---

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 June 30, 2010

[   ] 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 (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).
[   ]Yes    [   ]No

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

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

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

Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date: As of
August 9, 2010, the Registrant had 121,934,442 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 three months ended June 30, 2010 are
not necessarily indicative of the results that can be expected for the year
ending December 31, 2010.

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

2

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

|                                                         |   | (Unaudited)         |   |   |                   |  
|-------------------------------------------------------- | - | ------------------- | - | - | ----------------- | -
|                                                         |   | June
      30, 2010 |   |   | December 31, 2009 |  
|                                                         |   |                     |   |   |                   |  
|ASSETS                                                   |  
|                                                         |   |                     |   |   |                   |  
|Current assets                                           |   |                     |   |   |                   |  
|Cash                                                     | $ | 5,493,871           |   | $ | 3,651,015         |  
|Other receivables                                        |   | 30,000              |   |   | -                 |  
|Prepaid expenses                                         |   | 178,528             |   |   | 90,284            |  
|                                                         |   |                     |   |   |                   |  
|Total current assets                                     |   | 5,702,399           |   |   | 3,741,299         |  
|                                                         |   |                     |   |   |                   |  
|Property and equipment, net                              |   | 4,210,238           |   |   | 3,763,118         |  
|Mineral properties                                       |   | 31,948,053          |   |   | 31,948,053        |  
|Reclamation bonds                                        |   | 908,368             |   |   | 908,368           |  
|Deposits                                                 |   | 22,200              |   |   | 22,200            |  
|                                                         |   |                     |   |   |                   |  
|Total non-current assets                                 |   | 37,088,859          |   |   | 36,641,739        |  
|                                                         |   |                     |   |   |                   |  
|Total assets                                             | $ | 42,791,258          |   | $ | 40,383,038        |  
|                                                         |   |                     |   |   |                   |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                     |  
|                                                         |   |                     |   |   |                   |  
|Current liabilities                                      |   |                     |   |   |                   |  
|Accounts payable                                         | $ | 99,566              |   | $ | 133,541           |  
|Accounts payable - related party                         |   | 63,992              |   |   | 101,213           |  
|Accrued payroll and related taxes                        |   | 52,613              |   |   | 14,799            |  
|Due to related party                                     |   | 23,290              |   |   | 23,290            |  
|                                                         |   |                     |   |   |                   |  
|Total current liabilities                                |   | 239,461             |   |   | 272,843           |  
|                                                         |   |                     |   |   |                   |  
|Long-term liabilities                                    |   |                     |   |   |                   |  
|Accrued reclamation and remediation
      costs          |   | 275,338             |   |   | 275,338           |  
|Deferred tax liability                                   |   | 6,589,385           |   |   | 7,368,534         |  
|                                                         |   |                     |   |   |                   |  
|Total long-term liabilities                              |   | 6,864,723           |   |   | 7,643,872         |  
|                                                         |   |                     |   |   |                   |  
|Total liabilities                                        |   | 7,104,184           |   |   | 7,916,715         |  
|                                                         |   |                     |   |   |                   |  
|Commitments and contingencies - Note 11                  |   | -                   |   |   | -                 |  
|                                                         |   |                     |   |   |                   |  
|Stockholders' equity                                     |   |                     |   |   |                   |  
|Common stock, $0.001 par value;
      400,000,000 shares |   |                     |   |   |                   |  
|authorized, 121,934,442 and 110,899,442                  |   |                     |   |   |                   |  
|shares, respectively,
      issued and outstanding       |   | 121,934             |   |   | 110,899           |  
|Additional paid-in capital                               |   | 47,569,308          |   |   | 42,099,452        |  
|Common stock subscribed                                  |   | -                   |   |   | 162,000           |  
|Accumulated deficit during exploration stage             |   | (12,004,168         | ) |   | (9,906,028        | )
|                                                         |   |                     |   |   |                   |  
|Total stockholders' equity                               |   | 35,687,074          |   |   | 32,466,323        |  
|                                                         |   |                     |   |   |                   |  
|Total liabilities and stockholders'
      equity         | $ | 42,791,258          |   | $ | 40,383,038        |  

See Accompanying Notes to these Consolidated Financial Statements
  F-1

---

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

|                                             |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   | For the period from |  
|-------------------------------------------- | - | -------------------------- | - | - | ------------------------ | - | - | ------------------- | - | - | ------------------- | - | - | ------------------- | -
|                                             |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   | February 20, 2001   |  
|                                             |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   | (date of inception) |  
|                                             |   | For the three months ended |   |   | For the six months ended |   |   | through             |  
|                                             |   | June
      30, 2010        |   |   | June
      30, 2009      |   |   | June
      30, 2010 |   |   | June
      30, 2009 |   |   | June
      30, 2010 |  
|                                             |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|                                             |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Revenue                                      | $ | -                          |   | $ | -                        |   | $ | -                   |   | $ | -                   |   | $ | -                   |  
|                                             |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Operating expenses                           |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Mineral exploration and evaluation expenses  |   | 469,006                    |   |   | 687,033                  |   |   | 780,900             |   |   | 1,274,738           |   |   | 7,515,142           |  
|Mineral exploration and evaluation           |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|expenses - related party                     |   | 162,667                    |   |   | 135,000                  |   |   | 286,814             |   |   | 240,000             |   |   | 2,333,959           |  
|General and administrative                   |   | 824,719                    |   |   | 248,356                  |   |   | 1,583,418           |   |   | 478,576             |   |   | 5,096,034           |  
|General and administrative - related party   |   | -                          |   |   | -                        |   |   | 21,066              |   |   | -                   |   |   | 21,066              |  
|Depreciation                                 |   | 175,331                    |   |   | 10,901                   |   |   | 189,510             |   |   | 21,736              |   |   | 255,500             |  
|Mineral and property holding costs           |   | 15,000                     |   |   | 15,000                   |   |   | 30,000              |   |   | 30,000              |   |   | 440,500             |  
|Mineral and property holding costs -         |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|reimbursed to related party                  |   | -                          |   |   | -                        |   |   | -                   |   |   | -                   |   |   | 295,000             |  
|Write-off of mineral rights                  |   | -                          |   |   | -                        |   |   | -                   |   |   | -                   |   |   | 14,000              |  
|                                             |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Total operating expenses                     |   | 1,646,723                  |   |   | 1,096,290                |   |   | 2,891,708           |   |   | 2,045,050           |   |   | 15,971,201          |  
|                                             |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Loss from operations                         |   | (1,646,723                 | ) |   | (1,096,290               | ) |   | (2,891,708          | ) |   | (2,045,050          | ) |   | (15,971,201         | )
|                                             |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Other income (expense)                       |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Interest income                              |   | 8,319                      |   |   | 2,617                    |   |   | 17,913              |   |   | 10,360              |   |   | 300,973             |  
|Interest expense                             |   | -                          |   |   | (300                     | ) |   | (3,494              | ) |   | (426                | ) |   | (5,749              | )
|                                             |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Total other income (expense)                 |   | 8,319                      |   |   | 2,317                    |   |   | 14,419              |   |   | 9,934               |   |   | 295,224             |  
|                                             |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Loss before income taxes                     |   | (1,638,404                 | ) |   | (1,093,973               | ) |   | (2,877,289          | ) |   | (2,035,116          | ) |   | (15,675,977         | )
|                                             |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Income tax benefit                           |   | 448,744                    |   |   | 381,183                  |   |   | 779,149             |   |   | 708,660             |   |   | 3,671,809           |  
|                                             |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Net loss                                     | $ | (1,189,660                 | ) | $ | (712,790                 | ) | $ | (2,098,140          | ) | $ | (1,326,456          | ) | $ | (12,004,168         | )
|                                             |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|                                             |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Loss per common share - basic and diluted    | $ | (0.01                      | ) | $ | (0.01                    | ) | $ | (0.02               | ) | $ | (0.01               | ) |   |                     |  
|                                             |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|Weighted average common shares outstanding - |   |                            |   |   |                          |   |   |                     |   |   |                     |   |   |                     |  
|basic and diluted                            |   | 121,934,442                |   |   | 97,010,087               |   |   | 121,080,906         |   |   | 97,010,087          |   |   |                     |  

See Accompanying Notes to these Consolidated Financial Statements
  F-2

---

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, 2009                 |  | 110,899,442  |  | $ | 110,899    |  | $ | 42,099,452      |  | $ | 162,000     |   | $ | (9,906,028     | ) | $ | 32,466,323 |  
|                                           |  |              |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|Amortization of stock options and warrants |  |              |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|issued to directors, officers and          |  |              |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|consultants over vesting period            |  | -            |  |   | -          |  |   | 507,369         |  |   | -           |   |   | -              |   |   | 507,369    |  
|                                           |  |              |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|Issuance of stock options for              |  |              |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|67,197 shares of common stock              |  |              |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|to a director                              |  | -            |  |   | -          |  |   | 19,515          |  |   | -           |   |   | -              |   |   | 19,515     |  
|                                           |  |              |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|Issuance of common stock for cash          |  |              |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|Reg. S - Private Placement,                |  |              |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|$0.45 per share, net of $6,399             |  |              |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|financing costs                            |  | 200,000      |  |   | 200        |  |   | 83,401          |  |   | -           |   |   | -              |   |   | 83,601     |  
|                                           |  |              |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|Issuance of common stock for cash          |  |              |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|Reg. D - Private Placement,                |  |              |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|$0.45 per share, net of $5,344             |  |              |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|financing costs                            |  | 10,835,000   |  |   | 10,835     |  |   | 4,859,571       |  |   | (162,000    | ) |   | -              |   |   | 4,708,406  |  
|                                           |  |              |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|Net loss, June 30, 2010                    |  | -            |  |   | -          |  |   | -               |  |   | -           |   |   | (2,098,140     | ) |   | (2,098,140 | )
|                                           |  |              |  |   |            |  |   |                 |  |   |             |   |   |                |   |   |            |  
|Balance, June 30, 2010                     |  | 121,934,442  |  | $ | 121,934    |  | $ | 47,569,308      |  | $ | -           |   | $ | (12,004,168    | ) | $ | 35,687,074 |  

See Accompanying Notes to these Consolidated Financial Statements
  F-3

---

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

|                                                     |   |                          |   |   |                     |   |   | For the period from |  
|---------------------------------------------------- | - | ------------------------ | - | - | ------------------- | - | - | ------------------- | -
|                                                     |   |                          |   |   |                     |   |   | February 20, 2001   |  
|                                                     |   |                          |   |   |                     |   |   | (date of inception) |  
|                                                     |   | For the six months ended |   |   | through             |  
|                                                     |   | June
      30, 2010      |   |   | June
      30, 2009 |   |   | June
      30, 2010 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                 |   |                          |   |   |                     |   |   |                     |  
|Net loss                                             | $ | (2,098,140               | ) | $ | (1,326,456          | ) | $ | (12,004,168         | )
|Adjustments to reconcile loss from operating         |   |                          |   |   |                     |   |   |                     |  
|to net cash used in operating
      activities:      |   |                          |   |   |                     |   |   |                     |  
|Depreciation                                         |   | 189,510                  |   |   | 21,736              |   |   | 255,500             |  
|Write-off
      of mineral rights                    |   | -                        |   |   | -                   |   |   | 14,000              |  
|Consulting accrual                                   |   | -                        |   |   | -                   |   |   | 15,000              |  
|Stock based
      expenses                           |   | 526,884                  |   |   | 5,136               |   |   | 2,171,282           |  
|Changes in operating assets and liabilities:         |   |                          |   |   |                     |   |   |                     |  
|Other receivables                                    |   | (30,000                  | ) |   | 27,394              |   |   | (2,606              | )
|Prepaid expenses                                     |   | (88,244                  | ) |   | 23,765              |   |   | (328,603            | )
|Other assets                                         |   | -                        |   |   | -                   |   |   | (2,200              | )
|Reclamation deposit                                  |   | -                        |   |   | 24,720              |   |   | (925,042            | )
|Mineral property
      acquisition costs             |   | -                        |   |   | -                   |   |   | (1,022,663          | )
|Accounts payable and accrued
      liabilities       |   | (33,382                  | ) |   | 334,311             |   |   | 112,569             |  
|Deferred
      income taxes                          |   | (779,149                 | ) |   | (708,660            | ) |   | (3,671,809          | )
|Accrued reclamation and remediation
      costs      |   | -                        |   |   | -                   |   |   | 275,338             |  
|                                                     |   |                          |   |   |                     |   |   |                     |  
|Net cash used in operating
      activities          |   | (2,312,521               | ) |   | (1,598,054          | ) |   | (15,113,402         | )
|                                                     |   |                          |   |   |                     |   |   |                     |  
|CASH FLOW FROM INVESTING ACTIVITIES                  |   |                          |   |   |                     |   |   |                     |  
|Purchase
      of property and equipment             |   | (636,630                 | ) |   | (245,242            | ) |   | (3,316,690          | )
|                                                     |   |                          |   |   |                     |   |   |                     |  
|Net cash
      used in investing activities          |   | (636,630                 | ) |   | (245,242            | ) |   | (3,316,690          | )
|                                                     |   |                          |   |   |                     |   |   |                     |  
|CASH FLOW FROM FINANCING ACTIVITIES                  |   |                          |   |   |                     |   |   |                     |  
|Proceeds
      from stock issuance                   |   | 4,965,750                |   |   | -                   |   |   | 24,455,710          |  
|Proceeds
      from option issuance                  |   | -                        |   |   | -                   |   |   | 20,000              |  
|Stock
      issuance costs                           |   | (11,743                  | ) |   | -                   |   |   | (560,037            | )
|Common
      stock subscribed                        |   | (162,000                 | ) |   | -                   |   |   | -                   |  
|Proceeds
      from borrowings from related party    |   | -                        |   |   | -                   |   |   | 8,290               |  
|                                                     |   |                          |   |   |                     |   |   |                     |  
|Net cash provided by financing
      activities      |   | 4,792,007                |   |   | -                   |   |   | 23,923,963          |  
|                                                     |   |                          |   |   |                     |   |   |                     |  
|NET CHANGE IN CASH                                   |   | 1,842,856                |   |   | (1,843,296          | ) |   | 5,493,871           |  
|                                                     |   |                          |   |   |                     |   |   |                     |  
|CASH AT BEGINNING OF PERIOD                          |   | 3,651,015                |   |   | 2,565,823           |   |   | -                   |  
|                                                     |   |                          |   |   |                     |   |   |                     |  
|CASH AT END OF PERIOD                                | $ | 5,493,871                |   | $ | 722,527             |   | $ | 5,493,871           |  
|                                                     |   |                          |   |   |                     |   |   |                     |  
|SUPPLEMENTAL INFORMATION                             |   |                          |   |   |                     |   |   |                     |  
|                                                     |   |                          |   |   |                     |   |   |                     |  
|Interest paid                                        | $ | 3,494                    |   | $ | 426                 |   | $ | 5,749               |  
|                                                     |   |                          |   |   |                     |   |   |                     |  
|Income taxes paid                                    | $ | -                        |   | $ | -                   |   | $ | -                   |  
|                                                     |   |                          |   |   |                     |   |   |                     |  
|Non-cash investing and financing activities:         |   |                          |   |   |                     |   |   |                     |  
|                                                     |   |                          |   |   |                     |   |   |                     |  
|Assets acquired for common stock and warrants issued |   |                          |   |   |                     |   |   |                     |  
|for mineral properties                               | $ | -                        |   | $ | -                   |   | $ | 21,584,351          |  
|                                                     |   |                          |   |   |                     |   |   |                     |  
|Net deferred tax liability assumed                   | $ | -                        |   | $ | -                   |   | $ | 10,261,194          |  

See Accompanying Notes to these Consolidated Financial Statements
  F-4

---

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 consolidated financial statements have been prepared in accordance
        with Securities and Exchange Commission requirements for interim financial
        statements. Therefore, they do not include all of the 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, 2009 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 consolidated 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 footnote disclosures 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 consolidated financial statements
        be read in conjunction with the Companys audited consolidated financial
        statements and notes thereto for the year ended December 31, 2009.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | 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 $12,004,168 from operations as of June 30, 2010, 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, Columbus Minerals Inc. (CMI) (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-5

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
        POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Exploration costs Mineral exploration
        costs are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Mineral rights The Company capitalizes
        acquisition and option costs of mineral property rights. The amount capitalized
        represents fair value at the time the mineral rights were acquired.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The Company capitalizes acquisition and option costs
        of mineral rights as tangible assets. Upon commencement of commercial
        production, the mineral rights will be amortized using the unit-of- production
        method over the life of the mineral rights. If the Company does not continue
        with exploration after the completion of the feasibility study, the mineral
        rights will be expensed at that time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Mineral property acquisition costs Costs
        of acquiring mining properties are capitalized upon acquisition. Mine
        development costs incurred 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 assets 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 the 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
        are 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 that 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 June 30, 2010, exploration progress is on target with the Companys
        exploration and evaluation plan, and no events or circumstances have happened
        to indicate that 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-6

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
        POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | 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. These additional risks are
        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, the 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 indicating that
        the liabilities have potentially changed becomes available. Changes in
        estimates are reflected in the statement of operations in the period an
        estimate is revised.                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Accruals for reclamation and environmental matters totaled
        $275,338 at June 30, 2010 and December 31, 2009. The Company is in the
        exploration stage and is unable to determine the estimated timing of expenditures
        relating to these accruals at this time. It is reasonably possible that
        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-7

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY
        OF SIGNIFICANT POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | 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, the 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 June 30, 2010 and 2009 that
        were not included in the computation of diluted EPS, because the effect
        would be antidilutive, were 36,123,675 and 19,335,428, 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. The amount is reflected as an increase to the total
        purchase price which is then applied to the underlying acquired assets
        in the absence of a goodwill component associated with the acquisition
        transactions.

F-8

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY
        OF SIGNIFICANT POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | 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 that 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.
      In January 2010, the FASB issued ASU 2010-06,
        Improving Disclosures About Fair Value Measurements, which requires
        reporting entities to make new disclosures about recurring or nonrecurring
        fair-value measurements including significant transfers into and out of
        Level 1 and Level 2 fair-value measurements and information
        on purchases, sales, issuances, and settlements on a gross basis in the
        reconciliation of Level 3 fair value measurements. ASU 2010-6
        is effective for annual reporting periods beginning after December 15,
        2009, except for Level 3 reconciliation disclosures which are effective
        for annual periods beginning after December 15, 2010. The Company
        does not have any assets or liabilities classified as Level 3. As the
        update only pertains to disclosures, its adoption is not expected to have
        an impact on the Company’s financial position, results of operations
        or cash flows.
      In February 2010, the FASB issued ASU 2010-09, Subsequent
        Events (Topic 855), Amendment to Certain Recognition and Disclosure
        Requirements, to remove the requirement for SEC filers to disclose
        the date through which an entity has evaluated subsequent events. This
        change removes potential conflicts with current SEC guidance and clarifies
        the intended scope of the reissuance disclosure provisions. The update
        was effective upon its date of issuance, February 24, 2010, and the Company
        has adopted the amendments accordingly. As the update only pertained to
        disclosures, it had no impact on the Company’s financial position,
        results of operations or cash flows upon adoption.

F-9

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

|2. | PREPAID EXPENSES                                                                           
|-- | -------------------------------------------------------------------------------------------
|   |                                                                                            
|   | Prepaid expenses at June 30, 2010 and December 31, 2009
        consisted of the following:

| |                    |   | June 30, |  |   | December 31, | 
| | ------------------ | - | -------- |  | - | ------------ | 
| |                    |   | 2010     |  |   | 2009         | 
| |                    |   |          |  |   |              | 
| | Claims maintenance | $ | 70,300   |  | $ | 34,166       | 
| | Insurance policies |   | 88,363   |  |   | 49,973       | 
| | Retainers          |   | 12,000   |  |   | 2,000        | 
| | Other              |   | 7,865    |  |   | 4,145        | 
| |                    |   |          |  |   |              | 
| |                    | $ | 178,528  |  | $ | 90,284       | 

|3. | PROPERTY AND EQUIPMENT                                                                              
|-- | ----------------------------------------------------------------------------------------------------
|   |                                                                                                     
|   | Property and equipment consisted of the following as
        of June 30, 2010 and December 31, 2009:

| |                               |   | June 30,  |  |   | December 31, | 
| | ----------------------------- | - | --------- |  | - | ------------ | 
| |                               |   | 2010      |  |   | 2009         | 
| |                               |   |           |  |   |              | 
| | Furniture and fixtures        | $ | 8,921     |  | $ | 8,921        | 
| | Computers and equipment       |   | 41,165    |  |   | 39,137       | 
| | Land                          |   | 30,000    |  |   | 30,000       | 
| | Site improvements             |   | 2,813,134 |  |   | 99,631       | 
| | Site equipment                |   | 1,048,923 |  |   | 231,035      | 
| | Vehicles                      |   | 23,595    |  |   | 23,595       | 
| | Building                      |   | 500,000   |  |   | --           | 
| | Construction in progress:     |   |           |  |   |              | 
| | Building                      |   | --        |  |   | 500,000      | 
| | Site improvements             |   | --        |  |   | 2,325,198    | 
| | Site equipment                |   | --        |  |   | 571,591      | 
| |                               |   |           |  |   |              | 
| |                               |   | 4,465,738 |  |   | 3,829,108    | 
| | Less accumulated depreciation |   | 255,500   |  |   | 65,990       | 
| |                               |   |           |  |   |              | 
| |                               | $ | 4,210,238 |  | $ | 3,763,118    | 

Construction in progress consisted of
  capital expenditures for construction of the Companys pilot plant leach
  circuit. During the quarter ended June 30, 2010, the plant began operating on
  a continuous basis and $3,802,519 of construction in progress was placed in
  service.

Depreciation expense was $189,510 and
  $21,736 for the six months ended June 30, 2010 and 2009, respectively.

F-10

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

|4. | COLUMBUS PROJECT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | As of December 31, 2007, the Company had earned a 15%
        interest in the Columbus Project 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 CMI, 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 Company believes that 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 CMI was the surviving merger entity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

F-11

---

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

|4. | COLUMBUS PROJECT(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

F-12

---

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

|4. | COLUMBUS PROJECT(continued)                                                                       
|-- | --------------------------------------------------------------------------------------------------
|   |                                                                                                   
|   | 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
      
      10,261,194Total
      $
      32,220,545


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


F-13

---

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

|5. | RED MOUNTAIN PROJECT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Red Mountain Project located in San Bernardino,
        California is subject to an underlying option assignment agreement, as
        amended August 8, 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, as amended
        August 8, 2007, the Company granted a 5% net smelter return royalty to
        NMC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

F-14

---

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

|6. | PRIVATE PLACEMENTS                                                                                              
|-- | ----------------------------------------------------------------------------------------------------------------
|   |                                                                                                                 
|   | For the six months ended June 30, 2010, the
        Company completed the following private placements:         
|   |                                                                                                                 
|   | a)                                                                                                              
|   |                                                                                                                 
|   | b)                                                                                                              
|   |                                                                                                                 
|   | Warrants associated with the 2010 equity issuances
        do not constitute a registration payment arrangement.
|   |                                                                                                                 
|   | A summary of investor warrant activity for
        the six months ended June 30, 2010 is as follows:            

| |                                                |  | Number of  |  |                     | 
| | ---------------------------------------------- |  | ---------- |  | ------------------- | 
| |                                                |  | Shares     |  | Exercise Price      | 
| |                                                |  |            |  |                     | 
| | Outstanding and exercisable, December 31, 2009 |  | 22,598,357 |  | $ 0.75 - 2.39       | 
| | Granted                                        |  | 5,523,500  |  | 0.75                | 
| | Exercised                                      |  | --         |  | --                  | 
| | Forfeited/expired                              |  | --         |  | --                  | 
| |                                                |  |            |  |                     | 
| | Outstanding and exercisable, June 30, 2010     |  | 28,121,857 |  | $ 0.75
      - 2.39 | 

The table above does not include warrants
  issued to employees, non-employee directors and consultants as they are included
  under Share Based Payments below.

F-15

---

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

|7. | SHARE BASED COMPENSATION                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | 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.

The Company utilizes the Binomial Lattice
  pricing model to estimate the fair values of options and warrants granted in
  exchange for services. The Company used the following assumptions to estimate
  the fair value of the options granted:

2010Dividend yield
      --Expected volatility
      118.68%Risk-free interest rate
      1.88  3.33 %Expected life (years)
      2.75  4.25 years


The expected life represents the weighted-average
  period the awards are expected to remain outstanding and is a derived output
  of the Binomial Lattice model. The expected life is impacted by all of the underlying
  assumptions and calibration of the Companys model. The Binomial Lattice
  model estimates the probability of exercise as a function of these variables
  based on the entire history of exercises and cancellations on all past grants
  made by the Company.

For grants awarded during 2010 the expected
  volatility is based on the historical volatility levels of the Companys
  common stock. The risk-free interest rate is based on the implied yield available
  on U.S. Treasury zero-coupon issues over equivalent lives of the options.

F-16

---

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

|7. | SHARE BASED COMPENSATION(continued)                                                                                                                                                                                                                                                                          
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                              
|   | Expenses for the six months ended June 30,
        2010 and 2009 related to the granting and vesting of share based payments
        were $526,884 and $5,136, respectively. Such expenses are included in
        general and administrative expense and mineral exploration and evaluation
        expense.
|   |                                                                                                                                                                                                                                                                                                              
|   | During the six months ended June 30, 2010,
        the Company granted stock options and warrants as follows:                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                              
|   | a)                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                              
|   | b)                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                              
|   | c)                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                              
|   | d)                                                                                                                                                                                                                                                                                                           

The following table summarizes the Companys
  stock option and warrant activity for the six months ended June 30, 2010:

| |                             |  |           |   |   | Weighted       | 
| | --------------------------- |  | --------- | - | - | -------------- | 
| |                             |  | Number of |   |   | Average        | 
| |                             |  | Shares    |   |   | Exercise Price | 
| |                             |  |           |   |   |                | 
| | Balance, December 31, 2009  |  | 4,724,719 |   | $ | 0.23           | 
| |                             |  |           |   |   |                | 
| | Options granted and assumed |  | 4,067,197 |   |   | 0.75           | 
| | Options expired             |  | (79,719   | ) |   | 1.36           | 
| | Options forfeitures         |  | --        |   |   | --             | 
| | Options exercised           |  | --        |   |   | --             | 
| |                             |  |           |   |   |                | 
| | Balance, June 30, 2010      |  | 8,712,197 |   | $ | 0.46           | 

F-17

---

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

|7. | SHARE BASED COMPENSATION(continued)                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                 
|   | The following table summarizes information about options
        and warrants granted during the six months ended June 30, 2010:

|                        | Exercise
      Price     |          |               |             
|----------------------- | ------------------------ | -------- | ------------- | ------------
|Number
      of Options | Equals,
      Exceeds or | Weighted |               |             
|and
      Warrants      | is
      Less than Mkt.  | Average  | Range of      | Weighted    
|Granted                 | Price
      of Stock     | Exercise | Exercise      | Average Fair
|During
      2010       | on
      Grant Date      | Price    | Price         | Value       
|567,197                 | Equals                   | $ 0.76   | $0.75 - $0.81 | $ 0.27      
|3,300,000               | Exceeds                  | $ 0.75   | $ 0.75        | $ 0.42      
|200,000                 | Less
      Than          | $ 0.82   | $0.82         | $ 0.56      

The following table summarizes the changes
  of the Companys stock options and warrants issued for stock based compensation
  subject to vesting for the six months ended June 30, 2010:

| |                             |  |            |   |   | Weighted Average | 
| | --------------------------- |  | ---------- | - | - | ---------------- | 
| |                             |  | Number of  |   |   | Grant Date       | 
| |                             |  | Shares     |   |   | Fair
      Value | 
| |                             |  |            |   |   |                  | 
| | Unvested, December 31, 2009 |  | 540,000    |   | $ | 0.46             | 
| | Granted                     |  | 4,000,000  |   |   | 0.41             | 
| | Vested                      |  | (1,385,000 | ) |   | 0.40             | 
| | Forfeited                   |  | --         |   |   | --               | 
| |                             |  |            |   |   |                  | 
| | Unvested, June 30, 2010     |  | 3,155,000  |   | $ | 0.43             | 

As of June 30, 2010, there was $1,383,356
  of total unrecognized compensation cost related to unvested stock options and
  warrants. This cost is expected to be fully recognized as follows:

| | 2010  | $ | 450,002   | 
| | ----- | - | --------- | 
| | 2011  |   | 872,388   | 
| | 2012  |   | 40,644    | 
| | 2013  |   | 20,322    | 
| | 2014  |   | --        | 
| |       |   |           | 
| | Total | $ | 1,383,356 | 

The above tables do not include warrants
  issued in private placements which are discussed above in Note 6.

F-18

---

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

|8. | WARRANTS AND OPTIONS
|-- | --------------------

The following table summarizes all of
  the Companys stock option and warrant activity for the six months ended
  June 30, 2010, including private placement warrants and share based payment
  stock options and warrants:

| |                             |  |            |   |   | Weighted       | 
| | --------------------------- |  | ---------- | - | - | -------------- | 
| |                             |  | Number of  |   |   | Average        | 
| |                             |  | Shares     |   |   | Exercise Price | 
| |                             |  |            |   |   |                | 
| | Balance, December 31, 2009  |  | 27,323,076 |   | $ | 0.97           | 
| | Options granted and assumed |  | 9,590,697  |   |   | 0.75           | 
| | Options expired             |  | (79,719    | ) |   | 1.36           | 
| | Options forfeitures         |  | --         |   |   | --             | 
| | Options exercised           |  | --         |   |   | --             | 
| |                             |  |            |   |   |                | 
| | Balance, June 30, 2010      |  | 36,834,054 |   | $ | 0.91           | 

F-19

---

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

|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 for the six months ended June 30, 2010 and June 30, 2009:

| |                                                |   | June
      30, 2010 |   |   | June
      30, 2009 |  
| | ---------------------------------------------- | - | ------------------- | - | - | ------------------- | -
| |                                                |   |                     |   |   |                     |  
| | Income tax benefit based on statutory tax rate | $ | 1,007,050           |   | $ | 712,291             |  
| | Non-deductible and other                       |   | (1,633              | ) |   | (1,523              | )
| | Change in valuation allowance                  |   | (226,268            | ) |   | (2,108              | )
| |                                                |   |                     |   |   |                     |  
| | Income tax benefit                             | $ | 779,149             |   | $ | 708,660             |  

Significant components of the Companys
  net deferred income tax assets and liabilities at June 30, 2010 and December
  31, 2009 were as follows:

| |                                   |   | June 30,   |   |   | December 31, |  
| | --------------------------------- | - | ---------- | - | - | ------------ | -
| |                                   |   | 2010       |   |   | 2009         |  
| | Deferred income tax assets:       |   |            |   |   |              |  
| |                                   |   |            |   |   |              |  
| | Net operating loss carryforward   | $ | 4,477,806  |   | $ | 3,698,657    |  
| | Option compensation               |   | 759,948    |   |   | 575,539      |  
| | Property, plant & equipment       |   | 39,542     |   |   | --           |  
| | Reclamation and remediation costs |   | 96,368     |   |   | 96,368       |  
| |                                   |   |            |   |   |              |  
| | Gross deferred income tax asset   |   | 5,373,664  |   |   | 4,370,564    |  
| | Valuation allowance               |   | (895,858   | ) |   | (669,590     | )
| |                                   |   |            |   |   |              |  
| |                                   |   | 4,477,806  |   |   | 3,700,974    |  
| | Deferred income tax liabilities:  |   |            |   |   |              |  
| |                                   |   |            |   |   |              |  
| | Property, plant & equipment       |   | --         |   |   | 2,317        |  
| | Acquisition related liabilities   |   | 11,067,191 |   |   | 11,067,191   |  
| |                                   |   |            |   |   |              |  
| | Net deferred income tax liability | $ | 6,589,385  |   | $ | 7,368,534    |  

A valuation allowance was established
  for deferred tax assets related to option compensation and accrued reclamation
  and remediation costs due to the uncertainty of realizing these deferred tax
  assets based on conditions existing at June 30, 2010 and December 31, 2009.

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

F-20

---

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

|9. | INCOME TAXES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The resulting estimated future federal income tax liability
        associated with the temporary difference between the acquisition consideration
        and the tax basis 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
        $12,793,730 and $10,567,591 as of June 30, 2010 and December 31, 2009,
        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 expire between 2027 and 2030.                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | 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 the 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 2006. While the Company believes that
        its tax filings do not include uncertain tax positions, the results of
        potential examinations or the effect of changes in tax law cannot be ascertained
        at this time. The Company currently has no tax years under examination.

F-21

---

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

|10. | PROPERTY RENTAL AGREEMENTS AND LEASES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The Company, through its subsidiary CMI, 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, provides 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 Company paid the $30,000 rental payments due on
        June 30, 2010 and 2009, respectively. The payments consist 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Rental expense resulting from this operating lease agreement
        was $31,800 and $27,750 for the six months ended June 30, 2010 and 2009,
        respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Columbus Project 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, one of the
        principal stockholders of the Company. The Columbus Project is further
        discussed in Note 4.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Red Mountain Project Pursuant to the option
        assignment agreement, as amended August 8, 2007, the Company granted a
        5% net smelter return royalty to NMC, one of the principal stockholders
        of the Company. The Red Mountain Project is further discussed in Note
        5.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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 June 30, 2010 and December 31, 2009, were as follows:

| |                                              |   | June 30, |  |   | December 31, | 
| | -------------------------------------------- | - | -------- |  | - | ------------ | 
| |                                              |   | 2010     |  |   | 2009         | 
| |                                              |   |          |  |   |              | 
| | 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 six months ended June 30, 2010, was as
  follows:

| | Balance, December 31, 2009   | $ | 275,338 | 
| | ---------------------------- | - | ------- | 
| | Accruals for estimated costs |   | --      | 
| |                              |   |         | 
| | Balance, June 30, 2010       | $ | 275,338 | 

|    | The Company maintains reclamation bonds with the Bureau
        of Land Management in the amount of $908,368 as of June 30, 2010 and December
        31, 2009, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|13. | CONCENTRATION OF CREDIT RISK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The Company maintains its cash accounts in financial
        institutions. Cash accounts are insured by the Federal Deposit Insurance
        Corporation (FDIC) for up to $250,000 per financial institution. The Company
        has never experienced a material loss or lack of access to its cash accounts;
        however, no assurance can be provided that access to the Companys
        cash accounts will not be impacted by adverse conditions in the financial
        markets. At June 30, 2010, the Company had deposits in excess of FDIC
        insured limits in the amount of $4,795,618.

F-23

---

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

|14. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | Pursuant to option assignment agreements related to
        both the Columbus and Red Mountain projects, the Company granted a 5%
        net smelter return royalty to NMC. NMC is the Companys largest shareholder,
        owning approximately 33% of the Companys outstanding common stock.
        The Columbus Project is further discussed in Note 4. The Red Mountain
        Project is further discussed in Note 5.                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | During the six months ended June 30, 2010, 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.                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | In addition to the above services, NMC provided dedicated
        use of its laboratory, instrumentation, milling equipment and research
        facilities. NMC provided invoices for these fees plus expenses.                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | For the six months ended June 30, 2010, the Company
        incurred total fees and reimbursements of expenses to NMC of $210,000
        and $46,814, respectively, for a total of $256,814. At June 30, 2010,
        the Company had an outstanding balance due to NMC of $38,045.                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | Accounts payable  related party also includes
        $15,426 payable to one of the Companys independent directors. The
        amount includes $9,000 for director compensation and $6,426 for expense
        reimbursement.                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | The Company also had an outstanding balance for accrued
        compensation to Douglas D.G. Birnie, its executive officer, of $10,521.
        The amount is payable to a company wholly owned by Douglas D.G. Birnie.                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | Accounts payable  related party totaled $63,992
        as of June 30, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | Due to related parties includes amounts due to former
        officers of the Company. At June 30, 2010, the remaining amount of due
        to related parties was $23,290.                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | As further discussed in Note 10, the Company, through
        its subsidiary CMI, 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 NMC. Rental payments to DDB Syndicate were $30,000 for
        the six months ended June 30, 2010 and 2009, respectively.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | For the six months ended June 30, 2010, the Company
        incurred fees for services performed by one of its independent directors,
        Mark Brennan, of $21,066 primarily for executive search assistance.                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|15. | CONCENTRATION OF ACTIVITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | For the six months ended June 30, 2010, the Company
        purchased services from one major vendor, NMC, which exceeded more than
        10% of total purchases and amounted to $256,814. NMC is a related party
        as further discussed in Note 14.                                                                                                                                                                                                                                                                                                                                                                           

F-24

---

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

|16. | SUBSEQUENT EVENTS                                                 
|--- | ------------------------------------------------------------------
|    |                                                                   
|    | The following events occurred subsequent to
        June 30, 2010:
|    |                                                                   
|    | a)                                                                
|    |                                                                   
|    | b)                                                                
|    |                                                                   
|    | c)                                                                
|    |                                                                   
|    | d)                                                                
|    |                                                                   
|    | e)                                                                

F-25

---

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


Cautionary Statement Regarding Forward-Looking Statements

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

OVERVIEW

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

In February 2008, we acquired our lead project, a prospective
gold, silver and calcium carbonate property located in Esmeralda County, Nevada,
that we call the Columbus Project. The Columbus Project consists of 19,738
acres of placer mineral claims, including a 378 acre Permitted Mine Area
(58-acre mill site and mill facility, and 320-acre mine site). Our current
permits 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 Area. We also have a mineral lease covering, and the option to acquire, an
additional 23,440 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.

The discussion provided in this Quarterly Report should be read
in conjunction with our Annual Report on Form 10-K for the year ended December
31, 2009.

RECENT CORPORATE DEVELOPMENTS

The following significant developments occurred since our
fiscal quarter ended March 31, 2010:

New Geologic Modeling Completed

On April 13, 2010 we announced our new geologic modeling for
our Columbus Project. The modeling is based upon a full analysis of the
technical data generated from Irelands 2008 and 2009 drill programs and
presents a refinement of the parameters previously used to delineate mineralized
zones at the Columbus Project. The new geologic modeling has outlined seven
mineralized zones containing a total of 343.9 million tons of material in place
with an average grade of 0.040 ounces per ton (opt) gold equivalent (AuE)
(AuE (opt) = Au (opt) +0.013 Ag (opt)) (based on $900/oz Au and $12/oz Ag).

First Gold and Silver Poured from Pilot Plant Operations at
Columbus Project

On May 24, 2010 we announced that the pilot plant was
operational as a thiosulphate leach carbon-in-pulp circuit and that we had
poured the first gold and silver from the pilot plant operations at our Columbus
Project. We also reported that the primary goal of the initial test runs was to
demonstrate that the pilot plant facility could

3

---

extract gold and silver from continuous runs of large tonnages
of mineralized clays. This was achieved with the extraction of 0.011 opt gold
and 0.037 opt silver from an estimated 58.58 tons of low grade (0.02 opt Au,
0.39 opt Ag) head ore. This represents a weighted average recovery rate of 51%
for gold and 9.5% for silver. During these initial tests, no attempt was made to
optimize either head grade or extraction rates.

Grant of Options to the Chief Executive Officer and the
Chief Financial Officer under the 2007 Stock Incentive Plan

Effective July 22, 2010, we granted to Douglas D.G. Birnie,
CEO, and Robert D. McDougal, CFO, non-qualified stock options to acquire an
aggregate of 800,000 shares of our common stock under the our 2007 Stock
Incentive Plan (the 2007 Plan) as follows:

|1. | Mr. Birnie was granted non-qualified stock options to
      purchase an aggregate of 600,000 shares of our common stock pursuant to
      the 2007 Stock Incentive Plan as follows:
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                    
|   | (a)                                                                                                                                                                                

Number of Options to
    Exercise Price
    Vesting Date
    Expiration DateVest
    Per Share50,000
    $0.75
    June 30, 2010
    June 29, 201550,000
    $0.75
    December 31, 2010
    December 30, 201550,000
    $0.75
    June 30, 2011
    June 29, 201650,000
    $0.75
    December 31, 2011
    December 30, 201650,000
    $0.75
    June 30, 2012
    June 30, 201750,000
    $0.75
    December 31, 2012
    December 30, 2017


| | (b) | Options to purchase an aggregate of 150,000 shares of our
      common stock at an exercise price of $0.53 per share, vesting on the dates
      and in the amounts, and expiring on the dates, each as set out
    below:
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Number of Options to Vest
    Vesting Date
    Expiration Date150,000
    The first date after the Grant Date that the closing
      price for our common stock (as quoted by the principal market or exchange
      on which such shares trades) exceeds $1.00 per share for 20 consecutive
      trading days.
    The date that is 5 years after the vesting date.


| | (c) | Options to purchase an aggregate of 150,000 shares of our
      common stock at an exercise price of $0.53 per share, vesting upon the
      Board of Directors determining, by resolution, that the Company has, from
      the Grant Date, made adequate and sufficient progress on its technical and
      feasibility programs for our Columbus Mineral Project, and expiring on the
      date that is 5 years after the vesting date.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | Mr. McDougal was granted non-qualified stock options to
      purchase an aggregate of 200,000 shares of our common stock pursuant to
      the 2007 Stock Incentive Plan as follows:
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                      
|   | (a)                                                                                                                                                                                  

Number of Options to
    Exercise Price
    Vesting Date
    Expiration DateVest
    Per Share16,667
    $0.75
    June 30, 2010
    June 29, 201516,667
    $0.75
    December 31, 2010
    December 30, 201516,667
    $0.75
    June 30, 2011
    June 29, 2016


4

---

Number of Options to
    Exercise Price
    Vesting Date
    Expiration DateVest
    Per Share16,667
    $0.75
    December 31, 2011
    December 30, 201616,667
    $0.75
    June 30, 2012
    June 30, 201716,665
    $0.75
    December 31, 2012
    December 30, 2017


| | (b) | Options to purchase an aggregate of 50,000 shares of our
      common stock at an exercise price of $0.53 per share, vesting on the dates
      and in the amounts, and expiring on the dates, each as set out
    below:
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Number of Options to Vest
      Vesting Date
      Expiration Date50,000
      The first date
          after the Grant Date that the closing price for our common stock as
          quoted by the principal market or exchange on which such shares trades
          exceeds $1.00 per share for 20 consecutive trading days.
      The date that
          is 5 years after the vesting date.


| | (c) | Options to purchase an aggregate of 50,000 shares of our
      common stock at an exercise price of $0.53 per share, vesting upon the
      Board of Directors determining, by resolution, that the Company has, from
      the Grant Date, made adequate and sufficient progress on its technical and
      feasibility programs for our Columbus Mineral Project, and expiring on the
      date that is 5 years after the vesting date.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Pursuant to the option agreements between the Company and Mr.
Birnie and Mr. McDougal with respect to the above grants, each of the options
granted to Mr. Birnie and Mr. McDougal will automatically vest and become
exercisable upon the occurrence of a change in control of the Company.

Grant of Options to Independent Directors Pursuant to 2007
Plan

On July 22, 2010, the Company granted to its two independent
directors non-qualified stock options to acquire an aggregate of 400,000 shares
of our common stock under our 2007 Stock Incentive Plan summarized below:

|1. | Michael A. Steele was granted non-qualified stock options
      to purchase an aggregate of 200,000 shares of our common stock, vesting on
      the dates and in the amounts, exercisable at the price, and expiring on
      the dates, each as set out below:
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Number of Options to
    Exercise Price
    Vesting Date
    Expiration DateVest
    Per Share100,000
    $0.53
    June 30, 2010
    June 29, 201550,000
    $0.53
    September 30, 2010
    September 29 201550,000
    $0.53
    December 31, 2010
    December 30, 2015


|2. | Mark H. Brennan was granted non-qualified stock options
      to purchase an aggregate of 200,000 shares of our common stock, vesting on
      the dates and in the amounts, exercisable at the price, and expiring on
      the dates, each as set out below:
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Number of Options to
    Exercise Price
    Vesting Date
    Expiration DateVest
    Per Share100,000
    $0.53
    June 30, 2010
    June 29, 201550,000
    $0.53
    September 30, 2010
    September 29 201550,000
    $0.53
    December 31, 2010
    December 30, 2015


Pursuant to the option agreements between the Company and Mr.
Steele and Mr. Brennan with respect to the above option grants, each of the
options granted to Mr. Steele and Mr. Brennan will automatically vest and become
exercisable upon the occurrence of a change in control of the Company.

5

---

PLAN OF OPERATIONS

During the next 12 months, we intend to proceed with our
exploration and development programs for the Columbus Project and the Red
Mountain Project.

The Columbus Project

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

|(a) | Determining Project Mineralization: The goal of
      the drilling program is to determine whether there is sufficient
      mineralization at the Columbus Project for economic viability. Our 2008
      and 2009 drill programs for the Columbus Project were conducted with a
      wide drill hole spacing (~1/4 mile x 1⁄2 mile) in order to determine the
      boundaries of mineralization in the previously identified area of interest
      covering approximately 5,000 acres.                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Our 2010 drill program is being conducted by independent
      and qualified third parties under strict Chain- of-Custody, Quality
      Assurance and Quality Control standards. Samples will be assayed using
      caustic fusion techniques and metal extraction. Such assay methods are
      consistent with the previously reported 2008 and 2009 drill programs. In
      addition, Western Analytical Consultants LLC will independently analyze
      the drill samples at the Columbus Projects new on-site laboratory.
      Western Analytical is managed by its president Mr. Robert Wasiliew. Mr.
      Wasiliew has been a licensed and certified BC Assayer since 1971, and
      prior to founding Western Analytical Consultants, he acted as the General
      Manager for Inspectorates laboratory facility in Reno, NV.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The first phase of the 2010 drill program consisted of
      147 holes drilled to a depth of 40 feet within the permitted 320-acre mine
      site area. The goal of this drilling is to upgrade the mineralization
      estimates by better defining the continuity and grade within the currently
      permitted mining depth parameters of the mine site area. The drilling of
      these holes has now been completed. Management expects to periodically
      report results as they are received.                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The second phase of the 2010 drill program will consist
      of 33 holes to a depth of 200 feet within the northwest sector of the
      property, with the goal of improving tonnage and grade estimates so as to
      allow for their inclusion in the mine plan for the feasibility study.
      Currently an application for a drill permit for this phase has been filed
      with the BLM with approval expected in the third quarter of 2010 and
      drilling to be completed in the fourth quarter of 2010. Results will be
      reported as received during this phase of drilling.                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Beyond 2010, the process of determining project
      mineralization will continue at the project until in-fill drilling has
      been competed in all of the identified mineralized areas, and the
      boundaries of mineralization have been defined.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(b) | Project Feasibility: We currently have a
      production permit for the Columbus Project. The production permit allows
      us to extract precious metals and produce calcium carbonate on the 378
      acre (320 acre mine site and 58 acres of mill sites) Permitted Mine Area
      located at the Columbus Project at a mine rate of up to 792,000 tons per
      year. We have recently installed a precious metals leach extraction
      circuit at our on site pilot plant.                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The Company announced in May that the pilot plant was
        operational as a thiosulphate leach carbon-in- pulp circuit. It also reported
        that the primary goal of the initial test runs was to demonstrate that
        the pilot plant facility could extract gold and silver from continuous
        runs of large tonnages of mineralized clays. This was achieved with the
        extraction of 0.011 opt gold and 0.037 opt silver from an estimated 58.58
        tons of low grade (0.02 opt Au, 0.39 opt Ag) head ore. This represents
        a weighted average recovery rate of 51% for gold and 9.5% for silver.
        During these initial tests, no attempt was made to optimize either head
        grade or extraction rates.                                                                                    

6

---

Since the first test runs, activities
  have focused on maximizing gold and silver extraction rates and minimizing processing
  costs. Maximizing gold and silver extraction involves the optimization of five
  primary components of the process flow sheet: percentage of solids in slurry,
  thiosulphate concentration, leach time, oxidation method and carbon loading.
  With the first three components having been substantially determined, pilot
  tests are currently focused on oxidation and carbon loading. When this test
  work is completed, we expect to engage independent engineers to operate the
  pilot plant in order to verify results and to complete the feasibility study.

It should be noted that when reviewing
the precious metals extraction rates for all of the thiosulphate extraction
tests conducted to date by the company, that the processed tails have always
contained about 0.01 opt Au. If this holds true for production, then the
extraction rates for lower grade material will be lower than for higher grade
material due to the constant tails grade.

If the operation of the pilot
production facility proves, to our satisfaction, that the Columbus Project is
economically viable, we may 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.

If the 2010 drill program is completed
during the fourth quarter as expected, we believe that we should receive updated
mineralization estimates from the drill hole data by the end of the first
quarter of 2011. The mineralization report, combined with the independent pilot
plant verification studies, should allow us to engage additional independent
engineers to complete the feasibility study.

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 $4,645,000 on our
exploration and development program and $400,000 on our capital expenditures for
the Columbus Project from July 1, 2010 until June 30, 2011.

The Red Mountain Project

Sampling and Drilling Program: Our exploration and
development program for the Red Mountain Project currently consists of a
Drilling and Sampling program. Currently the Red Mountain Project is not in
active development. We have set a budget of $420,000 for Drilling and Sampling
at Red Mountain for the twelve months ending June 30, 2011; however, this
program is contingent on certain milestones being achieved at our lead project,
the Columbus Project. Wehave reallocated funds originally budgeted
towards the Red Mountain Project in order to provide us with maximum flexibility
in achieving our technical milestones at our lead project.

Cash Requirements

We have budgeted for the following cash expenditures for the
  period from July 1, 2010 to June 30, 2011:

Columbus Project•   Property Payments
    $
    100,000•   Drilling Program and Mineralization
        Estimates
    
    2,330,000•   Pilot Plant / Project Feasibility
    
    2,215,000Total for Columbus Project
    $
    4,645,000Red Mountain Project•   Property Acquisition and
        Maintenance Costs
    $
    105,000•   Sampling Exploration Program
    
    315,000Total for Red Mountain
        Project
    $
    420,000


7

---

General and AdministrationTotal for General
      and Administration
    $
    2,100,000Total Expected Expenses
    $
    7,165,000Total Expected Capital Expenditures
    $
    400,000Total Expected Cash Expenditures
    $
    7,565,000


As of June 30, 2010, we had cash in the amount of $5,493,871
and a working capital surplus of $5,462,938.

We do not currently have sufficient financial resources to pay
for our anticipated cash expenditures for the period from July 1, 2010 to June
30, 2011. We anticipate that our existing financial resources are sufficient
only to pay for the anticipated costs of our exploration and development
programs until March 31, 2011. Thereafter, we anticipate that we will require
additional financing to complete our planned exploration and development plans.
If we are unable to obtain sufficient financing to complete our planned
exploration and development plans, we will scale back our plans depending upon
our existing financial resources. We do not currently have any financing
arrangements in place.

RESULTS OF OPERATIONS

Three Months and Six Months Summary

|                       |   | Three
      Months Ended June 30 |   |   | Percentage |   |  | Six Months Ended June 30 |  |   | Percentage |  
|---------------------- | - | -------------------------------- | - | - | ---------- | - |  | ------------------------ |  | - | ---------- | -
|                       |   |                                  |   |   |            |   |  | Increase /               |  |   |            |  
|                       |   | 2010                             |   |   | 2009       |   |  | (Decrease)               |  |   | 2010       |  
|Revenue                | $ | - $                              |   |   | -          |   |  | n/a                      |  | $ | -          |  
|Operating Expenses     |   | (1,646,723                       | ) |   | (1,096,290 | ) |  | 50%                      |  |   | (2,891,708 | )
|Other Income (Expense) |   | 8,319                            |   |   | 2,317      |   |  | 259%                     |  |   | 14,419     |  
|Income Tax Benefit     |   | 448,744                          |   |   | 381,183    |   |  | 18%                      |  |   | 779,149    |  
|Net Loss               | $ | (1,189,660                       | ) | $ | (712,790   | ) |  | 67%                      |  | $ | (2,098,140 | )

Revenue

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

Operating Expenses

Our operating expenses for the three and six months ended June
30, 2010 and 2009 consisted of the following:

|                                                                  |   | Three Months
      Ended |  |   |            |  |  | Six Months
      Ended |   |   |            | 
|----------------------------------------------------------------- | - | ------------------------ |  | - | ---------- |  |  | ---------------------- | - | - | ---------- | 
|                                                                  |   | June
      30.           |  |   | Percentage |  |  | June
      30.         |   |   | Percentage | 
|                                                                  |   |                          |  |   |            |  |  | Increase /             |   |   |            | 
|                                                                  |   | 2010                     |  |   | 2009       |  |  | (Decrease)             |   |   | 2010       | 
|Mineral exploration and evaluation expenses                       | $ | 469,006                  |  | $ | 687,033    |  |  | (32%                   | ) | $ | 780,900    | 
|Mineral exploration and evaluation expenses  related
      party |   | 162,667                  |  |   | 135,000    |  |  | 21%                    |   |   | 286,814    | 
|General and administrative                                        |   | 824,719                  |  |   | 248,356    |  |  | 232%                   |   |   | 1,604,484  | 

8

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|Depreciation                       |   | 175,331   |  |   | 10,901    |  |  | 1508% |  |   | 189,510   |  |   | 21,736    |  |  | 772% | 
|---------------------------------- | - | --------- |  | - | --------- |  |  | ----- |  | - | --------- |  | - | --------- |  |  | ---- | 
|Mineral and property holding costs |   | 15,000    |  |   | 15,000    |  |  | 0%    |  |   | 30,000    |  |   | 30,000    |  |  | 0%   | 
|Total Operating Expenses           | $ | 1,646,723 |  | $ | 1,096,290 |  |  | 50%   |  | $ | 2,891,708 |  | $ | 2,045,050 |  |  | 41%  | 

Operating expenses for our second fiscal quarter ended June 30,
2010 increased as compared to our second fiscal quarter ended June 30, 2009.
General and administrative expenses increased during this period primarily due
to the recognition of stock based vesting expenses as well as increases in
legal, accounting and consulting expenses. In addition, depreciation of the
property, plant, and equipment commenced this period.

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 32.9%of
our outstanding common stock; and (b) amounts paid in respect of the DDB Claims
to the DDB Syndicate, an entity owned by related parties.

During the fiscal quarter ended June 30, 2010, we incurred fees
payable to Nanominerals of $105,000 for technical and financing related services
relating primarily to the Columbus and Red Mountain Projects. In addition, we
incurred $ 27,666 in respect to reimbursable expenses paid for by Nanominerals.
At June 30, 2009, we were indebted to Nanominerals in the amount of $ 38,045 for
unpaid fees and reimbursable expenses.

We made $30,000 in rental payments to the DDB Syndicate under
the terms of our lease agreement for the DDB Claims. The DDB Syndicate is a
mining syndicate made up of a company controlled by Douglas D.G. Birnie (our
President and Chief Executive Officer and a member of our Board of Directors),
Lawrence E. Chizmar (a former member of our Board of Directors and a former
director of CBI), three former officers, directors and affiliates of CBI, and
three companies affiliated with Nanominerals. The $30,000 in rental payments
made to the DDB Syndicate consisted of $ 3,719 paid to each member of the DDB
Syndicate, including $ 250 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 $ 10,521, payable to a company
controlled by Mr. Birnie.

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

LIQUIDITY AND CAPITAL RESOURCES

|Working Capital     |   |                        |   |   |                            |   |  |                       | 
|------------------- | - | ---------------------- | - | - | -------------------------- | - |  | --------------------- | 
|                    |   |                        |   |   |                            |   |  | Percentage            | 
|                    |   | At
      June 30, 2010 |   |   | At
      December 31, 2009 |   |  | Increase / (Decrease) | 
|Current Assets      | $ | 5,702,399              |   | $ | 3,741,299                  |   |  | 52%                   | 
|Current Liabilities |   | (239,461               | ) |   | (272,843                   | ) |  | 12%                   | 
|Working Capital     | $ | 5,462,938              |   | $ | 3,468,456                  |   |  | 58%                   | 

|Cash Flows                              |   |                       |   |   |                       |  
|--------------------------------------- | - | --------------------- | - | - | --------------------- | -
|                                        |   | Six Months Ended June |   |   | Six Months Ended June |  
|                                        |   | 30,
      2010        |   |   | 30,
      2009        |  
|Cash Flows used in Operating Activities | $ | (2,312,521            | ) | $ | (1,598,054            | )
|Cash Flows used in Investing Activities |   | (636,630              | ) |   | (245,242              | )
|Cash Flows from Financing Activities    |   | 4,792,007             |   |   | -                     |  
|Net Change in Cash During Period        | $ | 1,842,856             |   | $ | (1,843,296            | )

9

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At June 30, 2010 we had a working capital surplus of $5,462,938
as compared with a working capital surplus of $3,468,456 at December 31, 2009.
The increase in our working capital surplus is primarily attributable to the
$4,965,750 in proceeds that were received in January 2010 from the sale of
11,035,000 units..

Financing Requirements

We do not currently have sufficient financial resources to pay
for our anticipated cash expenditures for the period from July 1, 2010 to June
30, 2011. We anticipate that our existing financial resources are sufficient
only to pay for the anticipated costs of our exploration and development
programs until March 31, 2011. Thereafter, we anticipate that we will require
additional financing to complete our planned exploration and development plans.
If we are unable to obtain sufficient financing to complete our planned
exploration and development plans, we will scale back our plans depending upon
our existing financial resources. We do not currently have any financing
arrangements in place.

In January 2010, we sold an aggregate of 11,035,000 Units at a
price of $0.45 per Unit in separate private placement offerings made to US
accredited and foreign investors (the 2010 US Offering and the 2010 Foreign
Offering respectively) for total proceeds of $4,965,750. Each Unit offered was
comprised of one share of our common stock and one-half of one share purchase
warrant, with each full share purchase warrant entitling the holder to purchase
an additional share of our common stock at an exercise price of $0.75 per share,
expiring June 30, 2013. After June 30, 2010 we will have the right to accelerate
the expiration date of the warrants if:

| | (a) | the VWAP for our shares on the principal market on which
      they trade is above $4.50 per share for twenty consecutive trading days;
      and                                                         
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                           
| | (b) | the average daily trading volume for our shares on the
      principal market on which they trade during those twenty consecutive
      trading days is equal to or greater than 0.2% of our free
  float.

We agreed to pay $6,300 and issue 6,000 share purchase warrants
as finders fees for the units subscribed for by foreign investors.

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.

For these reasons, our financial statements filed herewith
include a statement that these factors raise substantial doubt about our ability
to continue as a going concern. Our ability to continue as a going concern will
be dependent on our raising additional capital and the success of our business
plan.

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.

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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 period
  ended June 30, 2010 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 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.

11

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Accruals for reclamation and environmental matters totaled $275,338
  at June 30, 2010 and December 31, 2009. 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 June 30, 2010, 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 June 30, 2010, our management,
including the CEO and CFO, concluded that our disclosure controls and procedures
were effective to ensure that the information required to be disclosed by us in
the reports that we file or submit under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in SEC rules and forms.

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

During the second quarter ended June 30, 2010, there were no
changes in our internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

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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 operation.

Although we have installed the leach circuit of the onsite
pilot production module for the Columbus Project, there is no assurance that
this project is commercially feasible.

We have begun testing and optimizing the onsite pilot production
  module at 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 $7,565,000 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 for the twelve
months ending June 30, 2011. We do not currently have sufficient financial
resources to pay for our anticipated expenditures for that period. We anticipate
that our existing financial resources are sufficient only to pay for the
anticipated costs of our exploration and development programs until March 31,
2011. Thereafter, we anticipate that we will require additional financing to
complete our planned exploration and development plans. In addition, actual
costs of completing our exploration and development plans could be greater than
anticipated and we may need additional financing sooner than anticipated. If we
are unable to obtain sufficient financing to complete our planned exploration
and development plans, we will scale back our plans depending upon our existing
financial resources. We do not currently have any financing arrangements in
place.

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

13

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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 or pay fees in respect
of those properties.

In order to maintain the rights to our mineral projects, we
will be required to make annual filings and pay fees with federal and state
regulatory authorities. On March 1, 2010, Nevadas State Assembly and Senate
passed Assembly Bill No. 6 (AB6). AB6 has installed an additional tiered fee
that is payable in conjunction with the annual filing of an affidavit of the
work performed on or improvements made to a mining claim, or an affidavit of the
intent to hold a mining claim applied to holders of 11 or more claims. The fee
ranges from $70 per claim for holders of 11 to 199 claims up to $195 per mining
claim for holders of 1,300 or more claims as of the date of filing. AB6 was
approved by the Governor of Nevada on March 12, 2010.

In addition to these fees, we may be required by federal and/or
state legislation or regulations to complete minimum annual amounts of mineral
exploration work on our mineral properties. A failure by us to meet the annual
maintenance requirements under federal and state laws could cause our mineral
rights to lapse.

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

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

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

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

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

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

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

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

14

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

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

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

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

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

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

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

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

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

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

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

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

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

15

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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.

If we are, or were, a U.S. real property holding
corporation, non-U.S. holders of our common stock or other security convertible
into our common stock could be subject to U.S. federal income tax on the gain
from the sale, exchange, or other disposition of such security.

If we are or ever have been a U.S. real property holding
corporation (a USRPHC) under the Foreign Investment Real Property Tax Act of
1980, as amended (FIRPTA) and applicable United States Treasury regulations
(collectively, the FIRPTA Rules), unless an exception described below applies,
certain non-U.S. investors in our common stock (or options or warrants for our
common stock) would be subject to U.S. federal income tax on the gain from the
sale, exchange or other disposition of shares of our common stock (or such
options or warrants), and such non-U.S. investor would be required to file a
United States federal income tax return. In addition, the purchaser of such
common stock, option or warrant would be required to withhold from the purchase
price an amount equal to 10% of the purchase price and remit such amount to the
U.S. Internal Revenue Service.

In general, under the FIRPTA Rules, a company is a USRPHC if
its interests in U.S. real property comprise at least 50% of the fair market
value of its assets. If we are or were a USRPHC, so long as our common stock is
regularly traded on an established securities market (as defined under the
FIRPTA Rules), a non-U.S. holder who, actually or constructively, holds or held
no more than 5% of our common stock is not subject to U.S. federal income tax on
the gain from the sale, exchange, or other disposition of our common stock under
FIRPTA. In addition, other interests in equity of a USRPHC may qualify for this
exception if, on the date such interest was acquired, such interests had a fair
market value no greater than the fair market value on that date of 5% of our
common stock. Any of our common stockholders (or owners of options or warrants
for our common stock) that are non-U.S. persons and own or anticipate owning
more than 5% of our common stock (or, in the case of options or warrants, of a
value greater than the fair market value of 5% of our common stock) should
consult their tax advisors to determine the consequences of investing in our
common stock (or options or warrants). We have not conducted a formal analysis
of whether we are or have ever been a USRPHC. We do not believe that we are or
have ever been a USRPHC. However, if we later determine that we were a USRPHC,
then we believe that we would have ceased to be a USRPHC as of June 1, 2005 and
that non-U.S. holders would not be subject to FIRPTA with respect to a sale,
exchange, or other disposition of shares of our common stock (or options or
warrants) after June 1, 2010.

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.

16

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

None.

ITEM 3.        DEFAULTS
UPON SENIOR SECURITIES.

None.

ITEM 5.        OTHER
INFORMATION.

None.

ITEM 6.       
EXHIBITS.

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

|Exhibit |  |                                                                                                                                                                                                                                      
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |  | Description of Exhibit                                                                                                                                                                                                               
|3.1     |  | Articles of Incorporation. (1)                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                      
|3.2     |  | Certificate of Amendment to Articles - Name Change from
      Merritt Ventures Corp. to Ireland Inc.(2)                                                                                                                              
|        |  |                                                                                                                                                                                                                                      
|3.3     |  | Certificate of Change  4-for-1 Stock Split.(3)                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                      
|3.4     |  | Bylaws.(1)                                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                      
|10.1    |  | 2007 Stock Incentive Plan.(4)                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                      
|10.2    |  | Assignment Agreement dated for reference as of March 29,
      2007, among Nanominerals Corp., the Company and Lorrie Archibald. (4)                                                                                                 
|        |  |                                                                                                                                                                                                                                      
|10.3    |  | Letter Agreement dated July 22, 2006 among Columbus Brine
      Inc., Columbus S.M. LLC and Nanominerals Corp., assigned to the Company by
      Nanominerals Corp.(11)                                                              
|        |  |                                                                                                                                                                                                                                      
|10.4    |  | Letter Agreement dated March 15, 2007 between Red
      Mountain Mining and Nanominerals Corp., assigned to the Company by
      Nanominerals Corp. (11)                                                                             
|        |  |                                                                                                                                                                                                                                      
|10.5    |  | Agency Agreement dated effective as of June 19, 2007
      between the Company and S & P Investors, Inc. (5)                                                                                                                         
|        |  |                                                                                                                                                                                                                                      
|10.6    |  | Amendment Agreement to Assignment Agreement among the
      Company, Nanominerals Corp. and Lorrie Archibald, dated for reference as
      of August 8, 2007.(6)                                                                     
|        |  |                                                                                                                                                                                                                                      
|10.7    |  | Consulting Agreement between the Company and RJ Falkner
      & Company, Inc., dated for reference as of November 5, 2007.(7)                                                                                                        
|        |  |                                                                                                                                                                                                                                      
|10.8    |  | Consultant Non-Qualified Stock Option Agreement between
      the Company and R. Jerry Falkner, dated effective as of November 5,
      2007.(7)                                                                                     
|        |  |                                                                                                                                                                                                                                      
|10.9    |  | Agreement and Plan of Merger dated December 14, 2007
      among the Company, Columbus Brine Inc., John T. Arkoosh, William Maghan
      and Lawrence E. Chizmar, Jr.(8)                                                             
|        |  |                                                                                                                                                                                                                                      
|10.10   |  | Amendment Agreement to Agreement and Plan of Merger
      entered into on January 31, 2008 among the Company, CBI Acquisition, Inc.,
      Columbus Brine Inc., John T. Arkoosh, William Maghan and Lawrence E.
      Chizmar, Jr.(9)
|        |  |                                                                                                                                                                                                                                      
|10.11   |  | Mining Lease Agreement dated November 30, 2007 between
      DDB Syndicate and Columbus S.M., LLC.(12)                                                                                                                               
|        |  |                                                                                                                                                                                                                                      
|10.12   |  | Non-Qualified Stock Option Agreement for Douglas D.G.
      Birnie. (14)                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                      
|10.13   |  | Non-Qualified Stock Option Agreement for Robert D.
      McDougal. (14)                                                                                                                                                              

17

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|Exhibit |  |                                                                                                                                                                       
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |  | Description of Exhibit                                                                                                                                                
|        |  |                                                                                                                                                                       
|10.14   |  | Non-Qualified
        Stock Option Agreement for Michael A. Steele. (14)                                                                                              
|        |  |                                                                                                                                                                       
|10.15   |  | Non-Qualified
        Stock Option Agreement for Mark H. Brennan. (14)                                                                                                
|        |  |                                                                                                                                                                       
|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.

|(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, 2009 filed on April 15, 2010.         
|(14) | Filed as an exhibit to our Current Report on Form 8-K
      filed on July 28, 2010                                                

18

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SIGNATURES

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

|                      |     | IRELAND INC.                                          
|--------------------- | --- | ------------------------------------------------------
|                      |     |                                                       
|                      |     |                                                       
|                      |     |                                                       
|Date: August 16, 2010 | By: | */s/ Douglas D.G. Birnie*                             
|                      |     | DOUGLAS D.G. BIRNIE                                   
|                      |     | Chief Executive Officer,
      President and Secretary
|                      |     | (Principal Executive Officer)                         
|                      |     |                                                       
|                      |     |                                                       
|                      |     |                                                       
|                      |     |                                                       
|Date: August 16, 2010 | By: | */s/ Robert D. McDougal*                              
|                      |     | ROBERT D. MCDOUGAL                                    
|                      |     | Chief Financial Officer and
      Treasurer           
|                      |     | (Principal Financial Officer)                         

---