---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2008

[   ] 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. Yes
[X]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 [ ] No [X]

Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date:
As of November 7, 2008, the Registrant had 97,010,087 shares of common
stockoutstanding.

---

PART I - FINANCIAL INFORMATION

ITEM
1.               
FINANCIAL STATEMENTS.

The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of
Regulation S-X, and, therefore, do not include all information and footnotes
necessary for a complete presentation of financial position, results of
operations, cash flows, and stockholders' equity in conformity with generally
accepted accounting principles. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations and
financial position have been included and all such adjustments are of a normal
recurring nature. Operating results for the nine months ended September 30, 2008
are not necessarily indicative of the results that can be expected for the year
ending December 31, 2008.

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

---

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

|                                                         |   | September 30, 2008 |   |   | December 31, 2007 |  
|-------------------------------------------------------- | - | ------------------ | - | - | ----------------- | -
|                                                         |   |                    |   |   |                   |  
|ASSETS                                                   |   |                    |   |   |                   |  
|                                                         |   |                    |   |   |                   |  
|Current assets                                           |   |                    |   |   |                   |  
|Cash                                                     | $ | 4,049,737          |   | $ | 8,759,605         |  
|Prepaid expenses                                         |   | 73,964             |   |   | 150,023           |  
|                                                         |   |                    |   |   |                   |  
|Total current
      assets                               |   | 4,123,701          |   |   | 8,909,628         |  
|                                                         |   |                    |   |   |                   |  
|Property and equipment, net                              |   | 3,016,399          |   |   | 290,718           |  
|Mineral properties                                       |   | 31,948,053         |   |   | -                 |  
|Mineral property acquisition costs                       |   | -                  |   |   | 1,058,872         |  
|Reclamation bonds                                        |   | 860,482            |   |   | 807,000           |  
|Deposits                                                 |   | 22,200             |   |   | 2,200             |  
|                                                         |   |                    |   |   |                   |  
|Total
      non-current assets                           |   | 35,847,134         |   |   | 2,158,790         |  
|                                                         |   |                    |   |   |                   |  
|Total assets                                             | $ | 39,970,835         |   | $ | 11,068,418        |  
|                                                         |   |                    |   |   |                   |  
|LIABILITIES AND STOCKHOLDERS'
      EQUITY               |   |                    |   |   |                   |  
|                                                         |   |                    |   |   |                   |  
|Current liabilities                                      |   |                    |   |   |                   |  
|Accounts payable                                         | $ | 237,561            |   | $ | 144,280           |  
|Accounts payable - related
      party                   |   | 120,459            |   |   | 82,128            |  
|Accrued payroll and related taxes                        |   | 18,878             |   |   | 38,754            |  
|Due to related party                                     |   | 23,290             |   |   | 23,290            |  
|                                                         |   |                    |   |   |                   |  
|Total current
      liabilities                          |   | 400,188            |   |   | 288,452           |  
|                                                         |   |                    |   |   |                   |  
|Long-term liabilities                                    |   |                    |   |   |                   |  
|Deferred tax liability                                   |   | 9,319,056          |   |   | -                 |  
|                                                         |   |                    |   |   |                   |  
|Total liabilities                                        |   | 9,719,244          |   |   | 288,452           |  
|                                                         |   |                    |   |   |                   |  
|Stockholders' equity                                     |   |                    |   |   |                   |  
|Common stock, $0.001 par
      value; 400,000,000 shares |   |                    |   |   |                   |  
|authorized, 97,010,087 and
      86,550,000 shares,      |   |                    |   |   |                   |  
|respectively,
      issued and outstanding               |   | 97,010             |   |   | 86,550            |  
|Additional paid-in capital                               |   | 34,639,396         |   |   | 13,234,865        |  
|Accumulated deficit during
      exploration stage       |   | (4,484,815         | ) |   | (2,541,449        | )
|                                                         |   |                    |   |   |                   |  
|Total
      stockholders' equity                         |   | 30,251,591         |   |   | 10,779,966        |  
|                                                         |   |                    |   |   |                   |  
|Total liabilities and stockholders' equity               | $ | 39,970,835         |   | $ | 11,068,418        |  

See Accompanying Notes to these Consolidated Financial
  Statements 
  2

---

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

|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   | For the period from |  
|-------------------------------------------- | - | -------------------------------- | - | - | ------------------------------- | - | - | ------------------ | - | - | ------------------ | - | - | ------------------- | -
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   | February 20, 2001   |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   | (Date of Inception) |  
|                                             |   | For
      the three months ended |   |   | For
      the nine months ended |   |   | Through            |  
|                                             |   | September 30, 2008               |   |   | September 30, 2007              |   |   | September 30, 2008 |   |   | September 30, 2007 |   |   | September 30, 2008  |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Revenue                                      | $ | -                                |   | $ | -                               |   | $ | -                  |   | $ | -                  |   | $ | -                   |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Operating expenses                           |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Mineral exploration and evaluation expenses  |   | 741,530                          |   |   | 21,810                          |   |   | 1,569,299          |   |   | 67,810             |   |   | 1,916,197           |  
|Mineral exploration and evaluation           |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|expenses - related party                     |   | 111,459                          |   |   | 867,125                         |   |   | 465,181            |   |   | 867,125            |   |   | 1,441,495           |  
|General and administrative                   |   | 262,225                          |   |   | 62,851                          |   |   | 901,621            |   |   | 129,892            |   |   | 1,660,875           |  
|Depreciation                                 |   | 3,986                            |   |   | 14                              |   |   | 9,431              |   |   | 14                 |   |   | 10,103              |  
|Mineral and property holding costs           |   | 15,000                           |   |   | 169,500                         |   |   | 66,000             |   |   | 169,500            |   |   | 335,500             |  
|Mineral and property holding costs -         |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|reimbursed to related
      party            |   | -                                |   |   | 295,000                         |   |   | -                  |   |   | 295,000            |   |   | 295,000             |  
|Write-off of mineral rights                  |   | -                                |   |   | -                               |   |   | -                  |   |   | -                  |   |   | 14,000              |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Total operating expenses                     |   | 1,134,200                        |   |   | 1,416,300                       |   |   | 3,011,532          |   |   | 1,529,341          |   |   | 5,673,170           |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Loss from operations                         |   | (1,134,200                       | ) |   | (1,416,300                      | ) |   | (3,011,532         | ) |   | (1,529,341         | ) |   | (5,673,170          | )
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Other income:                                |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Interest income                              |   | 22,003                           |   |   | 30,021                          |   |   | 126,028            |   |   | 30,021             |   |   | 246,217             |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Total other income                           |   | 22,003                           |   |   | 30,021                          |   |   | 126,028            |   |   | 30,021             |   |   | 246,217             |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Loss before income taxes                     |   | (1,112,197                       | ) |   | (1,386,279                      | ) |   | (2,885,504         | ) |   | (1,499,320         | ) |   | (5,426,953          | )
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Income tax benefit                           |   | 392,966                          |   |   | -                               |   |   | 942,138            |   |   | -                  |   |   | 942,138             |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Net loss                                     | $ | (719,231                         | ) | $ | (1,386,279                      | ) | $ | (1,943,366         | ) | $ | (1,499,320         | ) | $ | (4,484,815          | )
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Loss per common share - basic and diluted    | $ | (0.01                            | ) | $ | (0.02                           | ) | $ | (0.02              | ) | $ | (0.03              | ) |   |                     |  
|                                             |   |                                  |   |   |                                 |   |   |                    |   |   |                    |   |   |                     |  
|Weighted average common shares outstanding - |   |                                  |   |   |                                 |   |   |                    |   |  
|Basic and diluted                            |   | 97,010,087                       |   |   | 62,385,783                      |   |   | 95,064,815         |   |   | 45,412,828         |   |   |                     |  

See Accompanying Notes to these Consolidated Financial
  Statements 
  3

---

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

|                                         |                    |  |   |         |  |   |             |   |   | Accumulated    |   |   |            |  
|---------------------------------------- | ------------------ |  | - | ------- |  | - | ----------- | - | - | -------------- | - | - | ---------- | -
|                                         |                    |  |   |         |  |   | Additional  |   |   | Deficit During |   |   | Total      |  
|                                         | Common
      Stock |  |   | Paid-in |  |   | Exploration |   |   | Stockholders'  |  
|                                         | Shares             |  |   | Amount  |  |   | Capital     |   |   | Stage          |   |   | Equity     |  
|                                         |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|Balance, December 31, 2007               | 86,550,000         |  | $ | 86,550  |  | $ | 13,234,865  |   | $ | (2,541,449     | ) | $ | 10,779,966 |  
|                                         |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|Issuance of common stock                 |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|for cash, $0.05 per share                |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|from exercise of options                 | 20,000             |  |   | 20      |  |   | 980         |   |   | -              |   |   | 1,000      |  
|                                         |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|Issuance of common stock in              |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|connection with the acquisition          |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|to the former shareholders
      of CBI, |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|$1.92 per share                          | 10,440,087         |  |   | 10,440  |  |   | 19,989,560  |   |   | -              |   |   | 20,000,000 |  
|                                         |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|Fair value of share purchase warrants    |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|issued in connection with the            |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|acquisition of CBI                       | -                  |  |   | -       |  |   | 1,359,351   |   |   | -              |   |   | 1,359,351  |  
|                                         |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|Amortization of stock options            |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|issued to employee over                  |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|vesting period                           | -                  |  |   | -       |  |   | 39,410      |   |   | -              |   |   | 39,410     |  
|                                         |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|Effect of modification of stock          |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|options issued to a nonemployee          |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|former shareholder of CBI                | -                  |  |   | -       |  |   | 19,935      |   |   | -              |   |   | 19,935     |  
|                                         |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|Amortization of stock options            |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|issued to director over                  |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|vesting period                           | -                  |  |   | -       |  |   | 16,307      |   |   | -              |   |   | 16,307     |  
|                                         |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|Change in estimate of option             |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|forfeitures                              | -                  |  |   | -       |  |   | (21,012     | ) |   | -              |   |   | (21,012    | )
|                                         |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|Net loss, September 30, 2008             | -                  |  |   | -       |  |   | -           |   |   | (1,943,366     | ) |   | (1,943,366 | )
|                                         |                    |  |   |         |  |   |             |   |   |                |   |   |            |  
|                                         | 97,010,087         |  | $ | 97,010  |  | $ | 34,639,396  |   | $ | (4,484,815     | ) | $ | 30,251,591 |  

See Accompanying Notes to these Consolidated Financial
  Statements 
  4

---

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

|                                                                     |   |                                 |   |   |                    |   |   | For the period from |  
|-------------------------------------------------------------------- | - | ------------------------------- | - | - | ------------------ | - | - | ------------------- | -
|                                                                     |   |                                 |   |   |                    |   |   | February 20, 2001   |  
|                                                                     |   |                                 |   |   |                    |   |   | (Date of inception) |  
|                                                                     |   | For
      the nine months ended |   |   | through            |  
|                                                                     |   | September 30, 2008              |   |   | September 30, 2007 |   |   | September 30, 2008  |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                 |   |                                 |   |   |                    |   |   |                     |  
|Net loss                                                             | $ | (1,943,366                      | ) | $ | (1,499,320         | ) | $ | (4,484,815          | )
|Adjustments to reconcile loss from operating                         |   |                                 |   |   |                    |   |   |                     |  
|to net cash used in operating activities:                            |   |                                 |   |   |                    |   |   |                     |  
|Depreciation                                                         |   | 9,431                           |   |   | 14                 |   |   | 10,103              |  
|Write-off of mineral rights                                          |   | -                               |   |   | -                  |   |   | 14,000              |  
|Consulting
      accrual                                             |   | -                               |   |   | -                  |   |   | 15,000              |  
|Stock based expenses                                                 |   | 34,705                          |   |   | 6,817              |   |   | 136,022             |  
|Changes in operating assets and liabilities:                         |   |                                 |   |   |                    |   |   |                     |  
|Prepaid expenses                                                     |   | (74,016                         | ) |   | (207,700           | ) |   | (224,039            | )
|Other assets                                                         |   | -                               |   |   | (2,200             | ) |   | (2,200              | )
|Reclamation deposit                                                  |   | (28,762                         | ) |   | (807,000           | ) |   | (849,762            | )
|Mineral
      property acquisition costs                             |   | (188,791                        | ) |   | (500,000           | ) |   | (1,022,663          | )
|Accounts payable and accrued
      liabilities                       |   | 79,751                          |   |   | 198,689            |   |   | 273,296             |  
|Deferred
      income taxes                                          |   | (942,138                        | ) |   | -                  |   |   | (942,138            | )
|                                                                     |   |                                 |   |   |                    |   |   |                     |  
|Net cash used in operating activities                                |   | (3,053,186                      | ) |   | (2,810,700         | ) |   | (7,077,196          | )
|                                                                     |   |                                 |   |   |                    |   |   |                     |  
|CASH FLOW FROM INVESTING ACTIVITIES                                  |   |                                 |   |   |                    |   |   |                     |  
|Purchase of property and equipment                                   |   | (1,657,682                      | ) |   | (800               | ) |   | (1,877,454          | )
|                                                                     |   |                                 |   |   |                    |   |   |                     |  
|Net cash used in investing activities                                |   | (1,657,682                      | ) |   | (800               | ) |   | (1,877,454          | )
|                                                                     |   |                                 |   |   |                    |   |   |                     |  
|CASH FLOW FROM FINANCING ACTIVITIES                                  |   |                                 |   |   |                    |   |   |                     |  
|Proceeds from stock issuance                                         |   | 1,000                           |   |   | 12,387,475         |   |   | 13,239,750          |  
|Stock issuance costs                                                 |   | -                               |   |   | (201,110           | ) |   | (243,653            | )
|Proceeds from borrowings from related
      party                    |   | -                               |   |   | 1,500              |   |   | 8,290               |  
|                                                                     |   |                                 |   |   |                    |   |   |                     |  
|Net cash provided by financing activities                            |   | 1,000                           |   |   | 12,187,865         |   |   | 13,004,387          |  
|                                                                     |   |                                 |   |   |                    |   |   |                     |  
|NET CHANGE IN CASH                                                   |   | (4,709,868                      | ) |   | 9,376,365          |   |   | 4,049,737           |  
|                                                                     |   |                                 |   |   |                    |   |   |                     |  
|CASH AT BEGINNING OF PERIOD                                          |   | 8,759,605                       |   |   | 11,633             |   |   | -                   |  
|                                                                     |   |                                 |   |   |                    |   |   |                     |  
|CASH AT END OF PERIOD                                                | $ | 4,049,737                       |   | $ | 9,387,998          |   | $ | 4,049,737           |  
|                                                                     |   |                                 |   |   |                    |   |   |                     |  
|                                                                     |   |                                 |   |   |                    |   |   |                     |  
|                                                                     |   |                                 |   |   |                    |   |   |                     |  
|SUPPLEMENTAL INFORMATION                                             |   |                                 |   |   |                    |   |   |                     |  
|                                                                     |   |                                 |   |   |                    |   |   |                     |  
|Interest Paid                                                        | $ | -                               |   | $ | -                  |   | $ | -                   |  
|                                                                     |   |                                 |   |   |                    |   |   |                     |  
|Income Taxes Paid                                                    | $ | -                               |   | $ | -                  |   | $ | -                   |  
|                                                                     |   |                                 |   |   |                    |   |   |                     |  
|Non-cash investing and financing activities:                         |   |                                 |   |   |                    |   |   |                     |  
|                                                                     |   |                                 |   |   |                    |   |   |                     |  
|Assets acquired for common stock issued
      for mineral properties | $ | 21,359,351                      |   | $ | -                  |   | $ | 21,359,351          |  
|                                                                     |   |                                 |   |   |                    |   |   |                     |  
|Net deferred tax liability assumed                                   | $ | 10,261,194                      |   | $ | -                  |   | $ | 10,261,194          |  

See Accompanying Notes to these Consolidated Financial
  Statements 
  5

---

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
      SIGNIFICANT POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Basis of presentation The accompanying unaudited
      financial statements have been prepared in accordance with Securities and
      Exchange Commission requirements for interim financial statements.
      Therefore, they do not include all of 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, 2007 of
      Ireland Inc. (the Company).                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The interim financial statements present the balance
      sheets, statements of operations and cash flows of the Company. The
      financial statements have been prepared in accordance with accounting
      principles generally accepted in the United States.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | These financial statements have been prepared by the
      Company without audit, and include all adjustments (which consist solely
      of normal recurring adjustments) which, in the opinion of management, are
      necessary for a fair presentation of financial position and results of
      operations. Certain information and 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 financial statements
      be read in conjunction with the Companys audited financial statements and
    the notes thereto for the year ended December 31, 2007.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | 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
      a 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 of $4,484,815
      from operations as of September 30, 2008, 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 in the event the
      Company cannot continue in existence.                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Principles of consolidation The consolidated
      financial statements include the accounts of the Company and its
      wholly-owned subsidiary incorporated for the sole purpose of completing an
      acquisition, CBI Acquisition, Inc. (CBIA). CBIA was formed on December 19,
      2007. CBIA has a wholly-owned single-member LLC subsidiary Columbus Salt
      Marsh LLC (CSM). Rand Metals LLC (Rand) was formed by the Company on May
      1, 2008 for purposes of potential future acquisitions and has activity
      related to exploration of the Red Mountain
      Project.                                                                                                                                                                                                                                                    

6

---

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
      SIGNIFICANT POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Exploration costs- Mineral exploration costs are
      expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Mineral rights- The Company capitalizes
      acquisition and option costs of mineral property rights. The amount
      capitalized represents fair value at the time the mineral rights were
      acquired.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company capitalizes acquisition and option costs of
      mineral rights as tangible assets in accordance with Emerging Issues Task
      Force abstract 04-02 (EITF 04-02), Whether Mineral Rights are Tangible
      or Intangible Assets and Related Issues. Upon commencement of production,
      the mineral rights will be amortized using the unit-of-production method
      over the life of the mineral rights. If the Company does not continue with
      exploration after the completion of the feasibility study, the mineral
      rights will be expensed at that time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Mineral property acquisition costs Costs of
      acquiring mining properties are capitalized upon acquisition. Mine
      development costs incurred either to develop new ore deposits, expand the
      capacity of mines, or to develop mine areas substantially in advance of
      current production are also capitalized once proven and probable reserves
      exist and the property is a commercially mineable property. Costs incurred
      to maintain current production or to maintain assets on a standby basis
      are charged to operations. Costs of abandoned projects are charged to
      operations upon abandonment. The Company evaluates the carrying value of
      capitalized mining costs and related property and equipment costs, to
      determine if these costs are in excess of their recoverable amount
      whenever events or changes in circumstances indicate that their carrying
      amounts may not be recoverable. The periodic evaluation of carrying value
      of capitalized costs and any related property and equipment costs are
      based upon expected future cash flows and/or estimated salvage value in
      accordance with Statement of Financial Accounting Standards (SFAS) No.
      144, Accounting for Impairment or Disposal of Long-Lived
      Assets.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Property and equipment Property and equipment is
      stated at cost less accumulated depreciation. Depreciation is provided
      principally on the straight-line or unit-of-production methods, as
      applicable, over the estimated useful lives of the assets, which are
      generally 3 to 39 years. The cost of repairs and maintenance is charged to
      expense as incurred. Expenditures for property betterments and renewals
      are capitalized. Upon sale or other disposition of a depreciable asset,
      cost and accumulated depreciation are removed from the accounts and any
      gain or loss is reflected in other income (expense).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company periodically evaluates whether events and
      circumstances have occurred that may warrant revision of the estimated
      useful life of property and equipment or whether the remaining balance of
      property and equipment should be evaluated for possible impairment. If
      events and circumstances warrant evaluation, the Company uses an estimate
      of the related undiscounted cash flows over the remaining life of the
      property and equipment in measuring their recoverability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Impairment of long-lived assets The Company
      reviews and evaluates long-lived assets for impairment when events or
      changes in circumstances indicate the related carrying amounts may not be
      recoverable. The assets are subject to impairment consideration under SFAS
      No. 144 if events or circumstances indicate that their carrying amount
      might not be recoverable. As of September 30, 2008 exploration progress on
      these properties is on target with the Companys exploration and
      evaluation plan and no events or circumstances have happened to indicate
      the related carrying values of the properties may not be recoverable. When
      the Company determines a SFAS 144 impairment analysis should be done, the
      analysis will be performed using the rules of EITF 04-03, Mining Assets: Impairment
      and Business Combinations.                                                                                                                                                                                                                                                                                                                                                                                                                            

7

---

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
      SIGNIFICANT POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Various factors could impact our ability to achieve
      forecasted production schedules. Additionally, commodity prices, capital
      expenditure requirements and reclamation costs could differ from the
      assumptions the Company may use in cash flow models used to assess
      impairment. The ability to achieve the estimated quantities of recoverable
      minerals from exploration stage mineral interests involves further risks
      in addition to those factors applicable to mineral interests where proven
      and probable reserves have been identified, due to the lower level of
      confidence that the identified mineralized material can ultimately be
      mined economically.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Material changes to any of these factors or assumptions
      discussed above could result in future impairment charges to
      operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Asset retirement obligation- The Company has
      adopted Statement of Financial Accounting Standards No. 143 (SFAS 143),
      Accounting for Asset Retirement Obligations, which requires that an
      asset retirement obligation (ARO) associated with the retirement of a
      tangible long-lived asset be recognized as a liability in the period in
      which it is incurred and becomes determinable, with an offsetting increase
      in the carrying amount of the associated asset. The cost of the tangible
      asset, including the initially recognized ARO, is depleted, such that the
      cost of the ARO is recognized over the useful life of the asset. The ARO
      is recorded at fair value, and accretion expense is recognized over time
      as the discounted liability is accreted to its expected settlement value.
      The fair value of the ARO is measured using expected future cash flow,
      discounted at the Companys credit-adjusted risk- free interest rate. To
      date, no significant asset retirement obligation exists due to the early
      stage of exploration. Accordingly, no liability has been
      recorded.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Environmental protection and reclamation costs-
      The operations of the Company have been, and may in the future be affected
      from time to time in varying degrees by changes in environmental
      regulations, including those for future removal and site restoration
      costs. Both the likelihood of new regulations and their overall effect
      upon the Company may vary from region to region and are not
      predictable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Environmental expenditures that relate to ongoing
      environmental and reclamation programs are charged against statements of
      operations as incurred or capitalized and amortized depending upon their
      future economic benefits. The Company does not currently anticipate any
      material capital expenditures for environmental control facilities because
      its property holding is at an early stage of exploration.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Fair value of financial instruments The
      Companys financial instruments consist of accounts payable and accrued
      liabilities. The carrying value of these financial instruments
      approximates their fair value based on their liquidity or their short-term
      nature. The Company is not exposed to significant interest or credit risk
      arising from these financial instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Revenue recognition- Revenues are recognized
      during the period in which the revenues are earned. Costs and expenses are
      recognized during the period in which they are incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Use of estimates- The preparation of financial
      statements in conformity with generally accepted accounting principles
      requires management to make estimates and assumptions that affect the
      reported amounts of assets and liabilities, and disclosure of contingent
      assets and liabilities at the date of the financial statements, and the
      reported amounts of revenues and expenses for the reporting period. Actual
      results could differ from these estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

8

---

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
      SIGNIFICANT POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Earnings (loss) per share- The Company follows
      SFAS No. 128, Earnings Per Share and SFAS No. 150, Accounting for
      Certain Financial Instruments with Characteristics of Both Liabilities and
      Equity, which establish standards for the computation, presentation and
      disclosure requirements for basic and diluted earnings per share for
      entities with publicly-held common shares and potential common stock
      issuances. Basic earnings (loss) per share are computed by dividing net
      income by the weighted average number of common shares outstanding. In
      computing diluted earnings per share, the weighted average number of
      shares outstanding is adjusted to reflect the effect of potentially
      dilutive securities, such as stock options and warrants. Common stock
      equivalent shares are excluded from the computation if their effect is
      antidilutive. Weighted average of common stock equivalents, which include
      stock options and warrants to purchase common stock, on September 30, 2008
      and December 31, 2007 that were not included in the computation of diluted
      EPS because the effect would be antidilutive were 18,372,900 and
      6,694,521, respectively.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Expenses of offering- The Company accounts for
      specific incremental costs directly to a proposed or actual offering of
      securities as a direct charge against the gross proceeds of the
      offering.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Income taxes The Company accounts for income
      taxes under SFAS No. 109, Accounting for Income Taxes using the
      liability method, recognizing certain temporary differences between the
      financial reporting basis of the Companys liabilities and assets and the
      related income tax basis for such liabilities and assets. This method
      generates either a net deferred income tax liability or asset for the
      Company, as measured by the statutory tax rates in effect. The Company
      derives its deferred income tax provision or benefit by recording the
      change in either the net deferred income tax liability or asset balance
      for the year. The Company records a valuation allowance against any
      portion of those deferred income tax assets when it believes, based on the
      weight of available evidence, it is more likely than not that some portion
      or all of the deferred income tax will not be realized.                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | On July 13, 2006, the FASB issued interpretation No. 48,
      Accounting for Uncertainty in Income Taxes  An Interpretation of FASB
      Statement No. 109 (FIN 48). FIN 48 clarifies the accounting for
      uncertainty in income taxes recognized in an entitys financial statements
      in accordance with SFAS No. 109, and prescribes a recognition threshold
      and measurement attributes for financial statement disclosure of tax
      positions taken or expected to be taken on a tax return. Under FIN 48, the
      impact of an uncertain income tax position on the income tax return must
      be recognized at the largest amount that is more-likely-than-not to be
      sustained upon audit by the relevant taxing authority. An uncertain income
      tax position will not be recognized if it has less than 50% likelihood of
      being sustained. Additionally, FIN 48 provides guidance on de-recognition,
      classification, interest and penalties, accounting in interim periods, and
      disclosure and transition. The Company adopted the provision of FIN 48 on
      January 1, 2007, which did not have any impact on the consolidated
      financial statements.                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | For acquired properties, that do not constitute a
      business as defined in EITF 98-03 Determining Whether a Nonmonetary
      Transaction Involves Receipt of Productive Assets or of a Business,
      deferred income tax liability is recorded on GAAP basis over income tax
      basis using statutory federal and state rates. The resulting estimated
      future federal and state income tax liability associated with the
      temporary difference between the acquisition consideration and the tax
      basis is computed in accordance with EITF 98-11 and SFAS 109, and is
      reflected as an increase to the total purchase price which is then applied
      to the underlying acquired assets in the absence of there being a goodwill
      component associated with the acquisition transactions in accordance with
      EITF 98-11 and SFAS 109.                                                                                                                                                                                                                                                                                                                                                                                             

9

---

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
      SIGNIFICANT POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Stock-based compensation- On December 16, 2004,
      the FASB issued SFAS No. 123R, Share- Based Payment, which replaces SFAS
      No. 123, Accounting for Stock-Based Compensation and supersedes APB
      Opinion No. 25, Accounting for Stock Issued to Employees. SFAS No. 123R
      requires all share-based payments to employees, including grants of
      employee stock options, to be recognized in the financial statements based
      on the grant date fair value of the award. Under SFAS No. 123R, the
      Company must determine the appropriate fair value model to be used for
      valuing share-based payments, the amortization method for compensation
      cost and the transition method to be used at date of adoption. The
      transition methods include prospective and retroactive adoption option.
      Under the retroactive option, prior periods may be restated either as of
      the beginning of the year of adoption or for all periods presented. The
      prospective method requires that compensation expense be recorded for all
      unvested stock options and restricted stock at the beginning of the first
      quarter of adoption of SFAS No. 123R, while the retroactive methods would
      record compensation expense for all unvested stock options and restricted
      stock beginning with the first period restated. The Company adopted the
      requirements of SFAS No. 123R for the fiscal year beginning after December
      31, 2004.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | New accounting pronouncements The FASB issued
      FASB Staff Position (FSP) FAS 157-3, Determining the Fair Value of a
      Financial Asset When the Market for that Asset Is Not Active. The FSP
      clarifies the application of FASB Statement No. 157, Fair Value
      Measurements, in a market that is not active and provides an example to
      illustrate key considerations in determining the fair value of a financial
      asset when the market for that financial asset is not active. The FSP is
      effective October 10, 2008, and for prior periods for which financial
      statements have not been issued. Revisions resulting from a change in the
      valuation technique or its application should be accounted for as a change
      in accounting estimate following the guidance in FASB Statement No. 154,
      Accounting Changes and Error Corrections. However, the disclosure
      provisions in Statement 154 for a change in accounting estimate are not
      required for revisions resulting from a change in valuation techniques or
      its application. The Company has determined that the adoption of this
      statement will have little or no effect on the Companys consolidated
      financial position, results of operations, and disclosures.                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In May 2008, the FASB issued SFAS No. 162, Hierarchy of
      Generally Accepted Accounting Principles. This statement is intended to
      improve financial reporting by identifying a consistent framework, or
      hierarchy, for selecting accounting principles to be used in preparing
      financial statements of nongovernmental entities that are presented in
      conformity with GAAP. This statement will be effective 60 days following
      the U.S. Securities and Exchange Commissions approval of the Public
      Company Accounting Oversight Board amendment to AU Section 411, The
      Meaning of Present Fairly in Conformity with Generally Accepted Accounting
      Principles. The Company is currently evaluating the potential impact, if
      any, of the adoption of SFAS 162 on its consolidated financial
      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In May 2008, the FASB issued FSP APB 14-1, Accounting
      for Convertible Debt Instruments That May Be Settled in Cash upon
      Conversion (Including Partial Cash Settlement). This FSP clarifies that
      convertible debt instruments that may be settled in cash upon conversion
      (including partial cash settlement) are not addressed by the existing APB
      14. Additionally, this FSP specifies that issuers of such instruments
      should separately account for the liability and equity components in a
      manner that will reflect the entitys nonconvertible debt borrowing rate
      when interest cost is recognized in subsequent periods. This FSP is
      effective for financial statements issued for fiscal years beginning after
      December 15, 2008, and interim periods within those fiscal years. Early
      adoption is prohibited. The Company is currently evaluating the impact
      that FSP may have on the financial position, results of operations and
      cash flows of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

10

---

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
      SIGNIFICANT POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | On March 19, 2008, the FASB issued SFAS No. 161,
      Disclosures About Derivative Instruments and Hedging Activities. This
      statement is intended to improve financial reporting about derivative
      instruments and hedging activities by requiring enhanced disclosures. This
      statement is effective for financial statements issued for fiscal years
      and interim periods beginning after November 15, 2008, with early
      application encouraged. The Company is currently evaluating the impact
      that SFAS 161 will have on the consolidated financial
      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | In December 2007, the FASB issued SFAS No. 141(R),
      Business Combinations, which amends SFAS No. 141, and provides revised
      guidance for recognizing and measuring identifiable assets and goodwill
      acquired, liabilities assumed, and any noncontrolling interest in the
      acquiree. It also provides disclosure requirements to enable users of the
      financial statements to evaluate the nature and financial effects of the
      business combination. SFAS No. 141(R) is effective for the Companys
      fiscal year beginning January 1, 2009 and is to be applied prospectively.
      The Company is currently evaluating the potential impact of adopting this
      statement on the Companys consolidated financial position, results of
      operations or cash flows.                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | In December 2007, the FASB issued SFAS No. 160,
      Noncontrolling Interests in Consolidated Financial Statements - an
      amendment of ARB No. 51 which establishes accounting and reporting
      standards pertaining to ownership interests in subsidiaries held by
      parties other than the parent, the amount of net income attributable to
      the parent and to the noncontrolling interest, changes in a parents
      ownership interest, and the valuation of any retained noncontrolling
      equity investment when a subsidiary is deconsolidated. SFAS No. 160 also
      establishes disclosure requirements that clearly identify and distinguish
      between the interests of the parent and the interests of the
      noncontrolling owners. SFAS No. 160 is effective for the Companys fiscal
      year beginning January 1, 2009. The Company is currently evaluating the
      potential impact of adopting this statement on the Companys consolidated
      financial position, results of operations or cash flows.                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | In February 2007, the Financial Accounting Standards
      Board (FASB) issued SFAS No. 159, The Fair Value Option For Financial
      Assets And Financial Liabilities  Including An Amendment Of FASB
      Statement No. 115. This pronouncement permits entities to use the fair
      value method to measure certain financial assets and liabilities by
      electing an irrevocable option to use the fair value method at specified
      election dates. After election of the option, subsequent changes in fair
      value would result in the recognition of unrealized gains or losses as
      period costs during the period the change occurred. SFAS No. 159 becomes
      effective as of the beginning of the first fiscal year that begins after
      November 15, 2007, with early adoption permitted. However, entities may
      not retroactively apply the provisions of SFAS No. 159 to fiscal years
      preceding the date of adoption. The adoption of this statement had little
      or no effect on the Companys consolidated financial position, results of
      operations, and disclosures.

11

---

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

|2. | PROPERTY AND EQUIPMENT                                                                                 
|-- | -------------------------------------------------------------------------------------------------------
|   |                                                                                                        
|   | Property and equipment consisted of the following as of
      September 30, 2008 and December 31, 2007:

| |                               |   | September 30, |  |   | December 31, | 
| | ----------------------------- | - | ------------- |  | - | ------------ | 
| |                               |   | 2008          |  |   | 2007         | 
| |                               |   |               |  |   |              | 
| | Furniture and fixtures        | $ | 7,521         |  | $ | 2,698        | 
| | Computers and equipment       |   | 32,274        |  |   | 21,178       | 
| | Land                          |   | 30,000        |  |   | --           | 
| | Site equipment                |   | 7,500         |  |   | 7,500        | 
| | Vehicles                      |   | 23,595        |  |   | --           | 
| | Construction in progress:     |   |               |  |   |              | 
| | Building                      |   | 500,000       |  |   | --           | 
| | Site improvements             |   | 1,744,426     |  |   | 260,014      | 
| | Site equipment                |   | 681,186       |  |   | --           | 
| |                               |   |               |  |   |              | 
| |                               |   | 3,026,502     |  |   | 291,390      | 
| | Less accumulated depreciation |   | 10,103        |  |   | 672          | 
| |                               |   |               |  |   |              | 
| |                               | $ | 3,016,399     |  | $ | 290,718      | 

|   | Depreciation expense was $9,431 and $0 for the nine
      months ended September 30, 2008 and 2007, respectively.
|-- | -----------------------------------------------------------------------------------------------------------------
|   |                                                                                                                  
|3. | RECLAMATION BONDS                                                                                                
|   |                                                                                                                  
|   | Reclamation bonds consisted of the following as of
      September 30, 2008 and December 31, 2007:               

| |                   |   | September 30, |  |   | December 31, | 
| | ----------------- | - | ------------- |  | - | ------------ | 
| |                   |   | 2008          |  |   | 2007         | 
| |                   |   |               |  |   |              | 
| | Reclamation bonds | $ | 860,482       |  | $ | 807,000      | 

|   | During the nine months ended September 30, 2008, the
      Company acquired a reclamation bond of $24,720 in connection with the
      acquisition of CBI and $28,762 for financial guarantee.                                                                                                                            
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                           
|4. | MINERAL EXPLORATION PROPERTIES                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                           
|   | Ireland claim- On November 30, 2004, the Company
      entered into a mineral property purchase agreement to acquire a 100%
      undivided interest in one mineral claim located in the Yellow Pine Mining
      District in Clark County, Nevada, known as the Ireland Claim, for a total
      consideration of $6,000.
|   |                                                                                                                                                                                                                                                                                                                           
|   | The Company has not determined whether the mineral claim
      contains mineralized material and has consequently written off all mineral
      rights acquisition costs to operations during the previous financial
      periods.                                                                                       

12

---

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

|4. | MINERAL EXPLORATION PROPERTIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Columbus and Red Mountain projects- On March
      30, 2007, as amended August 8, 2007, the Company entered into an
      Assignment Agreement with Nanominerals Corp. (NMC) a Nevada corporation,
      to acquire two mineral property option interests, the first located in
      Esmeralda County, Nevada (the Columbus project) and the second located
      in San Bernardino County, California (the Red Mountain project). The
      assignments were completed on August 14, 2007.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Pursuant to the above assignment agreement, the Company
      issued 30,000,000 common shares to NMC and, in return, received a deed of
      assignment to the option interests in the Columbus Project and to the Red
      Mountain Project. The Company granted a 5% net smelter return royalty and
      has reimbursed $1,162,125 in documented fees and expenses to
      NMC.                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Upon assignment of the option rights, the Company assumed
      the terms of the underlying agreements to earn the respective interests in
      both properties.                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The mineral property options have been capitalized as
      tangible assets in accordance with Emerging Issues Task Force abstract
      04-02 and allocated in accordance with EITF 98-11. Valuation of $225,000
      is based on issuance of 30,000,000 shares at $0.0075 which was the share
      price at the time of the option assignment agreement.                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | At such time an option transaction is completed the
      option cost will continue to be included in the overall acquisition cost
      of the underlying mineral properties. If the Company does not complete an
      option transaction or the underlying mineral properties are considered
      impaired, the acquisition cost will be either written down or expensed at
      that time.                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|5. | COLUMBUS PROJECT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | On June 26, 2007, the Company paid $807,000 to the Bureau
      of Land Management as a bond for future reclamation work on the proposed
      Columbus Project. This payment was made pursuant to the underlying option
      agreement in anticipation of the completion of the transaction.                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Columbus project was subject to an underlying option
      agreement dated July 22, 2006. Under the terms of this agreement, to earn
      a 15% interest, the Company was required to pay $24,000 per month until
      December 31, 2007 and spend $3,000,000 on qualifying expenses by December
      31, 2007. These expenditures were satisfied as of December 31,
      2007.                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | As of December 31, 2007, the Company had earned a 15%
      operating interest in the Columbus project by satisfying the above terms
      of the agreement.                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | To earn a 100% interest in the Columbus project, the
      Company, after earning 15%, had the right to merge with the corporation
      holding the remaining 85% interest. To exercise the merger right, the
      Company issued shares of common stock with an aggregate value of
      $20,000,000 and issued share purchase warrants to purchase up to a further
      50% of the number of shares of common stock to be
      issued.                                                        

13

---

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

|5. | COLUMBUS PROJECT(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | On February 20, 2008, the Company, through its
      wholly-owned subsidiary CBIA, acquired a 100% interest in the Columbus
      Project, including an option for additional mining claims, by way of
      merger with the owner of the Columbus Project, Columbus Brine Inc. (CBI).
      Under the terms of the Merger Agreement, the Company issued an aggregate
      of 10,440,087 shares of its common stock, and 5,220,059 share purchase
      warrants to the former shareholders of CBI. Each share purchase warrant
      issued by the Company entitles the holder to purchase one additional share
      of the Companys common stock at a price of $2.39 per share for a period
      of 5 years. This acquisition supersedes the option agreement.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The following table reflects the recorded purchase
      consideration for the Columbus Project:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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


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

The following table reflects the
  components of the Columbus Project:

Allocation of acquisition cost:Mineral properties (including
        deferred tax liabilityassumed of
        $10,261,194)
      $
      31,639,422Property, plant and equipment
      
      511,061Deposits
      
      44,720Cash
      
      6,570Prepaid expenses
      
      24,925Accounts payable
      
      (6,153
      )Net assets acquired
      $
      32,220,545


14

---

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

|5. | COLUMBUS PROJECT(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | 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 as further discussed in Note 7.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company applied EITF 98-03 with regard to the
      acquisition of the Columbus Project. The Company determined that the
      acquisition of the Columbus Project did not constitute an acquisition of a
      business, as that term is defined in EITF 98-03, and the Company recorded
      the acquisition as a purchase of assets.                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company believes the acquisition of the Columbus
      Project was beneficial because it provides for 100% ownership of the
      properties and fosters greater opportunity to finance and further develop
      the project.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | This merger was treated as a statutory merger for tax
      purposes whereby, CBIA was the surviving merger entity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|6. | RED MOUNTAIN PROJECT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Red Mountain project is subject to an underlying
      option agreement dated March 15, 2007. Under the terms of this agreement,
      to earn a 60% interest, the Company is required to pay $5,000 per month
      until December 31, 2011 and spend an aggregate of $1,200,000 in additional
      qualifying expenditures by December 31, 2011.                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company may at any time during the life of the Red
      Mountain project, earn a 100% interest, by paying $100,000, issuing shares
      of common stock with an aggregate value of $1,400,000 and issuing share
      purchase warrants to purchase up to an additional 25% of the number of
      shares of common stock to be issued. If the project achieves commercial
      production, the Company will be required to pay an additional $100,000,
      issue shares of common stock with an aggregate value of $2,400,000 and
      issue share purchase warrants to purchase up to an additional 25% of the
      number of shares of common stock to be issued.                                         

15

---

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

|7. | STOCKHOLDERS EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | During the nine months ended September 30, 2008, the
      Companys stockholders equity activity consisted of the
      following:                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Warrants associated with the 2008 equity issuances do not
      constitute a registration payment arrangement.                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The value of the warrants issued in connection with the
      CBI acquisition option contain a cashless exercise provision and are
      callable by the Company based upon certain conditions which are defined in
      Note 5 related to the acquisition. The fair market valuation of the
      warrants was computed using the binomial lattice method and were allocated
      to the acquisition cost of the project. The fair market value of the
      warrants was computed based on the following
      assumptions:

Dividend yield
      --Expected volatility
      54.61%Risk-free interest rate
      3.02%Suboptimal exercise factor (call price)
      1.5 timesImputed life (years)
      4.88


|8. | STOCK OPTION PLAN AND WARRANTS                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | On March 27, 2007, the Board of Directors adopted the
      2007 Stock Incentive Plan (the Plan). Under the terms of the Plan,
      options to purchase up to 6,000,000 shares of the common stock of the
      Company, subject to an increase each quarter equal to 15% of the increase
      in the total number of outstanding shares during the previous quarter, may
      be granted to officers, directors, employees and eligible
      consultants.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | During the nine months ended September 30, 2008, the
      Company granted stock options as follows:                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                              

Expenses for the nine months ended
  September 30, 2008 and 2007 related to the granting and vesting of stock options
  were $34,705 and $0, respectively and are included in general and administrative
  expense.

Stock options  During the nine
  months ended September 30, 2008, the Company granted stock options to a director
  totaling 100,000 with a weighted average exercise price of $1.60 per share.

Subsequent to September 30, 2008, on
  November 4, 2008 a director of the Company provided a notice of immediate
  resignation. As a result of the resignation, the options granted to the director
  that were unvested as of the date of resignation were forfeited. The Company
  accounted for the impact of the forfeiture under SFAS 123R. As a result of the
  resignation, the Company adjusted estimated forfeitures and reduced the expense
  recognized related to vesting of stock options by $22,012.

16

---

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

|8. | STOCK OPTION PLAN AND WARRANTS(continued)
|-- | -----------------------------------------

As of September 30, 2008 stock options
  outstanding totaled 3,979,719 with a weighted average exercise price of $0.16
  per share.

On June 27, 2008, the Company extended
  the term of stock options previously issued to a nonemployee former shareholder
  of CBI for 79,719 shares of common stock for an additional 2 years. The Company
  accounted for the impact of the amended stock option grant as a stock option
  modification under SFAS 123R. As a result of modification, the Company
  recognized $19,935 of additional acquisition cost of CBI due to the increase in
  the fair market value of this stock option grant that was recorded as a
  reduction of accrued acquisition costs.

The following table summarizes the
  Companys stock option activity for the nine months ended September 30, 2008:

| |                             |  | Number of |   |   | Weighted       | 
| | --------------------------- |  | --------- | - | - | -------------- | 
| |                             |  | Shares    |   |   | Average        | 
| |                             |  |           |   |   | Exercise Price | 
| | Balance, December 31, 2007  |  | 3,895,000 |   | $ | 0.13           | 
| | Granted and assumed         |  | 179,719   |   |   | 1.49           | 
| | Expired                     |  | --        |   |   | --             | 
| | Forfeitures                 |  | (75,000   | ) |   | 1.60           | 
| | Exercised                   |  | (20,000   | ) |   | 0.05           | 
| |                             |  |           |   |   |                | 
| | Balance, September 30, 2008 |  | 3,979,719 |   | $ | 0.16           | 

The Company estimated the fair value
  of options granted prior to March 31, 2007 using the Black-Scholes option
  pricing model. The Company now utilizes the Binomial lattice pricing model to
  estimate the fair value of options granted. The Company believes this model
  provides the best estimate of fair value due to its ability to incorporate
  inputs that change over time, such as volatility and interest rates, and to
  allow for actual exercise behavior of option holders. The Company has used the
  same assumptions within each of the pricing models utilized to estimated the
  fair value of the options granted as follows:

2008
      2007Dividend yield
      --
      --Expected volatility
      56.13%
      56.13% to 120.24%Risk-free interest rate
      2.65% to 2.95%
      3.62% to 4.05%Expected life (years)
      2 to 6 years
      2 to 10


The Company estimates expected
  volatility using representative peer group average, because of limited
  historical equity transactions of the Company. 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.

17

---

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

|8. | STOCK OPTION PLAN AND WARRANTS(continued)                                                                                                                                   
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                             
|   | The following table summarizes the status of the
      Companys unvested shares as of September 30, 2008 and changes during the
      nine months ended September 30, 2008:

| |                                    |  | Number of |   |   | Weighted Average | 
| | ---------------------------------- |  | --------- | - | - | ---------------- | 
| |                                    |  | Shares    |   |   | Grant Date       | 
| |                                    |  |           |   |   | Fair
      Value | 
| | Unvested, January 1, 2008          |  | 75,000    |   | $ | 0.52             | 
| | Granted                            |  | 75,000    |   |   | 0.56             | 
| | Vested                             |  | (37,500   | ) |   | 0.52             | 
| | Forfeitures                        |  | (75,000   | ) |   | 0.56             | 
| |                                    |  |           |   |   |                  | 
| | Unvested,
      September 30, 2008 |  | 37,500    |   | $ | 0.52             | 

As of September 30, 2008, there was
  $9,405 of total unrecognized compensation cost related to unvested stock
  options. This cost is expected to be recognized as follows: 2008  $2,568 and
  2009 - $6,837.

The following table summarizes
  information about options granted during the nine months ended September 30,
  2008:

Exercise PriceEquals, ExceedsOr
      WeightedNumber of Options
      Is Less than Mkt.
      Average
      Range of
      WeightedGranted
      Price of Stock
      Exercise
      Exercise
      Average FairDuring 2008
      On Grant Date
      Price
      Price
      Value--
      Equals
      $                  
         --
      $    -- 
        to  $    --
      $                  
         --179,719
      Exceeds
      $               
        1.49
      $ 1.36 to $1.60
      $               
        0.31--
      Less Than
      $                  
         --
      $    --  to  $  
         --
      $                  
         --179,719
      Exceeds
      $                1.49
      $1.36 to $1.60
      $               
        0.31


Stock options/warrants  During
  the nine months ended September 30, 2008 the Company granted stock warrants
  related to common stock issued in connection with the CBI acquisition totaling
  5,220,059 with an exercise price of $2.39 per share for a period of 5 years.
  These share purchase warrants also contain additional material terms, as
  described in Note 5.

18

---

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

|8. | STOCK OPTION PLAN AND WARRANTS(continued)                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                       
|   | The following table summarizes information about
      options/warrants granted during the nine months ended September 30,
      2008:

| |                                      |  | Number of  |   |   | Weighted       | 
| | ------------------------------------ |  | ---------- | - | - | -------------- | 
| |                                      |  | Shares     |   |   | Average        | 
| |                                      |  |            |   |   | Exercise Price | 
| | Balance, December 31, 2007           |  | 14,055,650 |   | $ | 0.76           | 
| | Options/warrants granted and assumed |  | 5,399,778  |   |   | 2.36           | 
| | Options/warrants expired             |  | --         |   |   | --             | 
| | Options/warrants forfeitures         |  | (75,000    | ) |   | 1.60           | 
| | Options/warrants exercised           |  | (20,000    | ) |   | 0.05           | 
| |                                      |  |            |   |   |                | 
| | Balance, September 30, 2008          |  | 19,360,428 |   | $ | 1.20           | 

The Company estimated the fair value of
  warrants issued in connection with the acquisition of CBI using Binomial lattice
  pricing model. The following assumptions were used to value these warrants:

Dividend yield
      --Expected volatility
      54.61%Risk-free interest rate
      3.02%Expected life (years)
      5Suboptimal exercise factor
      1.5


The Company estimates expected
  volatility using representative peer group average, because of limited
  historical equity transactions of the Company. 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.

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 at
      September 30, 2008 and 2007,                                               

| |                                                             |   | September 30, |   |   | September 30, |  
| | ----------------------------------------------------------- | - | ------------- | - | - | ------------- | -
| |                                                             |   | 2008          |   |   | 2007          |  
| |                                                             |   |               |   |   |               |  
| | Income tax benefit per financial statements                 | $ | (1,012,093    | ) | $ | (509,769      | )
| | Non-deductible and other                                    |   | 5,521         |   |   | --            |  
| | Change in valuation allowance                               |   | (719,144      | ) |   | 509,769       |  
| | Rate change                                                 |   | (22,419       | ) |   | --            |  
| | Release of valuation allowance related to
      acquisition |   | 805,997       |   |   | --            |  
| |                                                             |   |               |   |   |               |  
| | Income tax benefit                                          | $ | (942,138      | ) | $ | --            |  

Significant components of the
  Companys net deferred income tax assets and liabilities at September 30, 2008
  and December 31, 2007 were as follows:

| |                                   |   | September 30, |   |   | December 31, |  
| | --------------------------------- | - | ------------- | - | - | ------------ | -
| |                                   |   | 2008          |   |   | 2007         |  
| | Deferred income tax assets:       |   |               |   |   |              |  
| |                                   |   |               |   |   |              |  
| | Net operating loss carryforward   | $ | 1,748,135     |   | $ | 727,864      |  
| | Option compensation               |   | 47,608        |   |   | 34,448       |  
| |                                   |   |               |   |   |              |  
| | Gross deferred income tax asset   |   | 1,795,743     |   |   | 762,312      |  
| | Valuation allowance               |   | (43,096       | ) |   | (762,240     | )
| |                                   |   |               |   |   |              |  
| |                                   |   | 1,752,647     |   |   | 72           |  
| | Deferred income tax liabilities:  |   |               |   |   |              |  
| |                                   |   |               |   |   |              |  
| | Property, plant & equipment       |   | 4,512         |   |   | 72           |  
| | Acquisition related liabilities   |   | 11,067,191    |   |   | --           |  
| |                                   |   |               |   |   |              |  
| | Net deferred income tax liability | $ | 9,319,056     |   | $ | --           |  

A valuation allowance for deferred tax
  related to option compensation was established for net deferred tax assets not
  allocated to offset acquisition related deferred tax liabilities due to the
  uncertainty of realizing these deferred tax assets based on conditions existing
  at September 30, 2008 and December 31, 2007.

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

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

20

---

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

|9.  | INCOME TAXES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The Company had cumulative net operating losses of
      approximately $4,994,670 and $2,140,776 as of September 30, 2008 and
      December 31, 2007, respectively for federal income tax purposes.
      Cumulative net operating losses from December 31, 2006 and previous years
      are effectively nil due to the annual limitation imposed by the Internal
      Revenue Code of 1986 as a result of the ownership percentage change
      limitations. The net operating loss carryforwards will be expiring between
      2027 and 2028.                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | As of January 1, 2007, the Company did not have any
      unrecognized tax benefits. The adoption of FIN 48 did not result in any
      cumulative effect adjustment to the January 1, 2007 balance of the
      Companys accumulated deficit. Upon adoption of FIN 48, the Company did
      not accrue for interest and penalties as there were no unrecognized tax
      benefits. If interest and penalties were to be assessed, we would charge
      interest to interest expense, and penalties to general and administrative
      expense. It is not anticipated that unrecognized tax benefits would
      significantly increase or decrease within 12 months of the reporting
      date.                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The Company and its subsidiary file income tax returns in
      the United States. These tax returns are subject to examination by
      taxation authorities provided the years remain open under the relevant
      statues of limitations, which may result in the payment of income taxes
      and/or decrease its net operating losses available for carryforwards.
      While the Company believes its tax filings do not include uncertain tax
      positions, the results of potential examinations or the effect of changes
      in tax law cannot be ascertained at this time. The Company currently has
      no tax years under examination.                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10. | PROPERTY RENTAL AGREEMENTS AND LEASES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The Company through its subsidiary CBIA has a lease
      agreement for mining claims with DDB Syndicate, an entity owned by related
      parties, including Douglas D.G. Birnie, Mr. Chizmar, three former officers
      and directors of CBI, Geotech Mining Inc., Jack Corp. and Wiser Corp.
      Geotech Mining Inc., Jack Corp. and Wiser Corp. are affiliates of
      Nanominerals Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The DDB Syndicate has leased the DDB Claims to CSM, a
      wholly owned subsidiary of the Company. The mining lease agreement (the
      DDB Agreement), between the DDB Syndicate and CSM, provide CSM with a
      lease, extending for approximately 5 years, with an option to purchase the
      DDB Claims at any time during the lease period. To maintain the lease
      rights, CSM must pay the DDB Syndicate $130,000 by June 30, 2008, with
      annual rental payments thereafter of $30,000 per year, payable on June 30,
      2009, 2010, and 2011 respectively. CSM may exercise its option to purchase
      the DDB Claims by paying a purchase price of $400,000, less any rental
      payments made by CSM prior to exercising the option, or paying the DDB
      Syndicate $10, plus the grant of a 2% royalty of net smelter returns on
      the DDB Claims.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The following table summarizes the rental payments under
      the mining lease agreement:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

June 30, 2009
      
      
      
      $
      30,000June 30, 2010
      
      
      
      
      30,000June 30, 2011
      
      
      
      
      30,000$
      90,000


The Company has made $130,000 in rental
  payments during the nine months ended September 30, 2008, which consists of
  $13,416 in payments to each of the eight owners of DDB Syndicate including
  reimbursement of expenses of $22,670 to a company controlled by Douglas D.G.
  Birnie.

21

---

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

|11. | COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|    | Lease obligations The Company rents office space
      in Henderson, Nevada. The lease terms expired on September 1, 2007 and the
      Company continues to rent the existing space under month-to-month terms
      for $4,325 per month.                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|    | Rental expense, resulting from this operating lease
      agreement, approximates $32,550 and $2,200 for the nine months ended
      September 30, 2008 and 2007, respectively.                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|12. | CONCENTRATION OF CREDIT RISK                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|    | Financial instruments that potentially subject the
      Company to concentration of credit risk consist of cash investments. The
      Company places its temporary cash investments with two financial
      institutions. Cash accounts at these financial institutions are insured by
      the Federal Deposit Insurance Corporation for up to $250,000 per financial
      institution.
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|13. | CONCENTRATION OF ACTIVITY                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|    | For the nine months ended September 30, 2008, the Company
      purchased services from two major vendors Arrakis, Inc. and Boart Longyear
      that exceeded more than 10% of total purchases and amounted to
      approximately $1,060,032 and $702,314, respectively.                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|14. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|    | During the nine months ended September 30, 2008, the
      Company utilized the services of NMC to provide technical and financing
      related activities. These services related primarily to the Columbus
      project and the Red Mountain project.                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|    | In addition to the above fees, NMC provided dedicated use
      of its laboratory, instrumentation, milling equipment and research
      facilities. NMC provided invoices for these fees plus expenses.                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|    | For the nine months ended September 30, 2008, the Company
      incurred total fees and reimbursements of expenses to NMC of $315,000 and
      $20,181, respectively, for a total of $335,181.                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|    | At September 30, 2008, the Company had an outstanding
      balance due to NMC of $111,459. The Company also had an outstanding
      balance for accrued compensation to Mr. Birnie, its executive officer of
      $9,000, payable to a company wholly owned by Mr. Birnie. Accounts payable
       related party totaled $120,459 as of September 30, 2008.                              
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|    | The company has the mining claim lease for the DDB Claims
      as further discussed in Note 10.                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|15. | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|    | On October 31, 2008, the Company extended the term of the
      options granted to certain of the Companys officers, directors and
      consultant for an additional 3 years. Other than extending the term for
      which the options granted may be exercised by the respective optionees, no
      other amendments were made.                                                         

22

---

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 an exploration stage company engaged in the acquisition
and exploration of mineral properties.

On February 20, 2008, we completed the acquisition of Columbus
Brine Inc. (CBI). A detailed description of our acquisition of CBI is provided
in our Annual Report on Form 10-K for the year ended December 31, 2007.

As a result of our acquisition of CBI, we now own 100% of a
mineral project located in Esmeralda County, Nevada, near Tonopah, that we call
the Columbus Project. As part of the acquisition of CBI, we also acquired
CBIs rights under a mining lease agreement covering an additional 23,500 acres
located in the same area as the Columbus Project that we call the DDB Claims.
The mining lease agreement for the DDB Claims includes an option to acquire a
100% interest in the DDB Claims. Title to the DDB Claims is held by a mining
syndicate known as the DDB Syndicate. Each of Douglas D.G. Birnie, our
President, Chief Executive Officer and a member of our Board of Directors, and
Lawrence E. Chizmar, Jr., a former member of our Board of Directors (and a
former director of CBI), is the owner of a 1/8 interest in the DDB Syndicate.
The remaining 6/8 interests in the DDB Syndicate are owned by former officers,
directors and affiliates of CBI, and certain affiliates of Nanominerals Corp.
(Nanominerals). Nanominerals is our principal shareholder.

In addition to the Columbus Project, we have an interest in a
  mineral project located in San Bernardino County and Kern County, California
  that we refer to as the Red Mountain Project. In addition, we own a 100% interest
  in a mineral claim located in Clark County, Nevada that we refer to as the Ireland
  Claim.

RECENT CORPORATE DEVELOPMENTS

The following significant developments have occurred since the
end of our last fiscal quarter ended June 30, 2008:

|1. | In September 2008, we completed drilling on a 39-hole
      exploratory drilling program at the Columbus Project. Samples, which were
      collected in accordance with strict chain-of-custody parameters, have been
      delivered to two independent laboratories for analysis. The laboratories
      are expected to complete their analyses and submit their findings to the
      Company over the next few months.                                                              
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|2. | In October 2008, we completed the installation of, and
      commenced operations at, our pilot production plant located at the
      Columbus Project. The pilot production plant will be operated as part of
      our pre- feasibility program designed to evaluate the commercial
      feasibility of the Columbus Project. A diagram and description outlining
      the pilot production process for the Columbus Project is attached as an
      exhibit to this Quarterly Report.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|3. | On November 4, 2008, Lawrence E. Chizmar, Jr. resigned
      from our Board of Directors due to personal health reasons. There were no
      disagreements between us and Mr. Chizmar relating to our
  operations,                                                                                                                                                                                                                                                                       

3

---

policies, practices or otherwise. A
replacement to fill the vacancy in our Board caused by Mr. Chizmars resignation
has not yet been chosen.

PLAN OF OPERATION

During our 2008 fiscal year, we intend to proceed with our
exploration and development programs for the Columbus Project and the Red
Mountain Project. To provide Ireland with maximum financial flexibility, we have
adjusted our capital expenditure budget for 2008. Accordingly, we have elected
to postpone the drilling program at the Red Mountain Project. We continue to
believe that the Red Mountain Project is an excellent prospect for us.

Although we currently intend to retain the Ireland Claim, our
management has deprioritized our exploration program for the Ireland Claim based
on the progress and potential of the Columbus and Red Mountain Projects. As a
result, our exploration program for the Ireland Claim is expected to be delayed,
and may be delayed indefinitely.

The Columbus Project

Our exploration and development program for the Columbus
Project currently consists of the following:

|1. | Pilot Production Module: The installation of our
      pilot production plant at the Columbus Project was completed in October
      2008 and the pilot production plant is currently in operation. The pilot
      production process consists of a full scale production and processing
      circuit that we will use to test the commercial viability of the project.
      If the operation of this pilot production process proves to our
      satisfaction that the Columbus Project is economically viable, we will
      seek to expand the production process or construct additional production
      circuits within the mill site to increase production capacity. The
      production model for the Columbus Project is anticipated to be a low cost,
      high volume mining operation. A diagram and description outlining the
      pilot production process for the Columbus Project is attached as an
      exhibit to this Quarterly Report.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | We currently have a production permit from the Bureau of
      Land Management (the BLM) for the Columbus Project. The production
      permit allows us to produce calcium carbonate and extract precious
      minerals on the 320 acre mine site and 60 acres of mill sites claims
      located at the Columbus Project at a mine rate of up to 792,000 tons per
      year. The mine site and mill sites are located on the northern edge of the
      5,000 acre area of interest identified by our surface sampling
    program.                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | We plan to use a dredge mining method to extract minerals
      from the Columbus Project. The material will be mined and slurried to the
      project facility. Once the material has been slurried, we will use a
      gravity concentration process to filter the minerals from the material.
      The final extraction method will involve acid leaching to recover the
      minerals from the materials.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | We anticipate that we will continue to operate our pilot
      production plant on an ongoing basis unless our production process is
      proven to be commercially unviable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2. | Drilling Exploration Program: Drilling on our
      39-hole drilling program for the Columbus Project has been completed. The
      goal of this drilling program is to determine whether there are sufficient
      reserves on the Columbus Project for economic viability. In April 2008, we
      received approval from the BLM to conduct a 28-hole drill program on the
      Columbus Project. In July 2008, the BLM approved our application to
      increase the drill program to 39 holes. The holes were drilled to depths
      ranging from 150 feet to 400 feet in depth. The objective of the program
      is to determine the three dimensional extent and economic potential of the
      gold mineralization within the 5,000 acre area of interest previously
      discovered by our                                                                                                                                                        

4

---

surface sampling program. We have
completed drilling on all 39 holes and expect to receive the results of initial
sample analyses from independent laboratories within the next few months.

We anticipate spending approximately $943,525 on the above
exploration and development program for the Columbus Project in the last quarter
of 2008.

The Red Mountain Project

Our exploration and development program for the Red Mountain
Project currently consists of the following:

|1. | Comprehensive Project Report: A comprehensive
      project report on the Red Mountain Project has been prepared for us by an
      independent geological consultant. This report includes a review, summary
      and analysis of the mining history of the area and previous exploration
      work done on the project area. Based on the previous exploration work done
      on the region and on the specific project area, the consulting geologist
      recommended that additional exploration work be conducted on the Red
      Mountain Project. We expect the project report to be updated once our
      sampling program has been completed and the results of that program have
      been analyzed.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2. | Sampling and Drilling Program: We have initiated a
      surface sampling program on the Red Mountain Project. We have postponed
      the drilling program on the Red Mountain Project until we obtain
      additional financing. See Financing
Requirements.                                                                                                                                                                                                                                                                                                                                                                                                                                                     

We anticipate that we will spend approximately $106,700 on our
exploration program for the Red Mountain Project in the last quarter of 2008.

Cash Requirements

Our estimated expenses for the fourth quarter of 2008 are as
follows:

Columbus Project•  Drilling Exploration Program and Obtaining
        Reserve Estimates
    $ 250,500•  Plant Facility Upgrades and
        Operations
    602,750•  Permits
    4,500857,750•  Contingency (@ 10%)
    85,775Total for Columbus Project
    $ 943,525Red Mountain Project•  Property Acquisition and Maintenance
        Costs
    $ 22,500•  Sampling Exploration Program
    74,50097,000•  Contingency (@ 10%)
    9,700Total for Red Mountain Project
    $ 106,700General and Administration•  General and Administration
    325,250•  Contingency (@ 10%)
    32,525Total for General and Administration
    $ 357,775TOTAL Expenses
    $ 1,408,000Capital Expenditures
    $ 100,000Total Cash Expenditures
    $ 1,508,000


As of September 30, 2008, we had cash in the amount of
$4,049,737 and a working capital surplus of $3,723,513. Although this amount is
sufficient to meet the anticipated costs for our exploration and development

5

---

programs for the remainder of our 2008 fiscal year, the actual
costs of completing those programs may be greater than anticipated. If the
actual costs are significantly greater than anticipated or if we proceed with
our exploration and development programs beyond what we currently have planned
for the next twelve months, we will need to obtain additional financing. There
are no assurances that we will be able to obtain additional financing in an
amount sufficient to meet our needs or on terms that are acceptable to us.

RESULTS OF OPERATIONS

Three Months and Nine Months Summary

|                |   | Three
        Months Ended |   |   | Percentage |   |  | Nine
        Months Ended |  |   | Percentage |  
|--------------- | - | -------------------------- | - | - | ---------- | - |  | ------------------------- |  | - | ---------- | -
|                |   | September
        30,      |   |   | Increase / |   |  | September
        30,     |  |   | Increase / |  
|                |   | 2008                       |   |   | 2007       |   |  | (Decrease)                |  |   | 2008       |  
|Revenue         | $ | -                          |   | $ | -          |   |  | n/a                       |  | $ | -          |  
|Operating       | $ | (1,134,200                 | ) | $ | (1,416,300 | ) |  | (19.9)%                   |  | $ | (3,011,532 | )
|Expenses        |   |                            |   |   |            |   |  |                           |  |   |            |  
|Interest Income | $ | 22,003                     |   | $ | 30,021     |   |  | (26.7)%                   |  | $ | 126,028    |  
|Income Tax      | $ | 392,966                    |   | $ | -          |   |  | n/a                       |  | $ | 942,138    |  
|Benefit         |   |                            |   |   |            |   |  |                           |  |   |            |  
|Net Loss        | $ | (719,231                   | ) | $ | (1,386,279 | ) |  | (48.1)%                   |  | $ | (1,943,366 | )

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 discover
commercially exploitable levels of mineral resources on our properties, or if
such resources are discovered, that we will be able to enter into commercial
production with respect to these mineral properties.

Operating Expenses

The major components of our operating expenses for the three
and nine months ended September 30, 2008 and 2007 consisted of the following:

|                        |   | Three
        Months Ended |  |   | Percentage |  |  | Nine
        Months Ended |    |   | Percentage | 
|----------------------- | - | -------------------------- |  | - | ---------- |  |  | ------------------------- | -- | - | ---------- | 
|                        |   | September
        30,      |  |   | Increase / |  |  | September
        30,     |    |   | Increase / | 
|                        |   | 2008                       |  |   | 2007       |  |  | (Decrease)                |    |   | 2008       | 
|Mineral exploration and | $ | 741,530                    |  | $ | 21,810     |  |  | 3,300.0%                  |    | $ | 1,569,299  | 
|evaluation expenses     |   |                            |  |   |            |  |  |                           |    |   |            | 
|Mineral exploration and |   | 111,459                    |  |   | 867,125    |  |  | (87.1)%                   |    |   | 465,181    | 
|evaluation expenses    |   |                            |  |   |            |  |  |                           |    |   |            | 
|related party           |   |                            |  |   |            |  |  |                           |    |   |            | 
|General and             |   | 262,225                    |  |   | 62,851     |  |  | 317.2%                    |    |   | 901,621    | 
|administrative          |   |                            |  |   |            |  |  |                           |    |   |            | 
|Depreciation            |   | 3,986                      |  |   | 14         |  |  | 28,371.4%                 |    |   | 9,431      | 
|                        |   |                            |  |   |            |  |  |                           |    |   |            | 
|Mineral and property    |   | 15,000                     |  |   | 169,500    |  |  | (91.2)%                   |    |   | 66,000     | 
|holding costs           |   |                            |  |   |            |  |  |                           |    |   |            | 
|Mineral and property    |   | -                          |  |   | 295,000    |  |  | n/a                       |    |   | -          | 
|holding costs          |   |                            |  |   |            |  |  |                           |    |   |            | 
|reimbursed to related   |   |                            |  |   |            |  |  |                           |    |   |            | 
|party                   |   |                            |  |   |            |  |  |                           |    |   |            | 
|Total Expenses          | $ | 1,134,200                  |  | $ | 1,416,300  |  |  | (19.9                     | )% | $ | 3,011,532  | 

6

---

Our operating expenses for the third quarter ended September
30, 2008 increased greatly as compared to the same period during our 2007 fiscal
year. The additional operating expenses for our third fiscal quarter of 2008 are
primarily expenses related to the exploration and development of the Columbus
Project and the exploration of the Red Mountain Project.

The item Mineral exploration and evaluation expenses  related
party represents (a) amounts paid or reimbursed to Nanominerals for exploration
work conducted on the Columbus and Red Mountain Projects; and (b) amounts paid
in respect of the DDB Claims to the DDB Syndicate, an entity owned by related
parties.

During the nine months ended September 30, 2008, we incurred
fees payable to Nanominerals of $315,000 for technical and financing related
services relating primarily to the Columbus and Red Mountain Projects. In
addition, we incurred $20,181 in respect to reimbursable expenses paid for by
Nanominerals. At September 30, 2008, we were indebted to Nanominerals in the
amount of $111,459 for unpaid fees and reimbursable expenses.

During the nine months ended September 30, 2008, we made
$130,000 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
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
$130,000 in rental payments made to the DDB Syndicate consisted of $13,416 paid
to each member of the DDB Syndicate, plus an additional $22,670 paid to a
company controlled by Mr. Birnie for the reimbursement of expenses related to
exploration work done on the DDB Claims.

We also had an outstanding balance for accrued compensation due
to Douglas D.G. Birnie (our President and Chief Executive Officer and a member
of our Board of Directors) in the amount of $9,000, payable to a company
controlled by Mr. Birnie.

The increase in general and administrative expenses is primarily
  attributable to: (i) increases in the amounts paid as executive compensation;
  (ii) an increase in legal and accounting expenses incurred by us; (iii) increased
  professional and administrative expenses associated with the administration
  of the Columbus Project; and (iv) an overall increase in company activity.

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

LIQUIDITY AND CAPITAL RESOURCES

|Working Capital                               |   |                             |   |   |                            |   |  |                       |  
|--------------------------------------------- | - | --------------------------- | - | - | -------------------------- | - |  | --------------------- | -
|                                              |   |                             |   |   |                            |   |  | Percentage            |  
|                                              |   | At
      September 30, 2008 |   |   | At
      December 31, 2007 |   |  | Increase / (Decrease) |  
|Current Assets                                | $ | 4,123,701                   |   | $ | 8,909,628                  |   |  | (53.7%                | )
|Current Liabilities                           | $ | (400,188                    | ) | $ | (288,452                   | ) |  | 38.7%                 |  
|Working Capital                               | $ | 3,723,513                   |   | $ | 8,621,176                  |   |  | (56.8%                | )
|                                              |   |                             |   |   |                            |   |  |                       |  
|Cash Flows                                    |   |                             |   |   |                            |  
|                                              |   | Nine Months Ended           |   |   | Nine Months Ended          |  
|                                              |   | September 30, 2008          |   |   | September 30, 2007         |  
|Cash Flows used in Operating
      Activities | $ | (3,053,186                  | ) | $ | (2,810,700                 | )
|Cash Flows used in Investing Activities       | $ | (1,657,682                  | ) | $ | (800                       | )
|Cash Flows from Financing
      Activities    | $ | 1,000                       |   | $ | 12,187,865                 |  
|Net (Decrease) Increase in Cash During Period | $ | (4,709,868                  | ) | $ | 9,376,365                  |  

At September 30, 2008 we had a working capital surplus of
$3,723,513 as compared to a working capital surplus of $8,621,176 at December
31, 2007. The decrease in our working capital surplus is primarily attributable
to the

7

---

fact that: (i) we had no sources of revenue and only nominal
financing during the period; and (ii) we incurred substantial expenses in the
acquisition, exploration and development of the Columbus Project and the
exploration of the Red Mountain Project.

The increase in cash flows used for investing activities is due
to purchase of plant and equipment for our pilot production plant during the
nine months ended September 30, 2008.

Financing Requirements

Although the amounts raised by us through our private placement
offerings completed in 2007 is sufficient to meet the anticipated costs for our
exploration and development programs for the remainder of 2008, the actual costs
of completing those programs may be greater than anticipated. In addition, in
order to fully complete our planned exploration and development programs, we
will need to obtain additional financing. We expect to seek out additional
financing sometime in the first half of 2009.

We do not currently have any additional financing arrangements
in place, and there are no assurances that we will be able to obtain additional
financing in an amount sufficient to meet our future needs or on terms that are
acceptable to us. If we are not able to obtain additional financing when needed,
we may be required adjust our exploration and development plans depending upon
our existing capital resources.

OFF-BALANCE SHEET ARRANGEMENTS

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

CRITICAL ACCOUNTING POLICIES

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

We have identified certain accounting policies, described
below, that are most important to the portrayal of our current financial
condition and results of operations. Our significant accounting policies are
also disclosed in the notes to our audited financial statements for the year
ended December 31, 2007 included in our Annual Report on Form 10-K filed with
the SEC on March 31, 2008.

Mineral Rights

We capitalize acquisition and option costs of mineral property
rights. The amount capitalized represents fair value at the time the mineral
rights were acquired. We capitalize acquisition and option costs of mineral
rights as tangible assets in accordance with Emerging Issues Task Force abstract
04-02 (EITF 04-02), Whether Mineral Rights are Tangible or Intangible Assets
and Related Issues. Upon commencement of 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.

8

---

Mineral Property Acquisition Costs

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

Environmental Protection and Reclamation Costs

Our operations have been, and may in the future, be affected
from time to time in varying degrees by changes in environmental regulations,
including those for future removal and site restoration costs. Both the
likelihood of new regulations and their overall effect upon us may vary from
region to region and are not predictable.

Environmental expenditures that relate to ongoing environmental
and reclamation programs are charged against statements of operations as
incurred or capitalized and amortized depending upon their future economic
benefits. We do not currently anticipate any material capital expenditures for
environmental control facilities because our property holding is at an early
stage of exploration.

ITEM
3.               
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM
4.               
CONTROLS AND PROCEDURES.

As of September 30, 2008, an evaluation was performed under the
supervision and with the participation of our management, including our Chief
Executive Officer (CEO) and Chief Financial Officer (CFO), of the
effectiveness of the design and operation of our disclosure controls and
procedures. These controls and procedures are based on the definition of
disclosure controls and procedures in Rule 13a-15(e) and Rule 15d-15(e)
promulgated under the Securities Exchange Act of 1934.

Based on that evaluation as of September 30, 2008, 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 third quarter of 2008, there were no changes in the
Company's internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.

9

---

PART II - OTHER INFORMATION

ITEM
1.               
LEGAL PROCEEDINGS.

None.

ITEM
1A.              RISK
FACTORS.

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

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

We have begun pilot production operations on the Columbus
Project. This pilot production module is designed to evaluate the economic
feasibility of the Columbus Project. However, we have not yet established any
probable or proven reserves and our activities continue to be exploratory in
nature. We can not provide any assurances that the Columbus Project will turn
out to be commercially viable.

If we do not obtain additional financing, we may not be able
to complete our exploration and development programs for our mineral projects.

Although we have obtained sufficient proceeds from our private
placements offerings completed in 2007 to meet the anticipated costs of our
exploration and development programs for the remainder of 2008, the actual costs
of completing those programs may be greater than anticipated. In addition, in
order to fully complete our planned exploration and development programs, we
will need to obtain additional financing. We expect to seek out additional
financing sometime in the first half of 2009. However, there are no assurances
that we will be able to obtain additional financing in an amount sufficient to
meet our needs or on terms that are acceptable to us.

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

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

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

In order to maintain our rights to the Columbus Project, Red
Mountain Project and Ireland Claim, we will be required to make annual filings
with federal and state regulatory authorities. Currently the amount of these
fees is nominal; however, these maintenance fees are subject to adjustment. In
addition, we may be required by federal and/or state legislation or regulations
to complete minimum annual amounts of mineral exploration work

10

---

on the Columbus Project, Red Mountain Project and Ireland
Claim. A failure by us to meet the annual maintenance requirements under federal
and state laws could cause our rights to the Columbus Project, Red Mountain
Project and Ireland Claim 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 Quarterly 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 our operating expenses will increase
prior to our earning revenues, we may never achieve profitability.

Prior to completion of our 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 and our business will fail.

The search for valuable minerals as a business is extremely
risky. We may not find commercially exploitable reserves of gold or silver on
our mineral claims. Exploration for minerals is a speculative venture,
necessarily involving substantial risk. The expenditures to be made by us in the
upcoming exploration of our mineral projects 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. In such a case, we would be unable to complete
our business plan.

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

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

Even if we discover commercial reserves of precious metals
on our optioned mineral claims, we may not be able to successfully reach
commercial production.

Our optioned mineral claims do not contain any known bodies of
ore. If our exploration programs are successful in discovering ore of commercial
tonnage and grade, we will require additional funds in order to place those
mineral claims into commercial production. At this time, there is a risk that we
will not be able to obtain such financing as 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.

11

---

If we are unable to hire and retain key personnel, we may
not be able to implement our business plan and our business will fail.

Our success will largely depend on our ability to hire highly
qualified personnel with experience in geological exploration. These individuals
may be in high demand and we may not be able to attract the staff we need. In
addition, we may not be able to afford the high salaries and fees demanded by
qualified personnel, or may lose such employees after they are hired. Currently,
we have not hired any key personnel. An inability to hire key personnel when
needed could have a significant negative effect on our business.

Because our executive officers do not have formal training
specific to the technicalities of mineral exploration, there is a higher risk
our business will fail.

Our executive officers and directors do not have formal
training as geologists or in the technical aspects of management of a mineral
exploration company. Accordingly, we will have to rely on the technical services
of others trained in appropriate areas. If we are unable to contract for the
services of such individuals, it will make it difficult and maybe impossible to
pursue our business plan.

As we undertake exploration of our optioned mineral claims,
we will be subject to compliance with government regulation that may increase
the anticipated cost of our exploration program.

There are several government regulations that materially
restrict the exploration of minerals. We may 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.

Certain work to be performed on our mineral projects may
require us to apply for permits from federal, state or local regulatory bodies.

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 as disclosed above, which could have a negative affect on
our business.

If we receive positive results from our exploration program
and we decide to pursue commercial production, we may be subject to an
environmental review process that may delay or prohibit commercial
production.

If the results of our geological exploration program indicate
commercially exploitable reserves, and we decide to pursue commercial production
of our mineral claims, we may be subject to an environmental review process
under environmental assessment legislation. 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 did 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 Bulleting Board under
the symbol IRLD. However, the volume of trading in our common stock is
currently limited. As a result, holders of our common stock may have difficulty
selling their shares.

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

Our shares constitute a penny stock under the Exchange Act 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

12

---

subject to Rules 15g-2 through 15g-9 of the Exchange Act.
Rather than having to comply with these rules, some broker-dealers will refuse
to attempt to sell a penny stock.

No Assurance That Forward Looking Assessments Will Be
Realized.

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

FOR ALL OF THE AFORESAID REASONS AND OTHERS SET-FORTH AND
NOT SET-FORTH HEREIN, AN INVESTMENT IN OUR SECURITIES INVOLVES A CERTAIN DEGREE
OF RISK. ANY PERSON CONSIDERING TO INVEST IN OUR SECURITIES SHOULD BE AWARE OF
THESE AND OTHER FACTORS SET-FORTH IN THIS QUARTERLY REPORT ON FORM 10-Q AND IN
THE OTHER REPORTS AND DOCUMENTS THAT WE FILE FROM TIME TO TIME WITH THE SEC AND
SHOULD CONSULT WITH HIS/HER LEGAL, TAX AND FINANCIAL ADVISORS PRIOR TO MAKING AN
INVESTMENT IN OUR SECURITIES. AN INVESTMENT IN OUR SECURITIES SHOULD ONLY BE
ACQUIRED BY PERSONS WHO CAN AFFORD TO LOSE THEIR TOTAL INVESTMENT.

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

None.

ITEM
3.               
DEFAULTS UPON SENIOR SECURITIES.

None.

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

None.

ITEM
5.               
OTHER INFORMATION.

Amendment to Option Grants to Executive Officers and
Directors

On October 31, 2008, our Board of Directors unanimously
resolved to extend the term of the options granted to our officers and directors
for an additional 3 years as follows:

Optionee
    Office
    No. of Options
    Exercise Price
    Expiry DateDouglas D.G Birnie
    Chief Executive
      Officer, President, Secretary and Director
    2,200,000
    $0.05
    March 30, 2012Robert D. McDougal
    Chief Financial Officer,
      Treasurer and Director
    500,000
    $0.05
    March 30, 2012Michael A. Steele
    Director
    500,000
    $0.05
    March 30, 2012


Other than extending the term for which the options granted may
be exercised by the respective optionees listed above, no other amendments were
made.

13

---

ITEM
6.               
EXHIBITS.

|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.(4)                                                                                                                                                                                    
|3.4     |  | Bylaws.(1)                                                                                                                                                                                                                                 
|10.1    |  | 2007 Stock Incentive
        Plan.(3)                                                                                                                                                                                                      
|10.2    |  | Assignment Agreement dated for
        reference as of March 29, 2007, among Nanominerals Corp., the Company
        and Lorrie Archibald.(3)                                                                                              
|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.(13)                                                                                                                           
|14.1    |  | Code of Ethics.(10)                                                                                                                                                                                                                        
|16.1    |  | Letter of Telford
        Sadovnick, PLLC.(12)                                                                                                                                                                                             
|21.1    |  | List of Subsidiaries.(13)                                                                                                                                                                                                                  
|31.1    |  | Certification
        of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.                                                                                                                    
|31.2    |  | Certification
        of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.                                                                                                                    
|32.1    |  | Certification
        of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as
        adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                     
|32.2    |  | Certification
        of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as
        adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                     
|99.1    |  | Diagram
        of Columbus Project Pilot Production Process.                                                                                                                                                                              

|(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 Annual Report on Form 10-KSB
      for the year ended December 31, 2006 filed on April 5, 2007. 
|(4) | Filed as an exhibit to our Current Report on Form 8-K
      filed on April 30, 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.                                     

14

---

|(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 Current Report on Form 8-K
      filed on October 12, 2007.                                            
|(13) | Filed as an exhibit to our Annual Report on Form 10-K for
      the year ended December 31, 2007, filed on March 31,
  2008.      

15

---

SIGNATURES

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

|                        |     | IRELAND INC.                                          
|----------------------- | --- | ------------------------------------------------------
|                        |     |                                                       
|                        |     |                                                       
|                        |     |                                                       
|Date: November 13, 2008 | By: | /s/ Douglas D.G. Birnie                               
|                        |     | DOUGLAS D.G. BIRNIE                                   
|                        |     | Chief Executive Officer, President and
      Secretary
|                        |     | (Principal Executive Officer)                         
|                        |     |                                                       
|                        |     |                                                       
|                        |     |                                                       
|                        |     |                                                       
|Date: November 12, 2008 | By: | /s/ Robert D. McDougal                                
|                        |     | ROBERT D. MCDOUGAL                                    
|                        |     | Chief Financial Officer and Treasurer                 
|                        |     | (Principal Financial Officer)                         

---