---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, 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 September 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 Number 000-50033

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 November 16, 2009, the Registrant had 110,899.442 shares of common
stockoutstanding.

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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 nine months ended September 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)

|                                                             |   | September 30, 2009 |   |   | December 31, 2008 |  
|------------------------------------------------------------ | - | ------------------ | - | - | ----------------- | -
|                                                             |   |                    |   |   |                   |  
|ASSETS                                                       |  
|                                                             |   |                    |   |   |                   |  
|Current assets                                               |   |                    |   |   |                   |  
|Cash                                                         | $ | 592,464            |   | $ | 2,565,823         |  
|Refunds receivable                                           |   | -                  |   |   | 27,394            |  
|Prepaid expenses                                             |   | 125,736            |   |   | 141,335           |  
|                                                             |   |                    |   |   |                   |  
|Total current assets                                         |   | 718,200            |   |   | 2,734,552         |  
|                                                             |   |                    |   |   |                   |  
|Property and equipment, net                                  |   | 3,569,882          |   |   | 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                               |   | 36,448,503         |   |   | 36,281,518        |  
|                                                             |   |                    |   |   |                   |  
|Total assets                                                 | $ | 37,166,703         |   | $ | 39,016,070        |  
|                                                             |   |                    |   |   |                   |  
|LIABILITIES AND STOCKHOLDERS'
      EQUITY                   |  
|                                                             |   |                    |   |   |                   |  
|Current liabilities                                          |   |                    |   |   |                   |  
|Accounts payable                                             | $ | 625,090            |   | $ | 89,543            |  
|Accounts payable - related
      party                       |   | 111,954            |   |   | 50,417            |  
|Accrued payroll and related taxes                            |   | 3,695              |   |   | 11,799            |  
|Due to related parties                                       |   | 23,290             |   |   | 23,290            |  
|                                                             |   |                    |   |   |                   |  
|Total current
      liabilities                              |   | 764,029            |   |   | 175,049           |  
|                                                             |   |                    |   |   |                   |  
|Long-term liabilities                                        |   |                    |   |   |                   |  
|Accrued reclamation and remediation costs                    |   | 275,338            |   |   | 275,338           |  
|Deferred tax liability                                       |   | 7,800,743          |   |   | 9,066,600         |  
|                                                             |   |                    |   |   |                   |  
|Total long-term
      liabilities                            |   | 8,076,081          |   |   | 9,341,938         |  
|                                                             |   |                    |   |   |                   |  
|Total
      liabilities                                      |   | 8,840,110          |   |   | 9,516,987         |  
|                                                             |   |                    |   |   |                   |  
|Stockholders' equity                                         |   |                    |   |   |                   |  
|Common stock, $0.001 par value; 400,000,000
      shares     |   |                    |   |   |                   |  
|authorized,
      100,219,998 shares, issued and outstanding |   | 100,219            |   |   | 97,010            |  
|Additional paid-in capital                                   |   | 37,469,245         |   |   | 36,059,449        |  
|Common stock subscribed                                      |   | (195,750           | ) |   | -                 |  
|Accumulated deficit during exploration stage                 |   | (9,047,121         | ) |   | (6,657,376        | )
|                                                             |   |                    |   |   |                   |  
|Total stockholders' equity                                   |   | 28,326,593         |   |   | 29,499,083        |  
|                                                             |   |                    |   |   |                   |  
|Total liabilities and
      stockholders' equity             | $ | 37,166,703         |   | $ | 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 nine months ended |   |   | Through            |  
|                                             |   | September 30, 2009               |   |   | September 30, 2008              |   |   | September 30, 2009 |   |   | September 30, 2008 |   |   | September 30, 2009  |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Revenue                                      | $ | -                                |   | $ | -                               |   | $ | -                  |   | $ | -                  |   | $ | -                   |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Operating expenses                           |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Mineral exploration and evaluation expenses  |   | 1,167,184                        |   |   | 741,530                         |   |   | 2,432,731          |   |   | 1,569,299          |   |   | 6,008,841           |  
|Mineral exploration and evaluation           |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|expenses - related party                     |   | 126,780                          |   |   | 111,459                         |   |   | 375,971            |   |   | 465,181            |   |   | 1,902,285           |  
|General and administrative                   |   | 302,605                          |   |   | 262,225                         |   |   | 781,181            |   |   | 901,621            |   |   | 3,116,165           |  
|Depreciation                                 |   | 10,901                           |   |   | 3,986                           |   |   | 32,637             |   |   | 9,431              |   |   | 52,996              |  
|Mineral and property holding costs           |   | 15,000                           |   |   | 15,000                          |   |   | 45,000             |   |   | 66,000             |   |   | 395,500             |  
|Mineral and property holding costs -         |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|reimbursed to related party                  |   | -                                |   |   | -                               |   |   | -                  |   |   | -                  |   |   | 295,000             |  
|Write-off of mineral rights                  |   | -                                |   |   | -                               |   |   | -                  |   |   | -                  |   |   | 14,000              |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Total operating expenses                     |   | 1,622,470                        |   |   | 1,134,200                       |   |   | 3,667,520          |   |   | 3,011,532          |   |   | 11,784,787          |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Loss from operations                         |   | (1,622,470                       | ) |   | (1,134,200                      | ) |   | (3,667,520         | ) |   | (3,011,532         | ) |   | (11,784,787         | )
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Other income (expense)                       |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Interest income                              |   | 2,184                            |   |   | 22,003                          |   |   | 12,544             |   |   | 126,028            |   |   | 277,841             |  
|Interest expense                             |   | (200                             | ) |   | -                               |   |   | (626               | ) |   | -                  |   |   | (626                | )
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Total other income (expense)                 |   | 1,984                            |   |   | 22,003                          |   |   | 11,918             |   |   | 126,028            |   |   | 277,215             |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Loss before income taxes                     |   | (1,620,486                       | ) |   | (1,112,197                      | ) |   | (3,655,602         | ) |   | (2,885,504         | ) |   | (11,507,572         | )
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Income tax benefit                           |   | 557,197                          |   |   | 392,966                         |   |   | 1,265,857          |   |   | 942,138            |   |   | 2,460,451           |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Net loss                                     | $ | (1,063,289                       | ) | $ | (719,231                        | ) | $ | (2,389,745         | ) | $ | (1,943,366         | ) | $ | (9,047,121          | )
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Loss per common share - basic and diluted    | $ | (0.01                            | ) | $ | (0.01                           | ) | $ | (0.02              | ) | $ | (0.02              | ) |   |                     |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Weighted average common shares outstanding - |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |  
|Basic and diluted                            |   | 98,261,756                       |   |   | 97,010,087                      |   |   | 97,431,895         |   |   | 95,064,815         |   |   |                     |  

See Accompanying Notes to these Consolidated Financial
  Statements 
  F-3

---

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

|                                          |  |                    |  |   |            |  |   |                 |  |   |             |   |   | Accumulated    |   |   |            |  
|----------------------------------------- |  | ------------------ |  | - | ---------- |  | - | --------------- |  | - | ----------- | - | - | -------------- | - | - | ---------- | -
|                                          |  |                    |  |   |            |  |   |                 |  |   | Common      |   |   | Deficit During |   |   | Total      |  
|                                          |  | Common
      Stock |  |   | Additional |  |   | Stock           |  |   | Exploration |   |   | Stockholders'  |  
|                                          |  | Shares             |  |   | Amount     |  |   | Paid-in Capital |  |   | Subscribed  |   |   | 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 a |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|director and employees over               |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|vesting period                            |  | -                  |  |   | -          |  |   | 32,717          |  |   | -           |   |   | -              |   |   | 32,717     |  
|                                          |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|Issuance of common stock for cash         |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|Reg. S - Private Placement,               |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|$0.45 per share, net of $21,711           |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|financing costs                           |  | 400,000            |  |   | 400        |  |   | 157,889         |  |   | -           |   |   | -              |   |   | 158,289    |  
|                                          |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|Issuance of common stock for cash         |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|Reg. D - Private Placement,               |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|$0.45 per share, net of $2,292            |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|financing costs                           |  | 863,800            |  |   | 863        |  |   | 385,555         |  |   | -           |   |   | -              |   |   | 386,418    |  
|                                          |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|Issuance of common stock for cash         |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|Reg. S - Private Placement,               |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|$0.45 per share, net of $39,107           |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|financing costs                           |  | 1,546,111          |  |   | 1,546      |  |   | 655,097         |  |   | (195,750    | ) |   | -              |   |   | 460,893    |  
|                                          |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|Issuance of common stock for cash         |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|Reg. D - Private Placement,               |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|$0.45 per share, net of $1,062            |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|financing costs                           |  | 400,000            |  |   | 400        |  |   | 178,538         |  |   | -           |   |   | -              |   |   | 178,938    |  
|                                          |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|Net loss, September 30, 2009              |  | -                  |  |   | -          |  |   | -               |  |   | -           |   |   | (2,389,745     | ) |   | (2,389,745 | )
|                                          |  |                    |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|Balance, September 30, 2009               |  | 100,219,998        |  | $ | 100,219    |  | $ | 37,469,245      |  | $ | (195,750    | ) | $ | (9,047,121     | ) | $ | 28,326,593 |  

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 nine months ended |   |   | through            |  
|                                                     |   | September 30, 2009              |   |   | September 30, 2008 |   |   | September 30, 2009  |  
|CASH FLOWS FROM OPERATING ACTIVITIES                 |   |                                 |   |   |                    |   |   |                     |  
|Net loss                                             | $ | (2,389,745                      | ) | $ | (1,943,366         | ) | $ | (9,047,121          | )
|Adjustments to reconcile loss from operating         |   |                                 |   |   |                    |   |   |                     |  
|to net cash
      used in operating activities:      |   |                                 |   |   |                    |   |   |                     |  
|Depreciation                                         |   | 32,637                          |   |   | 9,431              |   |   | 52,996              |  
|Write-off
      of mineral rights                    |   | -                               |   |   | -                  |   |   | 14,000              |  
|Consulting accrual                                   |   | -                               |   |   | -                  |   |   | 15,000              |  
|Stock based
      expenses                           |   | 32,717                          |   |   | 34,705             |   |   | 1,588,792           |  
|Changes in operating assets and liabilities:         |   |                                 |   |   |                    |   |   |                     |  
|Refunds receivable                                   |   | 27,394                          |   |   | -                  |   |   | 27,394              |  
|Prepaid expenses                                     |   | 15,599                          |   |   | (74,016            | ) |   | (275,811            | )
|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       |   | 588,980                         |   |   | 79,751             |   |   | 637,137             |  
|Deferred
      income taxes                          |   | (1,265,857                      | ) |   | (942,138           | ) |   | (2,460,451          | )
|Accrued reclamation and remediation
      costs      |   | -                               |   |   | -                  |   |   | 275,338             |  
|                                                     |   |                                 |   |   |                    |   |   |                     |  
|Net cash used in operating activities                |   | (2,933,555                      | ) |   | (3,053,186         | ) |   | (11,122,631         | )
|                                                     |   |                                 |   |   |                    |   |   |                     |  
|CASH FLOW FROM INVESTING ACTIVITIES                  |   |                                 |   |   |                    |   |   |                     |  
|Purchase of property and equipment                   |   | (224,342                        | ) |   | (1,657,682         | ) |   | (2,473,830          | )
|                                                     |   |                                 |   |   |                    |   |   |                     |  
|Net cash used in investing activities                |   | (224,342                        | ) |   | (1,657,682         | ) |   | (2,473,830          | )
|                                                     |   |                                 |   |   |                    |   |   |                     |  
|CASH FLOW FROM FINANCING ACTIVITIES                  |   |                                 |   |   |                    |   |   |                     |  
|Proceeds from stock issuance                         |   | 1,248,710                       |   |   | 1,000              |   |   | 14,488,460          |  
|Stock issuance costs                                 |   | (64,172                         | ) |   | -                  |   |   | (307,825            | )
|Proceeds from borrowings from related party          |   | -                               |   |   | -                  |   |   | 8,290               |  
|                                                     |   |                                 |   |   |                    |   |   |                     |  
|Net cash provided by financing activities            |   | 1,184,538                       |   |   | 1,000              |   |   | 14,188,925          |  
|                                                     |   |                                 |   |   |                    |   |   |                     |  
|NET CHANGE IN CASH                                   |   | (1,973,359                      | ) |   | (4,709,868         | ) |   | 592,464             |  
|                                                     |   |                                 |   |   |                    |   |   |                     |  
|CASH AT BEGINNING OF PERIOD                          |   | 2,565,823                       |   |   | 8,759,605          |   |   | -                   |  
|                                                     |   |                                 |   |   |                    |   |   |                     |  
|CASH AT END OF PERIOD                                | $ | 592,464                         |   | $ | 4,049,737          |   | $ | 592,464             |  
|                                                     |   |                                 |   |   |                    |   |   |                     |  
|                                                     |   |                                 |   |   |                    |   |   |                     |  
|                                                     |   |                                 |   |   |                    |   |   |                     |  
|SUPPLEMENTAL INFORMATION                             |   |                                 |   |   |                    |   |   |                     |  
|                                                     |   |                                 |   |   |                    |   |   |                     |  
|Interest Paid                                        | $ | 626                             |   | $ | -                  |   | $ | 626                 |  
|                                                     |   |                                 |   |   |                    |   |   |                     |  
|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 November 16, 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 $9,047,121 from operations as of September 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

---

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 Accounting Standards Codification (ASC) 360-10-35-15, 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 range from 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 ASC
      360-10-35-17, Measurement of an Impairment Loss, if events or
      circumstances indicate that their carrying amount might not be
      recoverable. As of September 30, 2009 exploration progress is on target
      with the Companys exploration and evaluation plan and no events or
      circumstances have happened to indicate the related carrying values of the
      properties may not be recoverable. When the Company determines that an
      impairment analysis should be done, the analysis will be performed using
      the rules of ASC 930-360-35, Asset Impairment, and 360-10-15-3
      through 15-5, Impairment or Disposal of Long-Lived
        Assets.                                                                                                                                                                                                                                                                                                                   

F-7

---

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 forecasted production schedules. 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 ASC 410-20, Asset Retirement
        Obligations. In accordance with ASC 410-20-25, Asset Retirement
          Obligations - Recognition, 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 ASC 450, Contingencies, or ASC 410-30-25, Asset Retirement and
        Environmental Obligations - Recognition. 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 September 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 12.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

F-8

---

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
      ASC 260, Earnings Per Share,and ASC 480, Distinguishing
        Liabilities from 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
      September 30, 2009 and 2008 that were not included in the computation of
      diluted EPS, because the effect would be antidilutive, were 19,599,686 and
      18,372,900, 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 its income
      taxes in accordance with ASC 740, Income Taxes, which requires
      recognition of deferred tax assets and liabilities for future tax
      consequences attributable to differences between the financial statement
      carrying amounts of existing assets and liabilities and their respective
      tax bases and tax credit carry-forwards. Deferred tax assets and
      liabilities are measured using enacted tax rates expected to apply to
      taxable income in the years in which those temporary differences are
      expected to be recovered or settled. The effect on deferred tax assets and
      liabilities of a change in tax rates is recognized in income in the period
      that includes the enactment date.                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | For acquired properties that do not constitute a business
      as defined in ASC 805-10-55-4, Definition 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 ASC
      740-10-25-51, Acquired Temporary Differences in Certain Purchase
        Transactions that Are Not Accounted for as Business Combinations, 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.                                                                                                                                                                                                                                                                                                          

F-9

---

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
      SIGNIFICANT POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Stock-based compensation- The Company accounts
      for share based payments in accordance with ASC 718, Compensation 
        Stock Compensation, which 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.
      In accordance with ASC 718-10-30-9, Measurement Objective  Fair Value
        at Grant Date, the Company estimates the fair value of the award using
      a valuation technique. For this purpose, the Company uses the Binomial
      Lattice option pricing model. 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. The compensation cost is
      recognized over the requisite service period which is generally equal to
      the vesting period.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | New accounting pronouncements From time to time,
      new accounting pronouncements are issued by the FASB that are adopted by
      the Company as of the specified effective date. Unless otherwise
      discussed, management believes that the impact of recently issued
      standards did not or will not have a material impact on the Companys
      consolidated financial statements upon adoption.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Effective July 1, 2009, the FASB (Financial Accounting
      Standards Board) Accounting Standards Codification (ASC) (Topic 105, Generally Accepted Accounting Principles), became the single source
      for authoritative nongovernmental U.S. generally accepted accounting
      principles. Rules and interpretive releases of the SEC under authority of
      federal securities laws are also sources of authoritative U.S. GAAP for
      SEC registrants. The ASC does not change U.S. GAAP, but is intended to
      simplify user access to all authoritative U.S. GAAP by providing all the
      authoritative literature related to a particular topic in one place.
      Effective September 15, 2009, all public filings of the Company will
      reference the ASC as the sole source of authoritative
      literature.                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In April 2009, the FASB issued SFAS No. 165, Subsequent Events(ASC 855-10-05), which provides guidance to
      establish general standards of accounting for and disclosure of events
      that occur after the balance sheet date but before financial statements
      are issued or are available to be issued. Under ASC 855-10-05 entities are
      required to disclose the date through which subsequent events were
      evaluated, as well as the rationale for why that date was selected. ASC
      855-10-05 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-10

---

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

|2. | PREPAID EXPENSES                                                                              
|-- | ----------------------------------------------------------------------------------------------
|   |                                                                                               
|   | Prepaid expenses at September 30, 2009 and December 31,
      2008 consisted of the following:

| |                      |   | September 30, |  |   | December 31, | 
| | -------------------- | - | ------------- |  | - | ------------ | 
| |                      |   | 2009          |  |   | 2008         | 
| |                      |   |               |  |   |              | 
| | Claims maintenance   | $ | 48,808        |  | $ | --           | 
| | Insurance policies   |   | 40,231        |  |   | 103,335      | 
| | Engineering services |   | 21,640        |  |   | 32,135       | 
| | Retainers            |   | 8,000         |  |   | 2,000        | 
| | Other                |   | 7,057         |  |   | 3,865        | 
| |                      |   |               |  |   |              | 
| |                      | $ | 125,736       |  | $ | 141,335      | 

|3. | PROPERTY AND EQUIPMENT                                                                                 
|-- | -------------------------------------------------------------------------------------------------------
|   |                                                                                                        
|   | Property and equipment consisted of the following as of
      September 30, 2009 and December 31, 2008:

| |                               |   | September 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       |   | 2,254,486     |  |   | 2,034,167    | 
| | Site equipment                |   | 571,591       |  |   | 568,634      | 
| |                               |   |               |  |   |              | 
| |                               |   | 3,622,878     |  |   | 3,398,536    | 
| | Less accumulated depreciation |   | 52,996        |  |   | 20,359       | 
| |                               |   |               |  |   |              | 
| |                               | $ | 3,569,882     |  | $ | 3,378,177    | 

Depreciation expense was $32,637 and
  $9,431 for the nine months ended September 30, 2009 and 2008, respectively.

F-11

---

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

|4. | 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.                                                                        
|   |                                                                                                                                                                                                                                                                                                            
|   | The Company has elected not to retain the Ireland Claim,
      by choosing not to 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-12

---

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

|5. | 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


As required by ASC 930-805-30, Mining  Business Combinations  Initial Recognition, and ASC
  740-10-25-49-55, Income Taxes  Overall  Recognition  Acquired Temporary
    Differences in Certain Purchase Transactions that Are Not Accounted for as
    Business Combinations, 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-13

---

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

|5. | 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 (which
  has been superseded by ASC 805-10-25-1) 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 ASC 805-10-55-4, and the Company recorded the acquisition as a purchase of
  assets.

F-14

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

|5. | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|6. | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

F-15

---

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

|7. | STOCKHOLDERS EQUITY                                                                                                                
|-- | ------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                     
|   | During the nine months ended September 30, 2009, the
      Companys stockholders equity activity consisted of the
      following:
|   |                                                                                                                                     
|   | a)                                                                                                                                  
|   |                                                                                                                                     
|   | b)                                                                                                                                  
|   |                                                                                                                                     
|   | c)                                                                                                                                  
|   |                                                                                                                                     
|   | d)                                                                                                                                  

F-16

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

|7. | STOCKHOLDERS EQUITY  (continued)                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | e)                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|8. | 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 nine months ended September 30, 2009 and
      2008 related to the granting and vesting of stock options were $32,717 and
      $34,705, respectively and are included in general and administrative
      expense and mineral exploration and evaluation
      expense.                                                                                                                                                                       

Stock options  During the nine
  months ended September 30, 2009, the Company granted 270,000 stock options to a
  director and an employee with a weighted average exercise price of $0.48 per
  share. As of September 30, 2009 stock options outstanding totaled 4,224,719 with
  a weighted average exercise price of $0.17 per share.

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

| |                             |  |           |  |   | Weighted       | 
| | --------------------------- |  | --------- |  | - | -------------- | 
| |                             |  | Number of |  |   | Average        | 
| |                             |  | Shares    |  |   | Exercise Price | 
| |                             |  |           |  |   |                | 
| | Balance, December 31, 2008  |  | 3,954,719 |  | $ | 0.15           | 
| | Options granted and assumed |  | 270,000   |  |   | 0.48           | 
| | Options expired             |  | --        |  |   | --             | 
| | Options forfeitures         |  | --        |  |   | --             | 
| | Options exercised           |  | --        |  |   | --             | 
| |                             |  |           |  |   |                | 
| | Balance, September 30, 2009 |  | 4,244,719 |  | $ | 0.17           | 

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-17

---

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

|8. | STOCK OPTION PLAN AND WARRANTS(continued)                                                                                                                                   
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                             
|   | The following table summarizes the status of the
      Companys unvested shares as of September 30, 2009 and changes during the
      nine months ended September 30, 2009:

| |                                    |  |           |   |   | Weighted Average | 
| | ---------------------------------- |  | --------- | - | - | ---------------- | 
| |                                    |  | Number of |   |   | Grant Date       | 
| |                                    |  | Shares    |   |   | Fair
      Value | 
| |                                    |  |           |   |   |                  | 
| | Unvested, December 31, 2008        |  | 37,500    |   | $ | 0.55             | 
| | Options granted                    |  | 270,000   |   |   | 0.17             | 
| | Options vested                     |  | (107,500  | ) |   | 0.30             | 
| | Options forfeited                  |  | --        |   |   | --               | 
| |                                    |  |           |   |   |                  | 
| | Unvested,
      September 30, 2009 |  | 200,000   |   | $ | 0.47             | 

As of September 30, 2009, there was
  $79,792 of total unrecognized compensation cost related to unvested stock
  options. This cost is expected to be fully recognized as follows: 2009 -
  $21,092, 2010 - $49,968, 2011 - $8,732.

Stock options/warrants  During
  the nine months ended September 30, 2009 the Company granted stock options as
  follows:

| | a) | On August 11, 2009, the Company granted nonqualified
      stock options under the 2007 Plan for the purchase of 250,000 shares of
      common stock at $0.48 per share. The options were granted to an
      Independent Director as a recruitment incentive and vest as follows:
      50,000 were fully vested on the grant date, 50,000 on December 31, 2009,
      50,000 on June, 30, 2010, 50,000 on December 31, 2010 and 50,000 on June
      30, 2011. The stock options expire five years after the vesting
      date.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | b) | On August 19, 2009, the Company granted nonqualified
      stock options under the 2007 Plan for the purchase of 20,000 shares of
      common stock at $0.48 per share. The options were granted to an employee.
      The stock options were fully vested at the grant date and expire on August
      19, 2014.                                                                                                                                                                                                                 

During the nine months ended September
  30, 2009 the Company granted warrants as follows:

| | a) | In connection with private placements completed on August
      14, 2009, the Company issued 633,180 warrants. The warrants have an
      expiration date of June 30, 2013 and an exercise price of $0.75 per share.
      In addition, the Company issued 19,665 warrants to brokers in connection
      with these private placements. The warrants have an expiration date of
      June 30, 2013 and an exercise price of $0.75 per share. After June 30,
      2010, the Company will have the right to accelerate the expiration date of
      the warrants if the volume weighted average price for the shares is above
      $4.50 per share for twenty consecutive trading days.        
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | b) | In connection with private placements completed on
      September 2, 2009, the Company issued 973,033 warrants. The warrants have
      an expiration date of June 30, 2013 and an exercise price of $0.75 per
      share. In addition, the Company issued 33,333 warrants to brokers in
      connection with these private placements. The warrants have an expiration
      date of June 30, 2013 and an exercise price of $0.75 per share. After June
      30, 2010, the Company will have the right to accelerate the expiration
      date of the warrants if the volume weighted average price for the shares
      is above $4.50 per share for twenty consecutive trading
      days.

F-18

---

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

|8. | STOCK OPTION PLAN AND WARRANTS(continued)                                                                                              
|-- | ---------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                        
|   | The following table summarizes information about
      options/warrants activity during the nine months ended September 30,
      2009:

| |                                      |  |            |  |   | Weighted       | 
| | ------------------------------------ |  | ---------- |  | - | -------------- | 
| |                                      |  | Number of  |  |   | Average        | 
| |                                      |  | Shares     |  |   | Exercise Price | 
| |                                      |  |            |  |   |                | 
| | Balance, December 31, 2008           |  | 19,335,428 |  | $ | 1.20           | 
| | Options/warrants granted and assumed |  | 1,927,954  |  |   | 0.71           | 
| | Options/warrants expired             |  | --         |  |   | --             | 
| | Options/warrants forfeitures         |  | --         |  |   | --             | 
| | Options/warrants exercised           |  | --         |  |   | --             | 
| |                                      |  |            |  |   |                | 
| | Balance, September 30, 2009          |  | 21,263,382 |  | $ | 1.16           | 

Subsequent Amendment of Warrants - On November 13, 2009, the Company made several material amendments to certain
  of its outstanding common stock purchase warrants. The warrants that were
  amended were issued in connection with the 2009 US and Foreign Private Placement
  Offering warrants and the 2007 US and Foreign Private Placement Offering
  warrants.

The 2009 US and Foreign Private
  Placement Offering warrants were amended to extend the expiration date from June
  30, 2012 to June 30, 2013 and by amending the conditions under which the Company
  may exercise the expiration date acceleration rights by increasing the minimum
  volume weighted average trading price threshold from $3.00 per share for 20
  consecutive trading days to $4.50 per share for 20 consecutive trading days; and
  by requiring that the average daily trading volume for the Companys common
  stock during the 20 consecutive trading days referred to above be not less then
  0.2% of the Companys free float during such 20 consecutive trading days.

The 2007 US and Foreign Private
  Placement Offering warrants were amended to extend the expiration date from June
  30, 2012 to June 30, 2013. No other changes were made with respect to the terms
  and conditions of the 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
  amendments to 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.

Subsequent Issuance of Warrants  In connection with private placements completed on October 9, 2009 and
  November 14, 2009, the Company issued 5,339,722 warrants. The warrants have an
  expiration date of June 30, 2013 and an exercise price of $0.75 per share. In
  addition, the Company issued 219,884 warrants to brokers in connection with
  these private placements. The warrants have an expiration date of June 30, 2013
  and an exercise price of $0.75 per share. After June 30, 2010, the Company will
  have the right to accelerate the expiration date of the warrants if the volume
  weighted average trading price for the shares is above $4.50 per share for
  twenty consecutive trading days. For further discussion on these private
  placements, see Note 16.

F-19

---

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

|8. | STOCK OPTION PLAN AND WARRANTS(continued)                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                   
|   | The following table summarizes information about options/warrants
      activity subsequent to September 30, 2009:

| |                                                              |  | Number of  |  |   | Weighted       | 
| | ------------------------------------------------------------ |  | ---------- |  | - | -------------- | 
| |                                                              |  | Shares     |  |   | Average        | 
| |                                                              |  |            |  |   | Exercise Price | 
| | Balance, December 31, 2008                                   |  | 19,335,428 |  | $ | 1.20           | 
| | Options/warrants granted and assumed                         |  | 1,927,954  |  |   | 0.71           | 
| | Options/warrants expired                                     |  | --         |  |   | --             | 
| | Options/warrants cancelled                                   |  | --         |  |   | --             | 
| | Options/warrants exercised                                   |  | --         |  |   | --             | 
| |                                                              |  |            |  |   |                | 
| | Balance, September 30, 2009                                  |  | 21,263,382 |  | $ | 1.16           | 
| |                                                              |  |            |  |   |                | 
| | Warrants granted October 9, 2009 and
      November 14, 2009 |  | 5,559,606  |  |   | 0.75           | 
| |                                                              |  |            |  |   |                | 
| | Balance, November 14, 2009                                   |  | 26,822,988 |  | $ | 1.07           | 

|9. | 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
      September 30, 2009 and 2008,                                               

| |                                                             |   | September 30, |   |   | September 30, |  
| | ----------------------------------------------------------- | - | ------------- | - | - | ------------- | -
| |                                                             |   | 2009          |   |   | 2008          |  
| |                                                             |   |               |   |   |               |  
| | Income tax benefit based on statutory tax
      rate        | $ | (1,279,461    | ) | $ | (1,012,093    | )
| | Non-deductible and other                                    |   | 2,177         |   |   | 5,521         |  
| | Change in valuation allowance                               |   | 11,427        |   |   | (719,144      | )
| | Rate change                                                 |   | --            |   |   | (22,419       | )
| | Release of valuation allowance related to
      acquisition |   | --            |   |   | 805,997       |  
| |                                                             |   |               |   |   |               |  
| | Income tax benefit                                          | $ | (1,265,857    | ) | $ | (942,138      | )

F-20

---

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

|9. | INCOME TAXES(continued)                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                
|   | Significant components of the Companys net deferred
      income tax assets and liabilities at September 30, 2009 and December 31,
      2008 were as follows:

| |                                   |   | September 30, |   |   | December 31, |  
| | --------------------------------- | - | ------------- | - | - | ------------ | -
| |                                   |   | 2009          |   |   | 2008         |  
| | Deferred income tax assets:       |   |               |   |   |              |  
| |                                   |   |               |   |   |              |  
| | Net operating loss carryforward   | $ | 3,266,448     |   | $ | 2,000,591    |  
| | Option compensation               |   | 556,077       |   |   | 544,626      |  
| | Reclamation and remediation costs |   | 96,368        |   |   | 96,368       |  
| |                                   |   |               |   |   |              |  
| | Gross deferred income tax asset   |   | 3,918,893     |   |   | 2,641,585    |  
| | Valuation allowance               |   | (650,606      | ) |   | (639,179     | )
| |                                   |   |               |   |   |              |  
| |                                   |   | 3,268,287     |   |   | 2,002,406    |  
| | Deferred income tax liabilities:  |   |               |   |   |              |  
| |                                   |   |               |   |   |              |  
| | Property, plant & equipment       |   | 1,839         |   |   | 1,815        |  
| | Acquisition related liabilities   |   | 11,067,191    |   |   | 11,067,191   |  
| |                                   |   |               |   |   |              |  
| | Net deferred income tax liability | $ | 7,800,743     |   | $ | 9,066,600    |  

A valuation allowance for deferred tax
  related to option compensation, 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 September 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 ASC
  740, 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.

The Company had cumulative net
  operating losses of approximately $9,332,707 and $5,713,177 as of September 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.

F-21

---

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

|9.  | INCOME TAXES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | 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.                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10. | 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 nine months ended September 30, 2009, which consists of $3,651 in
      payments to each of the eight owners of DDB Syndicate including
      reimbursement of expenses of $792 to a company controlled by Douglas D.G.
      Birnie.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                       
|11. | 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 $41,625 and $32,550 for the nine months ended September 30,
      2009 and 2008, respectively.                                                                                                                               

F-22

---

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

|12. | ENVIRONMENTAL AND RECLAMATION ACTIVITIES                                                                                                   
|--- | -------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                            
|    | The liabilities accrued for the reclamation and
      remediation costs at September 30, 2009 and December 31, 2008, were as
      follows:

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

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

Balance, December 31, 2008
      $
      275,338Accruals for estimated costs
      
      --Balance, September 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 September
      30, 2009 and December 31, 2008, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|13. | 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 June 30, 2010.
      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 September 30, 2009, the Company
      had deposits in excess of FDIC insured limits in the amount of
      $255,823.                                                                                                                                                                                                                                                                                                                                    

F-23

---

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

|14. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                             
|    | During the nine months ended September 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 40% 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 nine months ended September 30, 2009, the Company
      incurred total fees and reimbursements of expenses to NMC of $315,000 and
      $56,526, respectively, for a total of $371,526. At September 30, 2009, the
      Company had an outstanding balance due to NMC of $87,954.                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The Company also had an outstanding balance for accrued
      compensation to Douglas D.G. Birnie, its executive officer of $9,000
      payable to a company wholly owned by Douglas D.G. Birnie. The Company has
      the mining claim lease for the DDB Claims as further discussed in Note
      10.                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Accounts payable  related party also includes $7,500
      payable to each of the Companys two Independent Directors for director
      compensation. The Company anticipates paying the directors in the
      Companys common stock in the fourth quarter of 2009.                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Accounts payable  related party totaled $111,954 as of
      September 30, 2009.                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Due to related parties includes amounts due to former
      officers of the Company. The amount due to related parties was $23,290 as
      of September 30, 2009.                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                             
|    | In connection with the private placement completed on
      November 14, 2009, Mark Brennen, one of the Companys Independent
      Directors, purchased 140,000 units of securities at an aggregate purchase
      price of $63,000. Each unit consists of one share of common stock and one
      half share of common stock purchase warrant. For further discussion on the
      financing, see Note 16.
|    |                                                                                                                                                                                                                                                                                                                                                                                                             
|15. | CONCENTRATION OF ACTIVITY                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                             
|    | For the nine months ended September 30, 2009, the Company
      purchased services from two major vendors Boart Longyear and NMC that
      exceeded more than 10% of total purchases and amounted to $838,301 and
      $371,526, respectively.                                                                                                                                                            

F-24

---

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

|16. | SUBSEQUENT EVENTS                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                        
|    | Subsequent to the quarter ended September 30, 2009, the
      Company completed the following private
      placements:

| | a) | On October 9, 2009, the Company completed a private
      placement offering for gross proceeds of $328,500 to US accredited
      investors pursuant to Rule 506 of Regulation D promulgated under the
      Securities Act of 1933. A total of 730,000 units were issued at a price of
      $0.45. Each unit sold consisted of one share of the Companys common stock
      and one-half of one share purchase warrants. Each whole share purchase
      warrant entitles the holder to purchase one additional share of the
      Companys common stock at a price of $0.75 per share for a period expiring
      June 30, 2013. The Company incurred commissions payable to agents in
      connection with the Offering private placement in the amount of $16,695 in
      cash and issued warrants to purchase up to 15,900 shares of common stock.
      The warrants have an expiration date of June 30, 2013 and an exercise
      price of $0.75 per share.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | b) | On October 9, 2009, the Company completed a private
      placement offering for gross proceeds of $2,661,750 to non-US persons in
      reliance of Regulation S promulgated under the Securities Act of 1933. A
      total of 5,915,000 units were issued at a price of $0.45. Each unit sold
      consisted of one share of the Companys common stock and one-half of one
      share purchase warrants. Each whole share purchase warrant entitles the
      holder to purchase one additional share of the Companys common stock at a
      price of $0.75 per share for a period expiring June 30, 2013. The Company
      incurred commissions payable to agents in connection with the Offering
      private placement in the amount of $174,983 in cash and issued warrants to
      purchase up to 166,650 shares of common stock. The warrants have an
      expiration date of June 30, 2013 and an exercise price of $0.75 per
      share.            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | c) | On November 13, 2009, the Company made several material
      amendments to certain of its outstanding common stock purchase warrants.
      The warrants that were amended were issued in connection with the 2009 US
      and Foreign Private Placement Offering warrants and the 2007 US and
      Foreign Private Placement Offering warrants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | The 2009 US and Foreign Private Placement Offering
      warrants were amended to extend the expiration date from June 30, 2012 to
      June 30, 2013 and by amending the conditions under which the Company may
      exercise the expiration date acceleration rights by increasing the minimum
      volume weighted average trading price threshold from $3.00 per share for
      20 consecutive trading days to $4.50 per share for 20 consecutive trading
      days; and by requiring that the average daily trading volume for the
      Companys common stock during the 20 consecutive trading days referred to
      above be not less then 0.2% of the Companys free float during such 20
      consecutive trading days.                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | The 2007 US and Foreign Private Placement Offering
      warrants were amended to extend the expiration date from June 30, 2012 to
      June 30, 2013.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | The Company determined that the amendments to 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

F-25

---

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

|16. | SUBSEQUENT EVENTS 
      (continued)
|--- | -------------------------------------

| | d) | On November 14, 2009, the Company completed a private
      placement offering for gross proceeds of $1,500,500 to US accredited
      investors pursuant to Rule 506 of Regulation D promulgated under the
      Securities Act of 1933. A total of 3,334,444 units were issued at a price
      of $0.45. Each unit sold consisted of one share of the Companys common
      stock and one-half of one share purchase warrants. Each whole share
      purchase warrant entitles the holder to purchase one additional share of
      the Companys common stock at a price of $0.75 per share for a period
      expiring June 30, 2013. This represented the fourth tranche of the U.S.
      Offering. The U.S. Offering has been closed. The Company incurred
      commissions payable to agents in connection with the Offering private
      placement in the amount of $17,150 in cash and issued warrants to purchase
      up to 16,334 shares of common stock. The warrants have an expiration date
      of June 30, 2013 and an exercise price of $0.75 per share.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | In connection with this private placement, Mark Brennen,
      one of the Companys Independent Directors, purchased 140,000 units of
      securities at an aggregate purchase price of $63,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | e) | On November 14, 2009, the Company completed a private
      placement offering for gross proceeds of $315,000 to non-US persons in
      reliance of Regulation S promulgated under the Securities Act of 1933. A
      total of 700,000 units were issued at a price of $0.45. Each unit sold
      consisted of one share of the Companys common stock and one-half of one
      share purchase warrants. Each whole share purchase warrant entitles the
      holder to purchase one additional share of the Companys common stock at a
      price of $0.75 per share for a period expiring June 30, 2013. This
      represented the fourth tranche of the Foreign Offering. The Foreign
      Offering has been closed. The Company incurred commissions payable to
      agents in connection with the Offering private placement in the amount of
      $22,050 in cash and issued warrants to purchase up to 21,000 shares of
      common stock. The warrants have an expiration date of June 30, 2013 and an
      exercise price of $0.75 per share.                

F-26

---

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
owned a mineral property located in Clark County, Nevada known as the Ireland
Claim. However, we allowed the Ireland Claim to lapse on September 1, 2009 as
we did 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 June 30, 2009:

|1. | 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.                                                                                                                                                                          
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|2. | On August 11, 2009, we issued to Mark H. Brennan, a
      member of our Board of Directors, 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. The options granted to Mr. Brennan were in addition
      to the compensation that Mr. Brennan is entitled to as an independent
      member of our Board of Directors.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|3. | 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 2009 US 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                                                                                                                            

3

---

the Securities Act (the 2009 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. As originally approved, the share purchase warrants were to expire on
June 30, 2012, subject to our right to accelerate the expiration date for the
warrants after June 30, 2010 if the volume weighted average price (VWAP) for
the shares on our principal market is above $3.00 per share for twenty
consecutive trading days.

On November 13, 2009, our Board of
Directors decided to unilaterally amend the terms of the warrants without the
payment of any additional consideration by the subscribers to the 2009 US
Offering and 2009 Foreign Offering by:

| | (a) | extending the expiration date to June 30, 2013;
  and                                       
| | --- | --------------------------------------------------------------------------------------------
| |     |                                                                                             
| | (b) | amending the conditions under which we may exercise the
      warrant acceleration right by:
| |     |                                                                                             
| |     | (i)                                                                                         
| |     |                                                                                             
| |     | (ii)                                                                                        

|   | The 2009 US Offering and the 2009 Foreign Offering were
      originally set to terminate on August 31, 2009, but was extended by our
      Board of Directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | As of the date of filing of this Quarterly Report on Form
      10-Q, we had sold a total of 13,889,355 Units. Total proceeds received
      under the 2009 US Offering and the 2009 Foreign Offering was
      $6,250,209.75. An aggregate of 8,561,111 Units were sold under the 2009
      Foreign Offering, which represents an over allotment of 3,061,111 Units
      from the total number of Units originally approved by our directors for
      the 2009 Foreign Offering. To account for the over allotment, we decreased
      the number of Units available under the 2009 US Offering by an equal
      number of Units. A total of 5,328,244 Units were sold under the 2009 US
      Offering. We have agreed to pay a total of $286,526 and issue an aggregate
      of 272,882 warrants as commissions in connection with the 2009 US Offering
      and the 2009 Foreign Offering. The 2009 US Offering and the 2009 Foreign
      Offering have now been closed.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4. | On November 13, 2009, our Board of Directors decided to
      unilaterally amend the terms of the outstanding warrants issued by us
      pursuant to our US and foreign private placement offerings completed in
      2007 (the 2007 US Offering and 2007 Foreign Offering respectively)
      without the payment of any additional consideration by the holders thereof
      by extending the expiration date of those warrants from June 30, 2012 to
      June 30, 2013. As amended, each outstanding warrant issued under the 2007
      US Offering and the 2007 Foreign Offering entitles the holder to purchase
      one share of our common stock for a price of $1.00 per share. We have the
      right to accelerate the expiration date of these warrants if our common
      stock trades at a weighted average price of $3.50 for twenty consecutive
      trading days.                                                                                    

COLUMBUS PROJECT PROPERTY UPDATES

Drill Program

The objective of the drill program is to determine the
three-dimensional extent and economic potential of the gold/silver
mineralization that lies between and beyond the previously identified
mineralized Zones A and B of the Columbus Project.

4

---

Figure 1: Map of 2008 Drill Hole Locations and Mineralized
Zones



2009 Drilling 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. In September 2009, the BLM approved an expansion of the 2009
drilling program to a total of 58 holes. The 58 holes were drilled to depths
ranging from 200 feet to 400 feet below the surface. The 2009 Drill Program
consisted of infill drilling between Zones A and B and exploratory drilling
beyond Zones A and B. Drilling on all 58 holes was completed in the fourth
quarter of 2009.

Assay results for the first 23 holes were delivered by
independent consultants McEwen Geological LLC of Arvada, Colorado (McEwen) in
October 2009. The drill samples were analyzed using a caustic fusion technique,
and the results reported were from the extracted precious metals. Assay results
from these first 23 holes indicate that the mineralized Zone A area could
potentially be extended to the west and south, and the mineralized Zone B area
could potentially be extended to the west and north.

Hole ID
      Depth Drilled (ft)
      Mineralized Interval (ft)
      Thickness (ft)
      Au (opt)
      Ag (opt)
      AuE (opt)1Zone A South09-S3A
      200
      0
        to 200
      200
      0.038
      0.175
      0.04009-S6A
      200
      0
        to 200
      200
      0.039
      0.263
      0.04209-S9A
      330
      120
        to 330
      210
      0.035
      0.206
      0.03809-S10A
      200
      0
        to 120
      120
      0.023
      0.132
      0.02509-S11A
      400
      0
        to 140
      140
      0.048
      0.285
      0.05109-S12A
      200
      0
        to 40
      40
      0.037
      0.166
      0.039100
        to 160
      60
      0.048
      0.211
      0.05109-S13A
      200
      0
        to 200
      200
      0.038
      0.206
      0.041


______________________________________1 AuE
calculated using: $900/oz Au, $12/oz Ag

5

---

09-S14A
      400
      0
        to 380
      380
      0.033
      0.127
      0.03409-S15A
      200
      0
        to 200
      200
      0.039
      0.185
      0.042Zone
        A South - Weight Mean Average
      0.037
      0.190
      0.039Zone B West09-S1B
      200
      0
        to 200
      200
      0.038
      0.187
      0.04009-S2B
      200
      20
        to 200
      180
      0.041
      0.192
      0.044Zone
        B West - Weight Mean Average
      0.039
      0.190
      0.042Zone B East09-S3B
      200
      0
        to 180
      180
      0.023
      0.085
      0.02409-S4B
      200
      80
        to 200
      120
      0.025
      0.105
      0.02709-S5B
      400
      0
        to 360
      360
      0.024
      0.097
      0.025Zone
        B East - Weight Mean Average
      0.024
      0.095
      0.025Zone B South09-S7B
      400
      240
        to 400
      160
      0.023
      0.103
      0.02409-S8B
      200
      None09-S9B
      400
      0
        to 200
      200
      0.025
      0.099
      0.027240
        to 400
      160
      0.018
      0.067
      0.01909S-10B
      200
      80
        to 120
      40
      0.032
      0.133
      0.03309-S11B
      200
      None09-S12B
      400
      160
        to 240
      80
      0.027
      0.107
      0.02809-S13B
      200
      0
        to 180
      180
      0.025
      0.095
      0.02609-S14B
      200
      0
        to 200
      200
      0.018
      0.069
      0.01909-S15B
      400
      0
        to 380
      380
      0.023
      0.093
      0.024Zone
        B South - Weight Mean Average
      0.023
      0.091
      0.024


Samples from the remaining 35 drill holes are currently being
analyzed. We will report the assay results from these drill holes as they are
delivered to us.

2008 Drilling Results

During the first quarter of 2009, test results received from
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.

2008 Drilling Results  Zone A

A total of 25 contiguous holes were drilled adjacent 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 (AuE).

Hole ID2
    Depth Drilled
      (ft)
    Mineralized
      Interval3 (ft)
    Thickness (ft)
    Au (opt)
    Ag (opt)
    Au (opt) 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
    0.052


_____________________________________2 Holes
S20A to S22A did not contain sufficient samples above our cut off grade of 0.020
opt AuE to define any mineralized intercepts. 3 Mineralized
Intervals were determined using a 0.020 opt AuE cut-off.

6

---

Hole ID2
      Depth Drilled (ft)
      Mineralized Interval3
        (ft)
      Thickness (ft)
      Au (opt)
      Ag (opt)
      Au (opt) EquivalentS3A
      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
      0.042240
        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 AuE.

Hole ID
    Depth Drilled
      (ft)
    Mineralized
      Interval4 (ft)
    Thickness (ft)
    Au (opt)
    Ag (opt)
    Au (opt) 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
    0.051


_____________________________________4Mineralized Intervals were determined using a 0.020 opt AuE cut-off.

7

---

S10B
      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
      0.056170
        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


Pilot and Bench Scale Leach Test Results  Zone A
  and Zone B

In the first quarter of 2009, AuRIC conducted a pilot scale
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 AuE. 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.

In the second quarter of 2009, AuRIC conducted bench scale
leach tests on composite drill samples taken from Zone B by McEwen. 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.

In the third quarter of 2009, AuRIC conducted additional bench
scale leach tests and a pilot scale leach test on samples taken from Zone B by
McEwen. The bulk materials for the pilot scale test assayed 0.070 opt Au and
0.302 opt Ag, or 0.074 opt AuE. The pilot scale leach test on those material
extracted 0.066 opt Au and 0.181 opt Ag, or 0.068 opt AuE. The extracted
precious metals were then collected on activated carbon and processed to produce
Au and Ag bullion for a net extraction of 0.060 opt Au and 0.168 opt AG, or
0.062 opt AuE. This represents leach extraction of 92.4% of AuE into solution
and 84.1% of AuE as metal in hand.

All bench scale leach tests were conducted on composite samples
taken from Zone A and Zone B. AuRIC created 5.5 pound composites for each of the
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.

Parameter
    Test Size
      (lbs)
    Head Grade (opt
      AuE)
    AuE Recovered into
      Solution (opt)
    % Recovered into
      Solution
    AuE Recovered as
      Metal (opt)5
    % Recovered as
      MetalZone
      A Permitted Mine Area
    1,738
    0.062
    0.053
    85.9%
    0.043
    69.6%Zone
      B  S1B Composite
    5.5
    0.041
    0.037
    89.9%
    n/a
    n/aZone
      B  S9B Composite
    5.5
    0.074
    0.066
    89.8%
    n/a
    n/aZone
      B  S12B Composite
    5.5
    0.057
    0.046
    81.3%
    n/a
    n/aZone
      B  S12B Composite
    5.5
    0.057
    0.054
    94.0%
    n/a
    n/aZone
      B  S9B
    5.5
    0.074
    0.055
    74.7%
    n/a
    n/aZone
      B  S9B
    1.8
    0.074
    0.058
    78.7%
    n/a
    n/aZone
      B  S9B
    2,000
    0.074
    0.068
    92.4%
    0.062
    84.1%


_________________________________________5 Bench
Scale Tests are too small to be recovered as metal with resins or activated
carbon.

8

---

We are continuing to work on refining the extraction process in
order to optimize precious metal extraction rates.

Estimates of Material Extractable Using Surface Dredge
Operations

Based on the above 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 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 have
identified as Zone B.

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 AuE.

Location
    Potentially Mineable
      Acres6
    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.

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 allowed the Ireland Claim to lapse on September 1, 2009 as
we did 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 2009 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 23
      holes, which are reported above. We will continue to report results as
      they
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

_______________________________________6 Acreage
expected to be surface minable in an economical manner.

9

---

|   | are delivered to Ireland. McEwen will conduct geological
      modeling and resource calculations after they have received all of the
      drill program data.                                                                                                                                                                                                                                                                                                                                                                                           
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|b. | Project Feasibility: We currently have a
      production permit from 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | 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 have been and continue to be
      conducted at off-site facilities by independent consultants. These tests
      are designed to refine the Columbus Projects production process. We
      anticipate commencing activities onsite in early January. The onsite
      activities will include updating the existing pilot plant processing
      circuit, operations of the pilot plant and adjusting the pilot
    plant.                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | 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 $2,312,000 on our
exploration and development program for the Columbus Project from October 1,
2009 until June 30, 2010.

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 $60,000 on our
exploration program for the Red Mountain Project from October 1, 2009 until June
30, 2010.

Cash Requirements

We have budgeted for the following expenditures for the period
October 1, 2009 until June 30, 2010:

Columbus Project•         
        Drilling Exploration Program and Resource/Reserve Estimates
      $
      395,000•         
        Pre-feasibility and Feasibility Program
      
      1,887,000•         
        Property Maintenance Costs
      
      30,000Total for Columbus Project
      $
      2,312,000Red Mountain Project•         
        Property Acquisition and Maintenance Costs
      $
      60,000•         
        Sampling Exploration Program
      
      0Total for Red Mountain Project
      $
      60,000General and AdministrationTotal for General and Administration
      $
      940,000Total Cash Expenditures
      **$**
      3,312,000


10

---

As of September 30, 2009, we had cash in the amount of
  $592,464 and a working capital deficit of $45,829. After September 30, 2009,
  we sold an aggregate of 10,679,444 Units under our 2009 US Offering and 2009
  Foreign Offering, for total proceeds of $4,805,749.80. As a result, we currently
  have sufficient capital to pay for the anticipated costs of our exploration
  and development programs for the fourth fiscal quarter of 2009 and the first
  half of our 2010 fiscal year. However, actual costs could be greater than we
  have anticipated. Our 2009 US Offering and 2009 Foreign Offering have now been
  closed and we have no additional financing arrangements in place.

RESULTS OF OPERATIONS

Three Months and Nine Months Summary

Three
        Months Ended
      
      
      Percentage
      
      
      Nine
        Months Ended
      
      
      PercentageSeptember
        30,
      
      
      Increase /
      
      
      September
        30,
      
      
      Increase /2009
      
      
      2008
      
      
      (Decrease)
      
      
      2009
      
      
      2008
      
      
      (Decrease)Revenue
      $
      -
      
      $
      -
      
      
      n/a
      
      $
      -
      
      $
      -
      
      
      n/aOperating
      
      (1,622,470
      )
      
      (1,134,200
      )
      
      43.1%
      
      
      (3,667,520
      )
      
      (3,011,532
      )
      
      21.8%ExpensesOther Income
      
      1,984
      
      
      22,003
      
      
      (90.1)%
      
      
      11,918
      
      
      126,028
      
      
      (90.1)%(Expense)Income Tax
      
      557,197
      
      
      392,966
      
      
      41.8%
      
      
      1,265,857
      
      
      942,138
      
      
      34.4%BenefitNet Loss
      $
      (1,063,289
      )
      $
      (719,231
      )
      
      47.8%
      
      $
      (2,389,745
      )
      $
      (1,943,366
      )
      
      23.0%


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 nine months ended
September 30, 2009 and 2008 consisted of the following:

Three
        Months Ended
      
      
      Percentage
      
      
      Nine
        Months Ended
      
      
      PercentageSeptember
        30,
      
      
      Increase /
      
      
      September
        30,
      
      
      Increase /2009
      
      
      2008
      
      
      (Decrease)
      
      
      2009
      
      
      2008
      
      
      (Decrease)Mineral exploration and evaluation expenses
      $
      1,167,184
      
      $
      741,530
      
      
      57.4%
      
      $
      2,432,731
      
      $
      1,569,299
      
      
      55.0%Mineral exploration and evaluation expenses  related
        party
      
      126,780
      
      
      111,459
      
      
      13.8%
      
      
      375,971
      
      
      465,181
      
      
      (19.2)%General and administrative
      
      302,605
      
      
      262,225
      
      
      15.4%
      
      
      781,181
      
      
      901,621
      
      
      (13.3)%Depreciation
      
      10,901
      
      
      3,986
      
      
      173.5%
      
      
      32,637
      
      
      9,431
      
      
      246.1%Mineral and property holding costs
      
      15,000
      
      
      15,000
      
      
      --%
      
      
      45,000
      
      
      66,000
      
      
      (31.8)%Total Expenses
      $
      1,622,470
      
      $
      1,134,200
      
      
      43.1%
      
      $
      3,667,520
      
      $
      3,011,532
      
      
      21.8%


11

---

Operating expenses for our third fiscal quarter ended September
30, 2009 increased as compared with our third fiscal quarter ended September 30,
2008. Operating expenses increased as a result of increases in mineral and
exploration and evaluation expenses, mineral exploration and evaluation expenses
 related party, general and administrative expenses and depreciation.

Mineral and evaluation expenses have increased due to
completion of the 2008 drill program at the Columbus site and analysis and
testing of the 2008 drill hole samples and to the start of the 2009 drilling
program at the Columbus site which included drilling 58 holes. Drilling on all
58 holes was completed at the beginning of the fourth quarter of 2009.

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 40% 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 September 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 $21,780 in respect to reimbursable expenses paid for by
Nanominerals. At September 30, 2009, we were indebted to Nanominerals in the
amount of $87,954 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 in the second quarter of
2009. 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 $792 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 $9,000, payable to a company
controlled by Mr. Birnie.

The increase in general and administrative expenses is
primarily attributable to an increase in stock based compensation due to our
granting 250,000 stock options to an independent director as a recruitment
incentive and 20,000 stock options to an employee. Of these options, 70,000
vested immediately. We also incurred more director fees due to expansion of our
board and to modification of our independent director compensation plan.
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. No shares or options were
granted in the third quarter under this compensation plan. As of September 30,
2009, $15,000 of director fees have been included in accounts payable.

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.

12

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LIQUIDITY AND CAPITAL RESOURCES

|Working Capital     |   |                             |   |   |                            |   |  |                       | 
|------------------- | - | --------------------------- | - | - | -------------------------- | - |  | --------------------- | 
|                    |   |                             |   |   |                            |   |  | Percentage            | 
|                    |   | At
      September 30, 2009 |   |   | At
      December 31, 2008 |   |  | Increase / (Decrease) | 
|Current Assets      | $ | 718,200                     |   | $ | 2,734,552                  |   |  | (73.7)%               | 
|Current Liabilities |   | (764,029                    | ) |   | (175,049                   | ) |  | 336.5%                | 
|Working Capital     | $ | (45,829                     | ) | $ | 2,559,503                  |   |  | (101.8)%              | 

|Cash Flows                                    |   |                    |   |   |                    |  
|--------------------------------------------- | - | ------------------ | - | - | ------------------ | -
|                                              |   | Nine Months Ended  |   |   | Nine Months Ended  |  
|                                              |   | September 30, 2009 |   |   | September 30, 2008 |  
|Cash Flows used in Operating
      Activities | $ | (2,933,555         | ) | $ | (3,053,186         | )
|Cash Flows used in Investing Activities       |   | (224,342           | ) |   | (1,657,682         | )
|Cash Flows from Financing
      Activities    |   | 1,184,538          |   |   | 1,000              |  
|Net Decrease in Cash During Period            | $ | (1,973,359         | ) | $ | (4,709,868         | )

At September 30, 2009 we had a working capital deficit of
$45,829 as compared with a working capital surplus of $2,559,503 at December 31,
2008. The decrease in our working capital surplus is primarily attributable to
the 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 currently have sufficient financial resources to pay for the
expected costs of our exploration and development programs for the remainder of
fiscal 2009 and the first half of fiscal 2010.

To pay for the expected costs of these programs, 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 2009 US 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 2009 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. As originally approved, the share
purchase warrants were to expire on June 30, 2012, subject to our right to
accelerate the expiration date for the warrants after June 30, 2010 if the
volume weighted average price (VWAP) for the shares on our principal market is
above $3.00 per share for twenty consecutive trading days.

On November 13, 2009, our Board of Directors decided to
unilaterally amend the terms of the warrants without the payment of any
additional consideration by the subscribers to the 2009 US Offering and 2009
Foreign Offering by:

| | (a) | extending the expiration date to June 30, 2013;
  and                                       
| | --- | --------------------------------------------------------------------------------------------
| |     |                                                                                             
| | (b) | amending the conditions under which we may exercise the
      warrant acceleration right by:
| |     |                                                                                             
| |     | (i)                                                                                         
| |     |                                                                                             
| |     | (ii)                                                                                        

The 2009 US Offering and the 2009 Foreign Offering were
originally set to terminate on August 31, 2009, but were extended by our Board
of Directors.

13

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As of the date of filing of this Quarterly Report on Form 10-Q,
we sold a total of 13,889,355 Units. Total proceeds received under the 2009 US
Offering and the 2009 Foreign Offering was $6,250,209.75. An aggregate of
5,328,244 Units were sold under the 2009 Foreign Offering, which represents an
over allotment of 3,061,111 Units from the total number of Units originally
approved by our directors for the 2009 Foreign Offering. To account for the over
allotment, we decreased the number of Units available under the 2009 US Offering
by an equal number of Units. A total of 5,328,244 Units were sold under the 2009
US Offering. We have agreed to pay a total of $286,526 and issue an aggregate of
272,882 warrants as commissions in connection with the 2009 US Offering and the
2009 Foreign Offering. The 2009 US Offering and the 2009 Foreign Offering have
now been closed.

There is no assurance that the actual costs of our exploration
and development programs will not exceed our estimates. Furthermore, we may need
additional financing to proceed beyond our current exploration and development
plans. 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 nine months ended September 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 are 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.

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

14

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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 Accounting Standards
Codification (ASC) 360-10-35-15, 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 ASC 410-20, Asset Retirement Obligations.In accordance with ASC 410-20-25, Asset Retirement Obligations -
Recognition, 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 ASC 450, Contingencies, or ASC 410-30-25,
Asset Retirement and Environmental Obligations - Recognition. 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 September 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 12 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 September 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
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 September 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.

15

---

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 third quarter ended September 30, 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.

16

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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 $3,312,000 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
fourth quarter of 2009 and the first and second quarters of 2010. As of
September 30, 2009, we had cash on hand of $592,464. 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
2009 US Offering of up to 10,000,000 units at a price of $0.45 per unit and a
concurrent 2009 Foreign Offering of up to 5,500,000 units at a price of $0.45
per Unit for gross proceeds of $6,975,000.

To date, we have issued an aggregate of 5,328,244 Units under
the 2009 US Offering for total proceeds of $3,775,209.75. As discussed below,
the maximum number of Units available under the 2009 US offering was decreased
by 3,061,111 Units to account for an over allotment of Units under our 2009
Foreign Offering. The 2009 US Offering has now been closed.

To date, we have issued an aggregate of 8,561,111 Units under
the 2009 Foreign Offering for total proceeds of $3,852,499.95. This represents
an over allotment of 3,061,111 Units from the total number of Units originally
approved by our directors for the 2009 Foreign Offering. To account for the over
allotment, we decreased the number of Units available under the 2009 US Offering
by an equal number of Units. The 2009 Foreign Offering has now been closed.

We anticipate that we will require additional financing in
order to complete future phases of the 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.

17

---

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 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.

18

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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.

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.

19

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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 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.

Amendment to Terms of 2009 US Offering and 2009 Foreign
Offering

On November 13, 2009, our Board of Directors decided to
unilaterally amend the terms of the warrants without the payment of any
additional consideration by the subscribers to the 2009 US Offering and 2009
Foreign Offering by:

| | (a) | extending the expiration date to June 30, 2013;
  and                                       
| | --- | --------------------------------------------------------------------------------------------
| |     |                                                                                             
| | (b) | amending the conditions under which we may exercise the
      warrant acceleration right by:

| | (i) | increasing the VWAP threshold from $3.00 to $4.50;
    and
| | --- | ----------------------------------------------------------

20

---

| | (ii) | requiring that the average daily trading volume for our
      common stock on our principal market during the twenty trading days used
      to calculate the above VWAP threshold be not less than 0.2% of our free
      float.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Amendment to Terms of 2007 US Offering and 2007 Foreign
Offering

On November 13, 2009, our Board of Directors decided to
unilaterally amend the terms of the outstanding warrants issued by us pursuant
to our US and foreign private placement offerings completed in 2007 (the 2007
US Offering and 2007 Foreign Offering respectively) without the payment of
any additional consideration by the holders thereof by extending the expiration
date of those warrants from June 30, 2012 to June 30, 2013. As amended, each
outstanding warrant issued under the 2007 US Offering and the 2007 Foreign
Offering entitles the holder to purchase one share of our common stock for a
price of $1.00 per share. We have the right to accelerate the expiration date of
these warrants if our common stock trades at a weighted average price of $3.50
for twenty consecutive trading days.

Issuance of Shares Under 2009 US Offering and 2009 Foreign
Offering

On November 14, 2009, we sold an aggregate of 3,334,444 units
under our 2009 US Offering for total proceeds of $1,500,499.80 and an aggregate
of 700,000 units under our 2009 Foreign Offering for total proceeds of $315,000.
This represented the fourth tranche of both the 2009 US Offering and the 2009
Foreign Offering. Our 2009 US Offering and 2009 Foreign Offering have now been
closed. Details of the 2009 US Offering and the 2009 Foreign Offering are
provided in Part I of this Quarterly Report on Form 10-Q.

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)                                                                                            
|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                                                                                                                                              

21

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|Exhibit |  |                                                                                                                                                                       
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |  | Description of Exhibit                                                                                                                                                
|        |  | 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.         

22

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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: November 16, 2009 | By: | */s/ Douglas D.G. Birnie*                             
|                        |     | DOUGLAS D.G. BIRNIE                                   
|                        |     | Chief Executive Officer,
      President and Secretary
|                        |     | (Principal Executive Officer)                         
|                        |     |                                                       
|                        |     |                                                       
|                        |     |                                                       
|                        |     |                                                       
|Date: November 16, 2009 | By: | */s/ Robert D. McDougal*                              
|                        |     | ROBERT D. MCDOUGAL                                    
|                        |     | Chief Financial Officer and
      Treasurer           
|                        |     | (Principal Financial Officer)                         

---