairment of long-lived assets The Company
        reviews and evaluates long-lived assets for impairment when events or
        changes in circumstances indicate the related carrying amounts may not
        be recoverable. The assets are subject to impairment consideration under
        SFAS No. 144 if events or circumstances indicate that their carrying amount
        might not be recoverable. As of June 30, 2009 exploration on these properties
        is progressing in accordance with the Companys plan of operations
        and no events or circumstances have happened to indicate the related carrying
        values of the properties may not be recoverable. When the Company determines
        a SFAS 144 impairment analysis should be done, the analysis will be performed
        using the rules of EITF 04-03, Mining Assets: Impairment and Business
        Combinations.                                                                                                                                                                                                                                                                                                                                                                                                                                              

F-7

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|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
        POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Various factors could impact the Companys ability
        to achieve its exploration program. Additionally, commodity prices, capital
        expenditure requirements and reclamation costs could differ from the assumptions
        the Company may use in cash flow models used to assess impairment. The
        ability to achieve the estimated quantities of recoverable minerals from
        exploration stage mineral interests involves further risks in addition
        to those factors applicable to mineral interests where proven and probable
        reserves have been identified, due to the lower level of confidence that
        the identified mineralized material can ultimately be mined economically.                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Material changes to any of these factors or assumptions
        discussed above could result in future impairment charges to operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Reclamation and remediation costs (asset retirement
        obligation)- The Company accrued costs associated with environmental
        remediation obligations in accordance with Statement of Financial Accounting
        Standards (SFAS) No. 143, Accounting for Asset Retirement Obligations.
        In accordance with SFAS No. 143, the Company records a liability for the
        present value of the estimated environmental remediation costs in the
        period in which the liability is incurred and becomes determinable, with
        an offsetting increase in the carrying amount of the associated asset.
        The liability will be accreted and the asset will be depreciated over
        the life of the related assets. Adjustments for changes resulting from
        the passage of time and changes to either the timing or amount of the
        original present value estimate underlying the obligation will be made.
        As reclamation work is performed or liabilities are otherwise settled,
        the recorded amount of the liability will be reduced.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company accrues costs associated with environmental
        remediation obligation when it is probable that such costs will be incurred
        and they are reasonably estimable. Estimates for reclamation and other
        closure costs are prepared in accordance with SFAS No. 5 Accounting
        for Contingencies, or Statement of Position 96-1 Environmental
        Remediation Liabilities. Costs of future expenditures for environmental
        remediation are not discounted to their present value unless subject to
        a contractually obligated fixed payment schedule. Such costs are based
        on managements current estimate of amounts to be incurred when the
        remediation work is performed, within current laws and regulations.                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Future reclamation and environmental-related expenditures
        are difficult to estimate, in many circumstances, due to the early stage
        nature of the exploration project, and uncertainties associated with defining
        the nature and extent of environmental disturbance and the application
        of laws and regulations by regulatory authorities and changes in reclamation
        or remediation technology. The Company periodically reviews accrued liabilities
        for such reclamation and remediation costs as evidence becomes available
        indicating that the liabilities have potentially changed. Changes in estimates
        are reflected in the statement of operations in the period an estimate
        is revised.                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Accruals for reclamation and environmental matters totaled
        $275,338 at June 30, 2009 and December 31, 2008. The Company is in the
        exploration stage and is unable to determine the estimated timing of these
        expenditures relating to these accruals at this time. It is reasonably
        possible the ultimate cost of reclamation and remediation could change
        in the future, and that changes to these estimates could have a material
        effect on future operating results as new information becomes known. For
        additional information, see Note 11.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

F-8

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|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
        POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Fair value of financial instruments The
        Companys financial instruments consist of accounts payable and accrued
        liabilities. The carrying value of these financial instruments approximates
        their fair value based on their liquidity or their short-term nature.
        The Company is not exposed to significant interest or credit risk arising
        from these financial instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Revenue recognition- Revenues are recognized
        during the period in which the revenues are earned. Costs and expenses
        are recognized during the period in which they are incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Use of estimates- The preparation of financial
        statements in conformity with generally accepted accounting principles
        requires management to make estimates and assumptions that affect the
        reported amounts of assets and liabilities, and disclosure of contingent
        assets and liabilities at the date of the financial statements, and the
        reported amounts of revenues and expenses for the reporting period. Actual
        results could differ from these estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Earnings (loss) per share- The Company follows
        SFAS No. 128, Earnings Per Share and SFAS No. 150, Accounting
        for Certain Financial Instruments with Characteristics of Both Liabilities
        and Equity, which establish standards for the computation, presentation
        and disclosure requirements for basic and diluted earnings per share for
        entities with publicly-held common shares and potential common stock issuances.
        Basic earnings (loss) per share are computed by dividing net income by
        the weighted average number of common shares outstanding. In computing
        diluted earnings per share, the weighted average number of shares outstanding
        is adjusted to reflect the effect of potentially dilutive securities,
        such as stock options and warrants. Common stock equivalent shares are
        excluded from the computation if their effect is antidilutive. Weighted
        average of common stock equivalents, which include stock options and warrants
        to purchase common stock, on June 30, 2009 and 2008 that were not included
        in the computation of diluted EPS, because the effect would be antidilutive,
        were 19,335,428 and 17,835,798, respectively.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Expenses of offering- The Company accounts for
        specific incremental costs directly to a proposed or actual offering of
        securities as a direct charge against the gross proceeds of the offering.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Income taxes The Company accounts for
        income taxes under SFAS No. 109, Accounting for Income Taxes
        using the liability method, recognizing certain temporary differences
        between the financial reporting basis of the Companys liabilities
        and assets and the related income tax basis for such liabilities and assets.
        This method generates either a net deferred income tax liability or asset
        for the Company, as measured by the statutory tax rates in effect. The
        Company derives its deferred income tax provision or benefit by recording
        the change in either the net deferred income tax liability or asset balance
        for the year. The Company records a valuation allowance against any portion
        of those deferred income tax assets when it believes, based on the weight
        of available evidence, it is more likely than not that some portion or
        all of the deferred income tax will not be realized.                                                                                                                                                                                                                                                                     

F-9

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|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
        POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On July 13, 2006, the FASB issued interpretation No.
        48, Accounting for Uncertainty in Income Taxes  An Interpretation
        of FASB Statement No. 109 (FIN 48). FIN 48 clarifies
        the accounting for uncertainty in income taxes recognized in an entitys
        financial statements in accordance with SFAS No. 109, and prescribes a
        recognition threshold and measurement attributes for financial statement
        disclosure of tax positions taken or expected to be taken on a tax return.
        Under FIN 48, the impact of an uncertain income tax position on the income
        tax return must be recognized at the largest amount that is more-likely-than-not
        to be sustained upon audit by the relevant taxing authority. An uncertain
        income tax position will not be recognized if it has less than 50% likelihood
        of being sustained. Additionally, FIN 48 provides guidance on de-recognition,
        classification, interest and penalties, accounting in interim periods,
        and disclosure and transition. The Company adopted the provision of FIN
        48 on January 1, 2007, which did not have any impact on the consolidated
        financial statements.                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | For acquired properties, that do not constitute a business
        as defined in EITF 98-03 Determining Whether a Nonmonetary Transaction
        Involves Receipt of Productive Assets or of a Business, deferred
        income tax liability is recorded on GAAP basis over income tax basis using
        statutory federal and state rates. The resulting estimated future federal
        and state income tax liability associated with the temporary difference
        between the acquisition consideration and the tax basis is computed in
        accordance with EITF 98-11 and SFAS 109, and is reflected as an increase
        to the total purchase price which is then applied to the underlying acquired
        assets in the absence of there being a goodwill component associated with
        the acquisition transactions in accordance with EITF 98-11 and SFAS 109.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Stock-based compensation- On December 16, 2004,
        the FASB issued SFAS No. 123R, Share- Based Payment, which
        replaces SFAS No. 123, Accounting for Stock-Based Compensation
        and supersedes APB Opinion No. 25, Accounting for Stock Issued to
        Employees. SFAS No. 123R requires all share-based payments to employees,
        including grants of employee stock options, to be recognized in the financial
        statements based on the grant date fair value of the award. Under SFAS
        No. 123R, the Company must determine the appropriate fair value model
        to be used for valuing share-based payments, the amortization method for
        compensation cost and the transition method to be used at date of adoption.
        The transition methods include prospective and retroactive adoption options.
        Under the retroactive option, prior periods may be restated either as
        of the beginning of the year of adoption or for all periods presented.
        The prospective method requires that compensation expense be recorded
        for all unvested stock options and restricted stock at the beginning of
        the first quarter of adoption of SFAS No. 123R, while the retroactive
        methods would record compensation expense for all unvested stock options
        and restricted stock beginning with the first period restated. The Company
        adopted the requirements of SFAS No. 123R for the fiscal year beginning
        after December 31, 2004.

F-10

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|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
        POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | New accounting pronouncements The FASB
        has issued FASB Statement No. 168, The FASB Accounting Standards
        CodificationTMand the Hierarchy of Generally Accepted
        Accounting Principles. Statement 168 establishes the FASB Accounting Standards
        CodificationTM(Codification) as the single source of authoritative
        U.S. generally accepted accounting principles (U.S. GAAP) recognized by
        the FASB to be applied by nongovernmental entities. Rules and interpretive
        releases of the SEC under authority of federal securities laws are also
        sources of authoritative U.S. GAAP for SEC registrants. Statement 168
        and the Codification are effective for financial statements issued for
        interim and annual periods ending after September 15, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The FASB has issued FASB Statement No. 167, Amendment
        to FASB Interpretation No. 46(R). Statement 167 is a revision to
        FASB Interpretation No. 46 (Revised December 2003), Consolidation
        of Variable Interest Entities, and changes how a reporting entity
        determines when an entity that is insufficiently capitalized or is not
        controlled through voting (or similar rights) should be consolidated.
        The determination of whether a reporting entity is required to consolidate
        another entity is based on, among other things, the other entitys
        purpose and design and the reporting entitys ability to direct the
        activities of the other entity that most significantly impact the other
        entitys economic performance. Statement 167 will require a reporting
        entity to provide additional disclosures about its involvement with variable
        interest entities and any significant changes in risk exposure due to
        that involvement. A reporting entity will be required to disclose how
        its involvement with a variable interest entity affects the reporting
        entitys financial statements. Statement 167 will be effective at
        the start of a reporting entitys first fiscal year beginning after
        November 15, 2009, or January 1, 2010, for a calendar year- end entity.
        Adoption of this statement is not expected to have a material impact on
        the Companys consolidated financial statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The FASB has issued FASB Statement No. 166, Accounting
        for Transfers of Financial Assets. Statement 166 is a revision to
        FASB Statement No. 140, Accounting for Transfers and Servicing of
        Financial Assets and Extinguishment of Liabilities, and will require
        more information about transfers of financial assets, including securitization
        transactions, and where entities have continuing exposure to the risk
        related to the transferred financial assets. It eliminates the concept
        of a qualifying special- purpose entity, changes the requirements
        for derecognizing financial assets, and requires additional disclosures.
        Statement 166 enhances information reported to users of financial statements
        by providing greater transparency about transfers of financial assets
        and an entitys continuing involvement in transferred financial assets.
        Statement 166 will be effective at the start of a reporting entitys
        first fiscal year beginning after November 15, 2009, or January 1, 2010,
        for a calendar year- end entity. Adoption of this statement is not expected
        to have a material impact on the Companys consolidated financial
        statements.                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The FASB has issued FASB Statement No. 165, Subsequent
        Events. Statement 165 establishes general standards of accounting
        for and disclosure of events that occur after the balance sheet but before
        financial statements are issued or are available to be issued. Specifically,
        Statements 165 provides: (i) the period after the balance sheet date during
        which management of a reporting entity should evaluate events or transactions
        that may occur for potential recognition or disclosure in the financial
        statements; (ii) the circumstances under which an entity should recognize
        events or transactions occurring after the balance sheet date in its financial
        statements; and (iii) the disclosures that an entity should make about
        events or transactions that occurred after the balance sheet date. Statement
        165 is effective for interim or annual financial periods ending after
        June 15, 2009, and shall be applied prospectively. The required disclosures
        of this statement have been incorporated into the Companys consolidated
        financial statements.                                                                                                                                                                                                                                                                                                                                                                       

F-11

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|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
        POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In April 2009, FASB Staff Position (FSP) No. FAS 107-1
        and APB 28-1 was issued to amend SFAS No. 107, Disclosures about
        Fair Value of Financial Instruments, to require disclosures about
        fair value of financial instruments for interim reporting period as well
        as in annual financial statements. This FSP also amends APB Opinion No.
        28, Interim Financial Reporting, to require those disclosures
        in summarized financial information at interim reporting periods. FSP
        No. 107-1 and APB 28-1 is effective for interim reporting periods ending
        after June 15, 2009. Adoption of this guidance is not expected to have
        a material impact on the Companys consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In April 2009, FSP No. FAS 157-4, Determining
        Fair Value When the Volume and Level of Activity for the Asset or Liability
        Have Significantly Decreased and Identifying Transactions That Are Not
        Orderly, was issued to provide additional guidance for estimating
        the fair value in accordance with SFAS No. 157, Fair Value Measurements,
        when the volume and level of activity for the asset or liability have
        significantly decreased. This FSP also provides guidance on identifying
        circumstances that indicate a transaction is not orderly. FSP No. 157-4
        is effective for interim and annual reporting periods ending after June
        15, 2009, and shall be applied prospectively. Adoption of this guidance
        is not expected to have a material impact on the Companys consolidated
        financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In April 2009, FSP No. 141(R)-1, Accounting for
        Assets Acquired and Liabilities Assumed in a Business Combination That
        Arise from Contingencies. This FSP amends the guidance in FASB Statement
        No. 141 to require that assets acquired and liabilities assumed in a business
        combination that arise from contingencies be recognized at fair value
        if fair value can be reasonably estimated. If fair value of such asset
        or liability cannot be reasonable estimated, the asset or liability would
        generally be recognized in accordance with FASB Statement No. 5, Accounting
        for Contingencies, and FASB Interpretation (FIN) No. 14, Reasonable
        Estimation of the Amount of a Loss. This FSP eliminates the requirements
        to disclose an estimate of the range of outcomes of recognized contingencies
        at the acquisition date. This FSP also requires that contingent consideration
        arrangements of an acquiree assumed by the acquirer in a business combination
        be treated as contingent consideration of the acquirer and should be initially
        and subsequently measured at fair value in accordance with Statement 141R.
        This FSP is effective for assets and liabilities arising from contingencies
        in business combinations for which the acquisition date is on or after
        the beginning of the first annual reporting period beginning on or after
        December 15, 2008. The adoption of this statement had little or no effect
        on the Companys consolidated financial position, results of operations,
        and disclosures.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In December 2008, the FASB issued FSP No. FAS 132(R)-1,
        Employers Disclosures about Post- Retirement Benefit Plan
        Assets (FSP FAS 132(R)-1), which amends FASB Statement
        No. 132 Employers Disclosures about Pensions and Other Post-Retirement
        Benefits (FAS 132), to provide guidance on an employers
        disclosures about plan assets of a defined benefit pension or other post-
        retirement plan. The objective of FSP FAS 132(R)-1 is to require more
        detailed disclosures about employers plan assets, including employers
        investment strategies, major categories of plan assets, concentrations
        of risk within plan assets, and valuation techniques used to measure the
        fair value of plan assets. FSP FAS 132(R)-1 is effective for the Companys
        fiscal year beginning January 1, 2009. Upon initial application, the provisions
        of this FSP are not required for earlier periods that are presented for
        comparative purposes. The adoption of this statement had little or no
        effect on the Companys consolidated financial position, results
        of operations, and disclosures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

F-12

---

|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
        POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | In November 2008, the EITF reached consensus on Issue
        No. 08-6, Equity Method Investment Accounting Considerations
        (EITF 08-6), which clarifies the accounting for certain transactions
        and impairment considerations involving equity method investments. The
        intent of EITF 08-6 is to provide guidance on (i) determining the initial
        carrying value of an equity method investment, (ii) performing an impairment
        assessment of an underlying indefinite-lived intangible asset of an equity
        method investment, (iii) accounting for an equity method investees
        issuance of shares, and (iv) accounting for a change in an investment
        from the equity method to the cost method. EITF 08-6 is effective for
        the Companys fiscal year beginning January 1, 2009 and is to be
        applied prospectively. The adoption of this statement had little or no
        effect on the Companys consolidated financial position, results
        of operations, and disclosures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | In June 2008, the EITF reached consensus on Issue No.
        07-5, Determining Whether an Instrument (or Embedded Feature) Is
        Indexed to an Entitys Own Stock (EITF 07-5). EITF
        07-5 clarifies the determination of whether an instrument (or an embedded
        feature) is indexed to an entitys own stock, which would qualify
        as a scope exception under FASB Statement No. 133, Accounting for
        Derivative Instruments and Hedging Activities (FAS 133).
        EITF 07-5 is effective for the Companys fiscal years beginning January
        1, 2009. Early adoption for an existing instrument is not permitted. The
        adoption of this statement had little or no effect on the Companys
        consolidated financial position, results of operations, and disclosures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | In May 2008, the FASB issued FSP No. APB 14-1, Accounting
        for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
        (Including Partial Cash Settlement) (FSP APB 14-1).
        FSP APB 14-1 applies to convertible debt instruments that, by their stated
        terms, may be settled in cash (or other assets) upon conversion, including
        partial cash settlement, unless the embedded conversion option is required
        to be separately accounted for as a derivative under FAS 133. Convertible
        debt instruments within the scope of FSP APB 14-1 are not addressed by
        the existing APB 14. FSP APB 14-1 requires that the liability and equity
        components of convertible debt instruments within the scope of FSP APB
        14-1 be separately accounted for in a manner that reflects the entitys
        nonconvertible debt borrowing rate. This requires an allocation of the
        convertible debt proceeds between the liability component and the embedded
        conversion option (i.e., the equity component). The difference between
        the principal amount of the debt and the amount of the proceeds allocated
        to the liability component will be reported as a debt discount and subsequently
        amortized to earnings over the instruments expected life using the
        effective interest method. FSP APB 14-1 is effective for the Companys
        fiscal year beginning January 1, 2009 and will be applied retrospectively
        to all periods presented. The adoption of this statement had little or
        no effect on the Companys consolidated financial position, results
        of operations, and disclosures.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | In April 2008, the FASB issued FSP No. FAS 142-3, Determination
        of the Useful Life of Intangible Assets (FSP 142-3)
        which amends the factors that should be considered in developing renewal
        or extension assumptions used to determine the useful life of a recognized
        intangible asset under FASB Statement No. 142, Goodwill and Other
        Intangible Assets (FAS 142). The intent of this FSP
        is to improve the consistency between the useful life of a recognized
        intangible asset under FAS 142 and the period of expected cash flows used
        to measure the fair value of the asset under FASB Statement No. 141, Business
        Combinations (FAS 141). FSP 142-3 is effective for the
        Companys fiscal year beginning January 1, 2009 and will be applied
        prospectively to intangible assets acquired after the effective date.
        The adoption of this statement had little or no effect on the Companys
        consolidated financial position, results of operations, and disclosures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

F-13

---

|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
        POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The FASB issued FASB Staff Position (FSP) FAS 157-3,
        Determining the Fair Value of a Financial Asset When the Market
        for that Asset Is Not Active. The FSP clarifies the application
        of FASB Statement No. 157, Fair Value Measurements, in a market
        that is not active and provides an example to illustrate key considerations
        in determining the fair value of a financial asset when the market for
        that financial asset is not active. The FSP is effective October 10, 2008,
        and for prior periods for which financial statements have not been issued.
        Revisions resulting from a change in the valuation technique or its application
        should be accounted for as a change in accounting estimate following the
        guidance in FASB Statement No. 154, Accounting Changes and Error
        Corrections. However, the disclosure provisions in Statement 154
        for a change in accounting estimate are not required for revisions resulting
        from a change in valuation techniques or its application. The adoption
        of this statement had no material effect on the Companys consolidated
        financial position, results of operations, and disclosures.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | On March 19, 2008, the FASB issued SFAS No. 161, Disclosures
        About Derivative Instruments and Hedging Activities. This statement
        is intended to improve financial reporting about derivative instruments
        and hedging activities by requiring enhanced disclosures. This statement
        is effective for financial statements issued for fiscal years and interim
        periods beginning after November 15, 2008, with early application encouraged.
        The adoption of this statement had little or no effect on the Companys
        consolidated financial position, results of operations, and disclosures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | In February 2008, the FASB staff issued Staff Position
        No. 157-2 Effective Date of FASB Statement No. 157 (FSP
        FAS 157-2). FSP FAS 157-2 delayed the effective date of SFAS 157
        for nonfinancial assets and nonfinancial liabilities, except for items
        that are recognized or disclosed at fair value in the financial statements
        on a recurring basis (at least annually). The provisions of FSP FAS 157-2
        are effective for the Companys fiscal year beginning January 1,
        2009. SFAS 157 defines fair value, establishes a framework for measuring
        fair value in generally accepted accounting principles, and expands disclosures
        about fair value measurements. The adoption of this statement had little
        or no effect on the Companys consolidated financial position, results
        of operations, and disclosures.                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | In December 2007, the FASB issued Statement of Financial
        Accounting Standard No. 141(R) (SFAS 141(R)), Business
        Combinations, which amends SFAS No. 141, and provides revised guidance
        for recognizing and measuring identifiable assets and goodwill acquired,
        liabilities assumed, and any noncontrolling interest in the acquiree.
        It also provides disclosure requirements to enable users of the financial
        statements to evaluate the nature and financial effects of the business
        combination. SFAS 141(R) is effective for the Companys fiscal year
        beginning January 1, 2009 and is to be applied prospectively. The adoption
        of this statement had little or no effect on the Companys consolidated
        financial position, results of operations, and disclosures.                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | In December 2007, the FASB issued Statement of Financial
        Accounting Standard No. 160 (SFAS 160), Noncontrolling
        Interests in Consolidated Financial Statements - an amendment of ARB No.
        51 which establishes accounting and reporting standards pertaining
        to ownership interests in subsidiaries held by parties other than the
        parent, the amount of net income attributable to the parent and to the
        noncontrolling interest, changes in a parents ownership interest,
        and the valuation of any retained noncontrolling equity investment when
        a subsidiary is deconsolidated. SFAS 160 also establishes disclosure requirements
        that clearly identify and distinguish between the interests of the parent
        and the interests of the noncontrolling owners. SFAS 160 is effective
        for the Companys fiscal year beginning January 1, 2009. The adoption
        of this statement had little or no effect on the Companys consolidated
        financial position, results of operations, and disclosures.                                                                                                                                                                  

F-14

---

|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|2. | PROPERTY AND EQUIPMENT                                                                              
|-- | ----------------------------------------------------------------------------------------------------
|   |                                                                                                     
|   | Property and equipment consisted of the following as
        of June 30, 2009 and December 31, 2008:

| |                               |   | June 30,  |  |   | December 31, | 
| | ----------------------------- | - | --------- |  | - | ------------ | 
| |                               |   | 2009      |  |   | 2008         | 
| |                               |   |           |  |   |              | 
| | Furniture and fixtures        | $ | 8,921     |  | $ | 8,921        | 
| | Computers and equipment       |   | 34,657    |  |   | 33,591       | 
| | Land                          |   | 30,000    |  |   | 30,000       | 
| | Site improvements             |   | 99,631    |  |   | 99,631       | 
| | Site equipment                |   | 99,997    |  |   | 99,997       | 
| | Vehicles                      |   | 23,595    |  |   | 23,595       | 
| | Construction in progress:     |   |           |  |   |              | 
| | Building                      |   | 500,000   |  |   | 500,000      | 
| | Site improvements             |   | 2,254,017 |  |   | 2,034,167    | 
| | Site equipment                |   | 571,591   |  |   | 568,634      | 
| |                               |   |           |  |   |              | 
| |                               |   | 3,622,409 |  |   | 3,398,536    | 
| | Less accumulated depreciation |   | 42,095    |  |   | 20,359       | 
| |                               |   |           |  |   |              | 
| |                               | $ | 3,580,314 |  | $ | 3,378,177    | 

|   | Depreciation expense was $21,736 and $5,445 for the
        six months ended June 30, 2009 and 2008, respectively.                                                                                                                                                                                         
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                            
|3. | IRELAND CLAIM                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                            
|   | On November 30, 2004, the Company entered into a mineral
        property purchase agreement to acquire a 100% undivided interest in one
        mineral claim located in the Yellow Pine Mining District in Clark County,
        Nevada, known as the Ireland Claim, for a total consideration of $6,000.
|   |                                                                                                                                                                                                                                                                                                            
|   | The Company has not determined whether the mineral claim
        contains mineralized material and has consequently written off all mineral
        rights acquisition costs to operations during the previous financial periods.                                                                          
|   |                                                                                                                                                                                                                                                                                                            
|   | Subsequent to June 30, 2009, the Company has elected
        to not retain the Ireland Claim, by choosing to not pay the 2009 maintenance
        fee to Bureau of Land Management in August 2009, as it is not considered
        a core asset to the Companys business plan going forward.              

F-15

---

|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|4. | COLUMBUS PROJECT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | As of December 31, 2007, the Company had earned a 15%
        interest by satisfying its option agreement requirements and had the right
        to merge with the corporation holding the remaining 85% interest in the
        Columbus Project in Esmeralda County, Nevada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Pursuant to the option assignment agreement dated March
        30, 2007, as amended August 8, 2007, the Company granted a 5% net smelter
        return royalty to Nanominerals Corp (NMC), one of the principal stockholders
        of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | On February 20, 2008, the Company, through its wholly-owned
        subsidiary CBIA, acquired a 100% interest in the Columbus Project, including
        an option for additional mining claims, by way of merger with the owner
        of the Columbus Project, Columbus Brine Inc. (CBI). Under the terms of
        the Merger Agreement, the Company issued an aggregate of 10,440,087 shares
        of its common stock, and 5,220,059 share purchase warrants to the former
        shareholders of CBI. Each share purchase warrant issued by the Company
        entitles the holder to purchase one additional share of the Companys
        common stock at a price of $2.39 per share for a period of 5 years. This
        acquisition supersedes the option agreement.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The following table reflects the recorded purchase consideration
        for the Columbus Project:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

Purchase price:Common stock issued
      $
      20,000,000Fair value of warrants issued
      
      1,359,351Acquisition costs
      
      600,000Total purchase price
      
      21,959,351Net deferred income tax liability assumed
      
      10,261,194$
      32,220,545


In accordance with EITF 04-03 paragraph
  2 and EITF 98-11 the purchase price of $32 million was allocated to the assets
  acquired and liabilities assumed, based on their respective fair values at the
  date of acquisition. The purchase price allocated to the real properties was
  based on fair market values determined using an independent real estate appraisal
  firm (Arden Salvage Company) and the fair value of the remaining assets acquired
  and liabilities assumed were based on managements best estimates taking
  into account all available information at the time.

F-16

---

|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|4. | COLUMBUS PROJECT(continued)                                                 
|-- | ----------------------------------------------------------------------------
|   |                                                                             
|   | The following table reflects the components of the Columbus
        Project:

Allocation of acquisition cost:Mineral properties (including deferred tax
        liabilityassumed of $10,261,194)
      $
      31,948,053Property, plant and equipment
      
      202,430Deposits
      
      44,720Cash
      
      6,570Prepaid expenses
      
      24,925Accounts payable
      
      (6,153
      )Total
      $
      32,220,545


Pursuant to the terms of the acquisition
  of CBI, the Company issued an aggregate of 10,440,087 shares of common stock
  and 5,220,059 share purchase warrants to the former shareholders of CBI. Each
  share purchase warrant issued by the Company entitles the holder to purchase
  one additional share of the Companys common stock at a price of $2.39
  per share for a period of 5 years. Each warrant provides the holder with a cashless
  right of exercise. If the holder chooses to utilize this cashless exercise right,
  the total number of shares that the holder will be entitled to exercise will
  be determined by the following formula: [(A B )C]
  ÷ Awhere:

A = the average closing price of the
  Companys common stock during the five trading days prior to exercise.

B = the exercise price of $2.39.

C = the maximum number of shares of the
  Companys common stock issuable upon exercise of the warrants.

If the holder chooses to utilize the
  cashless exercise right, the holder must do so with respect to all of the unexercised
  warrants held by him.

The Company will have the right to accelerate
  the expiration date of the warrants at any time after August 19, 2010 if the
  average closing price of the Companys common stock over any 20 consecutive
  trading days is equal to or greater than 150% of the exercise price. If the
  Company exercises this acceleration right, the expiration date for the warrants
  will be accelerated to 30 days after the Company sends out notice that it is
  exercising the acceleration right.

The Company estimated the fair value
  of warrants issued in connection with the acquisition of CBI using the Binomial
  Lattice pricing model.

The Company applied EITF 98-03 with regard
  to the acquisition of the Columbus Project. The Company determined that the
  acquisition of the Columbus Project did not constitute an acquisition of a business,
  as that term is defined in EITF 98-03, and the Company recorded the acquisition
  as a purchase of assets.

F-17

---

|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|4. | COLUMBUS PROJECT(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Company believes the acquisition of the Columbus
        Project was beneficial because it provides for 100% ownership of the properties
        and fosters greater opportunity to finance and further develop the project.                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | This merger was treated as a statutory merger for tax
        purposes whereby, CBIA was the surviving merger entity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|5. | RED MOUNTAIN PROJECT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Red Mountain Project located in San Bernardino,
        California is subject to an underlying option assignment agreement dated
        March 15, 2007. Under the terms of this agreement, to earn a 60% interest,
        the Company is required to pay $5,000 per month until December 31, 2011
        and spend an aggregate of $1,200,000 in additional qualifying expenditures
        by December 31, 2011.                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Company may at any time during the life of the Red
        Mountain Project, earn a 100% interest, by paying $100,000, issuing shares
        of common stock with an aggregate value of $1,400,000 and issuing share
        purchase warrants to purchase up to an additional 25% of the number of
        shares of common stock to be issued. If the project achieves commercial
        production, the Company will be required to pay an additional $100,000,
        issue shares of common stock with an aggregate value of $2,400,000 and
        issue share purchase warrants to purchase up to an additional 25% of the
        number of shares of common stock to be issued.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Pursuant to the option assignment agreement dated March
        30, 2007, as amended August 8, 2007, the Company granted a 5% net smelter
        return royalty to NMC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|6. | STOCKHOLDERS EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | During the six months ended June 30, 2009, the Companys
        stockholders equity activity consisted of amortization of stock
        based compensation over vesting period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

F-18

---

|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|7. | STOCK OPTION PLAN AND WARRANTS                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | On March 27, 2007, the Board of Directors adopted the
        2007 Stock Incentive Plan (the Plan). Under the terms of the
        Plan, options to purchase up to 6,000,000 shares of the common stock of
        the Company, subject to an increase each quarter equal to 15% of the increase
        in the total number of outstanding shares during the previous quarter,
        may be granted to officers, directors, employees and eligible consultants.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Expenses for the six months ended June 30, 2009 and
        2008 related to the granting and vesting of stock options were $5,136
        and $39,410, respectively and are included in general and administrative
        expense and mineral exploration and evaluation expense.                                                                                                                                                                                  

Stock options During the
  six months ended June 30, 2009, the Company did not grant stock options. As
  of June 30, 2009 stock options outstanding totaled 3,954,719 with a weighted
  average exercise price of $0.15 per share.

The following table summarizes the Companys
  stock option activity for the six months ended June 30, 2009:

| |                             |  |           |  |   | Weighted       | 
| | --------------------------- |  | --------- |  | - | -------------- | 
| |                             |  | Number of |  |   | Average        | 
| |                             |  | Shares    |  |   | Exercise Price | 
| |                             |  |           |  |   |                | 
| | Balance, December 31, 2008  |  | 3,954,719 |  | $ | 0.15           | 
| | Options granted and assumed |  | --        |  |   | --             | 
| | Options expired             |  | --        |  |   | --             | 
| | Options forfeitures         |  | --        |  |   | --             | 
| | Options exercised           |  | --        |  |   | --             | 
| |                             |  |           |  |   |                | 
| | Balance, June 30, 2009      |  | 3,954,719 |  | $ | 0.15           | 

The Company utilizes the Binomial Lattice
  pricing model to estimate the fair value of options granted. The Company believes
  this model provides the best estimate of fair value due to its ability to incorporate
  inputs that change over time, such as volatility and interest rates, and to
  allow for actual exercise behavior of option holders.

F-19

---

|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|7. | STOCK OPTION PLAN AND WARRANTS(continued)                                                                                                                            
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                      
|   | The following table summarizes the status of the Companys
        unvested shares as of June 30, 2009 and changes during the six months
        ended June 30, 2009:

| |                               |  |           |  |   | Weighted Average | 
| | ----------------------------- |  | --------- |  | - | ---------------- | 
| |                               |  | Number of |  |   | Grant Date       | 
| |                               |  | Shares    |  |   | Fair
      Value | 
| |                               |  |           |  |   |                  | 
| | Unvested, December 31, 2008   |  | 37,500    |  | $ | 0.55             | 
| | Options granted               |  | --        |  |   | --               | 
| | Options vested                |  | --        |  |   | --               | 
| | Options forfeited             |  | --        |  |   | --               | 
| |                               |  |           |  |   |                  | 
| | Unvested, June 30,
      2009 |  | 37,500    |  | $ | 0.55             | 

As of June 30, 2009, there was $1,701
  of total unrecognized compensation cost related to unvested stock options. This
  cost is expected to be fully recognized in 2009.

Stock options/warrants
  During the six months ended June 30, 2009 the Company did not grant any stock
  warrants.

On June 17, 2009, the Company extended
  the expiration date for the outstanding warrants issued by the Company under
  its foreign and US private placement offerings completed in 2007 to June 30,
  2012. No other changes were made with respect to the terms and conditions of
  the warrants.

The Company determined that the amendment
  to extend the expiration date of the private placement warrants which were originally
  issued as part of equity transactions, did not result in an expense to the Company.
  The warrants were not a component to any debt transaction, registration agreement
  or services rendered to the Company.

The following table summarizes information
  about options/warrants activity during the six months ended June 30, 2009:

| |                                      |  |            |  |   | Weighted       | 
| | ------------------------------------ |  | ---------- |  | - | -------------- | 
| |                                      |  | Number of  |  |   | Average        | 
| |                                      |  | Shares     |  |   | Exercise Price | 
| |                                      |  |            |  |   |                | 
| | Balance, December 31, 2008           |  | 19,335,428 |  | $ | 1.20           | 
| | Options/warrants granted and assumed |  | --         |  |   | --             | 
| | Options/warrants expired             |  | --         |  |   | --             | 
| | Options/warrants forfeitures         |  | --         |  |   | --             | 
| | Options/warrants exercised           |  | --         |  |   | --             | 
| |                                      |  |            |  |   |                | 
| | Balance, June 30, 2009               |  | 19,335,428 |  | $ | 1.20           | 

F-20

---

|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|8. | INCOME TAXES                                                                                                                      
|-- | ----------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                   
|   | The Company is a Nevada corporation and is subject to
        federal income taxes. Nevada does not impose a corporate income tax.
|   |                                                                                                                                   
|   | The income tax benefit consisted of the following at
        June 30, 2009 and 2008,                                              

| |                                                       |   | June
      30, 2009 |   |   | June
      30, 2008 |  
| | ----------------------------------------------------- | - | ------------------- | - | - | ------------------- | -
| |                                                       |   |                     |   |   |                     |  
| | Income tax benefit based on statutory tax rate        | $ | (712,291            | ) | $ | (621,196            | )
| | Non-deductible and other                              |   | 1,523               |   |   | 3,017               |  
| | Change in valuation allowance                         |   | 2,108               |   |   | (714,571            | )
| | Rate change                                           |   | --                  |   |   | (22,419             | )
| | Release of valuation allowance related to acquisition |   | --                  |   |   | 805,997             |  
| |                                                       |   |                     |   |   |                     |  
| | Income tax benefit                                    | $ | (708,660            | ) | $ | (549,172            | )

Significant components of the Companys
  net deferred income tax assets and liabilities at June 30, 2009 and December
  31, 2008 were as follows:

| |                                   |   | June 30,   |   |   | December 31, |  
| | --------------------------------- | - | ---------- | - | - | ------------ | -
| |                                   |   | 2009       |   |   | 2008         |  
| | Deferred income tax assets:       |   |            |   |   |              |  
| |                                   |   |            |   |   |              |  
| | Net operating loss carryforward   | $ | 2,709,251  |   | $ | 2,000,591    |  
| | Option compensation               |   | 546,424    |   |   | 544,626      |  
| | Reclamation and remediation costs |   | 96,368     |   |   | 96,368       |  
| |                                   |   |            |   |   |              |  
| | Gross deferred income tax asset   |   | 3,352,043  |   |   | 2,641,585    |  
| | Valuation allowance               |   | (641,287   | ) |   | (639,179     | )
| |                                   |   |            |   |   |              |  
| |                                   |   | 2,710,756  |   |   | 2,002,406    |  
| | Deferred income tax liabilities:  |   |            |   |   |              |  
| |                                   |   |            |   |   |              |  
| | Property, plant & equipment       |   | 1,505      |   |   | 1,815        |  
| | Acquisition related liabilities   |   | 11,067,191 |   |   | 11,067,191   |  
| |                                   |   |            |   |   |              |  
| | Net deferred income tax liability | $ | 8,357,940  |   | $ | 9,066,600    |  

A valuation allowance for deferred tax
  related to option compensation and accrued reclamation and remediation costs
  was established for net deferred tax assets not allocated to offset acquisition
  related deferred tax liabilities due to the uncertainty of realizing these deferred
  tax assets based on conditions existing at June 30, 2009 and December 31, 2008.

Deferred income tax liability was recorded
  on GAAP basis over income tax basis using statutory federal rate with the corresponding
  increase in the purchase price allocation to the assets acquired.

The resulting estimated future federal
  income tax liability associated with the temporary difference between the acquisition
  consideration and the tax basis as computed in accordance with EITF 98-11 and
  SFAS 109, is reflected as an increase to the total purchase price which has
  been applied to the underlying mineral and Columbus project assets in the absence
  of there being a goodwill component associated with the acquisition transactions
  in accordance with EITF 98-11 and SFAS 109.

F-21

---

|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|8. | INCOME TAXES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company had cumulative net operating losses of approximately
        $7,740,716 and $5,713,177 as of June 30, 2009 and December 31, 2008, respectively
        for federal income tax purposes. Cumulative net operating losses from
        December 31, 2006 and previous years are effectively nil due to the annual
        limitation imposed by the Internal Revenue Code of 1986 as a result of
        the ownership percentage change limitations. The net operating loss carryforwards
        will be expiring between 2027 and 2029.                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | As of January 1, 2007, the Company did not have any
        unrecognized tax benefits. The adoption of FIN 48 did not result in any
        cumulative effect adjustment to the January 1, 2007 balance of the Companys
        accumulated deficit. Upon adoption of FIN 48, the Company did not accrue
        for interest and penalties as there were no unrecognized tax benefits.
        If interest and penalties were to be assessed, we would charge interest
        to interest expense, and penalties to general and administrative expense.
        It is not anticipated that unrecognized tax benefits would significantly
        increase or decrease within 12 months of the reporting date.                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company and its subsidiary file income tax returns
        in the United States. These tax returns are subject to examination by
        taxation authorities provided the years remain open under the relevant
        statues of limitations, which may result in the payment of income taxes
        and/or decrease its net operating losses available for carryforwards.
        The Company is no longer subject to income tax examinations by US federal
        tax authorities for years prior to 2005. While the Company believes its
        tax filings do not include uncertain tax positions, the results of potential
        examinations or the effect of changes in tax law cannot be ascertained
        at this time. The Company currently has no tax years under examination.

F-22

---

|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|9. | PROPERTY RENTAL AGREEMENTS AND LEASES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company through its subsidiary CBIA has a lease
        agreement for mining claims with DDB Syndicate, an entity owned by related
        parties, including Douglas D.G. Birnie, Chief Executive Officer of the
        Company, Mr. Chizmar, a former director of the Company, three former officers
        and directors of CBI, Geotech Mining Inc., Jack Corp. and Wiser Corp.
        Geotech Mining Inc., Jack Corp. and Wiser Corp. are affiliates of Nanominerals
        Corp.                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The DDB Syndicate has leased the DDB Claims to CSM,
        a wholly owned subsidiary of the Company. The mining lease agreement (the
        DDB Agreement), between the DDB Syndicate and CSM, provide CSM with a
        lease, extending for approximately 5 years, with an option to purchase
        the DDB Claims at any time during the lease period. To maintain the lease
        rights, CSM paid the DDB Syndicate $130,000 by June 30, 2008, with annual
        rental payments thereafter of $30,000 per year, payable on June 30, 2009,
        2010, and 2011 respectively. CSM may exercise its option to purchase the
        DDB Claims by paying a purchase price of $400,000, less any rental payments
        made by CSM prior to exercising the option, or paying the DDB Syndicate
        $10, plus the grant of a 2% royalty of net smelter returns on the DDB
        Claims.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The following table summarizes the rental payments under
        the mining lease agreement:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

June 30, 2010
      $
      30,000June 30, 2011
      
      30,000$
      60,000


|    | The Company had made $30,000 in rental payments during
        the six months ended June 30, 2009, which consists of $3,651 in payments
        to each of the eight owners of DDB Syndicate including reimbursement of
        expenses of $794 to a company controlled by Douglas D.G. Birnie.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                 
|10. | COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                 
|    | Lease obligations The Company rents office
        space in Henderson, Nevada. The lease terms expired on September 1, 2008
        and the Company continues to rent the existing space under month-to-month
        terms for $4,625 per month.                                              
|    |                                                                                                                                                                                                                                                                                                 
|    | Rental expense, resulting from this operating lease
        agreement, was $27,750 and $19,575 for the six months ended June 30, 2009
        and 2008, respectively.                                                                                                                           

F-23

---

|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|11. | ENVIRONMENTAL AND RECLAMATION ACTIVITIES                                                                                          
|--- | ----------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                   
|    | The liabilities accrued for the reclamation and remediation
        costs at June 30, 2009 and December 31, 2008, were as follows:

June 30,
      
      
      December 31,2009
      
      
      2008Exploration properties:Columbus
      $
      275,338
      
      $
      275,338Reclamation and remediation costs, long-term
      $
      275,338
      
      $
      275,338


The activity in the accrued reclamation
  and remediation cost liability for the six months ended June 30, 2009, was as
  follows:

Balance, December 31, 2008
      $
      275,338Accruals for estimated costs
      
      --Balance, June 30, 2009
      $
      275,338


|    | The Company maintains reclamation bonds with the Bureau
        of Land Management in the amount of $908,368 and $933,088 as of June 30,
        2009 and December 31, 2008, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|12. | CONCENTRATION OF CREDIT RISK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The Company maintains its cash accounts in three financial
        institutions. Cash accounts at these financial institutions are insured
        by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000
        per financial institution. Additionally, through the financial institutions
        participation in the FDICs Transaction Account Guarantee Program,
        all non-interest bearing checking accounts are fully guaranteed by the
        FDIC for the entire amount in the account through December 31, 2009. Coverage
        under the Transaction Account Guarantee Program is in addition to and
        separate from the coverage available under the FDICs general deposit
        insurance rules.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The Company has never experienced a material loss or
        lack of access to its cash accounts; however, no assurance can be provided
        that access to the Companys cash accounts will not be impacted by
        adverse conditions in the financial markets. At June 30, 2009, the Company
        had deposits in excess of FDIC insured limits in the amount of $102,320.                                                                                                                                                                                                                                                                                                                                                             

F-24

---

|IRELAND INC.                              
|------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|(UNAUDITED)                               

|13. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                  
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                             
|    | During the six months ended June 30, 2009, the Company
        utilized the services of NMC to provide technical assistance and financing
        related activities. These services related primarily to the Columbus project
        and the Red Mountain project. NMC is the Companys largest shareholder,
        owning approximately 41.4% of the Companys outstanding common stock.
|    |                                                                                                                                                                                                                                                                                                                                                                                             
|    | In addition to the above services, NMC provided dedicated
        use of its laboratory, instrumentation, milling equipment and research
        facilities. NMC provided invoices for these fees plus expenses.                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                             
|    | For the six months ended June 30, 2009, the Company
        incurred total fees and reimbursements of expenses to NMC of $210,000
        and $37,446, respectively, for a total of $247,446.                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                             
|    | At June 30, 2009, the Company had an outstanding balance
        due to NMC of $132,498. The Company also had an outstanding balance for
        accrued compensation to Douglas D.G. Birnie, its executive officer of
        $27,000 payable to a company wholly owned by Douglas D.G. Birnie. Accounts
        payable  related party totaled $159,498 as of June 30, 2009.             
|    |                                                                                                                                                                                                                                                                                                                                                                                             
|    | The Company has the mining claim lease for the DDB Claims
        as further discussed in Note 9.                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                             
|14. | CONCENTRATION OF ACTIVITY                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                             
|    | For the six months ended June 30, 2009, the Company
        purchased services from three major vendors Arrakis, Inc., AuRic Metallurgical
        Labs, LLC, and NMC that exceeded more than 10% of total purchases and
        amounted to approximately $466,146, $188,800, and $247,446, respectively.                                                                                  

F-25

---

|ITEM 2. | MANAGEMENT'S DISCUSSION
      AND ANALYSIS OF FINANCIAL CONDITION
      AND RESULTS OF OPERATIONS.
|------- | --------------------------------------------------------------------------------------------------

Cautionary Statement Regarding Forward-Looking
Statements

Certain statements contained in this Quarterly Report on Form
10-Q constitute "forward-looking statements. These statements, identified by
words such as plan, "anticipate, "believe, "estimate, "should, "expect"
and similar expressions include our expectations and objectives regarding our
future financial position, operating results and business strategy. These
statements reflect the current views of management with respect to future events
and are subject to risks, uncertainties and other factors that may cause our
actual results, performance or achievements, or industry results, to be
materially different from those described in the forward-looking statements.
Such risks and uncertainties include those set forth under the caption "Part II,
Item 1A. Risk Factors and elsewhere in this Quarterly Report on Form 10-Q. We
advise you to carefully review the reports and documents we file from time to
time with the United States Securities and Exchange Commission (the SEC),
particularly our periodic reports filed with the SEC pursuant to the Securities
Exchange Act of 1934 (the Exchange Act).

OVERVIEW

We are a minerals exploration and development company focused
on the discovery and extraction of precious metals from mineral deposits in the
Southwestern United States.

In February 2008, we acquired our lead project, a prospective
gold, silver and calcium carbonate property located in Esmeralda County, Nevada
that we call the Columbus Project. The Columbus Project consists of 19,680
acres of placer mineral claims, including a 380 acre permitted mine site
(60-acre mill site and mill facility, and 320-acre mine site). Our current
permits currently allow us to mine up to 792,000 tons per year to 40 feet in
depth for the purpose of extracting precious metals and calcium carbonate from
the permitted mine site. Results from our 2008 drilling program have also led us
to identify 3 new areas with significant mineralization. We also have a mineral
lease covering, and the option to acquire, an additional 22,640 acres of placer
mineral claims adjoining the current project area (the DDB Claims).

In addition to the Columbus Project, we own the right to
acquire a prospective gold, silver and tungsten property located in San
Bernardino County, California that we call the Red Mountain Project. We also
own a mineral property located in Clark County, Nevada known as the Ireland
Claim. However, we have decided to allow the Ireland Claim to lapse on
September 1, 2009 as we do not consider it to be a core asset of our
business.

RECENT CORPORATE DEVELOPMENTS

The following significant developments occurred since the
completion of our last fiscal quarter ended March 31, 2009:

|1. | On June 17, 2009, we extended the expiration date for the
      outstanding warrants issued by us under our foreign and US private
      placement offerings completed in 2007 (the 2007 Foreign Offering and the
      2007 US Offering, respectively). Each warrant issued under the 2007
      Foreign Offering and 2007 US Offering entitled the holder to purchase one
      share of our common stock at a price of $1.00 per share for a period of 2
      years after the date of issuance, subject to our right to accelerate the
      expiration date of the warrants if our common stock trades at a weighted
      average price over $3.50 for 20 consecutive trading days. If we choose to
      exercise our acceleration rights, the accelerated expiry date will be
      thirty (30) days after we send out notices of the acceleration. We have
      extended the expiration date for all of the outstanding warrants issued
      under the 2007 Foreign Offering and the 2007 US Offering to June 30, 2012,
      subject to the acceleration rights described above. No other changes were
      made with respect to the terms and conditions of the warrants.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2. | On June 24, 2009, we appointed Mark H. Brennan as a
      member of our Board of Directors. Mr. Brennan was appointed to fill the
      vacancy on our Board of Directors created by the resignation of Lawrence
      E. Chizmar, Jr. on November 4, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

3

---

|   | Mr. Brennan, age 49, has served as the President of his
      own consulting firm, the Brennan Consulting Group, through which he has
      managed a number of long-term, multi-year management and operations
      consulting engagements in various business sectors. In addition to his
      ongoing management consulting practice, Mr. Brennan has also founded and
      operated a number of private companies beginning in the early 1990s. Mr.
      Brennan is the founding Chairman of the Vegas Valley Angels, a non-profit
      organization of accredited investors whose purpose is to search out,
      invest in, mentor and foster the development of new and developing
      companies located in the southwestern United States. Mr. Brennan is also
      an active member of the Board of Advisors for both the Nevada Center for
      Entrepreneurship and Technology (NCET), and the University of Nevada Las
      Vegas Center for Entrepreneurship. Mr. Brennan holds an MBA from the
      Harvard Business School and a MA in Management from National University.
      Early in Mr. Brennans career he served his country for eight years as a
      fighter pilot and instructor pilot with the United States Air Force after
      earning his BS degree from the United States Air Force Academy.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|3. | Effective July 1, 2009, we raised our compensation for
      independent directors to: (i) a monthly payment of $2,500; and (ii) a
      quarterly issuance of restricted stock awards with a market value of
      $7,500. In lieu of the quarterly issuance of restricted stock awards, a
      director may accept stock options to purchase shares of our common stock
      with a market value of $15,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4. | In addition to Mr. Brennans monthly compensation as an
      independent director, we issued to Mr. Brennan, on August 11, 2009, stock
      options to purchase 250,000 shares of our common stock at an exercise
      price of $0.48 per share. 50,000 of the options vested immediately and the
      remaining balance of the options will vest at a rate of 50,000 options
      commencing on December 31, 2009 and every six months thereafter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|5. | Our Board of Directors approved a private placement
      offering of up to 10,000,000 units at a price of $0.45 per unit to
      accredited investors as such term is defined under Regulation D of the
      Securities Act (the U.S. Offering) and a concurrent foreign private
      placement offering of up to 5,500,000 units on the same terms to persons
      who are not U.S. Persons as such term is defined under Regulation S of
      the Securities Act (the Foreign Offering). Each unit is comprised of one
      share of our common stock and one-half share purchase warrant. Each full
      share purchase warrant will entitle the holder to purchase one additional
      share of our common stock at a price of $0.75 per share expiring June 30,
      2012. After June 30, 2010, we will have the right to accelerate the
      expiration date of the warrants if the volume weighted average price for
      the shares on our principal market is above $3.00 per share for twenty
      consecutive trading days. The U.S. Offering and the Foreign Offering are
      set to terminate on August 31, 2009, unless otherwise extended by the
      Board of Directors. There is no assurance that these private placement
      offerings or any part of them will be completed.                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The above does not constitute an offer to sell or a
      solicitation of an offer to buy any of our securities in the United
      States. The securities have not been registered under the United States
      Securities Act of 1933, as amended and may not be offered or sold within
      the United States or to U.S. persons unless an exemption from such
      registration is available.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

COLUMBUS PROJECT PROPERTY UPDATES

During the first quarter of 2009, test results received from
independent consultants McEwen Geological LLC of Arvada, Colorado (McEwen)
from our 2008 drilling program led us to identify 3 new areas with significant
mineralization. The 2008 drilling program involved the drilling of 39 holes to
depths ranging from 200 to 400 feet below the surface. Over 1,000 samples were
collected by McEwen under Chain of Custody (COC) standards and delivered for
testing and analysis to independent consultants Arrakis Inc. of Denver, Colorado
(Arrakis) and independent consultants AuRIC Metallurgical Laboratories of Salt
Lake City, Utah (AuRIC). The drill samples were analyzed using a caustic
fusion technique, and the results reported were from the extracted precious
metals.

Based on these test results, we have expanded our original
mineralized area (Zone A) from 380 acres to 2,530, and subdivided the
mineralized areas of Zone A into three potentially surface minable subsections:
Zone A  Permitted Mine Area (covering the 380 acre permitted mine site); Zone A
 West (covering holes

4

---

S1A to S2A, and holes S8A to S11A); and Zone A  Central
(covering holes S5A to S7A, and S14A to S17A). In addition, we have identified a
new area of significant mineralization covering 1,068 acres located
approximately 3 miles south of the Zone A  Permitted Mine Area that we now call
Zone B. Zone A and Zone B appear to be unbounded on all sides.



2008 Drilling Results  Zone A

A total of 25 contiguous holes were drilled next to the Zone A
 Permitted Mine Area. The weight mean average grade for the mineralized
intercepts identified in the 25 holes drilled was approximately 0.047 opt Au
equivalent.

Hole ID1
    Depth Drilled
      (ft)
    Mineralized
      Interval2 (ft)
    Thickness (ft)
    Au (opt)
    Ag (opt)
    Au (opt)3
      EquivalentS1A
    195
    50
      to 150
    100
    0.038
    0.132
    0.039S2A
    202
    10
      to 40
    30
    0.032
    0.134
    0.03460
      to 100
    40
    0.031
    0.132
    0.031160
      to 202
    42
    0.049
    0.209
    0.052S3A
    201
    100
      to 140
    40
    0.027
    0.094
    0.028S4A
    404
    250
      to 404
    154
    0.037
    0.166
    0.039S5A
    201
    0
      to 70
    70
    0.033
    0.112
    0.034160
      to 201
    41
    0.036
    0.111
    0.038S6A
    200
    0
      to 60
    60
    0.037
    0.180
    0.035120
      to 170
    50
    0.045
    0.332
    0.049S7A
    400
    0
      to 20
    20
    0.052
    0.409
    0.057130
      to 170
    40
    0.038
    0.299
    0.042


_______________________________
  1 Holes S20A to S22A did not contain sufficient samples above our cut
  off grade of 0.020 opt Au equivalent to define any mineralized intercepts.2 Mineralized Intervals were determined using a 0.020 opt Au equivalent
  cut-off.3 Au equivalent calculated using: $900/oz Au, $12/oz Ag.

5

---

Hole ID1
    Depth Drilled
      (ft)
    Mineralized
      Interval2 (ft)
    Thickness (ft)
    Au (opt)
    Ag (opt)
    Au (opt)3
      Equivalent240
      to 400
    160
    0.027
    0.152
    0.029S8A
    201
    0
      to 201
    201
    0.049
    0.238
    0.052S9A
    404
    50
      to 404
    354
    0.062
    0.302
    0.066S10A
    181
    0
      to 20
    20
    0.046
    0.214
    0.049110
      to 170
    60
    0.050
    0.382
    0.055S11A
    202
    40
      to 80
    40
    0.027
    0.137
    0.029S12A
    400
    60
      to 90
    30
    0.042
    0.238
    0.045130
      to 370
    240
    0.045
    0.272
    0.048S13A
    200
    100
      to 120
    20
    0.024
    0.133
    0.025S14A
    340
    0
      to 40
    40
    0.058
    0.413
    0.06390
      to 110
    20
    0.071
    0.465
    0.077S15A
    200
    0
      to 60
    60
    0.037
    0.295
    0.041150
      to 200
    50
    0.048
    0.374
    0.053S16A
    200
    0
      to 60
    60
    0.037
    0.270
    0.04100
      to 150
    50
    0.059
    0.396
    0.065S17A
    200
    0
      to 30
    30
    0.060
    0.568
    0.06760
      to 90
    30
    0.069
    0.725
    0.079S18A
    200
    150
      to 190
    40
    0.044
    0.367
    0.049S19A
    200
    0
      to 20
    20
    0.053
    0.350
    0.05790
      to 200
    110
    0.034
    0.231
    0.037S23A
    200
    60
      to 80
    20
    0.054
    0.389
    0.059130
      to 200
    70
    0.040
    0.302
    0.044S24A
    200
    170
      to 190
    20
    0.041
    0.341
    0.045S25A
    200
    20
      to 60
    40
    0.042
    0.223
    0.044Weight Mean Average for All Drill Hole Intercepts
    0.044
    0.257
    0.047


2008 Drilling Results  Zone B

A total of 14 holes were drilled in Zone B. Zone B is located
approximately 3 miles south of the Zone A Permitted Mine Area. The weight mean
average grade for the mineralized intercepts identified in the 14 holes drilled
in Zone B was approximately 0.044 opt Au equivalent.

Hole ID
    Depth Drilled
      (ft)
    Mineralized
      Interval4 (ft)
    Thickness (ft)
    Au (opt)
    Ag (opt)
    Au (opt)5
      EquivalentS1B
    400
    10
      to 400
    390
    0.045
    0.234
    0.047S2B
    200
    50
      to 160
    110
    0.034
    0.179
    0.036S3B
    275
    90
      to 275
    185
    0.039
    0.237
    0.042S4B
    200
    170
      to 200
    30
    0.021
    0.093
    0.022S5B
    200
    50
      to 200
    150
    0.041
    0.167
    0.044S6B
    400
    240
      to 270
    30
    0.036
    0.206
    0.038310
      to 400
    90
    0.033
    0.181
    0.036S7B
    200
    0
      to 200
    200
    0.037
    0.160
    0.039S8B
    350
    0
      to 350
    350
    0.040
    0.187
    0.042S9B
    200
    0
      to 200
    200
    0.048
    0.244
    0.051S10B
    400
    0
      to 310
    310
    0.040
    0.254
    0.043360
      to 400
    40
    0.080
    0.265
    0.083S11B
    200
    0
      to 140
    140
    0.042
    0.224
    0.044S12B
    200
    0
      to 60
    60
    0.057
    0.318
    0.061150
      to 200
    50
    0.026
    0.095
    0.027S13B
    400
    0
      to 100
    100
    0.053
    0.246
    0.056


_____________________________4Mineralized
Intervals were determined using a 0.020 opt Au equivalent cut-off.5 Au Equivalent calculated using: $900/oz Au, $12/oz Ag.

6

---

170
      to 250
    80
    0.026
    0.102
    0.027290
      to 350
    60
    0.052
    0.252
    0.055S14B
    280
    80
      to 100
    20
    0.023
    0.138
    0.024140
      to 280
    140
    0.045
    0.231
    0.048Weight Mean Average for All Drill Hole Intercepts
    0.041
    0.212
    0.044


Bulk Leach Test Results  Zone A  Permitted Mine
Area

In the first quarter of 2009, AuRIC conducted a bulk leach test
on 1,738 pounds of material extracted from the Zone A  Permitted Mine Area by
Arrakis under COC standards. No mineral processing operations, such as crushing,
grinding, drying or screening, were performed on the sample prior to leaching.
The material was analyzed using a caustic fusion technique and reported head
grades of 0.055 ounces per ton (opt) gold (Au) and 0.520 opt silver (Ag). The
material was then leached, resulting in the extraction of 0.047 opt Au and 0.464
opt Ag into solution. The precious metals were subsequently collected on resins
and processed to produce Au and Ag bullion, for a net extraction of 0.038 opt Au
and 0.385 opt Ag. This represents leach extraction of 86.2% of Au into solution
and 69.1% of Au recovered as metal. This also represents leach extraction of
89.2% of Ag into solution and 74% of Ag recovered as metal. The overall
extraction was 0.043 opt Au equivalent. Upon completion of the test, the
precious metal beads were delivered to us. We will commission further testing in
order to optimize net metal recovery.

Bench Leach Test Results  Zone B

In the second quarter of 2009, AuRIC conducted bench scale
leach tests on composite drill samples taken from Zone B. The tested materials
were composited from previously submitted and analyzed drill samples taken
during our 2008 drilling program. The results of these bench scale leach tests
were consistent with the results obtained from the bulk leach test conducted on
materials extracted from the Zone-A Permitted Mine Area in the first quarter of
2009.

Zone B  Drill Hole Sample Composite Results

Bench Scale Test
    Drill Hole
    Interval (ft)
    Au Equivalent6
      Head Grade (opt)
    % Recovered into
      Solution
    Au Equivalent Recovered
      into Solution (opt)3359C
    S1B
    40
      to 140
    0.041
    91.0%
    0.0373360C
    S9B
    0
      to 50
    0.074
    90.0%
    0.0663362C
    S12B
    0
      to 50
    0.057
    80.6%
    0.046


The composite samples were taken from three holes in Zone B
representing drilling depths of 100 feet, 50 feet and 50 feet, respectively.
AuRIC created 5.5 pound composites for each of the three mineralized intervals
tested. The composites were then assayed using a caustic fusion technique, and
then leached. The leach results indicate that the mineralogy of the Zone
A-Permitted Mine Area and Zone B are consistent with each other.

New Estimates of Material Extractable Using Surface
Dredge Operations

New operational cost estimates, results from our 2008 drilling
program and geological modeling by McEwen have led us to conclude that the
surface dredge mining method currently being used at our pilot production
facility being operated in the Zone A  Permitted Mine Area could economically
be used to mine to a depth of 200 feet. Based on this 200 foot depth, we have
estimated that up to 199.5 million (M) tons of material could potentially be
extracted from the newly identified mineralized areas Zone A  West, Zone A 
Central and Zone B. The average grade of all of the samples within this 199.5 M
tons approximates 0.041 opt Au equivalent.

_____________________________6 Au equivalent
calculated using: $900/oz Au, $12/oz Ag

7

---

Location
    Potentially Mineable
      Acres7
    Depth (ft)
    Thickness (ft)
    Potentially Minable
      MaterialZone A  Permitted
      Mine Area
    270
    3
      to 40
    37
    14.8
      M tonsZone A  West
    475
    0
      up to 200
    Up
      to 200
    50.0
      M tonsZone A  Central
    550
    0
      up to 90
    Up
      to 90
    41.5
      M tonsZone B  (Holes
      S7B to S13B)
    555
    0
      up to 200
    Up
      to 200
    108
      M tons


We believe that the sedimentary materials underlying the three
newly identified mineralized areas are substantially similar to the sedimentary
materials found in the Zone A  Permitted Mine Area where our pilot production
operation is located. The full extent of the mineralization in Zone A and Zone B
has yet to be determined by further drilling and drill sample analysis. There is
no assurance that the test results that we have received to date will be
indicative of actual extraction rates to be found throughout the Columbus
Project. Additional exploration work will be required before proven or probable
reserves can be established. We intend to conduct additional bench scale and
bulk sample tests in both Zone A and Zone B.

BLM Approval Obtained for 2009 Drill Program

In the second quarter of 2009, we received approval from the
Bureau of Land Management (the "BLM") to conduct a 30-hole drill program on the
Columbus Project. The drill program is scheduled to consist of 30 holes to be
drilled to depths ranging from 200 feet to 400 feet below the surface. We hope
that this drill program will expand the Zone A and Zone B mineralized zones and
provide us with a greater definition of the mineralization within these
zones.

PLAN OF OPERATION

During our 2009 fiscal year, we intend to proceed with our
exploration and development programs for the Columbus Project and the Red
Mountain Project. However, to provide us with maximum financial flexibility, we
have elected to postpone the drilling program at the Red Mountain Project until
2010. We continue to believe that the Red Mountain Project is an excellent
prospect for us.

We have decided to allow the Ireland Claim to lapse on
September 1, 2009 as we do not consider it to be a core asset of our
business.

The Columbus Project

Our technical program for the Columbus Project has two primary
objectives: (a) to prove the mineral resources/minable reserves, and (b) to
determine the commercial feasibility of mining and extracting precious metals
from the project.

|a. | Determining Project Resources / Reserves: The goal
      of the drilling program is to determine whether there are sufficient
      reserves on the Columbus Project for economic viability. In the 2008 drill
      program, the holes were drilled to depths ranging from 200 feet to 400
      feet. We have completed drilling on, and received the results for, all 39
      holes, which are reported above. In 2009, subject to our ability to obtain
      permits and additional financing, we intend to conduct an additional 60
      hole drilling program for the Columbus Project that we hope will provide
      greater definition of the mineralization at the Columbus
Project.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|b. | Project Feasibility: We currently have a
      production permit from the Bureau of Land Management (the BLM) for the
      Columbus Project. The production permit allows us to extract precious
      metals and produce calcium carbonate on the 380 acre (320 acre mine site
      and 60 acres of mill sites) Zone A- Permitted Mine Area located at the
      Columbus Project at a mine rate of up to 792,000 tons per year. The mine
      site and mill sites are located in Zone A on the northern edge of the area
      of interest identified by our surface sampling
program.                                                                                                    

_____________________________7 Acreage expected
to be surface minable in an economical manner.

8

---

We are currently using a dredge mining
method to mine and transfer material to the pilot plant at the Columbus Project.
The material is mined and handled as a slurry throughout the production process.
This production process has, to date, proven to be very successful and is our
preferred method of mining as the cost per ton of material mined is low.

Bench and bulk leach tests are being
conducted at off-site facilities by independent consultants. Upon completion of
these tests we will operate our on-site pilot production plant on an ongoing
basis unless our production process is proven to be commercially unviable.

If the operation of this pilot
production facility proves to our satisfaction that the Columbus Project is
economically viable, we will seek to expand the production process or construct
additional production circuits within the mill site to increase production
capacity. The production model for the Columbus Project is anticipated to be a
low cost, high volume mining operation.

Readers are cautioned that, although
we believe that the results of our exploration activities to date are
sufficiently positive to proceed with the installation and operation of a pilot
production circuit for the Columbus Project, we have not yet established any
probable or proven reserves. There is no assurance that we will be able to
establish that any commercially extractable ore reserves exist on the Columbus
Project or that we will enter into commercial production.

We anticipate spending approximately $2,486,787 on our
exploration and development program for the Columbus Project in the second half
of 2009.

The Red Mountain Project

Sampling and Drilling Program: We initiated a surface
sampling program on the Red Mountain Project in 2008. We have postponed the
drilling program on the Red Mountain Project until we obtain additional
financing. See Financing Requirements.

We anticipate that we will spend approximately $47,500 on our
exploration program for the Red Mountain Project in 2009.

Cash Requirements

We have budgeted for the following expenditures in the third
  and fourth quarters of 2009:

|Columbus Project           |                                                              |           |          
|-------------------------- | ------------------------------------------------------------ | --------- | ---------
|•                          | Drilling Exploration Program and Obtaining Reserve Estimates | $         | 1,090,567
|•                          | Pre-feasibility and Feasibility Program                      |           | 1,346,220
|•                          | Property Maintenance Costs                                   |           | 50,000   
|                           | Total for Columbus Project                                   | $         | 2,486,787
|Red Mountain Project       |                                                              |           |          
|•                          | Property Acquisition and Maintenance Costs                   | $         | 47,500   
|•                          | Sampling Exploration Program                                 |           | 0        
|                           | Total for
      Red Mountain Project                         | $         | 47,500   
|General and Administration |                                                              |           |          
|                           | Total for General and Administration                         | $         | 645,617  
|Total Cash Expenditures    | $                                                            | 3,179,904 |          

As of June 30, 2009, we had cash in the amount of $722,527 and
a working capital surplus of $352,106. This amount is substantially less than
the total expenditures that we have budgeted for our 2009 fiscal year. We
estimate that our current financial resources are sufficient to allow us to meet
the anticipated costs of our exploration and development programs for the first
half of our 2009 fiscal year. However, actual costs could be greater than we
have anticipated. We will require additional financing in order to fully
complete our exploration and development plans for 2009. In order to meet our
expenditure requirements for the second half of the fiscal year of 2009, our
Board of Directors approved a U.S. Offering of up to 10,000,000 units at a

9

---

price of $0.45 per unit and a concurrent Foreign Offering of up
to 5,500,000 units at a price of $0.45 per unit for aggregate proceeds of
$6,975,000. There is no assurance that these private placement offerings or any
part of them will be completed.

RESULTS OF OPERATIONS

Three Months and Six Months Summary

|                       |   | Three Months Ended June 30 |   |   | Percentage |   |  | Six Months Ended June 30 |     |   | Percentage |  
|---------------------- | - | -------------------------- | - | - | ---------- | - |  | ------------------------ | --- | - | ---------- | -
|                       |   |                            |   |   |            |   |  | Increase /               |     |   |            |  
|                       |   | 2009                       |   |   | 2008       |   |  | (Decrease)               |     |   | 2009       |  
|Revenue                | $ | -                          |   | $ | -          |   |  | n/a                      |     | $ | -          |  
|Operating Expenses     |   | (1,096,290                 | ) |   | (1,219,605 | ) |  | (10.1                    | ) % |   | (2,045,050 | )
|Other Income (Expense) |   | 2,317                      |   |   | 30,820     |   |  | (92.5                    | ) % |   | 9,934      |  
|Income Tax Benefit     |   | 381,183                    |   |   | 405,187    |   |  | (5.9                     | ) % |   | 708,660    |  
|Net Loss               | $ | (712,790                   | ) | $ | (783,598   | ) |  | (9.0                     | ) % | $ | (1,326,456 | )

Revenue

We have not earned any operational revenues since our inception
and we do not anticipate earning revenues until our mineral properties enter
into commercial production, of which there are no assurances. Our pilot
production plant at the Columbus Project is currently being operated for
pre-feasibility testing purposes only. We are currently in the exploration stage
of our business and we can provide no assurances that we will be able to
establish the existence of probable or proved mineral reserves on our
properties, or if such reserves are established, that we will be able to enter
into commercial production.

Operating Expenses

Our operating expenses for the three and six months ended June
30, 2009 and 2008 consisted of the following:

|                                                                  |   | Three Months Ended |  |   |            |  |  | Six Months Ended |     |   |            | 
|----------------------------------------------------------------- | - | ------------------ |  | - | ---------- |  |  | ---------------- | --- | - | ---------- | 
|                                                                  |   | June 30            |  |   | Percentage |  |  | June 30          |     |   | Percentage | 
|                                                                  |   |                    |  |   |            |  |  | Increase /       |     |   |            | 
|                                                                  |   | 2009               |  |   | 2008       |  |  | (Decrease)       |     |   | 2009       | 
|Mineral exploration and evaluation expenses                       | $ | 687,033            |  | $ | 643,569    |  |  | 6.8              | %   | $ | 1,274,738  | 
|Mineral exploration and evaluation expenses  related
      party |   | 135,000            |  |   | 235,000    |  |  | (42.6            | ) % |   | 240,000    | 
|General and administrative                                        |   | 248,356            |  |   | 323,230    |  |  | (23.2            | ) % |   | 478,576    | 
|Depreciation                                                      |   | 10,901             |  |   | 2,806      |  |  | 288.5            | %   |   | 21,736     | 
|Mineral and property holding costs                                |   | 15,000             |  |   | 15,000     |  |  | 0.0              | %   |   | 30,000     | 
|Total Operating Expenses                                          | $ | 1,096,290          |  | $ | 1,219,605  |  |  | (10.1            | ) % | $ | 2,045,050  | 

Operating expenses for our second fiscal quarter ended June 30,
2009 decreased slightly as compared to our second fiscal quarter ended June 30,
2008. Operating expenses decreased as a result of decreases in general and
administrative expenses and mineral exploration and evaluation expenses 
related party.

10

---

The item Mineral exploration and evaluation expenses  related
party represents (a) amounts paid or reimbursed to Nanominerals Corp. for
exploration work conducted on the Columbus and Red Mountain Projects,
Nanominerals is our largest shareholder, owning approximately 41.4% of our
outstanding common stock; and (b) amounts paid in respect of the DDB Claims to
the DDB Syndicate, an entity owned by related parties.

During the fiscal quarter ended June 30, 2009, we incurred fees
payable to Nanominerals of $105,000 for technical and financing related services
relating primarily to the Columbus and Red Mountain Projects. In addition, we
incurred $27,498 in respect to reimbursable expenses paid for by Nanominerals.
At June 30, 2009, we were indebted to Nanominerals in the amount of $132,498 for
unpaid fees and reimbursable expenses.

We made $30,000 in rental payments to the DDB Syndicate under
the terms of our lease agreement for the DDB Claims. The DDB Syndicate is a
mining syndicate made up of a company controlled by Douglas D.G. Birnie (our
President and Chief Executive Officer and a member of our Board of Directors),
Lawrence E. Chizmar (a former member of our Board of Directors and a former
director of CBI), three former officers, directors and affiliates of CBI, and
three companies affiliated with Nanominerals. The $30,000 in rental payments
made to the DDB Syndicate consisted of $3,651 paid to each member of the DDB
Syndicate, including $794 paid to a company controlled by Mr. Birnie for the
reimbursement of legal and government filing fees related to the DDB Claims.

We also had an outstanding balance for accrued compensation due
to Douglas D.G. Birnie (our President and Chief Executive Officer and a member
of our Board of Directors) in the amount of $27,000, payable to a company
controlled by Mr. Birnie.

The decrease in general and administrative expenses is
primarily attributable to a decrease in consulting fees, stock based
compensation expense, and a reallocation of executive and employee compensation
to mineral exploration and evaluation expenses. During the second quarter of
2009, our President and Chief Executive Officer and our operations manager spent
a large amount of time directly managing our exploration and development
activities at the Columbus Project. As a result, a portion of their compensation
was allocated to mineral exploration and evaluation expenses instead of general
and administrative.

We anticipate that our operating expenses will continue to
increase significantly as we pursue our exploration and development programs for
the Columbus Project and the Red Mountain Project.

LIQUIDITY AND CAPITAL RESOURCES

|Working Capital     |   |                        |   |   |                            |   |  |                      
|------------------- | - | ---------------------- | - | - | -------------------------- | - |  | ---------------------
|                    |   |                        |   |   |                            |   |  | Percentage           
|                    |   | At
      June 30, 2009 |   |   | At
      December 31, 2008 |   |  | Increase / (Decrease)
|Current Assets      | $ | 848,674                |   | $ | 2,734,552                  |   |  | (69.0 ) %            
|Current Liabilities |   | (496,568               | ) |   | (175,049                   | ) |  | 183.7
      %        
|Working Capital     | $ | 352,106                |   | $ | 2,559,503                  |   |  | (86.2 ) %            

|Cash Flows                              |   |                       |   |   |                       |  
|--------------------------------------- | - | --------------------- | - | - | --------------------- | -
|                                        |   | Six Months Ended June |   |   | Six Months Ended June |  
|                                        |   | 30,
      2009        |   |   | 30,
      2008        |  
|Cash Flows used in Operating Activities | $ | (1,598,054            | ) | $ | (1,974,196            | )
|Cash Flows used in Investing Activities |   | (245,242              | ) |   | (785,713              | )
|Cash Flows from Financing Activities    |   | -                     |   |   | 1,000                 |  
|Net Decrease in Cash During Period      | $ | (1,843,296            | ) | $ | (2,758,909            | )

At June 30, 2009 we had a working capital surplus of $352,106
as compared to a working capital surplus of $2,559,503 at December 31, 2008. The
decrease in our working capital surplus is primarily attributable to the

11

---

fact that: (i) we had no sources of revenue during the period;
and (ii) we incurred substantial expenses in the exploration and development of
the Columbus Project.

Financing Requirements

We will require additional financing if we are to complete our
proposed exploration and development programs for 2009. In order to meet these
expenditure requirements, our Board of Directors approved a U.S. Offering of up
to 10,000,000 units at a price of $0.45 per unit to accredited investors as
such term is defined under Regulation D and a concurrent Foreign Offering of up
to 5,500,000 units on the same terms to persons who are not U.S. Persons as
such term is defined under Regulation S. Each unit is comprised of one share of
our common stock and one-half share purchase warrant. Each full share purchase
warrant will entitle the holder to purchase one additional share of our common
stock at a price of $0.75 per share expiring June 30, 2012. After June 30, 2010,
we will have the right to accelerate the expiration date of the warrants if the
volume weighted average price for the shares on our principal market is above
$3.00 per share for twenty consecutive trading days.

Our ability to obtain additional financing will be subject to a
number of factors, including the variability of market prices for gold and
silver, investor interest in our mineral projects, and the performance of equity
markets in general. These factors may make the timing, amount, terms or
conditions of additional financing unavailable to us. If we are not able to
obtain financing when needed or in an amount sufficient to enable us to complete
our programs, we may be required to adjust our exploration and development plans
depending upon our existing capital resources.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to stockholders.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with
United States generally accepted accounting principles requires our management
to make estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Our management routinely makes judgments and estimates about the effects of
matters that are inherently uncertain.

We have identified certain accounting policies, described
below, that are most important to the portrayal of our current financial
condition and results of operations. Our significant accounting policies are
also disclosed in the notes to our unaudited consolidated financial statements
for the six months ended June 30, 2009 included in this Quarterly Report on Form
10-Q.

Mineral Rights

We capitalize acquisition and option costs of mineral property
rights. The amount capitalized represents fair value at the time the mineral
rights were acquired. We capitalize acquisition and option costs of mineral
rights as tangible assets. Upon commencement of commercial production, the
mineral rights will be amortized using the unit-of-production method over the
life of the mineral rights. If we do not continue with exploration after the
completion of a feasibility study, the mineral rights will be expensed at that
time.

Exploration Costs

Mineral exploration costs are expensed as incurred.

12

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Mineral Property Acquisition Costs

Costs of acquiring mining properties are capitalized upon
acquisition. Mine development costs incurred either to develop new ore deposits,
expand the capacity of mines, or to develop mine areas substantially in advance
of current production are also capitalized once proven and probable reserves
exist and the property is a commercially mineable property. Costs incurred to
maintain current production or to maintain assets on a standby basis are charged
to operations. Costs of abandoned projects are charged to operations upon
abandonment. We evaluate the carrying value of capitalized mining costs and
related property and equipment costs, to determine if these costs are in excess
of their recoverable amount whenever events or changes in circumstances indicate
that their carrying amounts may not be recoverable. The periodic evaluation of
carrying value of capitalized costs and any related property and equipment costs
are based upon expected future cash flows and/or estimated salvage value in
accordance with Statement of Financial Accounting Standards (SFAS) No. 144,
Accounting for Impairment or Disposal of Long-Lived Assets.

Reclamation and Remediation Costs (Asset Retirement
Obligation)

We accrued costs associated with environmental remediation
obligations in accordance with Statement of Financial Accounting Standards
(SFAS) No. 143, Accounting for Asset Retirement Obligations. In accordance
with SFAS No. 143, we record a liability for the present value of the estimated
environmental remediation costs in the period in which the liability is incurred
and becomes determinable, with an offsetting increase in the carrying amount of
the associated asset. The liability will be accreted and the asset will be
depreciated over the life of the related assets. Adjustments for changes
resulting from the passage of time and changes to either the timing or amount of
the original present value estimate underlying the obligation will be made. As
reclamation work is performed or liabilities are otherwise settled, the recorded
amount of the liability is reduced.

We accrue costs associated with environmental remediation
obligation when it is probable that such costs will be incurred and they are
reasonably estimable. Estimates for reclamation and other closure costs are
prepared in accordance with SFAS No. 5 Accounting for Contingencies, or
Statement of Position 96-1 Environmental Remediation Liabilities. Costs of
future expenditures for environmental remediation are not discounted to their
present value unless subject to a contractually obligated fixed payment
schedule. Such costs are based on managements current estimate of amounts to be
incurred when the remediation work is performed, within current laws and
regulations.

Future reclamation and environmental-related expenditures are
  difficult to estimate, in many circumstances, due to the early stage nature
  of the exploration project, and uncertainties associated with defining the nature
  and extent of environmental disturbance and the application of laws and regulations
  by regulatory authorities and changes in reclamation or remediation technology.
  We periodically review accrued liabilities for such reclamation and remediation
  costs as evidence becomes available indicating that the liabilities have potentially
  changed. Changes in estimates are reflected in the statement of operations in
  the period an estimate is revised.

Accruals for reclamation and environmental matters totaled
$275,338 at June 30, 2009 and December 31, 2008. We are in the exploration stage
and are unable to determine the estimated timing of these expenditures relating
to these accruals at this time. It is reasonably possible the ultimate cost of
reclamation and remediation could change in the future, and that changes to
these estimates could have a material effect on future operating results as new
information becomes known. For additional information, see Note 11 of the
financial statements included with this Quarterly Report on Form 10-Q.

|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES
      ABOUT MARKET RISK.
|------- | -----------------------------------------------------------------

Not Applicable.

|ITEM 4. | CONTROLS AND PROCEDURES.
|------- | ------------------------

As of June 30, 2009, an evaluation was performed under the
supervision and with the participation of our management, including our Chief
Executive Officer (CEO) and Chief Financial Officer (CFO), of the

13

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effectiveness of the design and operation of our disclosure
controls and procedures. These controls and procedures are based on the
definition of disclosure controls and procedures in Rule 13a-15(e) and Rule
15d-15(e) promulgated under the Securities Exchange Act of 1934.

Based on that evaluation as of June 30, 2009, our management,
including the CEO and CFO concluded that our disclosure controls and procedures
were effective to ensure that the information required to be disclosed by us in
the reports that we file or submit under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in SEC rules and forms.

Management, including our CEO and CFO, have concluded that our
disclosure controls and procedures provide reasonable assurance that the
controls and procedures will meet their desired control objectives. In designing
and evaluating our control system, management recognized that any control
system, no matter how well designed and operated, can provide only reasonable,
not absolute, assurance of achieving the desired control objectives. Further,
the design of a control system must reflect the fact that there are resource
constraints, and management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and procedures.
Because of the inherent limitations in all control systems, no evaluation of
controls can provide absolute assurance that all control issues and instances of
fraud, if any that may affect our operations have been detected. These inherent
limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or mistake.

During the second quarter of 2009, there were no changes in the
Company's internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.

14

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PART II - OTHER INFORMATION

|ITEM 1. | LEGAL PROCEEDINGS.
|------- | ------------------

None.

|ITEM 1A. | RISK FACTORS.
|-------- | -------------

The following are some of the important factors that could
affect our financial performance or could cause actual results to differ
materially from estimates contained in our forward-looking statements. We may
encounter risks in addition to those described below. Additional risks and
uncertainties not currently known to us, or that we currently deem to be
immaterial, may also impair or adversely affect our business, financial
condition or results of operations.

Although we have begun operation of a pilot production
module for the Columbus Project, there is no assurance that this project is
commercially feasible.

We have begun pilot production operations on the Columbus
Project. This pilot production module is part of our pre-feasibility study for
the Columbus Project, and is designed to evaluate the commercial viability of
the Columbus Project. There is no assurance that the results of our
pre-feasibility program will result in a decision to enter into commercial
production.

Additional exploration work is required before proved or
probable reserves can be established.

We intend to report the results of our exploration activities
promptly after those results have been received and analyzed. However, there is
no assurance that the test results reported by us will be indicative of
extraction rates throughout our mineral properties. We have not yet established
proved or probable reserves on the Columbus Project or on our other mineral
properties and additional exploration work will be required before proved or
probable reserves can be established.

We will likely require additional financing to complete our
exploration and development programs for our mineral projects.

We expect to spend approximately $3,179,904 on the exploration
and development of our Columbus and Red Mountain Projects and the general costs
of operating and maintaining our business and mineral properties during the
third and fourth quarter of 2009. As of June 30, 2009, we had cash on hand of
$722,527. We will need to obtain additional financing in order to complete our
proposed exploration and development programs for 2009. Accordingly, our Board
of Directors approved a U.S. Offering of up to 10,000,000 units at a price of
$0.45 per unit and a concurrent Foreign Offering of up to 5,500,000 units at a
price of $0.45 per Unit for gross proceeds of $6,975,000. However, there is no
assurance that the U.S. Offering and Foreign Offering or any part of them will
be completed. Even if the full amounts of the U.S. Offering and the Foreign
Offering are sold, we anticipate that we will require additional financing in
order to complete our exploration and development plans for the Columbus Project
and the Red Mountain Project. In addition, the actual costs of completing those
programs could be greater than anticipated of completing those programs could be
greater than anticipated.

Our ability to obtain future financing will be subject to a
number of factors, including the variability of market prices for gold and
silver, investor interest in our mineral projects, and the performance of equity
markets in general. These factors may make the timing, amount, terms or
conditions of additional financing unavailable to us. If we are not able to
obtain financing when needed or in an amount sufficient to enable us to complete
our programs, we may be required to scale back our exploration and development
programs.

If we complete additional financings through the sale of our
common stock, our existing stockholders will experience dilution.

The most likely source of future financing presently available
to us is through the sale of shares of our common stock. The only other
anticipated alternative for the financing of further exploration would be the
offering by us

15

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of an interest in our mineral properties to be earned by
another party or parties carrying out further exploration thereof, which is not
presently contemplated. In addition, if our management decides to exercise the
right to acquire a 100% interest in the Red Mountain Project, we will be
required to issue significantly more shares of our common stock. Issuing shares
of our common stock, for financing purposes or otherwise, will dilute the
interests of our existing stockholders.

In order to maintain the rights to our mineral properties,
we will be required to make annual filings with federal and state regulatory
agencies and/or be required to complete assessment work on those
properties.

In order to maintain the rights to our mineral projects, we
will be required to make annual filings with federal and state regulatory
authorities. Currently the amount of these fees is nominal; however, these
maintenance fees are subject to adjustment. In addition, we may be required by
federal and/or state legislation or regulations to complete minimum annual
amounts of mineral exploration work on our mineral properties. A failure by us
to meet the annual maintenance requirements under federal and state laws could
cause our mineral rights to lapse.

Because we are an exploration stage company, we face a high
risk of business failure.

To date, our primary business activities have involved the
acquisition of mineral claims and the exploration and development on these
claims. We have not earned any revenues as of the date of this report. Potential
investors should be aware of the difficulties normally encountered by
exploration stage companies and the high rate of failure of such enterprises.
The likelihood of success must be considered in light of the problems, expenses,
difficulties, complications and delays encountered in connection with the
exploration of the mineral properties that we plan to undertake. These potential
problems include, but are not limited to, unanticipated problems relating to
exploration, and additional costs and expenses that may exceed current
estimates.

Because we anticipate that our operating expenses will
increase prior to earning revenues, we may never achieve profitability.

Prior to exiting the exploration stage, we anticipate that we
will incur increased operating expenses without realizing any revenues. We
therefore expect to incur significant losses into the foreseeable future. We
recognize that if we are unable to generate significant revenues from the
exploration of our mineral claims and the production of minerals thereon, if
any, we will not be able to earn profits or continue operations. There is no
history upon which to base any assumption as to the likelihood that we will
prove successful, and we may not be able to ever generate any operating revenues
or achieve profitable operations. If we are unsuccessful in addressing these
risks, our business will most likely fail.

Because of the speculative nature of exploration of mining
properties, there is substantial risk that no commercially exploitable minerals
will be found.

The search for valuable minerals as a business is extremely
risky. Although we have been encouraged by the results of the exploration work
conducted by us to date, further exploration work is required before proven or
probable reserves can be established, and there are no assurances that we will
be able to establish any proven or probable reserves. Exploration for minerals
is a speculative venture, necessarily involving substantial risk. The
expenditures to be made by us may not result in the discovery of commercial
quantities of ore. Problems such as unusual or unexpected formations and other
conditions are involved in mineral exploration and often result in unsuccessful
exploration efforts.

Because of the inherent dangers involved in mineral
exploration, there is a risk that we may incur liability or damages if and when
conducting mineral exploration activities.

The search for valuable minerals involves numerous hazards. As
a result, when conducting exploration activities we may become subject to
liability for such hazards, including pollution, cave-ins and other hazards
against which we cannot insure or against which we may elect not to insure. The
payment of such liabilities may have a material adverse effect on our financial
position.

16

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Even if we establish proven or probable reserves on our
mineral claims, we may not be able to successfully reach commercial
production.

We anticipate using a low cost, high volume surface dredge
operation to mine the Columbus Project. Our pre-feasibility program for the
Columbus Project is designed to test and optimize our planned mining process for
the Columbus Project. There is no assurance that this pre-feasibility program
will result in a decision to enter into commercial production. In addition,
expanding our production facilities to accommodate commercial operations is
expected to require substantially more financial resources than what we
currently have available to us.

There is a risk that we will not be able to obtain such
financing if and when needed.

Even if we can successfully reach commercial production, any
change to mining laws or regulations or levy of additional taxes in the future
may make our planned production process nonviable economically.

Several bills have been introduced by the US federal government
that would levy resource taxes on mineral exploration companies. Any levy of
additional taxes would have an adverse effect on our business. In addition, laws
and regulations governing the exploration of mineral properties and the mining
process are subject to change. Changes to mining laws and regulations that would
have the effect of increasing the cost of mineral exploration and mining
activities would adversely impact our business.

We are subject to compliance with government regulations.
The costs of complying with these regulations may change without notice, and may
increase the anticipated cost of our exploration and development
programs.

There are several government regulations that materially
restrict the exploration of minerals. We will be required to obtain work
permits, post bonds and perform remediation work for any physical disturbance to
the land in order to comply with these laws. While our planned exploration
program budgets for regulatory compliance, there is a risk that new regulations
could increase our costs of doing business and prevent us from carrying out our
exploration program.

In addition, if our applications for permits from the relevant
regulatory bodies are denied, we may not be able to proceed with our exploration
and development programs.

If we decide to pursue commercial production, we may be
subject to an environmental review process that may delay or prohibit commercial
production.

Our planned method for mining the Columbus Project is not
expected to generate any significant long term environmental impact. However, we
have not yet had a comprehensive environmental review conducted on our planned
mining operations for the Columbus Project.

Compliance with an environmental review process may be costly
and may delay commercial production. Furthermore, there is the possibility that
we would not be able to proceed with commercial production upon completion of
the environmental review process if government authorities do not approve our
mine or if the costs of compliance with government regulation adversely affected
the commercial viability of the proposed mine.

The market for our common stock is limited and investors may
have difficulty selling their stock.

Our shares are currently traded on the over the counter market,
with quotations entered for our common stock on the OTC Bulletin Board under the
symbol IRLD. However, the volume of trading in our common stock is currently
limited. As a result, holders of our common stock may have difficulty selling
their shares.

Because our common stock is a penny stock, stockholders may
be further limited in their ability to sell their shares.

Our shares constitute a penny stock under the Securities
Exchange Act of 1934 and are expected to remain classified as a penny stock for
the foreseeable future. Classification as a penny stock makes it more difficult
for

17

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a broker-dealer to sell the stock into a secondary market,
which makes it more difficult for a purchaser to liquidate his or her
investment. Any broker-dealer engaged by the purchaser for the purpose of
selling his or her shares will be subject to Rules 15g-2 through 15g-9 of the
Exchange Act. Rather than having to comply with these rules, some broker-dealers
will refuse to attempt to sell a penny stock.

No Assurance That Forward Looking Assessments Will Be
Realized.

Our ability to accomplish our objectives and whether or not we
are financially successful is dependent upon numerous factors, each of which
could have a material effect on the results obtained. Some of these factors are
in the discretion and control of management and others are beyond managements
control. The assumptions and hypothesis used in preparing any forward-looking
assessments contained herein are considered reasonable by management. There can
be no assurance, however, that any projections or assessments contained herein
or otherwise made by management will be realized or achieved at any level.

FOR ALL OF THE AFORESAID REASONS AND OTHERS SET-FORTH AND
NOT SET-FORTH HEREIN, AN INVESTMENT IN OUR SECURITIES INVOLVES A CERTAIN DEGREE
OF RISK. ANY PERSON CONSIDERING TO INVEST IN OUR SECURITIES SHOULD BE AWARE OF
THESE AND OTHER FACTORS SET-FORTH IN THIS REPORT AND IN THE OTHER REPORTS AND
DOCUMENTS THAT WE FILE FROM TIME TO TIME WITH THE SEC AND SHOULD CONSULT WITH
HIS/HER LEGAL, TAX AND FINANCIAL ADVISORS PRIOR TO MAKING AN INVESTMENT IN OUR
SECURITIES. AN INVESTMENT IN OUR SECURITIES SHOULD ONLY BE ACQUIRED BY PERSONS
WHO CAN AFFORD TO LOSE THEIR TOTAL INVESTMENT.

|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND
      USE OF PROCEEDS.
|------- | ------------------------------------------------------------------

None.

|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES.
|------- | --------------------------------

None.

|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS.
|------- | ----------------------------------------------------------

None.

|ITEM 5. | OTHER INFORMATION.
|------- | ------------------

None.

|ITEM 6. | EXHIBITS.
|------- | ---------

The following exhibits are either provided with this Quarterly
Report or are incorporated herein by reference:

|Exhibit |                                                                                                                                          
|------- | -----------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibit                                                                                                                   
|3.1     | Articles of
      Incorporation.(1)                                                                                                      
|3.2     | Certificate of Amendment to Articles - Name
      Change from Merritt Ventures Corp. to Ireland Inc.(2)                                  
|3.3     | Certificate of Change  4-for-1
      Stock Split.(3)                                                                                    
|3.4     | Bylaws.(1)                                                                                                                               
|10.1    | 2007 Stock Incentive
      Plan.(4)                                                                                                      
|10.2    | Assignment Agreement dated for reference as of
      March 29, 2007, among Nanominerals Corp., the Company and Lorrie
      Archibald.(4)

18

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|Exhibit |                                                                                                                                                                                                                                      
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibit                                                                                                                                                                                                               
|10.3    | Letter Agreement dated July 22,
      2006 among Columbus Brine Inc., Columbus S.M. LLC and Nanominerals Corp.,
      assigned to the Company by Nanominerals Corp.(11)                                                              
|10.4    | Letter Agreement dated March 15, 2007 between Red
      Mountain Mining and Nanominerals Corp., assigned to the Company by Nanominerals
      Corp.(11)                                                                              
|10.5    | Agency Agreement dated effective
      as of June 19, 2007 between the Company and S & P Investors, Inc.(5)                                                                                                                          
|10.6    | Amendment Agreement to Assignment Agreement among
      the Company, Nanominerals Corp. and Lorrie Archibald, dated for reference
      as of August 8, 2007.(6)                                                                     
|10.7    | Consulting Agreement between the
      Company and RJ Falkner & Company, Inc., dated for reference as of November
      5, 2007.(7)                                                                                                  
|10.8    | Consultant Non-Qualified Stock Option Agreement
      between the Company and R. Jerry Falkner, dated effective as of November
      5, 2007.(7)                                                                                     
|10.9    | Agreement and Plan of Merger dated
      December 14, 2007 among the Company, Columbus Brine Inc., John T. Arkoosh,
      William Maghan and Lawrence E. Chizmar, Jr.(8)                                                             
|10.10   | Amendment Agreement to Agreement and Plan of Merger
      entered into on January 31, 2008 among the Company, CBI Acquisition, Inc.,
      Columbus Brine Inc., John T. Arkoosh, William Maghan and Lawrence E. Chizmar,
      Jr.(9)
|10.11   | Mining Lease Agreement dated November
      30, 2007 between DDB Syndicate and Columbus S.M., LLC.(12)                                                                                                                               
|14.1    | Code of Ethics.(10)                                                                                                                                                                                                                  
|21.1    | List of Subsidiaries.(13)                                                                                                                                                                                                            
|31.1    | Certification of Principal
      Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                        
|31.2    | Certification
      of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.                                                                                                                  
|32.1    | Certification of Principal
      Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                   
|32.2    | Certification
      of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                   
|99.1    | Diagram of Columbus Project Pilot Production Process.(13)                                                                                                                                                                            

|(1)  | Filed as an exhibit to our Registration Statement on Form
      SB-2 originally filed on April 18, 2002, as amended.              
|---- | ----------------------------------------------------------------------------------------------------------------------------------
|(2)  | Filed as an exhibit to our Annual Report on Form 10-KSB
      for the year ended December 31, 2005 filed on April 12, 2006.       
|(3)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on April 30, 2007.                                              
|(4)  | Filed as an exhibit to our Annual Report on Form 10-KSB
      for the year ended December 31, 2006 filed on April 5, 2007.        
|(5)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on June 21, 2007.                                               
|(6)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on August 14, 2007.                                             
|(7)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on November 9, 2007.                                            
|(8)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on December 20, 2007.                                           
|(9)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on February 6, 2008.                                            
|(10) | Filed as an exhibit to our Annual Report on Form 10-KSB
      for the year ended December 31, 2003, filed on September 28,
  2004.
|(11) | Filed as a Schedule to Exhibit 10.2.                                                                                              
|(12) | Filed as an exhibit to our Annual Report on Form 10-K for
      the year ended December 31, 2007 filed on March 31, 2008.         
|(13) | Filed as an exhibit to our Annual Report on Form 10-K for
      the year ended December 31, 2008 filed on March 26,
2009.         

19

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

|      |                 |  |     | IRELAND INC.                                          
|----- | --------------- |  | --- | ------------------------------------------------------
|      |                 |  |     |                                                       
|      |                 |  |     |                                                       
|      |                 |  |     |                                                       
|Date: | August 12, 2009 |  | By: | /s/
      Douglas D.G. Birnie                         
|      |                 |  |     | DOUGLAS D.G. BIRNIE                                   
|      |                 |  |     | Chief Executive Officer, President and
      Secretary
|      |                 |  |     | (Principal Executive Officer)                         
|      |                 |  |     |                                                       
|      |                 |  |     |                                                       
|      |                 |  |     |                                                       
|      |                 |  |     |                                                       
|Date: | August 12, 2009 |  | By: | /s/
      Robert D. McDougal                          
|      |                 |  |     | ROBERT D. MCDOUGAL                                    
|      |                 |  |     | Chief Financial Officer and Treasurer                 
|      |                 |  |     | (Principal Financial Officer)                         

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